##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2006
 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.
  Georgia
    
    58-2122873(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)450 Northridge Parkway, Suite 302, Atlanta, GA
    
    30350(Address of principal executive offices)
    
    (Zip Code)
 (770) 394-6000  (Registrants telephone number, including area code)
 None  (Former name, former address and former fiscal year, if changed since last report)
  Title of each class
    
    Name of each exchange on which registeredCommon Stock, $.01 par value per share
    
    American Stock Exchange
  o þ
 o þ
 þ o
 þ
 o þ
   o o þ
  Class
    
    Outstanding at March 14,2007Common Stock, $.01 par value per share
    
    5,807,141 shares
 DOCUMENTS INCORPORATED BY REFERENCE
 Document
    

Parts
Into Which IncorporatedNone




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TABLE OF CONTENTS
 PAGEPART I
    
    
    
    
    3ITEM 1.
    
    DESCRIPTION OF BUSINESS
    
    
    3ITEM 1A.
    
    RISK FACTORS
    
    
    12ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
    
    
    23ITEM 2.
    
    PROPERTIES
    
    
    23ITEM 3.
    
    LEGAL PROCEEDINGS
    
    
    31ITEM 4
    
    SUBMISSION OF MATTERS TO A VOTE OF  SECURITY HOLDERS
    
    
    31PART II
    
    
    
    
    32ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    32ITEM 6.
    
    SELECTED FINANCIAL DATA
    
    
    33ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    35ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    49ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    50ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    50ITEM 9A
    
    CONTROLS AND PROCEDURES
    
    
    50ITEM 9B
    
    OTHER INFORMATION
    
    
    51PART III
    
    
    
    
    52ITEM 10.
    
    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
    
    
    56ITEM 11.
    
    EXECUTIVE COMPENSATION
    
    
    55ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    61ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
    
    
    64ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    69PART IV
    
    
    
    
    71ITEM 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    71EX-21 SUBSIDIARIES OF THE REGISTRANTEX-23.1 AUDITOR'S CONSENT-DELOITTE & TOUCHE LLPEX-23.2 AUDITOR'S CONSENT-REZNICK GROUP PCEX-31 SECTION 302, CERTIFICATION OF CHARLES S. ROBERTS AND CHARLES R. ELLIOTEX-32 SECTION 906, CERTIFICATIONS OF CHARLES S. ROBERTS AND CHARLES R. ELLIOT




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NOTE REGARDING FORWARD-LOOKING STATEMENTS
   2




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PART I
 
 ITEM 1. DESCRIPTION OF BUSINESS.
 General
    (1)
    
    the multifamily segment consisting of operating apartment communities;(2)
    
    the retail/office segment consisting of operating retail centers and an
office building;(3)
    
    the land segment consisting of various tracts of land that are either
under development and construction or held for investment; and(4)
    
    the corporate segment consisting primarily of operating cash and cash
equivalents plus miscellaneous other assets.
   The Operating Partnership
  3




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Recent Developments
 Purchase of 1.3-Acre Parcel at Grand Pavilion Retail Center
  Purchase of Remaining 18% Undivided Interest at Peachtree Parkway
  4




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Trends
     Growth Strategies
  5




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
    
    we focus on maximizing cash flow from our stabilized apartment communities by
seeking to maintain high occupancy levels, obtain regular rent increases, manage
resident turnover efficiently, and control operating expenses; and
    
    we look for the right opportunities to develop and/or acquire new multifamily
residential communities, neighborhood retail centers, and/or mixed-use projects in
Atlanta and Palm Beach County, Florida.
  Property Management Strategy
 
    
    to increase occupancy and rental rates as market conditions permit;
    
    to minimize resident turnover and delinquent rental payments through strict review
of each applicants creditworthiness;
    
    to provide our commercial (retail and office) tenants with superior facilities that
enable them to succeed in business;
    
    to control operating expenses and increase net operating income at each of our
properties; and
    
    to provide superior customer service to our apartment residents and commercial
tenants.
 Development and Construction Strategy
 6




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
    
    households, population and employment growth;
    
    prevailing rental and occupancy rates in the immediate market area and the perceived
potential for growth in those rates;
    
    costs that affect profitability of the investment, including construction,
financing, operating, and maintenance costs;
    
    income levels in the area;
    
    existing employment bases;
    
    traffic volume, transportation access, proximity to commercial centers and regional
malls; and
    
    proximity to and quality of the areas schools.
  Determination of Investment, Financing and Conflict of Interest Policies
  
    
    we cannot change our policy of holding our assets and conducting our business
exclusively through the operating partnership without amending the operating
partnership agreement, which will generally require the consent of the holders of a
majority in interest of the limited partners in the operating partnership including, if
applicable, Roberts Realty; and
    
    any changes in our conflicts of interest policies must be approved by a majority of
the independent directors and otherwise be consistent with legal requirements.
 Investment Policies
 Investments in Real Estate or Interests in Real Estate
 7




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Possible Acquisition of Properties from Mr. Roberts or His Affiliates
 
    
    we may hire Mr. Roberts or the Roberts Companies to develop and construct real
estate assets under a fee arrangement;
    
    we may acquire undeveloped property from Mr. Roberts or his affiliates for future
development, which we did in 2004 and 2005; or
    
    we may acquire from Mr. Roberts or his affiliates partially or completely
constructed properties, whether in their lease-up phase or already leased and
stabilized.
   Securities of or Interest in Persons Primarily Engaged in Real Estate Activities and Other
Issuers
 No Investments in Mortgages
 8




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Financing Policies
     Conflict of Interest Policies
   
    
    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.
  9




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Other Policies
   Competition
   Environmental and Other Regulatory Matters
  10




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
    
    remediation and removal costs; and
    
    damages to persons or property arising from the existence or maintenance of
hazardous or toxic substances.
  Insurance
    11




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ITEM 1A. RISK FACTORS
  
    
    real estate related risks;
    
    financing risks;
    
    tax risks;
    
    environmental and other legal risks; and
    
    risks for investors in our stock.
  Real Estate Related Risks
 Our business currently operates at a loss
  Construction risks inherent in the development and construction of new properties could negatively
affect our financial performance.
  
    
    increased costs for or any unavailability of materials or labor;
    
    building restrictions;
    
    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, Inc., which is owned
by Mr. Charles S. Roberts, our President, Chief Executive Officer and Chairman of our
Board of
 12




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Directors), general contractor (Roberts Properties Construction, Inc., also owned by Mr.
Roberts) or any subcontractor.
  We face leasing risks in our planned development and construction program.
  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.
  
    
    lack of employment growth;
    
    supply and demand for properties;
    
    neighborhood values in the submarkets in which our properties are located;
    
    zoning and other regulatory conditions;
    
    competition from other properties;
    
    property taxes;
    
    weather problems; and
    
    price increases for materials or labor.
  We face conflicts of interest because of our business dealings with our Chief Executive Officer and
his affiliates.
  13




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
    
    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 Company may be in a position to take action
contrary to our instructions or requests or contrary to our policies or objectives.
 We face substantial competition.
  
    
    cause us to pay a higher price for a new property than we otherwise would have paid;
    
    prevent us from purchasing a desired property at all;
    
    decrease the rental rates that we would be able to charge in the absence of such
direct competition; and
    
    reduce the occupancy rates that we would otherwise be able to achieve.
  Favorable conditions for purchasing residential properties could adversely affect our revenues from
our residential communities.
  Changes in market or economic conditions may affect our business negatively.
  14




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Terrorism could impair our business.
  Our commercial and office tenants may go bankrupt or be unable to make lease payments.
  Real estate properties are illiquid and may be difficult to sell, particularly in a poor market
environment.
  Losses from natural catastrophes may exceed our insurance coverage.
  Our business depends on key personnel.
  15




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If we are unable to lease up our Addison Place Shops and our Northridge office building as we
intend, our financial performance and condition could suffer.
  Financing Risks
 We may not be able to obtain the debt and equity we need to carry out our planned development and
construction program.
  We may be unable to refinance our existing debt or we may only be able to do so on unfavorable
terms.
  
    
    the risk that our cash flow will be insufficient to meet required payments of
principal and interest; and
    
    the risk 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.
   16




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Rising interest rates could materially and adversely affect the cost of our indebtedness.
  Increased debt and leverage could affect our financial position and impair our ability to make
distributions to our investors.
  
    
    increase our vulnerability to general adverse economic and industry conditions;
    
    limit our flexibility in planning for, or reacting to, changes in our business and
the REIT industry, 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.
  If we are unable to reinvest sales or refinancing proceeds as quickly as we expect, our financial
condition may be adversely affected.
  If we incur additional debt, the agreements covering those debts could contain various covenants
that limit our discretion in the operation of our business.
  17




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
    
    incur additional debt and issue preferred stock;
    
    pay dividends and make other distributions;
    
    make investments and other payments;
    
    redeem or repurchase our capital stock;
    
    consolidate or merge;
    
    create liens;
    
    sell assets; or
    
    enter into certain transactions with our affiliates.
  Our interest rate hedging activities may not effectively protect us from fluctuations in interest
rates.
  Tax Risks
 Our company may fail to qualify for REIT status under federal income tax laws.
   18




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Our operating partnership may fail to be treated as a partnership for federal income tax purposes.
  Environmental and Other Legal Risks
 We may have liability under environmental laws.
  
    
    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.
  We face risks related to mold and asbestos.
  19




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
    
    properly manage and maintain the asbestos;
    
    notify and train those who may come into contact with asbestos; and
    
    undertake special precautions, including removal or other abatement, if asbestos
would be disturbed during renovation or demolition of a building.
  We may acquire properties that are subject to liabilities for which we have no recourse, or only
limited recourse, against the seller.
  
    
    claims by tenants, vendors or other persons dealing with the former owners of the
properties;
    
    liabilities incurred in the ordinary course of business; and
    
    claims for indemnification by directors, officers and others indemnified by the
former owners of the properties.
  We face risks in complying with Section 404 of the Sarbanes-Oxley Act of 2002.
   20




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Failure to comply with the Americans with Disabilities Act or other similar laws could result in
substantial costs.
  Risks for Investors in Our Stock
 We do not pay regular quarterly dividends, and we do not anticipate making any distributions to
investors for the indefinite future, other than possibly to preserve our REIT status if so
required.
  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.
  Additional issuances of equity securities may dilute the investment of our current shareholders.
  21




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Restrictions on changes of control could prevent a beneficial takeover for investors.
   
    
    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.
 A redemption of units is taxable.
  22




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ITEM 1B. UNRESOLVED STAFF COMMENTS.
  
 ITEM 2. PROPERTIES.
 General
  Multifamily
  Retail/Office
 1.
    
    Grand Pavilion, a 62,323-square-foot retail center located in Johns
Creek that is 58.8% occupied.2.
    
    Bassett Shopping Center, a 19,949-square-foot retail center located
directly across from the Mall of Georgia in Gwinnett County that is 100% occupied.3.
    
    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 61.8%
occupied.4.
    
    Addison Place Shops, a 39,205-square-foot retail center in lease-up
located at the entrance to our Addison Place apartment community in Johns Creek.
The Addison Place Shops are 34.4% occupied.5.
    
    Northridge Office Building, a 37,864-square-foot building that is in
lease-up in Sandy Springs, Georgia. 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, Inc. (Roberts
Properties) and Roberts Properties Construction, Inc. (Roberts Construction),
each of which is owned by Mr. Charles S. Roberts, our President, Chief Executive
Officer and Chairman of our Board of Directors. We have also entered into a lease
with an unrelated third party for a portion of the first floor. The building is
43.8% leased and 43.8% occupied.
 Land
 Properties under Development
 1.
    
    Northridge, a 220-unit apartment community to be located on a 10.9-acre
site adjacent to our Northridge office building.
 23




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2.
    
    Peachtree Parkway, a 292-unit apartment community to be located on a
23.6-acre site fronting Peachtree Parkway (Highway 141) in Gwinnett County.3.
    
    North Springs, a 9.8-acre tract of undeveloped land located on
Peachtree Dunwoody Road in Atlanta that is zoned for 356 residential units, 210,000
square feet of office space, and 56,000 square feet of retail space.4.
    
    Sawmill Village, a 22.0-acre tract of undeveloped land in Cumming zoned
for 154 residential units.5.
    
    Highway 20, a 38.2-acre tract of undeveloped land in Cumming, zoned for
210 residential units.6.
    
    A 0.8-acre undeveloped commercial site adjacent to our Addison Place
Shops on which we intend to build a 5,000 square foot retail building for lease.
 Land Held for Investment
     24




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Year
    
    Number
    
    Approximate
    
    Average
    
    December 2006
    
    OccupancyResidential
    
    
    
    Completed
    
    of
    
    Rentable Area
    
    Unit Size
    
    Average Monthly Rental Rates
    
    as ofProperty
    
    Location
    
    or Acquired
    
    Units
    
    (Square Feet)
    
    (Square Feet)
    
    Per Unit
    
    Per Sq. Ft.
    
    12/31/06ResidentialAddison Place
Townhomes
(1)
    
    Johns Creek
    
    
    1999
    
    
    
    118
    
    
    
    200,194
    
    
    
    1,697
    
    
    
    1,233
    
    
    
    0.73
    
    
    
    89.0
    %Addison Place
Apartments
(1)
    
    Johns Creek
    
    
    2001
    
    
    
    285
    
    
    
    403,312
    
    
    
    1,415
    
    
    
    1,119
    
    
    
    0.79
    
    
    
    88.8
    %Total Residential
(1)
    
    
    
    
    
    
    
    
    403
    
    
    
    603,506
    
    
    
    1,498
    
    
    
    1,152
    
    
    
    0.77
    
    
    
    88.9
    %
 
 (1)
    
    Addison Place was completed in two phases. Addison Place townhomes, the 118-unit first
phase, was completed in October 1999, and Addison Place apartments, the 285-unit second phase,
was completed in September 2001.  Month
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Average Effective Annual Rental RatesCompleted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2002
    
    2003
    
    2004
    
    2005
    
    2006Initial
    
    Physical Occupancy Rate
    
    Per
    
    Per
    
    Per
    
    Per
    
    Per
    
    Per
    
    Per
    
    Per
    
    Per
    
    PerCommunity
    
    Lease up
    
    2002
    
    2003
    
    2004
    
    2005
    
    2006
    
    Unit
    
    Sq. Ft.
    
    Unit
    
    Sq. Ft.
    
    Unit
    
    Sq. Ft.
    
    Unit
    
    Sq. Ft.
    
    Unit
    
    Sq. Ft.Addison Place
Townhomes
    
    
    5/00
    
    
    
    74.7
    %
    
    
    88.5
    %
    
    
    94.0
    %
    
    
    93.4
    %
    
    
    92.8
    %
    
    $
    1,275
    
    
    $
    0.75
    
    
    $
    1,195
    
    
    $
    0.70
    
    
    $
    1,157
    
    
    $
    0.68
    
    
    $
    1,207
    
    
    $
    0.71
    
    
    $
    1,253
    
    
    $
    0.74Addison Place
Apartments
    
    
    9/02
    
    
    
    65.8
    %*
    
    
    90.3
    %
    
    
    94.2
    %
    
    
    94.2
    %
    
    
    91.4
    %
    
    $
    1.044
    *
    
    $
    0.74
    *
    
    $
    1,007
    
    
    $
    0.71
    
    
    $
    994
    
    
    $
    0.70
    
    
    $
    1,032
    
    
    $
    0.73
    
    
    $
    1,085
    
    
    $
    0.77Total Addison
Place
    
    
    N/A
    
    
    
    N/A
    
    
    
    89.8
    %
    
    
    94.2
    %
    
    
    94.0
    %
    
    
    91.8
    %
    
    
    N/A
    
    
    
    N/A
    
    
    $
    1,061
    
    
    $
    0.71
    
    
    $
    1,041
    
    
    $
    0.69
    
    
    $
    1,083
    
    
    $
    0.72
    
    
    $
    1,134
    
    
    $
    0.76
 25




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Retail or
    
    
    
    
    
    
    
    
    
    
    
    Approximate
    
    
    Average
    
    
    OccupancyOffice
    
    
    
    Year
    
    
    Year
    
    
    Rentable Area
    
    
    Base Rent per
    
    
    as ofProperty
    
    Location
    
    Completed
    
    
    Acquired
    
    
    (Square Feet)
    
    
    Square Foot
    
    
    12/31/06RetailGrand Pavilion
    
    Johns Creek
    
    
    1999
    
    
    
    2005
    
    
    
    62,323
    
    
    $
    17.49
    
    
    
    60.7
    %Bassett Center
    
    Gwinnett County
    
    
    1999
    
    
    
    2005
    
    
    
    19,949
    
    
    
    24.25
    
    
    
    100.0
    %Spectrum Center
    
    Gwinnett County
    
    
    2002
    
    
    
    2005
    
    
    
    30,050
    
    
    
    25.68
    
    
    
    57.7
    %Addison Place Shops (1)
    
    Johns Creek
    
    
    2005
    
    
    
    2001
    
    
    
    39,205
    
    
    
    20.98
    
    
    
    20.8
    %Total Retail
    
    
    
    
    
    
    
    
    
    
    
    
    151,527
    
    
    $
    20.68
    
    
    
    55.0
    %Northridge Office Building
(2)
    
    Atlanta
    
    
    2004
    
    
    
    2001
    
    
    
    37,864
    
    
    $
    16.00
    
    
    
    44.1
    %
 
 (1)
    
    The Addison Place Shops retail center was completed in May 2005 and is in its lease-up phase.(2)
    
    The Northridge office building is still in its lease-up phase. A total of 6,557 square feet
of the occupied space is allocated to Roberts Realty Investors, Inc.  Expiring
    
    
    % of TotalNumber of
    
    
    Approximate
    
    
    Approximate
    
    
    Expiring
    
    
    % of TotalExpiring
    
    
    Rentable Area
    
    
    Rentable Area
    
    
    Annualized
    
    
    AnnualizedYear
    
    Leases(1)
    
    
    (Square Feet)
    
    
    (Square Feet)
    
    
    Base Rent
    
    
    Base Rent2007
    
    
    10
    
    
    
    26,514
    
    
    
    24.9
    %
    
    $
    586,910
    
    
    
    26.7
    %2008
    
    
    6
    
    
    
    10,550
    
    
    
    9.9
    %
    
    
    199,401
    
    
    
    9.1
    %2009
    
    
    7
    
    
    
    15,440
    
    
    
    14.5
    %
    
    
    331,748
    
    
    
    15.1
    %2010
    
    
    6
    
    
    
    16,527
    
    
    
    15.5
    %
    
    
    266,564
    
    
    
    12.1
    %2011
    
    
    4
    
    
    
    9,035
    
    
    
    8.5
    %
    
    
    203,780
    
    
    
    9.3
    %2012 and later
    
    
    6
    
    
    
    28,354
    
    
    
    26.7
    %
    
    
    610,719
    
    
    
    27.7
    %Total
    
    
    39
    
    
    
    106,420
    
    
    
    100.0
    %
    
    $
    2,199,122
    
    
    
    100.0
    %
 
 (1)
    
    Lease expiration table does not include option periods. 26




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##### Table of Contents



Fulton County
  Alpharetta / Johns Creek
  Addison Place Apartments and Townhomes.
   Addison Place Shops.
 27




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##### Table of Contents



Grand Pavilion.
 Westside
 Perimeter Center/North Springs Area
   North Springs.
 28




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##### Table of Contents



Northridge Office Building
 Northridge Apartment Community.
 Gwinnett County
  Peachtree Corners Area
  Peachtree Parkway.
 Mall of Georgia Area
  Bassett Shopping Center.
 29




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##### Table of Contents



Spectrum Shopping Center.
 Forsyth County/Cumming
  Sawmill
 Highway
20
 Summary of Debt Secured by Our Properties
  Possible Additional Communities to Be Developed
  30




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##### Table of Contents



ITEM 3. LEGAL PROCEEDINGS.
  
 ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  31




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##### Table of Contents



PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES.
  DividendsQuarter Ended
    
    High
    
    Low
    
    Declared2006
    
    First Quarter
    
    $
    8.09
    
    
    $
    7.65
    
    
    NoneSecond Quarter
    
    
    8.10
    
    
    
    7.60
    
    
    NoneThird Quarter
    
    
    8.10
    
    
    
    7.75
    
    
    NoneFourth Quarter
    
    
    8.10
    
    
    
    7.55
    
    
    None2005
    
    First Quarter
    
    $
    8.62
    
    
    $
    7.60
    
    
    NoneSecond Quarter
    
    
    8.48
    
    
    
    7.14
    
    
    NoneThird Quarter
    
    
    8.97
    
    
    
    7.58
    
    
    NoneFourth Quarter
    
    
    7.92
    
    
    
    7.42
    
    
    None
      32




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##### Table of Contents



ITEM 6. SELECTED FINANCIAL DATA.
  OPERATING DATA:  (Dollars in Thousands, Except Per Share Amounts)
 YEARS ENDED DECEMBER 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002OPERATING DATA:REVENUES:Rental operations
    
    $
    7,276
    
    
    $
    5,485
    
    
    $
    4,774
    
    
    $
    4,607
    
    
    $
    3,733Other operating income
    
    
    781
    
    
    
    394
    
    
    
    288
    
    
    
    282
    
    
    
    208Total revenues
    
    
    8,057
    
    
    
    5,879
    
    
    
    5,062
    
    
    
    4,889
    
    
    
    3,941EXPENSES:Personnel
    
    
    608
    
    
    
    586
    
    
    
    508
    
    
    
    470
    
    
    
    474Utilities
    
    
    455
    
    
    
    394
    
    
    
    324
    
    
    
    257
    
    
    
    301Repairs, maintenance, and landscaping
    
    
    571
    
    
    
    442
    
    
    
    370
    
    
    
    312
    
    
    
    261Real estate taxes
    
    
    1,121
    
    
    
    656
    
    
    
    445
    
    
    
    403
    
    
    
    351Marketing, insurance and other
    
    
    422
    
    
    
    364
    
    
    
    286
    
    
    
    261
    
    
    
    229General and administrative expense
    
    
    1,730
    
    
    
    1,561
    
    
    
    1,708
    
    
    
    2,072
    
    
    
    2,155Bad debt expense
    
    
    188
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Write off of fair value/market value of leases
    
    
    389
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Depreciation and amortization
    
    
    2,992
    
    
    
    2,116
    
    
    
    1,695
    
    
    
    1,795
    
    
    
    2,029Interest income
    
    
    (96
    )
    
    
    (265
    )
    
    
    (294
    )
    
    
    (77
    )
    
    
    (39
    )Interest expense
    
    
    4,587
    
    
    
    3,118
    
    
    
    2,479
    
    
    
    2,003
    
    
    
    1,775Legal settlement
    
    
    28
    
    
    
    150
    
    
    
    (340
    )
    
    
    0
    
    
    
    0Amortization of deferred financing costs
    
    
    161
    
    
    
    160
    
    
    
    101
    
    
    
    149
    
    
    
    163Total expenses
    
    
    13,156
    
    
    
    9,282
    
    
    
    7,282
    
    
    
    7,645
    
    
    
    7,699LOSS FROM CONTINUING OPERATIONS BEFORE MINORITY
INTEREST AND GAINS ON SALE OF REAL ESTATE ASSETS
    
    
    (5,099
    )
    
    
    (3,403
    )
    
    
    (2,220
    )
    
    
    (2,756
    )
    
    
    (3,758
    )MINORITY INTEREST OF UNITHOLDERS
IN THE OPERATING PARTNERSHIP
    
    
    1,241
    
    
    
    865
    
    
    
    596
    
    
    
    783
    
    
    
    1,184LOSS FROM CONTINUING OPERATIONS BEFORE GAINS ON
SALE OF REAL ESTATE ASSETS
    
    
    (3,858
    )
    
    
    (2,538
    )
    
    
    (1,624
    )
    
    
    (1,973
    )
    
    
    (2,574
    )GAINS ON SALE OF REAL ESTATE ASSETS, net of minority interest
of unitholders in the operating partnership
    
    
    
    
    
    
    
    
    
    
    102
    
    
    
    77
    
    
    
    941LOSS FROM CONTINUING OPERATIONS
    
    
    (3,858
    )
    
    
    (2,538
    )
    
    
    (1,522
    )
    
    
    (1,896
    )
    
    
    (1,633
    )INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of
minority interest of unitholders in the operating partnership
    
    
    
    
    
    
    3,794
    
    
    
    38,508
    
    
    
    4,586
    
    
    
    (883
    )Net income (loss)
    
    $
    (3,858
    )
    
    $
    1,256
    
    
    $
    36,986
    
    
    $
    2,690
    
    
    $
    (2,516
    )INCOME (LOSS) PER COMMON SHARE  DILUTED:Loss from continuing operations
    
    $
    (0.67
    )
    
    $
    (0.46
    )
    
    $
    (0.29
    )
    
    $
    (0.37
    )
    
    $
    (0.33
    )Income (loss) from discontinued operations
    
    
    
    
    
    
    0.69
    
    
    
    7.30
    
    
    
    0.89
    
    
    
    (0.18
    )Net income (loss)
    
    $
    (0.67
    )
    
    $
    0.23
    
    
    $
    7.01
    
    
    $
    0.52
    
    
    $
    (0.51
    )Dividends declared
    
    $
    0.00
    
    
    $
    0.00
    
    
    $
    4.50
    
    
    $
    0.55
    
    
    $
    0.00
 December 31,BALANCE SHEET DATAReal estate assets, before accumulated depreciation
    
    $
    81,473
    
    
    $
    80,365
    
    
    $
    80,649
    
    
    $
    42,175
    
    
    $
    42,495Real estate assets, net of accumulated depreciation
    
    
    68,629
    
    
    
    70,107
    
    
    
    71,492
    
    
    
    35,600
    
    
    
    37,658Total assets
    
    
    131,767
    
    
    
    127,149
    
    
    
    129,229
    
    
    
    177,739
    
    
    
    179,007Total debt
    
    
    76,550
    
    
    
    66,925
    
    
    
    72,942
    
    
    
    57,917
    
    
    
    53,363Minority interest of unitholders in the operating partnership
    
    
    12,863
    
    
    
    14,459
    
    
    
    14,368
    
    
    
    9,214
    
    
    
    9,361Shareholders equity
    
    
    41,298
    
    
    
    44,794
    
    
    
    39,849
    
    
    
    24,049
    
    
    
    22,479
 Footnotes are on the following page.
 33




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##### Table of Contents



December 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002OTHER DATA:Cash flow provided by (used in):Operating activities of continuing operations
    
    $
    (1,326
    )
    
    $
    (746
    )
    
    $
    (1,493
    )
    
    $
    (1,263
    )
    
    $
    (1,712
    )Operating activities of discontinued operations
    
    
    
    
    
    
    355
    
    
    
    (537
    )
    
    
    3,234
    
    
    
    4,481Investing activities
    
    
    (5,196
    )
    
    
    (21,350
    )
    
    
    117,722
    
    
    
    5,191
    
    
    
    (16,221
    )Financing activities
    
    
    9,511
    
    
    
    (3,892
    )
    
    
    (97,223
    )
    
    
    (4,121
    )
    
    
    16,377Net increase (decrease) in cash and cash equivalents
    
    
    2,989
    
    
    
    (25,633
    )
    
    
    18,469
    
    
    
    3,041
    
    
    
    2,925Cash and cash equivalents, beginning of year
    
    
    1,419
    
    
    
    27,052
    
    
    
    8,583
    
    
    
    5,542
    
    
    
    2,617Cash and cash equivalents, end of year
    
    
    4,408
    
    
    
    1,419
    
    
    
    27,052
    
    
    
    8,583
    
    
    
    5,542Weighted average common shares outstanding  basic
    
    
    5,732,274
    
    
    
    5,522,630
    
    
    
    5,280,064
    
    
    
    5,171,748
    
    
    
    4,943,280Weighted average common shares outstanding 
diluted (effect of operating
partnership units)
    
    
    7,576,618
    
    
    
    7,406,066
    
    
    
    7,220,658
    
    
    
    7,223,727
    
    
    
    7,220,593Total stabilized communities (at end of year)
    
    
    2
    
    
    
    2
    
    
    
    2
    
    
    
    7
    
    
    
    5Total stabilized apartments (at end of year)
    
    
    403
    
    
    
    403
    
    
    
    403
    
    
    
    1,632
    
    
    
    1,029Average physical occupancy (stabilized
communities) (1)
    
    
    91.8
    %
    
    
    94.0
    %
    
    
    94.2
    %
    
    
    86.2
    %
    
    
    93.3
    %Total stabilized retail properties (at end of year)
    
    
    3
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    Total stabilized retail square footage (at end of year)
    
    
    112,322
    
    
    
    112,322
    
    
    
    
    
    
    
    
    
    
    
    Average physical occupancy (stabilized retail properties)
    
    
    93.0
    %
    
    
    89.1
    %
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Represents the average physical occupancy of the stabilized communities calculated by
dividing the total number of vacant days by the total possible number of vacant days for
each period and subtracting the resulting number from 100%.  34




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##### Table of Contents



ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION.
 Overview
  Recent Developments
 Purchase of Land Adjacent to Grand Pavilion Retail Center
  Listing of Bassett Shopping Center for Sale
  Peachtree Parkway loan closing and acquisition
  
    
    We used $2,284,043, plus closing costs of $22,108, to acquire the remaining 18%
undivided interest in Peachtree Parkway from an unaffiliated third party. In
addition, we paid the $146,000 balance owed by the seller to Roberts Properties for
the sellers portion of the total $811,111 amount incurred under the design and
development agreement with Roberts Properties through the date of closing. The
property remains as collateral for the Wachovia loan.
    
    We used $1,350,858 was used to pay off the balance on our line of credit.
    
    We will use the remainder for working capital and general corporate purposes,
including funding part of our development and construction program.
 35




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##### Table of Contents



Adoption of Segment Reporting
  Trends
    Results of Operations
  Comparison of the Year Ended December 31, 2006 to the Year Ended December 31, 2005
  36




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37




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##### Table of Contents



Comparison of the Year Ended December 31, 2005 to the Year Ended December 31, 2004
        38




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##### Table of Contents



Liquidity and Capital Resources
  Comparison of the Year Ended December 31, 2006 to the Year Ended December 31, 2005
     
    
    a property sale in 2005, which resulted in net reductions of debt of $22,217,000;
    
    a $21,034,000 repayment of our Addison Place apartments loan in 2005; and
 39




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##### Table of Contents




    
    a net decrease in repayment of land loans payable of $20,413,000.
  
    
    $36,036,000 in proceeds from mortgage notes payable in 2005, $15,002 of which was
used to finance our retail acquisitions in September and October 2005 and $21,034 of
which was used to payoff our Addison Place apartments loan in April 2005;
    
    $2,901,000 in proceeds from the sale of stock in June 2005; and
    
    a net decrease in proceeds from land loans of $8,513,000.
 Comparison of the Year Ended December 31, 2005 to the Year Ended December 31, 2004
     
    
    property sales in 2004 and 2005, which resulted in net reductions of debt of
$73,521,000 in 2004 and $22,217,000 in 2005;
    
    $36,036,000 in proceeds from mortgage notes payable, $15,002,000 of which was used
to finance our retail acquisitions in September and October 2005 and $21,034,000 of
which was used to pay off our Addison Place apartments loan in April 2005;
    
    a net increase in land loan proceeds of $11,303,000 used to fund five land
acquisitions in 2004 and 2005;
    
    $2,901,000 in proceeds from the sale of stock in June 2005; and
    
    a payment of $32,509,000 in a special distribution during June 2004 with no
corresponding distributions in 2005;
  
    
    a net increase in repayment of land loans of $17,413,000; and
    
    a $21,034,000 repayment of our Addison Place apartments loan.
 40




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##### Table of Contents



Debt Summary
  41




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##### Table of Contents



ROBERTS REALTY INVESTORS, INC.
DEBT SUMMARY SCHEDULE
(Listed in order of maturity)
As of December 31, 2006
 December 31,Interest
    
    
    Maturity
    
    
    Balance at
    
    
    Monthly
    
    
    2006Lender
    
    Interest Terms
    
    Rate(1)
    
    
    Date
    
    
    Maturity
    
    
    Payment
    
    
    BalanceInsurance Premium Loan
    
    AICCO, Inc.
    
    Fixed-rate permanent
    
    
    6.25%
    
    
    
    06/01/07
    
    
    
    
    
    
    $
    22,233
    
    
    $
    109,000Revolving $2,500,000 Line
    
    
    
    LIBOR plus 175of Credit (2) (3)
    
    Compass Bank
    
    basis points (b.p.)
    
    
    7.07%
    
    
    
    08/01/07
    
    
    
    
    
    
    Interest only
    
    
    
    Northridge Office Building (3)
    
    Bank of North Georgia
    
    LIBOR plus 200 b.p.
    
    
    7.32%
    
    
    
    09/10/07
    
    
    $
    3,760,000
    
    
    $
    13,333
    (4)
    
    
    3,846,000Addison Place Shops (5)
    
    Compass Bank
    
    LIBOR plus 185 b.p.
    
    
    7.17%
    
    
    
    10/30/07
    
    
    
    6,500,000
    
    
    Interest only
    
    
    
    6,363,000Peachtree Parkway Land Loan
    
    Wachovia Bank
    
    LIBOR plus 175 b.p.
    
    
    7.07%
    
    
    
    12/06/07
    
    
    
    8,175,000
    
    
    Interest only
    
    
    
    8,175,000Highway 20 Land Loan (6)
    
    Wachovia Bank
    
    LIBOR plus 175 b.p.
    
    
    7.07%
    
    
    
    01/31/08
    
    
    
    4,077,000
    
    
    Interest only
    
    
    
    4,077,000Westside Land Loan (3)
    
    Compass Bank
    
    LIBOR plus 175 b.p.
    
    
    7.07%
    
    
    
    08/27/08
    
    
    
    6,480,000
    
    
    Interest only
    
    
    
    6,480,000Sawmill Village Land Loan (3)
    
    Bank of North Georgia
    
    LIBOR plus 175 b.p.
    
    
    7.07%
    
    
    
    08/29/08
    
    
    
    3,335,000
    
    
    Interest only
    
    
    
    3,335,000Addison Place Townhomes (7)
    
    Prudential Life
    
    Fixed-rate permanent
    
    
    6.95%
    
    
    
    11/15/09
    
    
    
    8,339,000
    
    
    $
    62,885
    
    
    
    8,788,000Grand Pavilion Shopping
Center (8)
    
    LaSalle Bank
    
    Fixed-rate permanent
    
    
    5.43%
    
    
    
    07/11/13
    
    
    
    6,016,000
    
    
    $
    40,565
    
    
    
    6,855,000Spectrum Shopping Center (8)
    
    LaSalle Bank
    
    Fixed-rate permanent
    
    
    5.68%
    
    
    
    05/01/14
    
    
    
    4,546,000
    
    
    $
    31,273
    
    
    
    5,217,000Addison Place Apartments (9)
    
    Freddie Mac
    
    Fixed-rate permanent
    
    
    6.35%
    
    
    
    05/01/15
    
    
    
    18,027,000
    
    
    $
    130,669
    
    
    
    20,628,000Bassett Shopping Center (8)
    
    LaSalle Bank
    
    Fixed-rate permanent
    
    
    8.47%
    
    
    
    10/01/19
    
    
    
    1,943,000
    
    
    $
    21,853
    
    
    
    2,677,000Totals
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    71,198,000
    
    
    
    
    
    
    $
    76,550,000
 
 (Footnotes are on following page.)
 42




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##### Table of Contents



(1)
    
    The interest rate shown for variable-rate debt is as of December 31, 2006.(2)
    
    On August 1, 2006, this line of credit was increased to $2.5 million, and the maturity
date was extended to August 1, 2007.(3)
    
    Each of these loans has an interest rate floor of 3.75%.(4)
    
    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.(5)
    
    This loan has an interest rate floor of 3.50%.(6)
    
    On January 26, 2007, we extended the maturity date of the loan from January 31, 2007 to
January 31, 2008.(7)
    
    We may prepay the loan secured by the Addison Place townhomes upon payment of a premium
equal to the greater of (a) 1% of the principal amount being prepaid multiplied by a
fraction having as its numerator the number of months to maturity and its denominator
the number of months in the full term of the loan or (b) the present value of the loan
less the amount of principal and accrued interest being repaid. We may prepay the loan
in full during the last 30 days before its maturity date without any prepayment premium.(8)
    
    The lender acts as trustee for the actual lender. Additional monthly payments are
required to sustain escrow reserves. Prepayment of the loan is not an option.(9)
    
    We may prepay the loan secured by the Addison Place apartments upon payment of a
premium equal to the greater of (a) 1% of the principal amount being prepaid or (b) the
product obtained by multiplying: (1) the amount of principal being prepaid or
accelerated, by (2) the excess (if any) of the Monthly Note Rate over the Assumed
Reinvestment Rate, by (3) the Present Value Factor. We may prepay the loan in full
during the last 30 days before its maturity date without any prepayment premium. 43




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##### Table of Contents



Debt Maturities
  Debt Maturity Schedule  As of December 31, 2006
 PrincipalYear
    
    Payments
    
    
    Properties with Balloon Payments2007
    
    $
    23,187,000
    
    
    Northridge Office, Addison Place Shops, Peachtree Parkway land, Highway 20 land2008
    
    
    10,466,000
    
    
    Westside land, Sawmill Village land2009
    
    
    9,011,000
    
    
    Addison Place townhomes2010
    
    
    564,0002011
    
    
    599,000Thereafter
    
    
    32,723,000
    
    
    Addison Place apartments; Grand Pavilion, Spectrum, and Bassett retail centersTotal
    
    $
    76,550,000
 Short-Term Debt
  Insurance Premium Loan
 Unsecured Line of Credit
 Northridge Office Building
 44




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##### Table of Contents



Addison Place Shops
 Peachtree Parkway Land Loan
 
    
    we used $2,284,043, plus closing costs of $22,108, to acquire from an unrelated
seller the remaining 18% undivided interest in the Peachtree Parkway land ;
    
    we used $1,350,858 to pay off the existing balance on our unsecured line of credit;
and
    
    we used or will use the remainder for working capital and general corporate
purposes, including funding part of our development and construction program.
  Highway 20 Land Loan
 Long-Term Debt
  Land Loans
  45




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##### Table of Contents




    
    extending the maturity date if the property has not been developed;
    
    obtaining a construction loan if we are ready to begin construction; or
    
    obtaining a permanent mortgage on the property if construction has been completed
and the property has achieved stabilized occupancy.
 Floating Rate Debt
   Contractual Obligations
  Payments due by periodLess than
    
    
    
    
    
    
    
    
    
    
    More thanContractual obligations
    
    Total
    
    
    1 year
    
    
    1-3 years
    
    
    4-5 years
    
    
    5 yearsLong-Term Debt Obligations
    
    $
    53,980
    
    
    $
    616
    
    
    $
    19,477
    
    
    $
    1,163
    
    
    $
    32,724Capital Lease Obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating Lease Obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Due to affiliates (1)
    
    
    3,060
    
    
    
    3,060
    
    
    
    
    
    
    
    
    
    
    
    Other construction obligations
    
    
    96
    
    
    
    96
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    58,186
    
    
    $
    4,230
    
    
    $
    19,477
    
    
    $
    1,163
    
    
    $
    32,724
 
 (1)
    
    We enter into design and development agreements with Roberts Properties and construction
contracts with Roberts Construction in the normal course of business. The amounts listed in
the table are obligations related to the design and development agreements. These agreements
are fixed at $5,000 per residential unit and are payable over the planned development period.
Obligations related to the construction contracts have not been determined because the design
of the projects is still in process. Terms of the construction contracts are cost plus 10%
for overhead and profit. We estimate, however, the total amount of construction obligations
to be approximately $206 million based on current zoning and an estimated cost per unit,
although we 46




---



##### Table of Contents



cannot predict with any certainty the timing of the construction obligations. See Item 13,
Certain Relationships and Related Transactions  Transactions with the Roberts Companies,
for a description of our design and development agreements and construction contracts with
Roberts Properties and Roberts Construction.  Critical Accounting Policies
  Cost Capitalization
   Purchase Valuation
  47




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##### Table of Contents



Asset Impairment Evaluation
  Derivatives and Hedging Activities
    48




---



##### Table of Contents



Stock Repurchase Plan
  
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
   Recent Accounting Pronoucement
 Accounting for Income Tax
Uncertainties
 49




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
  Report of Independent Registered Public Accounting Firm
    
    
    F-1Consolidated Financial Statements and Schedule as of December 31, 2006 and
2005 and for the Years Ended December 31, 2006, 2005 and 2004:Consolidated Balance Sheets
    
    
    F-3Consolidated Statements of Operations
    
    
    F-4Consolidated Statements of Shareholders Equity
    
    
    F-5Consolidated Statements of Cash Flows
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7Schedule III  Real Estate and Accumulated Depreciation
    
    
    S-1
 
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
  
 ITEM 9A. CONTROLS AND PROCEDURES.
    50




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##### Table of Contents



ITEM 9B. OTHER INFORMATION.
  51




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##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
 Directors and Executive Officers
  Term asDirectorName
    
    Age
    
    Expires
    
    PositionCharles S. Roberts
    
    60
    
    2009
    
    Chairman of the Board, Chief Executive Officer and PresidentCharles R. Elliott
    
    53
    
    2009
    
    Director, Chief Financial Officer, Secretary and TreasurerWm. Jarell Jones
    
    58
    
    2008
    
    Director, Chairman of Audit Committee and Chairman of Nominating and Governance CommitteeDennis H. James
    
    59
    
    2008
    
    Director, Chairman of Compensation CommitteeDr. James M. Goodrich
    
    66
    
    2007
    
    DirectorBen A. Spalding
    
    72
    
    2007
    
    Director
 Biographical Information
 Charles S. Roberts
  52




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##### Table of Contents



Charles R. Elliott
 Wm. Jarell Jones
 Dennis H. James
 James M. Goodrich
 53




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##### Table of Contents



Ben A. Spalding
 Section 16(a) Beneficial Ownership Reporting Compliance
  Code of Ethics and Business Conduct
  (1)
    
    honest and ethical conduct, including the ethical handling of corporate
opportunities and actual or apparent conflicts of interest between personal and
professional relationships;(2)
    
    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;(3)
    
    compliance with applicable governmental laws, rules and regulations;(4)
    
    confidentiality; protection and proper use of company assets;(5)
    
    equal employment opportunities and prohibition of discrimination or
harassment;
 54




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##### Table of Contents



(6)
    
    the prompt internal reporting of violations of the code to an appropriate
person or persons identified in the code; and(7)
    
    accountability for adherence to the code.
  Audit Committee
  
 ITEM 11. EXECUTIVE COMPENSATION.
 Compensation Discussion and Analysis
 Executive Compensation Policy and Philosophy
  Pay-for-Performance
 Pay Competitiveness
 Elements of Compensation
 Base Salaries
 Bonuses
 55




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##### Table of Contents



Restricted Stock
 Other Information Relevant to Our Compensation Programs
    56




---



##### Table of Contents



Compensation Determinations for 2006
   Compensation Determinations for 2007
  57




---



##### Table of Contents



Compensation Committee Report
   
 58




---



##### Table of Contents



Compensation of Executive Officers
  Summary Compensation Table
 All OtherName and Principal
    
    
    
    
    
    Salary
    
    Bonus
    
    Stock Awards
    
    Compensation
    
    TotalPosition
    
    Year
    
    ($)
    
    ($)
    
    ($)(1)
    
    ($)
    
    ($)Charles S. Roberts,
Chief Executive Officer,
President and Chairman
of the Board
    
    
    2006
    
    
    
    199,032
    (1)(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    199,032Charles R. Elliott,
Chief Financial
Officer,
Secretary and Treasurer
    
    
    2006
    
    
    
    100,812
    (1)(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,812Michael A. Quinlan
Former Chief Financial
Officer, Secretary and
Treasurer
    
    
    2006
    
    
    
    49,728
    (3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49,728
 
 (1)
    
    On February 28, 2007, our compensation committee granted a $25,000 salary increase to Charles
S. Roberts for his performance as Chief Executive Officer and granted 6,250 shares of
restricted stock to Charles R Elliott for his performance as Chief Financial Officer. Mr.
Elliotts restricted shares vest on June 1, 2007. The salary increase to Mr. Roberts and the
grant of restricted shares to Mr. Elliott are not intended as additional compensation for
2006, and, accordingly, are not reflected in the table above.(2)
    
    Effective May 31, 2006, we hired Mr. Charles R. Elliott as our Chief Financial Officer,
Secretary and Treasurer. Under an arrangement we negotiated with Mr. Elliott, we pay him $70
per hour for his service in those positions. Charles Elliott receives no employee benefits,
i.e. medical, vacation, holidays, etc., and he is paid only for the actual hours he works. In
addition, because Mr. Elliott is one of our directors, he continues to receive our standard
director fee of $12,000 per year, which is included in the salary amount shown in the table.
(We do not compensate Mr. Roberts for his service as a director.)(3)
    
    Mr. Quinlan received the prorated portion of his annual salary of $125,000. 59




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##### Table of Contents



Director Compensation for 2006
  Fees Earnedor Paid in Cash
    
    TotalName
    
    ($)
    
    ($)Dr. James M. Goodrich
    
    
    12,000
    
    
    
    12,000Dennis H. James
    
    
    21,000
    
    
    
    21,000Wm. Jarell Jones
    
    
    24,000
    
    
    
    24,000Ben A. Spalding
    
    
    12,000
    
    
    
    12,000
  Compensation Committee Interlocks and Insider Participation
  
    
    none of our other executive officers was a director of another entity where one of
that entitys executive officers served on our compensation committee;
    
    no member of the compensation committee was an officer or employee of Roberts Realty
or Roberts Properties Residential, L.P. or was formerly an officer of either of them;
    
    no member of the compensation committee entered into any related party transaction
with us;
    
    none of our executive officers served on the compensation committee of any entity
where one of that entitys executive officers served on our compensation committee;
    
    none of our executive officers served on the board of directors of another entity
where one of that entitys executive officers served on our compensation committee; and
    
    none of our executive officers served on the compensation committee of another
entity where one of that entitys executive officers served as a director on our board.
 60




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##### Table of Contents



ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED  STOCKHOLDER MATTERS.
 Ownership of Common Stock and Units
  
    
    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 officer; and
    
    our directors and executive officers as a group.
   61




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##### Table of Contents



Number of UnitsName of
    
    Number of Shares
    
    Beneficially
    
    
    
    
    
    Percent ofBeneficial Owner
    
    Owned
    
    Owned
    
    Total
    
    Class(1)Charles S. Roberts (2)
    
    
    1,541,223
    
    
    
    950,092
    
    
    
    2,491,315
    
    
    
    36.9
    %James M. Goodrich (3)
    
    
    281,847
    
    
    
    0
    
    
    
    281,847
    
    
    
    4.9
    %Dennis H. James
    
    
    109,552
    
    
    
    2,405
    
    
    
    111,957
    
    
    
    1.9
    %Ben A. Spalding (4)
    
    
    23,252
    
    
    
    27,318
    
    
    
    50,570
    
    
    
    *Wm. Jarell Jones(5)
    
    
    32,012
    
    
    
    0
    
    
    
    32,012
    
    
    
    *Charles R. Elliott (6)
    
    
    19,000
    
    
    
    0
    
    
    
    19,000
    
    
    
    *All directors and executive
officers as a group: (6
persons) (7)
    
    
    2,006,886
    
    
    
    979,815
    
    
    
    2,986,701
    
    
    
    44.0
    %
 
 *
    
    Less than 1%.(1)
    
    The total number of shares outstanding used in calculating this percentage is 5,807,141, the
number of shares outstanding as of March 14, 2007. Percent of class is not the equivalent of
share ownership as it takes into account the units owned by the individual.(2)
    
    Includes 2,744 shares and 29,500 units owned by a family limited liability company of which
Mr. Roberts is the manager. Mr. Roberts disclaims beneficial ownership of those shares and
units.(3)
    
    Includes 158,582 shares owned jointly by Dr. Goodrich and his wife, Penelope; and 108,478
shares owned by Goodrich Enterprises, Inc., all of the outstanding shares of which are owned
by Dr. and Mrs. Goodrich and their sons. Each of Dr. and Mrs. Goodrich disclaims beneficial
ownership of the shares held by the corporation except to the extent of their respective
pecuniary interests in those shares. Dr. Goodrichs total also includes 14,787 shares he owns
through an IRA.(4)
    
    Includes 7,564 shares owned by partnerships of which Mr. Spaldings wife is the managing
partner. Mr. Spaldings beneficial ownership of units includes 2,917 units owned by Mrs.
Spalding and 24,401 units owned by partnerships of which Mrs. Spalding is the managing
partner. Mr. Spalding disclaims beneficial ownership of all units and shares owned by his
wife or partnerships of which she is the managing partner.(5)
    
    Includes 1,745 shares owned by Mr. Jones wife, to which Mr. Jones disclaims beneficial
ownership.(6)
    
    Includes 6,250 restricted shares granted on February 28, 2007 per the 2006 Roberts Realty
Investors, Inc. Restricted Stock Grant Plan. These shares include forfeiture restrictions
that will lapse on June 1, 2007.(7)
    
    Includes an aggregate of 9,309 shares and 27,318 units beneficially owned by two directors
wives, as to which shares such directors disclaim beneficial ownership. 62




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##### Table of Contents



Equity Compensation Plan Information
  Equity Compensation Plan Information
 Number ofsecuritiesto be issued
    
    Weighted-average
    
    Number of securitiesupon exercise of
    
    exercise price of
    
    remaining available for futureoutstanding
    
    outstanding
    
    issuances under equityoptions, warrants
    
    options, warrants
    
    compensation plans (excludingPlan category
    
    and rights
    
    and rights
    
    securities reflected in column (a)(a)
    
    (b)
    
    (c)Equity compensation
plans approved by
security holders
    
    
    N/A
    
    
    
    N/A
    
    
    
    399,364Equity compensation
plans not approved
by security holders
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/ATotal
    
    
    
    
    
    
    
    
    
    
    399,364
  63




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##### Table of Contents



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
 General
   Transactions with the Roberts Companies
 Overview
 Northridge Community
 Northridge Office Building
   64




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##### Table of Contents



Peachtree Parkway Land
   (a)
    
    Roberts Properties, or any entity designated by Mr. Roberts, will be engaged as
the development company for the project and will be paid a development fee in an amount
equal to $5,000 per residential unit multiplied by the number of residential units that
are developed on the property, with such fee to be paid in equal monthly amounts over
the contemplated development period; and(b)
    
    Roberts Construction, or any other entity designated by Mr. Roberts, 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 10% (5% profit and 5% overhead) with such
payments to be paid commencing with the start of construction.
   65




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##### Table of Contents



North Springs Land
 Development Fees
 TotalAmountTotal
    
    
    Incurred
    
    
    RemainingContract
    
    
    through
    
    
    ContractualAmount
    
    
    2/28/07
    
    
    CommitmentNorth Springs
    
    $
    1,780,000
    
    
    $
    989,000
    
    
    $
    791,000Peachtree Parkway
    
    
    1,460,000
    
    
    
    811,000
    
    
    
    649,000Sawmill Village
    
    
    770,000
    
    
    
    100,000
    
    
    
    670,000Highway 20
    
    
    1,050,000
    
    
    
    100,000
    
    
    
    950,000$
    5,060,000
    
    
    $
    2,000,000
    
    
    $
    3,060,000
 Construction Contracts
 Other Fees and Reimbursements
 66




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##### Table of Contents



Approval of Transactions with Related Persons
   
    
    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.
    
    
    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 other than nominal gifts or excessive entertainment from any company
with which the company has current or prospective business dealings;
 67




---



##### Table of Contents




    
    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.
    Determination of Director Independence
  68




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##### Table of Contents



ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
  Audit Fees
 For 2005
   For 2006
   Audit-Related Fees
  Tax Fees
 For 2005
   69




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##### Table of Contents



For 2006
  All Other Fees
  Pre-Approval Policy
  General.
 Audit Services.
 Audit-related Services.
 Tax Services.
 All Other Services
 Pre-Approval Fee Levels
 70




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##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
 (a)
    
    1. and 2. Financial Statements and Schedules.The financial statements and schedules listed below are filed as part of this annual report
on the pages indicated.
 INDEX TO FINANCIAL STATEMENTS
 PageREPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS
    
    
    F-1CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE AS OF DECEMBER 31, 2006 AND 2005 AND FOR
THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004:Consolidated Balance Sheets
    
    
    F-3Consolidated Statements of Operations
    
    
    F-4Consolidated Statements of Shareholders Equity
    
    
    F-5Consolidated Statements of Cash Flows
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7Schedule III  Real Estate and Accumulated Depreciation
    
    
    S-1
 71




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      
 F-1




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
       
 F-2




---



##### Table of Contents



ROBERTS REALTY INVESTORS, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (Dollars in Thousands, Except Per Share Data)
 December 31,
    
    
    December 31,2006
    
    
    2005ASSETSREAL ESTATE
ASSETS  At cost:Land
    
    $
    16,322
    
    
    $
    15,705Buildings and improvements
    
    
    60,996
    
    
    
    60,890Furniture, fixtures and equipment
    
    
    4,155
    
    
    
    3,77181,473
    
    
    
    80,366Less accumulated depreciation
    
    
    (12,844
    )
    
    
    (10,260
    )Operating real estate assets
    
    
    68,629
    
    
    
    70,106Construction in progress and real estate under development
    
    
    47,480
    
    
    
    42,860Land held for investment
    
    
    9,019
    
    
    
    9,267Net real estate assets
    
    
    125,128
    
    
    
    122,233CASH AND CASH EQUIVALENTS
    
    
    4,408
    
    
    
    1,419RESTRICTED CASH
    
    
    416
    
    
    
    340DEFERRED
FINANCING COSTS  Net of accumulated amortization of
$346 and $185 at December 31, 2006 and 2005, respectively
    
    
    508
    
    
    
    551FAIR VALUE
OF LEASES  Net of accumulated amortization of $320 and
$68 at December 31, 2006 and 2005, respectively
    
    
    806
    
    
    
    1,584OTHER ASSETS
 Net
    
    
    501
    
    
    
    1,022$
    131,767
    
    
    $
    127,149LIABILITIES AND SHAREHOLDERS EQUITYLIABILITIES:Mortgage notes payable
    
    $
    44,165
    
    
    $
    44,746Construction loans payable
    
    
    10,209
    
    
    
    10,364Land notes payable
    
    
    22,067
    
    
    
    9,815Line of credit payable
    
    
    
    
    
    
    2,000Insurance premium note payable
    
    
    109
    
    
    
    Accounts payable and accrued expenses
    
    
    791
    
    
    
    577Due to affiliates
    
    
    14
    
    
    
    97Security deposits and prepaid rents
    
    
    251
    
    
    
    297Total liabilities
    
    
    77,606
    
    
    
    67,896COMMITMENTS AND CONTINGENCIES (Note 10)MINORITY INTEREST OF UNITHOLDERS IN THE OPERATING PARTNERSHIP
    
    
    12,863
    
    
    
    14,459SHAREHOLDERS EQUITY:Preferred shares, $.01 par value, 20,000,000 shares authorized, no shares
issued or outstanding
    
    
    
    
    
    
    Common shares, $.01 par value, 100,000,000 shares authorized, 5,777,458 and
5,727,429 shares issued at December 31, 2006 and 2005, respectively
    
    
    58
    
    
    
    57Additional paid-in capital
    
    
    27,429
    
    
    
    27,067Unamortized deferred compensation
    
    
    (5
    )
    
    
    (4
    )Retained Earnings
    
    
    13,816
    
    
    
    17,674Total shareholders equity
    
    
    41,298
    
    
    
    44,794$
    131,767
    
    
    $
    127,149
  F-3




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##### Table of Contents



ROBERTS REALTY INVESTORS, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Dollars in Thousands, Except Per Share Data)
 Years Ended December 31,2006
    
    
    2005
    
    
    2004OPERATING REVENUES:Rental operations
    
    $
    7,276
    
    
    $
    5,485
    
    
    $
    4,774Other operating income
    
    
    781
    
    
    
    394
    
    
    
    288Total operating revenues
    
    
    8,057
    
    
    
    5,879
    
    
    
    5,062OPERATING EXPENSES:Personnel
    
    
    608
    
    
    
    586
    
    
    
    508Utilities
    
    
    455
    
    
    
    394
    
    
    
    324Repairs, maintenance and landscaping
    
    
    571
    
    
    
    442
    
    
    
    370Real estate taxes
    
    
    1,121
    
    
    
    656
    
    
    
    445Marketing, insurance and other
    
    
    422
    
    
    
    364
    
    
    
    286General and administrative expenses
    
    
    1,730
    
    
    
    1,561
    
    
    
    1,708Bad debt expense
    
    
    188
    
    
    
    
    
    
    
    Write-off of fair value/market value of leases (net)
    
    
    389
    
    
    
    
    
    
    
    Depreciation and amortization expense
    
    
    2,992
    
    
    
    2,116
    
    
    
    1,695Total operating expenses
    
    
    8,476
    
    
    
    6,119
    
    
    
    5,336LOSS FROM OPERATIONS
    
    
    (419
    )
    
    
    (240
    )
    
    
    (274
    )OTHER INCOME (EXPENSE):Interest income
    
    
    96
    
    
    
    265
    
    
    
    294Interest expense
    
    
    (4,587
    )
    
    
    (3,118
    )
    
    
    (2,479
    )Legal settlement
    
    
    (28
    )
    
    
    (150
    )
    
    
    340Amortization of deferred financing costs
    
    
    (161
    )
    
    
    (160
    )
    
    
    (101
    )Total other expense
    
    
    (4,680
    )
    
    
    (3,163
    )
    
    
    (1,946
    )LOSS FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST AND
GAIN ON SALE OF REAL ESTATE ASSETS
    
    
    (5,099
    )
    
    
    (3,403
    )
    
    
    (2,220
    )MINORITY INTEREST OF UNITHOLDERS IN THE OPERATING PARTNERSHIP
    
    
    1,241
    
    
    
    865
    
    
    
    596LOSS FROM CONTINUING OPERATIONS BEFORE GAIN ON SALE OF REAL
ESTATE ASSETS
    
    
    (3,858
    )
    
    
    (2,538
    )
    
    
    (1,624
    )GAIN ON SALE OF REAL ESTATE ASSET, net of minority interest
of unitholders in the operating partnership
    
    
    
    
    
    
    
    
    
    
    102LOSS FROM CONTINUING OPERATIONS
    
    
    (3,858
    )
    
    
    (2,538
    )
    
    
    (1,522
    )INCOME FROM DISCONTINUED OPERATIONS, net of minority interest
of unitholders in the operating partnership (Note 4)
    
    
    
    
    
    
    3,794
    
    
    
    38,508NET (LOSS) INCOME
    
    $
    (3,858
    )
    
    $
    1,256
    
    
    $
    36,986INCOME (LOSS) PER COMMON SHARE  BASIC AND DILUTED (Note 7):(Loss) from continuing operations-basic
    
    $
    (0.67
    )
    
    $
    (0.46
    )
    
    $
    (0.29
    )(Loss) income from discontinued operations-basic
    
    
    
    
    
    
    0.69
    
    
    
    7.30Net (loss) income-basic
    
    $
    (0.67
    )
    
    $
    (0.23
    )
    
    $
    7.01(Loss) from continuing operations-diluted
    
    $
    (0.67
    )
    
    $
    (0.46
    )
    
    $
    (0.29
    )(Loss) income from discontinued operations-diluted
    
    
    
    
    
    
    0.69
    
    
    
    7.30Net (loss) income-diluted
    
    $
    (0.67
    )
    
    $
    (0.23
    )
    
    $
    7.01
  F-4




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##### Table of Contents



ROBERTS REALTY INVESTORS, INC.
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 (Dollars in Thousands, Except Share and Per Share Data)
 Common Shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    TotalNumber of
    
    
    
    
    
    
    Paid-In
    
    
    Treasury
    
    
    Deferred
    
    
    Comprehensive
    
    
    Retained
    
    
    ShareholdersShares Issued
    
    
    Amount
    
    
    Capital
    
    
    Shares
    
    
    Compensation
    
    
    Income
    
    
    Earnings
    
    
    EquityBALANCE AS OF DECEMBER 31, 2003
    
    
    5,585,206
    
    
    $
    56
    
    
    $
    26,050
    
    
    
    ($2,764
    )
    
    
    ($93
    )
    
    
    ($2,353
    )
    
    $
    3,153
    
    
    $
    24,049Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,986
    
    
    
    36,986Unrealized gain on interest rate swaps
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,033
    
    
    
    
    
    
    
    2,033Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,019Conversion of units to shares
    
    
    93,896
    
    
    
    1
    
    
    
    473
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    474Dividends declared ($4.50 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,721
    )
    
    
    (23,721
    )Restricted shares issued to
employees, net of forfeitures
    
    
    (10,480
    )
    
    
    
    
    
    
    (75
    )
    
    
    
    
    
    
    75Adjustment for minority interest in
the operating partnership
    
    
    
    
    
    
    
    
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28BALANCE AS OF DECEMBER 31, 2004
    
    
    5,668,622
    
    
    
    57
    
    
    
    26,476
    
    
    
    (2,764
    )
    
    
    (18
    )
    
    
    (320
    )
    
    
    16,418
    
    
    
    39,849Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,256
    
    
    
    1,256Unrealized gain on interest rate swaps
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    320
    
    
    
    
    
    
    
    320Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,576Sale of treasury shares
    
    
    
    
    
    
    
    
    
    
    137
    
    
    
    2,764
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,901Conversion of units to shares
    
    
    59,085
    
    
    
    
    
    
    
    285
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    285Restricted shares issued to
employees, net of forfeitures
    
    
    (278
    )
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    12Adjustment for minority interest in
the operating partnership
    
    
    
    
    
    
    
    
    
    
    171
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    171BALANCE AS OF DECEMBER 31, 2005
    
    
    5,727,429
    
    
    
    57
    
    
    
    27,067
    
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    17,674
    
    
    
    44,794Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,858
    )
    
    
    (3,858
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3.858
    )Conversion of units to shares
    
    
    49,876
    
    
    
    1
    
    
    
    357
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    358Restricted shares issued to
employees, net
of forfeitures
    
    
    153
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    (5
    )Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    4Adjustment for minority interest in
the operating partnershipBALANCE AS OF DECEMBER 31, 2006
    
    
    5,777,458
    
    
    $
    58
    
    
    $
    27,429
    
    
    $
    
    
    
    
    ($5
    )
    
    $
    
    
    
    $
    13,816
    
    
    $
    41,298
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##### Table of Contents



ROBERTS REALTY INVESTORS, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Dollars in Thousands)
 Years Ended December 31,2006
    
    
    2005
    
    
    2004OPERATING ACTIVITIES:Net (loss) income
    
    $
    (3,858
    )
    
    $
    1,256
    
    
    $
    36,986Adjustments to reconcile net income to net cash provided by operating activities:(Income) from discontinued operations, net of minority interest
    
    
    
    
    
    
    (3,778
    )
    
    
    (38,508
    )Minority interest of unitholders in the operating partnership
    
    
    (1,241
    )
    
    
    (879
    )
    
    
    (596
    )Depreciation and amortization
    
    
    3,153
    
    
    
    2,276
    
    
    
    1,795Amortization of above and below market leases
    
    
    63
    
    
    
    10
    
    
    
    Write-off of fair value/market value of leases (net)
    
    
    389
    
    
    
    
    
    
    
    Amortization of deferred compensation
    
    
    4
    
    
    
    14
    
    
    
    Gain on sale of real estate assets, net of minority interest
    
    
    
    
    
    
    
    
    
    
    (102
    )Changes in assets and liabilities:Decrease (increase) in other assets
    
    
    438
    
    
    
    498
    
    
    
    (895
    )(Increase) in restricted cash
    
    
    (76
    )
    
    
    (241
    )
    
    
    (30
    )(Decrease) in due to affiliates
    
    
    9
    
    
    
    
    
    
    
    Increase (decrease) in accounts payable and other liabilities relating to operations
    
    
    (207
    )
    
    
    98
    
    
    
    (143
    )Net cash (used in) operating activities from continuing operations
    
    
    (1,326
    )
    
    
    (746
    )
    
    
    (1,493
    )Net cash provided by (used in) operating activities from discontinued operations
    
    
    
    
    
    
    355
    
    
    
    (537
    )Net cash (used in) provided by operating activities
    
    
    (1,326
    )
    
    
    (391
    )
    
    
    (2,030
    )INVESTING ACTIVITIES:Proceeds from sale of real estate assets
    
    
    
    
    
    
    
    
    
    
    890Increase (decrease) in accounts payable and other liabilities relating to investing
    
    
    374
    
    
    
    
    
    
    
    (Decrease) in due to affiliates
    
    
    (92
    )
    
    
    (308
    )
    
    
    56Acquisition and construction of real estate assets
    
    
    (5,478
    )
    
    
    (57,735
    )
    
    
    (24,592
    )Net cash (used in) investing activities from continuing operations
    
    
    (5,196
    )
    
    
    (58,043
    )
    
    
    (23,646
    )Net cash provided by investing activities from discontinued operations
    
    
    
    
    
    
    36,693
    
    
    
    141,368Net cash (used in) provided by investing activities
    
    
    (5,196
    )
    
    
    (21,350
    )
    
    
    117,722FINANCING ACTIVITIES:Principal repayments on mortgage notes payable
    
    
    (582
    )
    
    
    (1,442
    )
    
    
    (297
    )Proceeds from mortgage notes payable
    
    
    
    
    
    
    36,036
    
    
    
    Repayment of mortgage notes, including prepayment penalty
    
    
    
    
    
    
    (21,034
    )
    
    
    Repayment of construction note payable
    
    
    (154
    )
    
    
    (530
    )
    
    
    Proceeds from (repayment of) line of credit
    
    
    (2,000
    )
    
    
    2,000
    
    
    
    Payment of loan costs
    
    
    (118
    )
    
    
    (1,042
    )
    
    
    (121
    )Proceeds from construction loans
    
    
    
    
    
    
    1,084
    
    
    
    2,763Proceeds from land notes payable
    
    
    12,252
    
    
    
    20,765
    
    
    
    9,462Repayment of land notes payable
    
    
    
    
    
    
    (20,413
    )
    
    
    (3,000
    )Proceeds from insurance premium note payable
    
    
    110
    
    
    
    
    
    
    
    Re-issuance of treasury shares
    
    
    
    
    
    
    2,901
    
    
    
    Forfeiture of dividends payable on restricted stock
    
    
    3
    
    
    
    
    
    
    
    Payment of dividends and distributions
    
    
    
    
    
    
    
    
    
    
    (32,509
    )Net cash provided by (used in) financing activities from continuing operations
    
    
    9,511
    
    
    
    18,325
    
    
    
    (23,702
    )Net cash (used in) financing activities from discontinued operations
    
    
    
    
    
    
    (22,217
    )
    
    
    (73,521
    )Net cash (used in) investing activities
    
    
    9,511
    
    
    
    (3,892
    )
    
    
    (97,223
    )NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    2,989
    
    
    
    (25,633
    )
    
    
    18,469CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
    
    
    1,419
    
    
    
    27,052
    
    
    
    8,583CASH AND CASH EQUIVALENTS, END OF YEAR
    
    $
    4,408
    
    
    $
    1,419
    
    
    $
    27,052SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for interest
    
    $
    4,596
    
    
    $
    3,924
    
    
    $
    6,167
 
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##### Table of Contents



ROBERTS REALTY INVESTORS, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1.
    
    BUSINESS AND ORGANIZATIONRoberts Realty Investors, Inc. (Roberts Realty), a Georgia corporation, was formed July
22, 1994 to serve as a vehicle for investments in, and ownership of, a professionally
managed real estate portfolio consisting of multifamily residential communities and
commercial properties. 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 its three wholly owned subsidiaries, each of which is a Georgia limited
liability company. Roberts Realty is the sole general partner of the operating partnership.
Roberts Realty had a 76.25% ownership interest in the operating partnership at December 31,
2006 and a 75.59% ownership interest in the operating partnership at December 31, 2005. As
the sole general partner and owner of a majority interest of the operating partnership,
Roberts Realty controls the operating partnership.At December 31, 2006, Roberts Realty owned the following real estate assets:
 
    
    one multifamily apartment community, consisting of 285 garden apartments and
118 townhomes, located in the Atlanta metropolitan area;
    
    four neighborhood retail centers totaling 151,527 square feet, which includes a
39,205 square foot retail center that is in its lease-up phase;
    
    a 37,864 square foot commercial office building that is in its lease-up phase,
part of which serves as Roberts Realtys corporate headquarters;
    
    six tracts of undeveloped land totaling 105 acres in various phases of
development; and
    
    a 44-acre tract of land that is held for investment.
 2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESBasis 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 minority interest of the
unitholders in the operating partnership.The minority interest of the unitholders in the operating partnership on the accompanying
balance sheets is calculated by multiplying the minority interest ownership percentage at
the balance sheet date by the operating partnerships net assets (total assets less total
liabilities). The minority interest ownership percentage is calculated by dividing the
number of units outstanding by the combined total of shares and units outstanding at a
specific point in time. The minority interest ownership percentage will change as
additional shares and/or units are issued or as units are redeemed for shares of Roberts
Realty. The minority interest of the unitholders in the earnings or loss of the operating
partnership on the accompanying statements of operations is calculated based on the weighted
average number of units outstanding during the period, which was 24.34%, 25.43% and 26.85%
for the years ended December 31, 2006, 2005 and 2004, respectively. The minority interest
of the unitholders was $12,863 and $14,459 at December 31, 2006 and 2005, respectively.
 F-7




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##### Table of Contents



Holders of operating partnership units generally have the right to require the operating
partnership to redeem their units for shares of Roberts Realty. Upon submittal of units for
redemption, the operating partnership has the option either (a) to acquire those units in
exchange for shares, on a one-for-one basis, or (b) to pay cash for those units at their
fair market value, based upon the then current trading price of the shares. Roberts Realty
has adopted a policy that it will issue shares in exchange for all future units submitted
for redemption.In January 2003, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46), which was
subsequently revised in December 2003. Roberts Realty adopted FIN 46 in January 2004, at
which time it determined that it had no variable interest entities, nor does Roberts Realty
have any variable interest entities at December 31, 2006.Certain reclassifications of prior years balances have been made to conform to the current
format.Real Estate Assets and Depreciation.Real estate assets are recorded at depreciated cost
less reductions for impairment, if any. Roberts Realty evaluates the carrying value of its
real estate assets in accordance with SFAS No. 144, Accounting for the Impairment of
Long-Lived Assets. In identifying potential impairment, management considers such factors
as declines in a propertys operating performance or market value, a change in use, and
adverse changes in general market conditions. In determining whether an asset is impaired,
management estimates the future cash flows expected to be generated from both the assets
use and its eventual disposition. If the sum of these estimated future cash flows on an
undiscounted basis is less than the assets carrying cost, the asset is written down to its
fair value. None of Roberts Realtys real estate assets required a write-down during the
twelve months ended December 31, 2006.The purchase price of acquired real estate assets is allocated to land, building, and
intangible assets, in accordance with Statement of Financial Accounting Standard (SFAS)
No. 141, Accounting for Business Combinations. During September and October 2005, Roberts
Realty acquired three retail centers in separate transactions totaling $24,275,000. 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,
customer relationships 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 net value of above and below market leases acquired, net of
accumulated amortization, was $81,000 and $124,000, and is included in other assets on the
consolidated balance sheets at December 31, 2006 and 2005, respectively. The value of
in-place leases is amortized over the term of the respective lease. Intangible assets that
are subject to amortization are reviewed for potential impairment whenever events or
circumstances indicate that carrying amounts may not be recoverable and are tested at least
annually. During 2006, Roberts Realty determined that, based on estimated future cash
flows, the carrying amount of the fair value of the leases relating to the Retail/Office
segment exceeds its fair value by approximately $389,000. Accordingly, an impairment loss
of that amount was recognized and is included in write off of fair value / market value of
leases (net) in the statement of operations.Expenditures directly related to the development, acquisition and improvement of real estate
assets are capitalized at cost as land, buildings, and improvements. During the
construction period, interest expense, real estate taxes, and insurance are capitalized.
Interest expense is capitalized on qualifying assets during construction using a weighted
average interest rate for all indebtedness. Interest capitalized for the years ended
December 31, 2006, 2005, and 2004 was
 F-8




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##### Table of Contents



$0, $356,000 and $707,000, respectively. Leasing costs, including commissions and legal
costs, are capitalized and amortized over the term of the lease. Ordinary repairs and
maintenance 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, leasing costs, and any tenant improvement allowance is included in the depreciation
and amortization expense on the operating statement with the operating real estate
depreciable assets.Roberts Realty recognizes gains on sales of assets in accordance with SFAS No. 66,
Accounting for Sales of Real Estate. If any significant continuing obligation exists at
the date of the 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 Roberts Realtys assets as of December 31,
2006, 2005 or 2004.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 exceed
federally insured limits. Roberts Realty has not experienced any losses related to these
balances and management believes its credit risk is minimal.Restricted Cash.Restricted cash consists of multifamily, retail, and office security
deposits, and lender escrows held by third parties.Deferred Financing Costs.Deferred financing costs include fees and costs incurred to
obtain financings and are amortized on the straight-line method over the terms of the
related debt.Revenue Recognition.Roberts Realty leases its multifamily properties under operating
leases with terms generally one year or less. 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 and sewer,
and trash removal. Rental income from multifamily properties is recognized when collected,
and rental income from retail and office properties is recognized when earned, which
materially approximates revenue recognition on a straight-line basis.At December 31, 2006, future minimum rentals to be received by Roberts Realty under its
retail and office leases, excluding reimbursements for operating expenses, were as follows:
 Year
    
    Amount2007
    
    $
    1,867,0002008
    
    
    1,636,0002009
    
    
    1,396,0002010
    
    
    1,122,0002011
    
    
    857,000Thereafter
    
    
    1,352,000Total
    
    $
    8,230,000
 Income Taxes.Roberts Realty elected to be taxed as a REIT under the Internal Revenue Code
of 1986, as amended (the Code), commencing with the taxable year ended December 31, 1994.
As a result, Roberts Realty generally will not be subject to federal and state income
taxation at the
 F-9




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##### Table of Contents



corporate level to the extent it distributes each year at least 90% of its taxable income,
as defined in the Code, 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 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 Roberts Realtys net income (loss)
to its taxable loss for the years ending December 31, 2006, 2005 and 2004 is shown on the
following page.
 2006
    
    
    2005
    
    
    2004Net (loss) income
    
    $
    (3,858
    )
    
    $
    1,256
    
    
    $
    36,986Adjustments to net income:Political campaign
contributions
    
    
    9
    
    
    
    
    
    
    
    Gains from real estate sales
    
    
    
    
    
    
    (1,170
    )
    
    
    (11,014
    )Gains from sale of fixed assets
    
    
    (15
    )
    
    
    
    
    
    
    Depreciation
    
    
    302
    
    
    
    (166
    )
    
    
    (939
    )Amortization of intangibles
    
    
    592
    
    
    
    70
    
    
    
    29Prepaid rents
    
    
    (34
    )
    
    
    26
    
    
    
    (48
    )Unearned compensation
    
    
    (36
    )
    
    
    (49
    )
    
    
    (58
    )Straight line rent
    
    
    (90
    )
    
    
    
    
    
    
    Section 754 deduction
    
    
    (34
    )
    
    
    
    
    
    
    Disallowed charities
    
    
    1
    
    
    
    
    
    
    
    Capitalized costs
    
    
    
    
    
    
    
    
    
    
    58Dividends paid deduction
    
    
    
    
    
    
    
    
    
    
    (23,654
    )Operating loss
    
    
    (497
    )
    
    
    (481
    )
    
    
    (1,858
    )Other
    
    
    20
    
    
    
    17
    
    
    
    16Taxable (loss)
    
    $
    (3,640
    )
    
    $
    (497
    )
    
    $
    (481
    )
 Tax Status of Dividends.During 2004, Roberts Realty paid a dividend in the form of a
special distribution to shareholders and unitholders of $4.50 per share (and unit) totaling
approximately $32.5 million. See Note 3  Acquisitions and Dispositions. Roberts Realty
did not pay a dividend or special distribution during 2006 or 2005. Of the $4.50 per share
dividend paid during 2004, Roberts Realty designated various percentages of the dividend to
the following types of income (shares only):
 2004Pre-May 6 capital gains
    
    
    0
    %Long-term capital gains
    
    
    60
    %Unrecaptured section 1250 gains
    
    
    34
    %Non-taxable return of capital
    
    
    6
    %
 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 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
 F-10




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##### Table of Contents



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.In May 2005, the FASB issued SFAS No. 154, Accounting
Changes and Error Corrections, a replacement of APB Opinion No. 20 and FASB Statement No. 3
(SFAS No. 154) effective for fiscal years beginning after December 15, 2005. SFAS No. 154
changes the requirements for the accounting for, and the reporting of, a change in
accounting principle. The adoption of SFAS No. 154 had no effect on Roberts Realtys
financial statements for the year ended December 31, 2006.In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Income Tax
Uncertainties(FIN 48). FIN 48 defines the threshold for recognizing tax return
positions in the financial statements as those that are more-likely-than-not to be
sustained upon examination by the taxing authority. FIN 48 also provides guidance on
derecognition, measurement and classification of income tax uncertainties, along with any
related interest and penalties, accounting for income tax uncertainties in interim periods
and the level of disclosures associated with any recorded income tax uncertainties. FIN 48
is effective January 1, 2007. Roberts Realty does not anticipate that adopting the
provisions of FIN 48 will have a material effect on its financial position or results of
operations.3.
    
    ACQUISITIONS AND DISPOSITIONSOn June 2, 2004, Roberts Realty sold five of its Atlanta apartment communities  Bradford
Creek, Plantation Trace, Preston Oaks, River Oaks, and Veranda Chase, totaling 1,091 units
 to Colonial Properties Trust, a publicly-traded REIT. The sales price was $109,150,000
or an average of $100,045 per apartment home, resulting in a gain of $32,404,000, net of
minority interest of $11,985,000. Net sales proceeds were approximately $47,016,000, or
$6.51 per share/unit, after deduction of the following:
 (a)
    
    $58,802,000 for the mortgage notes payable assumed by the buyer,(b)
    
    closing costs and prorations totaling $150,000, and(c)
    
    a partnership profits interest distribution of $3,182,000 paid to
Roberts Properties under the amended partnership agreement of the operating
partnership.
 On June 18, 2004, Roberts Realty paid a distribution of $4.50 per share to shareholders and
unitholders of record on June 14, 2004. Roberts Realty retained $14,407,000 of the net
proceeds, or $1.99 per share/unit, for the purchase and development of other communities and
for working capital.On July 29, 2004, Roberts Realty sold its St. Andrews at the Polo Club community in Palm
Beach County, Florida for $36,000,000 or an average of $180,000 per apartment unit,
resulting in a gain of $8,254,000, net of minority interest of $3,053,000. Net sales
proceeds were approximately $15,113,000 after deduction of $20,412,000 for the mortgage note
payable assumed by the buyer, and closing costs and prorations totaling $475,000. Roberts
Realty reinvested the proceeds in three undeveloped land parcels using a Section 1031
tax-deferred exchange, which permits its shareholders to defer paying the tax they would
otherwise incur on the gain.On October 29, 2004, Roberts Realty sold a 1.2-acre parcel of land located adjacent to its
Addison Place community to an unrelated third party for $895,000, resulting in a gain of
approximately $102,000, net of minority interest of $37,000. Net sales proceeds were
approximately $890,000 after deduction of closing costs and prorations totaling $5,000.
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On December 29, 2004, Roberts Realty purchased an 82% undivided interest in 23.6 acres of
undeveloped land for $7,786,000, including closing costs, from Roberts Properties Peachtree
Parkway, L.P., a partnership owned and controlled by Mr. Roberts. The property, which
Roberts Realty refers to as the Peachtree Parkway property, is zoned for 292 residential
units and is located directly across from The Forum shopping center on Peachtree Parkway in
Gwinnett County, Georgia. The purchase included a restrictive covenant that requires the
land owner to engage Roberts Properties as the development company (if the project is
developed for residential use within ten years from the effective date of the covenant) at a
fee equal to $5,000 per residential unit, and to engage Roberts Construction as the general
contractor for a fee equal to cost plus 10% (5% profit and 5% overhead). The transaction
was part of the Section 1031 tax-deferred exchange partially funded by sales proceeds from
the sale of St. Andrews at the Polo Club. See Note 9  Related Party Transactions.On December 29, 2004, Roberts Realty purchased 29.5 acres of undeveloped land on Westside
Parkway located in the north Atlanta submarket of Alpharetta, Georgia from an unrelated
third party. The land was acquired for $5,919,000, including closing costs, and is zoned
for 109 condominium units, 15,000 square feet of retail space, and a density of 500,000
square feet for a university education center. The transaction was part of the
Section 1031 tax-deferred exchange partially funded by sales proceeds from the sale of St.
Andrews at the Polo Club.On January 19, 2005, Roberts Realty purchased 9.8 acres of undeveloped land from Roberts
Properties Peachtree Dunwoody, LLC, which is owned and controlled by Mr. Roberts. The
purchase price was $15,724,000, including closing costs and was part of the Section 1031
tax-deferred exchange partially funded by sales proceeds from the sale of St. Andrews at the
Polo Club. The property, which Roberts Realty refers to as the North Springs property, is
located on Peachtree Dunwoody Road directly across the street from MARTAs North Springs
rail station in the Perimeter Center submarket of Atlanta. The property is zoned for a
mixed-use development of 356 residential units, 210,000 square feet of office space and
56,000 square feet of retail space. The purchase included a restrictive covenant that
requires the land owner to engage Roberts Properties as the development company (if the
project is developed for residential use within ten years from the effective date of the
covenant) at a fee equal to $5,000 per residential unit, and to engage Roberts Construction
as the general contractor for a fee equal to cost plus 10% (5% profit and 5% overhead). See
Note 9  Related Party Transactions.On May 31, 2005, Roberts Realty sold its Ballantyne Place community in Charlotte, North
Carolina for $37,250,000, with the buyer paying an additional $690,000 to reimburse Roberts
Realty for a previously paid loan commitment fee, resulting in a total price of $37,940,000,
or an average of $118,934 per residential unit. The gain on sale was $4,495,000, net of
minority interest of $1,530,000, and cash proceeds were approximately $14,316,000, net of
closing costs, mortgage debt, and prorations. Roberts Realty reinvested the proceeds in
three existing neighborhood retail centers and three undeveloped tracts of land, as more
fully described below, using a Section 1031 tax-deferred exchange.On June 30, 2005, Robert Realty purchased 14.5 acres of undeveloped land zoned for 217
residential units located adjacent to the 29.5 acres on Westside Parkway that Roberts Realty
purchased in December 2004. The land was acquired for $3,324,000, including closing costs,
from Roberts Properties Peachtree Dunwoody, LLC, which is wholly owned by Mr. Roberts. The
acquisition included a right of first refusal to acquire an adjacent seven-acre parcel of
land zoned for 105 residential units from an unrelated third party.On August 4, 2005, Roberts Realty purchased 22.0 acres of undeveloped land, referred to as
Sawmill Village, zoned for 154 residential units located in Cumming, Georgia, a suburb in
north
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##### Table of Contents



Atlanta. The purchase price was $4,829,000, including closing costs and sewer tap fees of
$431,000.On September 29, 2005, Roberts Realty purchased Grand Pavilion, a 62,323 square-foot retail
center located in Alpharetta, Georgia for $10,933,000, including closing costs. Built in
1993, the property is located in the new City of Johns Creek in north Atlanta. Grand
Pavilion was 88% occupied at the time of the purchase. Roberts Realty assumed $6,995,000 in
debt and financed the balance with proceeds from the sale of Ballantyne Place.On September 30, 2005, Roberts Realty purchased Bassett Shopping Center, a 19,949
square-foot retail center located in Buford, Georgia for $4,847,000, including closing
costs. Built in 1999, the property is located directly across from the Mall of Georgia and
was 100% occupied at the time of the purchase. Roberts Realty assumed $2,715,000 in debt
and financed the balance with proceeds from the sale of Ballantyne Place.On October 27, 2005, Roberts Realty purchased Spectrum at the Mall of Georgia, a 30,050
square-foot retail center located in Buford, Georgia, for $8,495,000, including closing
costs. Built in 2002, the property is located directly across from the Mall of Georgia and
was 100% occupied at the time of the purchase. Roberts Realty assumed $5,306,000 in debt
and financed the balance with proceeds from the sale of Ballantyne Place.On November 23, 2005, Roberts Realty purchased 36.9 acres of undeveloped land zoned for 210
residential units located in Cumming, Georgia, which Roberts Realty refers to as Highway 20.
The purchase price was $5,051,000, which included closing costs and sewer tap fees of
$840,000.On January 31, 2006, Roberts Realty purchased a 1.29-acre parcel of land located adjacent to
the Highway 20 land. The purchase price, including closing costs, was $378,000.On October 3, 2006, Roberts Realty purchased a 1.34-acre parcel of land located adjacent to
its Grand Pavilion retail center in Alpharetta, Georgia. The purchase price, including
closing costs, was $876,006. Roberts Realty funded this acquisition by drawing on its line
of credit, which was subsequently repaid in full prior to December 31, 2006.On December 6, 2006, Roberts Realty acquired the remaining 18% undivided interest in the
Peachtree Parkway property from an unaffiliated third party for $2,284,043, plus closing
costs of $22,108. In addition, Roberts Realty paid the $146,000 balance owed by the seller
to Roberts Properties for the sellers portion of the total $811,111 amount incurred under
the Design and Development Agreement through the date of closing. The property remains as
collateral on the $8,175,000 note taken to fund this acquisition.The unaudited pro forma amounts from the acquisition of Grand Pavilion, Bassett Shopping
Center and Spectrum at the Mall of Georgia for the year ended December 31, 2005, assuming
that the acquisitions had taken place on January 1, 2005 is presented in the following table
(dollars in thousands, except share and per share amounts).
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For the year ended December 31, 2005Pro formaAs reported
    
    
    Adjustments
    
    
    Pro formaTotal operating revenues
    
    
    5,879
    
    
    
    1,918
    
    
    
    7,797Loss (income) from continuing operations
    
    
    (2,538
    )
    
    
    472
    
    
    
    (2,066
    )Net income
    
    
    1,256
    
    
    
    472
    
    
    
    1,728Weighted average common shares  basic
    
    
    5,522,630
    
    
    
    5,522,630
    
    
    
    5,522,630Weighted average common shares  diluted
    
    
    7,406,066
    
    
    
    7,406,066
    
    
    
    7,406,066Per Share Data  Basic and DilutedNet income
    
    $
    0.23
    
    
    $
    0.08
    
    
    $
    0.31
 Unaudited pro forma amounts for the years ended December 31, 2006, 2005 and 2004 assuming
the sales of Ballantyne Place, Bradford Creek, Plantation Trace, Preston Oaks, River Oaks,
Veranda Chase, and St. Andrews at the Polo Club had taken place as of January 1, 2004 for
the periods presented, are presented on the following page (dollars in thousands, except
share and per share amounts). The unaudited pro forma information is not necessarily
indicative of the results of operations of Roberts Realty had the acquisition and sales
occurred at the beginning of the period presented, nor is it indicative of future results.
 Years Ended December 31,2006
    
    
    2005
    
    
    2004Total operating revenues
    
    $
    8,057
    
    
    $
    5,879
    
    
    $
    5,062Net loss
    
    
    (3,858
    )
    
    
    (2,538
    )
    
    
    (1,522
    )Weighted average common shares  basic
    
    
    5,732,274
    
    
    
    5,522,630
    
    
    
    5,280,064Weighted average common shares  diluted
    
    
    7,576,618
    
    
    
    7,406,066
    
    
    
    7,220,658Per Share Data  Basic and DilutedNet loss
    
    
    (0.67
    )
    
    
    (0.46
    )
    
    
    (0.29
    )
 4.
    
    DISCONTINUED OPERATIONSRoberts Realty reports the results of operations and gains or losses for sold properties in
accordance with SFAS No. 144. Gains and losses and results of operations from sold
properties are listed separately on the Consolidated Statements of Operations. Interest
expense on any property that Roberts Realty has sold along with all expenses related to the
retirement of debt are included in discontinued operations in the year incurred.On February 3, 2006, Roberts Realty entered into a listing agreement for the sale of its
118-unit Addison Place townhome community. On June 5, 2006, Roberts Realty terminated its
listing agreement and, as of the date of this report, Roberts Realty has no immediate plans
to market the property for sale. As a result, the community no longer meets the criteria
outlined in SFAS 144
to be classified as held for sale, and its net real estate assets and liabilities are
classified as operating real estate assets and liabilities at December 31, 2006.
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##### Table of Contents



On September 29, 2006, Roberts Realty entered into a listing agreement for the sale of its
19,949 square foot Bassett retail center, which Roberts Realty acquired on September 30,
2005. On December 27, 2006, Roberts Realty terminated its listing agreement effective
December 31, 2006. Although Roberts Realty intends to market its Bassett retail center for
sale at some point during 2007, Roberts Realty determined that the property does not meet
the criteria outlined in SFAS 144 to be classified as held for sale and, therefore, its net
real estate assets and liabilities are classified as operating real estate assets and
liabilities at December 31, 2006.For the year ended December 31, 2005, Income from Discontinued Operations is composed of the
Ballantyne Place apartment community that Roberts Realty sold on May 31, 2005. For the year
ended December 31, 2004, income from discontinued operations includes operations from
Ballantyne Place and operations from the following apartment communities that Roberts Realty
sold on the dates indicated:
 
    
    Bradford Creek, a 180-unit apartment community sold on June 2, 2004;
    
    Plantation Trace, a 232-unit apartment community sold on June 2, 2004;
    
    Preston Oaks, a 213-unit apartment community sold on June 2, 2004;
    
    River Oaks, a 216-unit apartment community sold on June 2, 2004;
    
    Veranda Chase, a 250-unit apartment community sold on June 2, 2004; and
    
    St. Andrews at the Polo Club, a 200-unit apartment community sold on July 29, 2004.
 The table on the following page summarizes the operating revenues and expenses for Roberts
Realtys discontinued operations for the twelve month periods ended December 31, 2005 and
2004 (dollars in thousands):
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##### Table of Contents



Year Ended December 31,2005
    
    
    2004OPERATING REVENUES:Rental operations
    
    $
    887
    
    
    $
    6,561Other operating income
    
    
    41
    
    
    
    420Total operating revenues
    
    
    928
    
    
    
    6,981OPERATING EXPENSES:Personnel
    
    
    211
    
    
    
    943Utilities
    
    
    83
    
    
    
    509Repairs, maintenance and landscaping
    
    
    67
    
    
    
    514Real estate taxes
    
    
    151
    
    
    
    944Marketing, insurance and other
    
    
    146
    
    
    
    606Depreciation of real estate assets
    
    
    741
    
    
    
    2,845Total operating expenses
    
    
    1,399
    
    
    
    6,361INCOME FROM OPERATIONS
    
    
    (471
    )
    
    
    620OTHER EXPENSE:Interest expense
    
    
    (450
    )
    
    
    (2,923
    )Expenses related to retirement of debt
    
    
    
    
    
    
    (719
    )Amortization of deferred financing costs
    
    
    (18
    )
    
    
    (106
    )Total other expense
    
    
    (468
    )
    
    
    (3,748
    )Loss before minority interest
    
    
    (939
    )
    
    
    (3,128
    )MINORITY INTEREST OF UNITHOLDERS IN THE
OPERATING PARTNERSHIP
    
    
    238
    
    
    
    844LOSS BEFORE GAIN ON SALE OF REAL ESTATE
ASSETS
    
    
    (701
    )
    
    
    (2,284
    )GAIN ON SALE OF REAL ESTATE ASSETS, net of
minority interest of unitholders
    
    
    4,495
    
    
    
    40,792INCOME FROM DISCONTINUED OPERATIONS
    
    $
    3,794
    
    
    $
    38,508
 5.
    
    NOTES PAYABLERoberts Realty has five types of debt:
 1.
    
    mortgage notes secured by some of its operating properties;2.
    
    construction/permanent loans secured by other real estate
assets;3.
    
    land loans used to purchase undeveloped land;4.
    
    an unsecured, revolving line of credit; and5.
    
    an insurance premium note payable.
 The details of each of the five types of debt are summarized below. For each loan other
than the insurance premium note payable, the operating partnership or its wholly owned
subsidiary is the borrower, and Roberts Realty is the guarantor.
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##### Table of Contents



Mortgage Notes.The permanent mortgage notes payable secured by Roberts Realtys operating
properties at December 31, 2006 and 2005 were as follows (in order of maturity date):
 FixedInterestRate as of
    
    
    Principal OutstandingProperty Securing Mortgage
    
    Maturity
    
    
    12/31/06
    
    
    12/31/06
    
    
    12/31/05Addison Place Townhomes
    
    
    11/15/09
    
    
    
    6.95
    %
    
    $
    8,788,000
    
    
    $
    8,927,000Grand Pavilion Retail Center
    
    
    07/11/13
    
    
    
    5.43
    %
    
    
    6,855,000
    
    
    
    6,962,000Spectrum at the Mall of Georgia
    
    
    05/01/14
    
    
    
    5.68
    %
    
    
    5,217,000
    
    
    
    5,289,000Addison Place Apartments
    
    
    05/01/15
    
    
    
    6.35
    %
    
    
    20,628,000
    
    
    
    20,860,000Bassett Retail Center
    
    
    10/01/19
    
    
    
    8.47
    %
    
    
    2,677,000
    
    
    
    2,708,000Total
    
    
    
    
    
    
    
    
    
    $
    44,165,000
    
    
    $
    44,746,000
 On October 25, 1999, the operating partnership closed a $9,500,000 loan from Prudential
Insurance Company secured by the Addison Place townhome community. This loan is scheduled
to mature on November 15, 2009. The interest rate is fixed at 6.95% per year for the full
10-year term and the loan is amortized over 30 years.On May 1, 2000, the operating partnership closed a $22,500,000 loan from Wachovia Bank
secured by the Addison Place apartment community. This loan was scheduled to mature on May
10, 2005. On April 19, 2005, the operating partnership closed a $21,000,000 loan from
Primary Capital Advisors LC and, using proceeds from the new loan along with cash on hand,
repaid the balance of the Addison Place apartment loan to Wachovia Bank. Roberts Realty is
the guarantor of the operating partnerships obligations under the loan documents. There
were no early termination fees due on the repayment of either the Wachovia Bank loan or the
related swap agreement. Primary Capital Advisors LC assigned the loan and related loan
documents to the Federal Home Loan Mortgage Corporation (Freddie Mac) in June 2005. The
loan has a 10-year term and matures on May 1, 2015. The interest rate is fixed at 6.35% per
year for the full 10-year term and the loan is amortized over 30 years. In addition,
Roberts Realty has the option, at its election, to extend the loan for an additional
one-year period at an interest rate that will float at 250 basis points over a Freddie Mac
index.On September 29, 2005, Roberts Realty purchased Grand Pavilion, a 62,323 square foot retail
center, and assumed the existing mortgage with a balance of $6,995,000, a fixed interest
rate of 5.43%, and a maturity date of July 11, 2013. The loan is secured by the property
and is being amortized over 30 years.On September 30, 2005, Roberts Realty purchased Bassett Retail Center, a 19,949 square foot
retail center, and assumed the existing mortgage with a balance of $2,715,000, a fixed
interest rate of 8.47%, and a maturity date of October 1, 2019. The loan is secured by the
property and is being amortized over 30 years.October 27, 2005, Roberts Realty purchased Spectrum at the Mall of Georgia, a 30,050 square
foot retail center, and assumed the existing mortgage with a balance of $5,306,000, a fixed
interest rate of 5.68%, and a maturity date of May 1, 2014. The loan is secured by the
property and is being amortized over 30 years.Construction Loans.On June 28, 2001, Roberts Realty closed a $5,280,000 loan to fund the
construction of the Northridge office building. The loan is secured by the land and
improvements and bears interest at the 30-day LIBOR rate plus 200 basis points. On May 28,
2004, Roberts Realty extended the maturity date of the loan to May 28, 2005 and
simultaneously reduced the
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maximum principal amount available to be borrowed under the loan to $4,530,000. On May 28,
2005, Roberts Realty reduced the principal amount of the loan to $4,000,000 and extended the
maturity date to May 28, 2006. On March 10, 2006, Roberts Realty extended the maturity date
from May 28, 2006 to September 10, 2007. Under the extended term, monthly payments consist
of a fixed principal amount of $13,333 per month and interest at the 30-day LIBOR rate plus
200 basis points, with a balloon payment at maturity of $3,760,000 plus interest. At
December 31, 2006, the outstanding balance on the loan was $3,846,000 and the interest rate
was 7.32%.On May 30, 2003, Roberts Realty closed a $6,500,000 construction loan to fund the
construction of the Addison Place Shops retail center. The loan is secured by the land and
improvements, bears interest at the 30-day LIBOR rate plus 185 basis points, and matures on
April 30, 2006. On March 9, 2006, Roberts Realty extended the maturity date from April 30,
2006 to October 30, 2007, with all other terms and conditions of the loan remaining the
same. At December 31, 2006, the outstanding balance on the loan was $6,363,000 and the
interest rate was 7.17%.Land Loans.On December 29, 2004, Roberts Realty closed a $20,412,000 loan with Wachovia
Bank (as amended on January 19, 2005) to help fund a portion of the following land
acquisitions:
 1.
    
    An 82% undivided interest in 23.6 acres of undeveloped land located on
Peachtree Parkway in Gwinnett County, Georgia; the land was acquired on December
29, 2004 for $7,786,000, which includes closing costs. See Note 3, Acquisitions
and Dispositions, for more information.2.
    
    29.5 acres of undeveloped land located on Westside Parkway in
Alpharetta, Georgia; the land was acquired on December 29, 2004 for $5,919,000,
which includes closing costs. See Note 3, Acquisitions and Dispositions, for
more information.3.
    
    9.8 acres of undeveloped land located on Peachtree Dunwoody Road in
Sandy Springs, Georgia; the land was acquired on January 19, 2005 for $15,724,000,
which includes closing costs. See Note 3, Acquisitions and Dispositions, for
more information.
 Roberts Realty repaid $5,800,000 on January 31, 2005 and $7,769,500 On February 17, 2005,
leaving a balance of $6,842,500 on the original $20,412,000 loan, at which time Wachovia
Bank released the 23.6-acre Peachtree Parkway land as collateral as provided in the loan
documents. The loan was secured by the land and the interest rate was the 30-day LIBOR rate
plus 185 basis points. Although the loan was not scheduled to mature until December 29,
2005, Roberts Realty prepaid the loan on September 27, 2005 without penalty as explained in
the following paragraph.On June 30, 2005, Roberts Realty acquired 14.5 acres of undeveloped land on Westside
Parkway, adjacent to its Westside land purchased in December 2004. This acquisition
increased Roberts Realtys total investment in Westside to 44.0 acres. On September 27,
2005, Roberts Realty closed a $6,480,000, interest-only loan with Compass Bank secured by
its investment in Westside. The interest rate on the loan is the 30-day LIBOR rate plus 175
basis points, and the maturity date is August 27, 2008. Roberts Realty used proceeds from
the loan, along with working capital, to pay off the Wachovia land loan described above. At
December 31, 2006, the outstanding balance on the loan was $6,480,000 and the interest rate
was 7.07%.On September 29, 2005, Roberts Realty closed a $3,335,000, interest-only loan with Bank of
North Georgia secured by Sawmill Village, a 22.0-acre tract of undeveloped land located in
Cumming, Georgia. The interest rate on the loan is the 30-day LIBOR rate plus 175 basis
points, and the maturity date is August 29, 2008. Roberts Realty used the proceeds from the
loan to fund the acquisition of the Spectrum at the Mall of Georgia retail center, as more
fully described in
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##### Table of Contents



Note 3, Acquisitions and Dispositions. At December 31, 2006, the outstanding balance on
the loan was $3,335,000 and the interest rate was 7.07%.On January 31, 2006, Roberts Realty closed a $4,077,000, interest-only loan with Wachovia
Bank, secured by the Highway 20 land, a 38.2-acre tract of undeveloped land located in
Cumming, Georgia. The interest rate on the loan is the 30-day LIBOR rate plus 175 basis
points. On January 26, 2007, the maturity date of the loan was extended from January 31,
2007 to January 31, 2008, with all other terms and conditions of the loan remaining the
same. See Note 12  Subsequent Events, for more information. At December 31, 2006, the
outstanding balance on the loan was $4,077,000 and the interest rate was 7.07%.On December 6, 2006, the operating partnership closed an $8,175,000 land loan with Wachovia
Bank, secured by the Peachtree Parkway land, a 23.6-acre tract of undeveloped land located
in Gwinnett County, Georgia The loan matures on December 6, 2007 and interest is payable in
consecutive monthly payments of accrued interest only, until maturity. The interest rate on
the loan is the one-month LIBOR rate plus 175 basis points, and the loan may be prepaid at
any time, in whole or in part, without penalty or premium. At December 31, 2006, the
outstanding balance on the loan was $8,175,000 and the interest rate was 7.07%. The
proceeds of the loan were or will be used as follows:
 
    
    $2,284,043, plus closing costs of $22,108, was used to acquire the remaining 18%
undivided interest in Peachtree Parkway (see Note 3, Acquisitions and
Dispositions, for more information);
    
    $1,350,858 was used to pay off the balance on Roberts Realtys line of credit;
and
    
    the remainder will be used for working capital and general corporate purposes,
including funding part of Roberts Realtys development and construction program.
 Line of Credit.Roberts Realty has a $2,500,000 unsecured, revolving line of credit to
provide funds for short-term working capital purposes. The line of credit, which matures on
August 1, 2007, was increased by $500,000 to $2,500,000 on August 1, 2006. At December 31,
2006, there were no outstanding borrowings under the line of credit.Insurance Premium Note Payable.On September 12, 2006, Roberts Realty signed a premium
finance agreement to finance approximately 75% of its property and casualty insurance
renewal that took effect on August 1, 2006. The amount financed was $220,000 at a fixed
interest rate of 6.25% and a maturity date of June 1, 2007, which is equal to monthly
installments of $22,233. At December 31, 2006, the balance outstanding was $109,000.The scheduled principal payments of all debt outstanding at December 31, 2006 are as
follows:
 2007
    
    $
    23,187,0002008
    
    
    10,466,0002009
    
    
    9,011,0002010
    
    
    564,0002011
    
    
    599,000Thereafter
    
    
    32,723,000Total
    
    $
    76,550,000
 At December 31, 2006, the weighted average interest rate on Roberts Realtys short-term debt
(scheduled principal payments during 2007 as shown in the above table) was 7.12%. The
amount of interest expense that was capitalized was $0, $356,000, and $707,000 for the years
ended
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##### Table of Contents



December 31, 2006, 2005, and 2004, respectively. Fixed rate mortgage debt with an aggregate
carrying value of $44,165,000 at December 31, 2006 has an estimated approximate fair value
of $46,374,000 based on interest rates available to Roberts Realty for debt with similar
terms and maturities. Real estate assets having a combined depreciated cost of $55,297,000
served as collateral for the outstanding mortgage debt at December 31, 2006.
 6.
    
    DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES.Effective January 1, 2001, Roberts Realty adopted Statement of Financial Accounting
Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities,
as amended. SFAS No. 133 establishes accounting and reporting standards for derivative
instruments and for hedging activities by requiring that all derivatives be recognized on
the balance sheet and measured at fair value. Gains or losses resulting from changes in the
fair value of derivatives are recognized in earnings or recorded in other comprehensive
income, and recognized in the income statement when the hedged item affects earnings,
depending on the purpose of the derivatives and whether they qualify for hedge accounting
treatment.Roberts Realty generally enters into fixed rate debt instruments for its operating assets.
In certain situations, Roberts Realty may utilize derivative financial instruments in the
form of interest rate swaps to hedge interest rate exposure on variable-rate debt. Roberts
Realty does not use these instruments for trading or speculative purposes. Roberts Realty
entered into an interest rate swap agreement to fix the interest rate on its Addison Place
apartments loan with Wachovia Bank (see Note 5  Notes Payable). The swap agreement was
scheduled to expire May 10, 2005, the loans scheduled maturity date. The swap agreement
was designated as a cash flow hedge and, accordingly, was recorded at fair value in the
consolidated balance sheets, and the related gains or losses were deferred in shareholders
equity, net of minority interest, as a component of other comprehensive income. Amounts
received or paid in connection with the swap agreements were recognized as adjustments to
interest related to the designated debt. Any ineffective portions of cash flow hedges were
recognized immediately in earnings. Roberts Realty held the interest rate swap arrangement
and related debt agreement for the Addison Place apartments mortgage loan until April 19,
2005, when it refinanced the mortgage loan and paid off the unamortized balance of the
related swap agreement.7.
    
    SHAREHOLDERS EQUITYExchanges of Units for Shares.During the years ended December 31, 2006, 2005, and 2004, a
total of 49,876, 59,085, and 93,896 units, respectively, were exchanged for an equal number
of shares. Each conversion was reflected in the accompanying consolidated financial
statements at book value.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. and Roberts Properties Construction, Inc., which are
non-owned affiliates of Roberts Realty. Per the Plan, Roberts Realty may grant up to
400,000 shares of restricted stock, subject to 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 under the Plan. The Plan is administered by the
compensation committee of Roberts Realtys board of directors.During the third quarter of 2006, Roberts Realty adopted the provisions of FASB Statement of
Financial Accounting Standards No. 123-Revised 2004, Share-Based Payment (SFAS 123R),
which requires that share-based compensation cost be recognized in the statement of
operations
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and measured at the grant-date fair value of the share-based award. Roberts Realty accounts
for the Plan in accordance SFAS 123R. Under the fair value provisions of the statement,
stock-based compensation cost will be measured at the date of grant based on the fair value
of the award and will be recognized as an expense on a straight-line basis over the
requisite service period, which is the vesting period. During the fourth quarter of 2006,
Roberts Realty issued 636 shares under the Plan. The adoption of SFAS 123R had a minimal
effect on the financial statements for the year ended December 31, 2006. In addition, a
total of 483 shares of restricted stock, previously granted prior to the adoption of the
Plan, were forfeited and cancelled during 2006 when a former employee left Roberts Realtys
employment before the shares had vested.Dividends and Distributions.On June 18, 2004, Roberts Realty paid a special distribution
of $4.50 per share and unit to shareholders and unitholders in the operating partnership of
record on June 14, 2004. Roberts Realty has not paid regular quarterly dividends since the
third quarter of 2001.Treasury Stock.Roberts Realty repurchased 362,588 shares of its common stock for
$2,764,000 prior to 2002, and held those shares in treasury. In June 2005, Roberts Realty
sold the treasury shares in a private offering to Mr. Roberts and Mr. Wm. Jarell Jones, a
director, for $2,901,000. Proceeds from the sale of these shares were used to fund Roberts
Realtys development and construction program. Roberts Realty did not repurchase any of its
outstanding shares of common stock during 2006.Earnings Per Share.The reconciliations of income available to common shareholders and
weighted average shares and units used in Roberts Realtys basic and diluted earnings per
share computations are detailed below (dollars in thousands).
 2006
    
    
    2005
    
    
    2004Loss from continuing operations  basic
    
    $
    (3,858
    )
    
    $
    (2,538
    )
    
    $
    (1,522
    )Minority interest of unitholders in the operating
partnership in income attributable to continuing
operations
    
    
    (1,241
    )
    
    
    (865
    )
    
    
    (556
    )Loss from continuing operations  diluted
    
    $
    (5,099
    )
    
    $
    (3,403
    )
    
    $
    (2,078
    )Income from discontinued operations  basic
    
    
    
    
    
    
    3,794
    
    
    
    38,508Minority interest of unitholders in the operating
partnership in income attributable to discontinued
operations
    
    
    
    
    
    
    1,292
    
    
    
    14,167Income from discontinued operations  diluted
    
    $
    
    
    
    $
    5,086
    
    
    $
    52,675Net (loss) income  diluted
    
    $
    (5,099
    )
    
    $
    1,683
    
    
    $
    50,597Weighted average shares  basic
    
    
    5,732,274
    
    
    
    5,522,630
    
    
    
    5,280,064Dilutive securities  weighted average units
    
    
    1,844,344
    
    
    
    1,883,436
    
    
    
    1,940,594Weighted average shares  diluted
    
    
    7,576,618
    
    
    
    7,406,066
    
    
    
    7,220,658
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8.
    
    SEGMENT REPORTINGSFAS No. 131, Disclosures about Segments of an Enterprise and Related Information,
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 its chief
executive officer.Roberts Realty develops, constructs, owns, and manages multifamily apartment communities,
neighborhood retail centers, and one office building, all of which are currently located in
Georgia. As a result, Roberts Realty has four reportable operating segments: multifamily,
retail/office, land, and corporate.
 1.
    
    the multifamily segment consists of operating apartment communities;2.
    
    the retail/office segment consists of operating retail centers and an
office building;3.
    
    the land segment consists of various tracts of land that are either
under development and construction or held for investment; and4.
    
    the corporate segment consists primarily of operating cash and cash
equivalents plus miscellaneous other assets.
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The following table summarizes the operating results of Roberts Realtys reportable segments
for the twelve months ended December 31, 2006. The multifamily segment is composed of the
Addison Place apartment community, which consists of 285 apartments and 118 townhomes. The
retail/office segment is composed of the Addison Place Shops, Grand Pavilion retail center,
Bassett retail center, Spectrum at the Mall of Georgia retail center, and the Northridge
office building. The land segment is composed of (a) six tracts of undeveloped land
totaling 105 acres in various phases of development, and (b) one tract of undeveloped land
totaling 44 acres that is held for investment. The corporate segment consists primarily of
cash and cash equivalents, miscellaneous other assets, and general and administrative
expenses.
 Twelve Months Ended December 31, 2006

(Dollars in Thousands)
 Retail/Multifamily
    
    
    Office
    
    
    Land
    
    
    Corporate
    
    
    TotalOperating revenues  continuing
    
    $
    4,959
    
    
    $
    2,308
    
    
    $
    9
    
    
    $
    
    
    
    $
    7,276Other operating income
    
    
    264
    
    
    
    509
    
    
    
    
    
    
    
    8
    
    
    
    781Total operating revenues from
consolidated entities
    
    
    5,223
    
    
    
    2,817
    
    
    
    9
    
    
    
    8
    
    
    
    8,057Operating expenses  continuing
    
    
    (2,011
    )
    
    
    (1,495
    )
    
    
    (306
    )
    
    
    (1,672
    )
    
    
    (5,484
    )Depreciation and amortization expense
    
    
    (1,452
    )
    
    
    (1,501
    )
    
    
    
    
    
    
    (39
    )
    
    
    (2,992
    )Total operating expenses from
consolidated entities
    
    
    (3,463
    )
    
    
    (2,996
    )
    
    
    (306
    )
    
    
    (1,711
    )
    
    
    (8,476
    )Other (expense) income
    
    
    (1,995
    )
    
    
    (1,674
    )
    
    
    (1,032
    )
    
    
    21
    
    
    
    (4,680
    )Loss from continuing operations
before minority interest
    
    
    (235
    )
    
    
    (1,853
    )
    
    
    (1,329
    )
    
    
    (1,682
    )
    
    
    (5,099
    )Minority interest of unitholders
in the operating partnership
    
    
    57
    
    
    
    451
    
    
    
    324
    
    
    
    409
    
    
    
    1,241(Loss) from continuing operations
    
    
    (178
    )
    
    
    (1,402
    )
    
    
    (1,005
    )
    
    
    (1,273
    )
    
    
    (3,858
    )(Loss) income from discontinued
operations, net of minority interest
of unitholders in the operating
partnership (Note 4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net (loss) income
    
    $
    (178
    )
    
    $
    (1,402
    )
    
    $
    (1,005
    )
    
    $
    (1,273
    )
    
    $
    (3,858
    )Total assets at December 31, 2006
    
    $
    31,754
    
    
    $
    38,775
    
    
    $
    56,583
    
    
    $
    4,655
    
    
    $
    131,767
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The following table summarizes the operating results of Roberts Realtys reportable
segments for the twelve months ended December 31, 2005. The multifamily segment is composed
of the Addison Place apartment community and Ballantyne Place, an apartment community
located in Charlotte, North Carolina that Roberts Realty sold in May 2005. The
retail/office segment is composed of the Addison Place Shops (beginning in the third quarter
of 2005), Grand Pavilion retail center (acquired September 29, 2005), Bassett retail center
(acquired September 30, 2005), Spectrum at the Mall of Georgia retail center (acquired
October 27, 2005), and the Northridge office building. The land segment is composed of (a)
five tracts of undeveloped land totaling 100 acres in various phases of development, and (b)
one tract of undeveloped land totaling 44 acres that is held for investment. The corporate
segment consists primarily of cash and cash equivalents, miscellaneous other assets, and
general and administrative expenses.
 Twelve Months Ended December 31, 2005
(Dollars in Thousands)
 Retail/Multifamily
    
    
    Office
    
    
    Land
    
    
    Corporate
    
    
    TotalOperating revenues  continuing
    
    $
    4,925
    
    
    $
    543
    
    
    $
    17
    
    
    $
    
    
    
    $
    5,485Other operating income
    
    
    307
    
    
    
    71
    
    
    
    
    
    
    
    16
    
    
    
    394Total operating revenues from
consolidated entities
    
    
    5,232
    
    
    
    614
    
    
    
    17
    
    
    
    16
    
    
    
    5,879Operating expenses  continuing
    
    
    (1,865
    )
    
    
    (423
    )
    
    
    (174
    )
    
    
    (1,541
    )
    
    
    (4,003
    )Depreciation and amortization expense
    
    
    (1,576
    )
    
    
    (538
    )
    
    
    
    
    
    
    (2
    )
    
    
    (2,116
    )Total operating expenses from
consolidated entities
    
    
    (3,441
    )
    
    
    (961
    )
    
    
    (174
    )
    
    
    (1,543
    )
    
    
    (6,119
    )Other (expense) income
    
    
    (2,253
    )
    
    
    (651
    )
    
    
    (271
    )
    
    
    12
    
    
    
    (3,163
    )Loss from continuing operations
before minority interest
    
    
    (462
    )
    
    
    (998
    )
    
    
    (428
    )
    
    
    (1,515
    )
    
    
    (3,403
    )Minority interest of unitholders
in the operating partnership
    
    
    117
    
    
    
    254
    
    
    
    109
    
    
    
    385
    
    
    
    865(Loss) from continuing operations
    
    
    (345
    )
    
    
    (744
    )
    
    
    (319
    )
    
    
    (1,130
    )
    
    
    (2,538
    )(Loss) income from discontinued
operations, net of minority interest
of unitholders in the operating
partnership (Note 4)
    
    
    3,794
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,794Net (loss) income
    
    $
    3,449
    
    
    $
    (744
    )
    
    $
    (319
    )
    
    $
    (1,130
    )
    
    $
    1,256Total assets at December 31, 2005
    
    $
    33,029
    
    
    $
    39,704
    
    
    $
    52,190
    
    
    $
    2,226
    
    
    $
    127,149
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The following table summarizes the operating results of Roberts Realtys reportable
segments for the twelve months ended December 31, 2004. The multifamily segment is composed
of the Addison Place apartment community, Ballantyne Place, and six apartment communities
that Roberts Realty sold during 2004. (See Note 4, Discontinued Operations, for more
information.) The retail/office segment is composed of the Northridge office building. The
land segment is composed of (a) three tracts of undeveloped land totaling 31 acres in
various phases of development, (b) one tract of undeveloped land totaling 29.5 acres that is
held for investment, and (c) the Addison Place Shops, which was under construction during
2004. The corporate segment consists primarily of cash and cash equivalents, miscellaneous
other assets, and general and administrative expenses.
 Twelve Months Ended December 31, 2004  (Dollars in Thousands)
 Retail/Multifamily
    
    
    Office
    
    
    Land
    
    
    Corporate
    
    
    TotalOperating revenues  continuing
    
    $
    4,740
    
    
    $
    34
    
    
    $
    
    
    
    $
    
    
    
    $
    4,774Other operating income
    
    
    251
    
    
    
    
    
    
    
    
    
    
    
    37
    
    
    
    288Total operating revenues from
consolidated entities
    
    
    4,991
    
    
    
    34
    
    
    
    
    
    
    
    37
    
    
    
    5,062Operating expenses  continuing
    
    
    (1,736
    )
    
    
    (161
    )
    
    
    (29
    )
    
    
    (1,715
    )
    
    
    (3,641
    )Depreciation and amortization expense
    
    
    (1,606
    )
    
    
    (89
    )
    
    
    
    
    
    
    
    
    
    
    (1,695
    )Total operating expenses from
consolidated entities
    
    
    (3,342
    )
    
    
    (250
    )
    
    
    (29
    )
    
    
    (1,715
    )
    
    
    (5,336
    )Other (expense) income
    
    
    (2,582
    )
    
    
    (33
    )
    
    
    57
    
    
    
    612
    
    
    
    (1,946
    )Loss from continuing operations
before minority interest
    
    
    (933
    )
    
    
    (249
    )
    
    
    28
    
    
    
    (1,066
    )
    
    
    (2,220
    )Minority interest of unitholders
in the operating partnership
    
    
    250
    
    
    
    67
    
    
    
    (7
    )
    
    
    286
    
    
    
    596(Loss) income from continuing operations
    
    
    (683
    )
    
    
    (182
    )
    
    
    21
    
    
    
    (780
    )
    
    
    (1,624
    )Gain on sale of real estate assets, net of
minority interest of unitholders in the
operating partnership
    
    
    
    
    
    
    
    
    
    
    102
    
    
    
    
    
    
    
    102(Loss) income from discontinued
operations, net of minority interest
of unitholders in the operating
partnership (Note 4)
    
    
    38,508
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,508Net (loss) income
    
    $
    37,825
    
    
    $
    (182
    )
    
    $
    123
    
    
    $
    (780
    )
    
    $
    36,986Total assets at December 31, 2004
    
    $
    66,218
    
    
    $
    6,798
    
    
    $
    28,305
    
    
    $
    27,908
    
    
    $
    129,229
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9.
    
    RELATED PARTY TRANSACTIONSTransactions with Mr. Charles S. Roberts and His AffiliatesRoberts Realty enters into contractual commitments in the normal course of business with
Roberts Properties, Inc. (Roberts Properties) and Roberts Properties Construction, Inc.
(Roberts Construction), together referred to as the Roberts Companies. Mr. Charles S.
Roberts, the President, Chief Executive Officer and Chairman of the Board of Roberts Realty,
owns all of the outstanding stock of 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 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. On May 19, 2004, Roberts Realty adopted
a new charter for the audit committee of its board of directors under the applicable rules
of the American Stock Exchange. Under the new charter, related party transactions are also
subject to appropriate review and oversight by the audit committee. In entering into the
transactions described below, Roberts Realty complied with those policies.Design and Development Agreements with Roberts Properties. Roberts Realty pays Roberts
Properties fees for various development services that include market studies, business
plans, exterior design, finish selection, interior design, and construction administration.
During 2005 and 2006, Roberts Realty entered into the following design and development
agreements with Roberts Properties.
 1.
    
    on April 14, 2005 for the Peachtree Parkway property;2.
    
    on April 14, 2005 for the North Springs property (formerly referred to
as the Peachtree Dunwoody property);3.
    
    on August 4, 2005 for the Sawmill Village property; and
4. on February 21, 2006 for the Highway 20 property.
 The financial terms of the agreements are generally $5,000 per residential unit payable over
the development period. The following table summarizes the four design and development
agreements listed above.
 TotalAmountTotal
    
    
    Incurred
    
    
    RemainingContract
    
    
    through
    
    
    ContractualAmount
    
    
    12/31/06
    
    
    CommitmentNorth Springs
    
    $
    1,780,000
    
    
    $
    989,000
    
    
    $
    791,000Peachtree Parkway (note 1)
    
    
    1,460,000
    
    
    
    811,000
    
    
    
    649,000Sawmill Village
    
    
    770,000
    
    
    
    100,000
    
    
    
    670,000Highway 20 - Cumming
    
    
    1,050,000
    
    
    
    100,000
    
    
    
    950,000$
    5,060,000
    
    
    $
    2,000,000
    
    
    $
    3,060,000
 Note 1:
    
    On December 6, 2006, Roberts Realty acquired the remaining 18%
undivided interest in the Peachtree Parkway land from an unaffiliated third
party for $2,284,043, plus closing costs of $22,108. In addition, Roberts
Realty paid the $146,000 balance owed by the seller to Roberts Properties for
the sellers portion of the total $811,111 amount incurred under the Design and
Development Agreement through the date of closing.
 Construction Contracts with Roberts Construction. From time to time, Roberts Realty
enters into construction contracts with Roberts Construction. Roberts Construction began
construction
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on the 39,205 square foot Addison Place Shops retail center before Roberts Realty purchased
the property, and in 2001, Roberts Realty entered into a cost plus 5% contract with Roberts
Construction to finish the construction. Prior to 2004, Roberts Realty entered into a cost
plus 10% construction contract with Roberts Construction for the Ballantyne Place
residential community located in Charlotte, North Carolina that Roberts Realty sold in May
2005.During 2005 and 2006, Roberts Realty entered into the following cost plus 10% construction
contracts with Roberts Construction. See Note 10, Commitments and Contingencies, for more
information.
 1.
    
    on April 14, 2005 for the Peachtree Parkway property;2.
    
    on April 14, 2005 for the North Springs property (formerly referred to
as the Peachtree Dunwoody property);3.
    
    on August 4, 2005 for the Sawmill Village property; and4.
    
    on February 21, 2006 for the Highway 20 property.
 Land Acquisitions.On December 29, 2004, Roberts Realty purchased an 82% undivided interest
in 23.6 acres of undeveloped land (Peachtree Parkway) for $7,786,000 from Roberts Properties
Peachtree Parkway, L.P., a partnership owned and controlled by Mr. Roberts. Subsequently,
on December 6, 2006, Roberts Realty acquired the remaining 18% undivided interest from an
unaffiliated third party. (See Note 3  Acquisitions and Dispositions, for more
information). In acquiring the Peachtree Parkway property, Roberts Realty assumed and
became bound by a restrictive covenant that expires on October 29, 2014. The covenant was
recorded in favor of Roberts Properties and Roberts Construction and states Roberts
Properties will be paid a development fee equal to $5,000 per residential unit and Roberts
Construction will be engaged as the general contractor for the project for a fee equal to
cost plus 10%.On January 19, 2005, Roberts Realty purchased 9.8 acres of undeveloped land (North Springs)
for $15,724,000 from Roberts Properties Peachtree Dunwoody, LLC, which is owned and
controlled by Mr. Roberts. (See Note 3, Acquisitions and Dispositions, for more
information.) In acquiring the North Springs property, Roberts Realty assumed and became
bound by a restrictive covenant that expires January 3, 2015. The covenant was recorded in
favor of Roberts Properties and Roberts Construction and states Roberts Properties will be
paid a development fee equal to $5,000 per residential unit and Roberts Construction will be
engaged as the general contractor for the project for a fee equal to cost plus 10%.Roberts Realty entered into design and development agreements and construction contracts on
the Peachtree Parkway and North Springs projects to satisfy the restrictive covenants.Roberts Realty paid Roberts Construction for labor and materials to perform capital
improvements for the communities in the amounts of $0, $27,000 and $12,000 in 2006, 2005 and
2004, respectively.Partnership Profits Interests.Between 1994 and 1996, the operating partnership acquired
nine limited partnerships of which Mr. Roberts was the sole general partner. Each
partnership owned an apartment community that had been developed or was in the development
process. As a part of each acquisition, the operating partnership assumed an existing
financial obligation to an affiliate of Mr. Roberts. That financial obligation was
formalized as a profits interest in the operating partnership. As the holder of the profits
interest, Roberts Properties was entitled to receive distributions of a specified percentage
of the gross sales proceeds of some, but not all, of the apartment communities owned by
Roberts Realty. The amount distributed to Roberts
Properties with respect to each obligated property was limited to the amount by which the
gross proceeds from the sale of that property exceeded the sum of:
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##### Table of Contents




    
    the debt assumed, or taken subject to, by the operating partnership in
connection with its acquisition of the property;
    
    the equity issued by the operating partnership in acquiring the property; and
    
    all subsequent capital improvements to the property made by the operating partnership.
 On June 2, 2004, Roberts Realty sold five of its Atlanta apartment communities for
$109,150,000, resulting in a gain of $32,404,000, net of minority interest of $11,985,000.
As a result of the sale, Roberts Realty paid to Roberts Properties partnership profits
interest distributions totaling $3,182,000 for three of the five communities that were sold:
River Oaks, Preston Oaks Phase I, and Plantation Trace Phase I.Other Fees.During 2006, 2005 and 2004, affiliates of Mr. Roberts received miscellaneous
fees and cost reimbursements of $80,000, $108,000 and $88,000, respectively.Office Leases.Roberts Realty entered into leases for office space on the third floor of
the Northridge office building with Roberts Properties and Roberts Construction for a total
of $4,200 per month for the period of June 1, 2004 to August 31, 2004; for a total of $5,250
per month for the period of September 1, 2004 to December 31, 2004; and for a total of
$5,950 per month for the period of January 1, 2005 to March 31, 2005. At March 31, 2005,
the leases converted to a month-to-month basis with the rental rate and all other terms
remaining unchanged.On March 27, 2006, Roberts Realty entered into a lease agreement with each of the Roberts
Companies. These leases supersede the month-to-month leases that were previously in effect,
and the new terms were retroactively effective as of January 1, 2006. The terms of the
lease to Roberts Properties include a total of 5,336 rentable square feet for a one-year
term at a rate of $19.00 per rentable square foot. Roberts Properties paid Roberts Realty
$94,000 in 2006 under this lease and the previous lease. Roberts Properties has three
one-year options to renew its lease for all or part of the premises upon three months prior
written notice to be negotiated at market rents, but in no event less than the base rent at
the end of the term. Roberts Properties has exercised its option to renew the lease for
2007.The terms of the lease to Roberts Construction include a total of 1,542 rentable square feet
for a one-year term at a rate of $19.00 per rentable square foot. Roberts Construction paid
Roberts Realty $25,000 in 2006 under this lease and the previous lease. Roberts
Construction has three one-year options to renew its lease for all or part of the premises
upon three months prior written notice to be negotiated at market rents, but in no event
less than the base rent at the end of the term. Roberts Construction has exercised its
option to renew the lease for 2007.Transactions with Charles R. ElliottIn 2004, Roberts Realty paid Charles R. Elliott, a director of Roberts Realty and former
Chief Financial Officer, $205,000 in consulting fees for services he performed on the sale
of five apartment communities to Colonial Properties Trust, the sale of St. Andrews at the
Polo Club, the refinancing of the Ballantyne Place debt, and the refinancing of the Addison
Place apartments debt. Effective May 31, 2006, Roberts Realty hired Mr. Charles R. Elliott
as its Chief Financial Officer, Secretary, and Treasurer. Roberts Realty agreed with Mr.
Elliott that it would pay him $70 per hour for his service in those positions. Under that
arrangement, Roberts Realty paid Mr. Elliott $88,812 for his services.
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##### Table of Contents



10.
    
    COMMITMENTS AND CONTINGENCIESRoberts Realty has six projects in various phases of development and has entered into
various contracts for the development and construction of these projects. The contracts
with Roberts Properties and Roberts Construction are described in Note 9  Related Party
Transactions. The construction contracts with Roberts Construction require Roberts Realty
to pay Roberts Construction a general contractor fee equal to cost plus 10% (5% overhead and
5% profit). The cost of these six new projects has not been determined because the
architectural design, land planning, floor plans, and other details have not been finalized.
In addition to its contracts with Roberts Properties and Roberts Construction, Roberts
Realty has entered into other cost plus contracts with architectural and engineering firms
related to the design and construction of its projects. Roberts Realty estimates the total
cost of the six projects, including development fees payable to Roberts Properties and
contractor fees payable to Roberts Construction, to be approximately $206 million, although
the final cost could be materially different.In addition to the construction contracts with Roberts Construction, Roberts Realty entered
into architectural and engineering contracts with third parties for the North Springs,
Sawmill, and Highway 20 projects. At December 31, 2006, outstanding commitments on these
contracts totaled $96,000.At December 31, 2006, Roberts Realty had one $500,000 letter of credit outstanding. The
letter of credit is a requirement of the lender for Roberts Realtys Spectrum retail center
and is held in a reserve fund by the lender for the payment of leasing costs. Roberts
Realty assumed this obligation under the loan documents when it acquired the Spectrum retail
center in October 2005. The letter of credit expires on October 27, 2007.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 or
results of operations. In 2006, a lien for approximately $1,191,000 was filed against the
North Springs property for a dispute over architectural fees. Roberts Realty believes that
it has made an adequate provision in the financial statements for any liability that may
result upon settlement of the lien matter.As a result of the mergers of various limited partnerships into the operating partnership,
the former partners of these limited partnerships received 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 one-for-one basis). Roberts Realty has adopted a policy
that it will issue shares in exchange for all future units submitted. There were 1,799,610
units outstanding at December 31, 2006 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 officer and directors serving in
such capacity. 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 Roberts Realty has recorded no liabilities for
this indemnification arrangement as of December 31, 2006.
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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, development projects,
and land held for investment have not revealed any environmental liability that it believes
would have a material adverse effect on its business, assets, or results of operations, nor
is Roberts Realty aware of any liability of that type.
 11.
    
    SUMMARIZED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
  Quarter EndedMarch 31
    
    June 30
    
    Sept 30
    
    Dec 31Year Ended December 31, 2006Total operating revenues
    
    $
    1,586
    
    
    $
    2,182
    
    
    $
    1,878
    
    
    $
    2,411(Loss) income from operations
    
    
    30
    
    
    
    (66
    )
    
    
    (170
    )
    
    
    176(Loss) from continuing operations
    
    
    (695
    )
    
    
    (900
    )
    
    
    (994
    )
    
    
    (1,325
    )Income (loss) from discontinued operations
    
    
    58
    
    
    
    
    
    
    
    (2
    )
    
    
    Net income (loss)
    
    
    (637
    )
    
    
    (900
    )
    
    
    (996
    )
    
    
    (1,325
    )Per share (diluted):Loss from continuing operations
    
    $
    (0.12
    )
    
    $
    (0.16
    )
    
    $
    (0.17
    )
    
    $
    (0.23
    )Income from discontinued operations
    
    $
    0.01
    
    
    
    
    
    
    
    
    
    
    
    Net (loss)
    
    $
    (0.11
    )
    
    $
    (0.16
    )
    
    $
    (0.17
    )
    
    $
    (0.23
    )Year Ended December 31, 2005Total operating revenues
    
    $
    1,.325
    
    
    $
    1,330
    
    
    $
    1,332
    
    
    $
    1,892Income (loss) from operations
    
    
    (39
    )
    
    
    (127
    )
    
    
    (128
    )
    
    
    54Loss from continuing operations
    
    
    (589
    )
    
    
    (642
    )
    
    
    (710
    )
    
    
    (597
    )Income (loss) from discontinued operations
    
    
    (410
    )
    
    
    4,175
    
    
    
    29
    
    
    
    Net income (loss)
    
    
    (999
    )
    
    
    3,533
    
    
    
    (681
    )
    
    
    (597
    )Per share (diluted):(Loss) from continuing operations
    
    $
    (0.11
    )
    
    $
    (0.12
    )
    
    $
    (0.13
    )
    
    $
    (0.10
    )Income (loss) from discontinued operations
    
    $
    (0.08
    )
    
    
    0.77
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    (0.19
    )
    
    
    0.65
    
    
    $
    (0.13
    )
    
    $
    (0.10
    )
 (Amounts have been restated, as appropriate, to give effect to discontinued operations)12.
    
    SUBSEQUENT EVENTSOn January 26, 2007, Roberts Realty extended the maturity date of the $4,077,000
interest-only loan secured by land on Highway 20 in Cumming, Georgia from January 31, 2007
to January 31, 2008. All other terms and conditions remained the same.On February 28 2007, the compensation committee granted 25,000 shares of restricted stock
under the 2006 Roberts Realty Investors, Inc. Restricted Stock Plan. These shares have an
approximate value of $200,000 based on a price of $8.00 per share and are subject to
forfeiture restrictions, which lapse on June 1, 2007 for 6,250 shares and March 1, 2012 for
18,750 shares.
 F-30




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##### Table of Contents



SCHEDULE III  REAL ESTATE AND ACCUMULATED DEPRECIATION
 ROBERTS REALTY INVESTORS, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 2006
(Dollars in Thousands)
 Initial Cost to Company
    
    
    
    
    
    
    Carried at Close of PeriodImprovementsCapitalizedAfterBuildings and
    
    
    Acquisition/
    
    
    
    
    
    
    Buildings andDescription
    
    Encumbrance
    
    
    Land
    
    
    Improvements
    
    
    Construction
    
    
    Land
    
    
    Improvements
    
    
    TotalOPERATING PROPERTIESAddison Place Apartments
    
    $
    20,627
    
    
    $
    3,152
    
    
    $
    25,917
    
    
    $
    562
    
    
    $
    3,152
    
    
    $
    26,479
    
    
    $
    29,631Addison Place Townhomes
    
    
    8,788
    
    
    
    2,053
    
    
    
    10,440
    
    
    
    403
    
    
    
    2,053
    
    
    
    10,843
    
    
    
    12,896Grand Pavilion Retail Center (a)
    
    
    6,855
    
    
    
    3,996
    
    
    
    7,008
    
    
    
    29
    
    
    
    3,996
    
    
    
    7,037
    
    
    
    11,033Addison Place Shops
    
    
    6,364
    
    
    
    1,848
    
    
    
    6,569
    
    
    
    103
    
    
    
    1,848
    
    
    
    6,672
    
    
    
    8,520Spectrum Retail Center (a)
    
    
    5,217
    
    
    
    3,190
    
    
    
    4,565
    
    
    
    69
    
    
    
    3,190
    
    
    
    4,634
    
    
    
    7,824Northridge Office Building
    
    
    3,846
    
    
    
    357
    
    
    
    6,511
    
    
    
    205
    
    
    
    357
    
    
    
    6,716
    
    
    
    7,073Bassett Retail Center (a)
    
    
    2,677
    
    
    
    1,726
    
    
    
    2,763
    
    
    
    7
    
    
    
    1,726
    
    
    
    2,770
    
    
    
    4,496Total Operating Properties
    
    $
    54,374
    
    
    $
    16,322
    
    
    $
    63,773
    
    
    $
    1,378
    
    
    $
    16,322
    
    
    $
    65,151
    
    
    $
    81,473CONSTRUCTION IN PROGRESS AND REAL
ESTATE UNDER DEVELOPMENTAddison Place Shops, Building D
    
    $
    
    
    
    $
    259
    
    
    $
    
    
    
    $
    20
    
    
    $
    259
    
    
    $
    20
    
    
    $
    279North Springs
    
    
    
    
    
    
    15,739
    
    
    
    
    
    
    
    2,729
    
    
    
    15,739
    
    
    
    2,729
    
    
    
    18,468Peachtree Parkway
    
    
    8,175
    
    
    
    10,490
    
    
    
    
    
    
    
    978
    
    
    
    10,490
    
    
    
    978
    
    
    
    11,468Northridge Community
    
    
    
    
    
    
    5,300
    
    
    
    
    
    
    
    1,388
    
    
    
    5,300
    
    
    
    1,388
    
    
    
    6,688Highway 20 Cumming
    
    
    4,077
    
    
    
    5,478
    
    
    
    
    
    
    
    109
    
    
    
    5,478
    
    
    
    109
    
    
    
    5,587Sawmill Village
    
    
    3,335
    
    
    
    4,829
    
    
    
    
    
    
    
    161
    
    
    
    4,829
    
    
    
    161
    
    
    
    4,990Total Properties Under Construction
    
    $
    15,587
    
    
    $
    42,095
    
    
    $
    
    
    
    $
    5,385
    
    
    $
    42,095
    
    
    $
    5,385
    
    
    $
    47,480LAND HELD FOR INVESTMENTWestside Parkway
    
    $
    6,480
    
    
    $
    9,019
    
    
    $
    
    
    
    $
    
    
    
    $
    9,019
    
    
    $
    
    
    
    $
    9,019Total
    
    $
    76,441
    
    
    $
    67,436
    
    
    $
    63,773
    
    
    $
    6,763
    
    
    $
    67,436
    
    
    $
    70,536
    
    
    $
    137,972
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##### Table of Contents



SCHEDULE III  REAL ESTATE AND ACCUMULATED DEPRECIATION
 ROBERTS REALTY INVESTORS, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 2006
(Dollars in Thousands)
 Life on whichAccumulated
    
    
    Date of Original
    
    Date
    
    DepreciationDescription
    
    Depreciation
    
    
    Construction
    
    Acquired
    
    is ComputedAddison Place Townhomes
    
    $
    3,705
    
    
    1999
    
    Sept  99
    
    3  27.5
YearsAddison Place Apartments
    
    
    7,448
    
    
    1999
    
    June  98
    
    3  27.5 YearsAddison Place Shops
    
    
    445
    
    
    2005
    
    May - 05
    
    3  27.5 YearsNorthridge Office Building
    
    
    623
    
    
    2004
    
    June  01
    
    3  27.5 YearsGrand Pavilion Shopping Center
    
    
    308
    
    
    1999
    
    Sept  05
    
    3  27.5 YearsSpectrum Shopping Center
    
    
    194
    
    
    2002
    
    Oct  05
    
    3  27.5 YearsBassett Shopping Center
    
    
    121
    
    
    1999
    
    Sept - 05
    
    3  27.5 YearsTotal
    
    $
    12,844
  S-2




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##### Table of Contents



(a)
    
    A portion of Building and Improvements is acquisition cost allocated to the fair
value of in-place leases. This cost is being amortized over the life of the respective
leases.(b)
    
    Gross capitalized costs of operating real estate assets are summarized as follows:
 2006
    
    
    2005
    
    
    2004BALANCE AT BEGINNING OF PERIOD
    
    $
    80,366
    
    
    $
    80,649
    
    
    $
    152,553Additions during period:Other additions
    
    
    1,281
    
    
    
    31,105
    
    
    
    38,893Improvements
    
    
    89
    
    
    
    823
    
    
    
    217Total Additions
    
    
    1,370
    
    
    
    31,928
    
    
    
    39,110Deductions during period:Sales
    
    
    
    
    
    
    (32,211
    )
    
    
    (110,646
    )Other disposals
    
    
    (263
    )
    
    
    
    
    
    
    (368
    )Total disposals
    
    
    (263
    )
    
    
    (32,211
    )
    
    
    (111,014
    )Balance at close of period
    
    $
    81,473
    
    
    $
    80,366
    
    
    $
    80,649
 (c)
    
    Accumulated depreciation on operating real estate assets is as follows:
 2006
    
    
    2005
    
    
    2004BALANCE AT BEGINNING OF PERIOD
    
    $
    10,260
    
    
    $
    9,157
    
    
    $
    30,871Additions during period:Depreciation expense
    
    
    2,595
    
    
    
    2,788
    
    
    
    4,540Deductions during period:Sales
    
    
    
    
    
    
    (1,685
    )
    
    
    (26,101
    )Other disposals
    
    
    (11
    )
    
    
    
    
    
    
    (153
    )Total disposals
    
    
    (11
    )
    
    
    (1,685
    )
    
    
    (26,254
    )Balance at close of period
    
    $
    12,844
    
    
    $
    10,260
    
    
    $
    9,157
 S-3




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##### Table of Contents



(a)
    
    3. Exhibits required by Item 601 of Regulation S-K.
  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.
 ExhibitNo.
    
    DescriptionArticles 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
    
    
    Bylaws of Roberts Realty Investors, Inc. [* 2.2]4.1
    
    
    Agreement of Limited Partnership of Roberts Properties Residential, L.P.,
dated as of July 22, 1994. [* 3.1]4.1.1
    
    
    First Amended and Restated Agreement of Limited Partnership of Roberts
Properties Residential, L.P., dated as of October 1, 1994, as amended.
[* 3.1.1]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. [* 3.1.2]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. [* 3.2]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]
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##### Table of Contents



ExhibitNo.
    
    Description4.2.4
    
    
    Certificate of Merger filed with the Georgia Secretary of State on
September 27, 1995, merging Roberts Properties-St. Simons, L.P. 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 Building10.1.1
    
    
    Construction Administration Agreement between Roberts Residential, L.P.
and Roberts Properties, Inc. (Corporate Office Building). [Incorporated
by reference to Exhibit 10.20.5 in our quarterly report on Form 10-Q for
the quarter ended September 30, 2001.]10.1.2
    
    
    Office Lease between Roberts Properties Residential, L.P. and Roberts
Properties, Inc. dated November 23, 2004. [Incorporated by reference to
Exhibit 10.1.6 in our annual report on Form 10-K for the year ended
December 31, 2004.]10.1.3
    
    
    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.]10.1.4
    
    
    Office Lease between Roberts Properties Residential, L.P. and Roberts
Properties Construction, Inc. dated November 23, 2004. [Incorporated by
reference to Exhibit 10.1.7 in our annual report on Form 10-K for the
year ended December 31, 2004.]10.1.5
    
    
    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.]Addison Place Shops10.2.1
    
    
    Construction Administration Agreement between Roberts Residential, L.P.
and Roberts Properties, Inc. (Addison Place Shops). [Incorporated by
reference to Exhibit 10.21.3 in our quarterly report on Form 10-Q for the
quarter ended September 30, 2001.]Northridge10.3.1
    
    
    Design and Development Agreement between Roberts Properties Residential,
L.P. and Roberts Properties, Inc. dated June 15, 2001 (Northridge).
[Incorporated by reference to Exhibit 10.1.17 in our annual report on
Form 10-K for the year ended December 31, 2001.]
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##### Table of Contents



ExhibitNo.
    
    Description10.3.2
    
    
    Construction Agreement between Roberts Properties Residential, L.P. and
Roberts Properties Construction, Inc. (Northridge). [Incorporated by
reference to Exhibit 10.1.18 in our quarterly report on Form 10-Q for the
quarter ended March 31, 2003.]Peachtree Parkway10.4.1
    
    
    Sales Contract dated December 29, 2004 between Roberts Properties
Residential, L.P. and Roberts Properties Peachtree Parkway, L.P.
[Incorporated by reference to Exhibit 10.1 in our current report on Form
8-K dated January 5, 2005.]10.4.2
    
    
    Tenants-In-Common Agreement between Georgianna Jean Valentino and Roberts
Properties Peachtree Parkway, L.P., assumed by Roberts Properties
Residential, L.P. on December 29, 2004. [Incorporated by reference to
Exhibit 10.2 in our current report on Form 8-K dated January 5, 2005.]10.4.3
    
    
    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.]10.4.4
    
    
    Design and Development Agreement among Roberts Properties Residential,
L.P., Georgianna Jean K. Valentino and Roberts Properties, Inc. for the
Peachtree Parkway property, 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.]10.4.5
    
    
    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.]10.4.6
    
    
    Construction Contract among Roberts Properties Residential, L.P.,
Georgianna Jean K. Valentino and Roberts Properties Construction, Inc.
for the Peachtree Parkway property, 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.]10.4.7
    
    
    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.]North Springs (formerly Peachtree Dunwoody)10.5.1
    
    
    Sales Contract dated January 19, 2005 between Roberts Properties
Residential, L.P. and Roberts Properties Peachtree Dunwoody, LLC.
[Incorporated by reference to Exhibit 10.1 in our current report on Form
8-K dated January 21, 2005.]10.5.2
    
    
    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.]
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##### Table of Contents



ExhibitNo.
    
    Description10.5.3
    
    
    Design and Development Agreement between Roberts Properties Residential,
L.P. and Roberts Properties, Inc. for the North Springs (formerly
Peachtree Dunwoody) property, 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.]10.5.4
    
    
    Construction Contract between Roberts Properties Residential, L.P. and
Roberts Properties Construction, Inc. for the North Springs (formerly
Peachtree Dunwoody) property, 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.]Westside10.6.1
    
    
    Purchase contract dated June 28, 2005 between Roberts Properties
Residential, L.P. and Roberts Properties Peachtree Dunwoody, LLC
(Westside). [Incorporated by reference to Exhibit 10.11 in our quarterly
report on Form 10-Q for the quarter ended June 30, 2005.]Sawmill10.7.1
    
    
    Design and Development Agreement between Roberts Properties Residential,
L.P. and Roberts Properties, Inc. for the Sawmill property 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.]10.7.2
    
    
    Construction Contract between Roberts Properties Residential, L.P. and
Roberts Properties Construction, Inc. for the Sawmill property 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 2010.8.1
    
    
    Design and Development Agreement between Roberts Properties Residential,
L.P. and Roberts Properties, Inc. for the Highway 20 property 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.]10.8.2
    
    
    Construction Contract between Roberts Properties Residential, L.P. and
Roberts Properties Construction, Inc. for the Highway 20 property 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 Plan10.9.1
    
    
    Determination of annual base salaries for 2005, effective January 1,
2005, for the registrants executive officers, and determination that
there will be no further bonus paid to Mr. Roberts related to his 2004
performance. [Incorporated by reference to Item 1.01 in our current
report on Form 8-K dated March 9, 2005.]10.9.2
    
    
    Determination of the registrants executive officer salaries for 2005 and
bonuses for 2004. [Incorporated by reference to Item 1.01 in our current
report on Form 8-K dated March 9, 2005.]10.9.3
    
    
    Determination of bonuses for the registrants executive officers for
2005. [Incorporated by reference to Item 1.01 in our current report on
Form 8-K dated June 21, 2005.]
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ExhibitNo.
    
    Description10.9.4
    
    
    Determination of annual base salary for 2006, effective January 1, 2006,
for Charles S. Roberts, the registrants President and Chief Executive
Officer. [Incorporated by reference to Item 1.01 in our current report
on Form 8-K dated May 16, 2006.]10.9.5
    
    
    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.]10.9.6
    
    
    2006 Roberts Realty Investors, Inc. Restricted Stock Plan [Incorporated
by reference to Annex A to the registrants definitive proxy statement
filed July 20, 2006.]Other Agreements with Affiliates10.10.1
    
    
    Reimbursement arrangement approved and ratified on February 15, 2005
between the registrant and Roberts Properties, Inc., a wholly owned
affiliate of Charles S. Roberts, the registrants Chief Executive
Officer, President, and Chairman of the Board of Directors, for the use
of an aircraft owned by Roberts Properties, Inc. [Incorporated by
reference to Item 1.01 in our current report on Form 8-K dated February
15, 2005.]10.10.2
    
    
    Agreements between Roberts Realty Investors, Inc. and each of Charles S.
Roberts and Wm. Jarell Jones to acquire shares of treasury stock.
[Incorporated by reference to our current report on Form 8-K dated June
22, 2005.]10.10.3
    
    
    Agreement between Roberts Realty and Charles R. Elliott for him to assist
Roberts Realty in offering its Addison Place townhome community in
Alpharetta, Georgia for sale. [Incorporated by reference to our current
report on Form 8-K dated November 15, 2005.]Addison Place Financing Documents:10.11.1
    
    
    Promissory Note executed by Roberts Properties Residential, L.P. in favor
of The Prudential Insurance Company of America, dated October 25, 1999,
in the original principal amount of $9,500,000 (Addison Place Townhomes).
[Incorporated by reference to Exhibit 10.14.04 in our annual report on
Form 10-K for the year ended December 31, 1999.]10.11.2
    
    
    Deed to Secure Debt and Security Agreement executed by Roberts Properties
Residential, L.P. in favor of The Prudential Insurance Company of
America, dated October 25, 1999, and related collateral documents
(Addison Place Townhomes). [Incorporated by reference to Exhibit
10.14.05 in our annual report on Form 10-K for the year ended December
31, 1999.]10.11.3
    
    
    Guaranty executed by Roberts Realty Investors, Inc. in favor of The
Prudential Insurance Company of America, dated October 25, 1999 (Addison
Place Townhomes). [Incorporated by reference to Exhibit 10.14.06 in our
annual report on Form 10-K for the year ended December 31, 1999.]10.11.4
    
    
    Promissory Note executed by Roberts Properties Residential, L.P. in favor
of First Union National Bank, dated May 3, 2000, in the original
principal amount of $22,500,000 (Addison Place Apartments).
[Incorporated by reference to Exhibit 10.14.09 in our quarterly report on
Form 10-Q for the quarter ended June 30, 2000.]
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ExhibitNo.
    
    Description10.11.5
    
    
    Deed to Secure Debt, Security Agreement and Assignment of Leases and
Rents Agreement executed by Roberts Properties Residential, L.P. in favor
of First Union National Bank, dated May 3, 2000 (Addison Place
Apartments). [Incorporated by reference to Exhibit 10.14.10 in our
quarterly report on Form 10-Q for the quarter ended June 30, 2000.]10.11.6
    
    
    Multifamily Note in the principal amount of $21,000,000, dated April 19,
2005, executed by Roberts Properties Residential, L.P. in favor of
Primary Capital Advisors LC (Addison Place Apartments). [Incorporated by
reference to Exhibit 10.1 in our current report on Form 8-K dated April
19, 2005.]10.11.7
    
    
    Multifamily Deed to Secure Debt, Assignment of Rents, and Security
Agreement dated April 19, 2005 made by Roberts Properties Residential,
L.P. in favor of Primary Capital Advisors LC (Addison Place Apartments).
[Incorporated by reference to Exhibit 10.2 in our current report on Form
8-K dated April 19, 2005.]10.11.8
    
    
    Guaranty dated April 19, 2005 made by Roberts Realty Investors, Inc. in
favor of Primary Capital Advisors LC (Addison Place Apartments).
[Incorporated by reference to Exhibit 10.3 in our current report on Form
8-K dated April 19, 2005.]Peachtree Parkway / North Springs (formerly Peachtree Dunwoody)Financing Documents10.12.1
    
    
    Promissory Note in the principal amount of $20,411,550, dated December
29, 2004, executed by Roberts Properties Residential, L.P. in favor of
Wachovia Bank, National Association. [Incorporated by reference to
Exhibit 10.4 in our current report on Form 8-K dated January 5, 2005.]10.12.2
    
    
    Deed to Secure Debt, Security Agreement and Assignment of Leases and
Rents dated December 29, 2004 made by Roberts Properties Residential,
L.P. in favor of Wachovia Bank, National Association. [Incorporated by
reference to Exhibit 10.5 in our current report on Form 8-K dated January
5, 2005.]10.12.3
    
    
    Unconditional Guaranty of Payment and Performance dated December 29, 2004
made by Roberts Realty Investors, Inc. in favor of Wachovia Bank,
National Association. [Incorporated by reference to Exhibit 10.6 in our
current report on Form 8-K dated January 5, 2005.]10.12.4
    
    
    First Consolidated Amendatory Agreement dated January 19, 2005 among
Roberts Properties Residential, L.P., Roberts Realty Investors, Inc., and
Wachovia Bank, National Association. [Incorporated by reference to
Exhibit 10.3 in our current report on Form 8-K dated January 21, 2005.]10.12.5
    
    
    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.]10.12.6
    
    
    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.]
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ExhibitNo.
    
    Description10.12.7
    
    
    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.]Sale of Ballantyne Place10.13.1
    
    
    Sales Contract dated May 2, 2005 between Roberts Properties Residential,
L.P. and Post Apartment Homes, L.P. [Incorporated by reference to
Exhibit 10.1 in our current report on Form 8-K dated May 2, 2005.]Ballantyne Place Financing Documents:(1)10.14.1
    
    
    Construction Loan Agreement executed by Roberts Properties Residential,
L.P. in favor of AmSouth Bank, dated February 21, 2002 (Ballantyne Place
construction loan). [Incorporated by reference to Exhibit 10.4.1 in our
quarterly report on Form 10-Q for the quarter ended March 31, 2002.]10.14.2
    
    
    Promissory Note executed by Roberts Properties Residential, L.P. in favor
of AmSouth Bank, dated February 21, 2002 in the original principal amount
of $24,000,000 (Ballantyne Place construction loan). [Incorporated by
reference to Exhibit 10.4.2 in our quarterly report on Form 10-Q for the
quarter ended March 31, 2002.]10.14.3
    
    
    Deed of Trust, Security Agreement, and Assignment of Rents and Leases
executed by Roberts Properties Residential, L.P. in favor of AmSouth
Bank, dated February 21, 2002 (Ballantyne Place construction loan).
[Incorporated by reference to Exhibit 10.4.3 in our quarterly report on
Form 10-Q for the quarter ended March 31, 2002.]10.14.4
    
    
    Guaranty Agreement executed by Roberts Realty Investors, Inc. in favor of
AmSouth Bank, dated February 21, 2002 (Ballantyne Place construction
loan). [Incorporated by reference to Exhibit 10.4.4 in our quarterly
report on Form 10-Q for the quarter ended March 31, 2002.]Other Exhibits:21
    
    

Subsidiaries of the Registrant.23.1
    
    

Independent Auditors Consent  Deloitte & Touche LLP.23.2
    
    
    Independent Auditors Consent  Reznick Group, P.C.24.1
    
    
    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.
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SIGNATURES
   By:
    
    /s/ Charles S. RobertsCharles S. Roberts, Chairman of the Board,
Chief Executive Officer and President
  POWER OF ATTORNEY
   Signature
    
    Title
    
    Date/s/ Charles S. Roberts

Charles S. Roberts
    
    Chairman of the Board, Chief Executive
Officer
and President
    
    March 26, 2007/s/ Charles R. Elliott

Charles R. Elliott
    
    Secretary, Treasurer, Chief Financial
Officer (Principal Financial
Officer and Principal Accounting
Officer) and Director
    
    March 26, 2007/s/ Dennis H. James

Dennis H. James
    
    Director
    
    March 26, 2007/s/ Wm. Jarell Jones

Wm. Jarell Jones
    
    Director
    
    March 26, 2007/s/ James M. Goodrich

James M. Goodrich
    
    Director
    
    March 26, 2007/s/ Ben A. Spalding

Ben A. Spalding
    
    Director
    
    March 26, 2007
 79