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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

|           |  |                                                                                         
|---------- |  | ----------------------------------------------------------------------------------------
|(Mark One) | 
|[X]        |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934    
|           |  |                                                                                         
|           |  | For the fiscal year ended December 31, 2002.                                            
|           |  |                                                                                         
|[   ]      |  | 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.

---

(Name of small business issuer in its charter)


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Georgia                                                        |  | 58-2122873                          
|                                                               |  |                                     
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)
|                                                               |  |                                     
|8010 Roswell Road, Suite 120                                   |  |                                     
|Atlanta, GA                                                    |  | 30350                               
|                                                               |  |                                     
|(Address of Principal Executive Offices)                       |  | (Zip Code)                          

Issuers telephone number: (770) 394-6000

Securities registered under Section 12(b) of the Act: None

|                     |  |                                           
|-------------------- |  | ------------------------------------------
|Title of each class: |  | Name of each exchange on which registered:
|                     |  |                                           
|N/A                  |  | N/A                                       

Securities registered under Section 12(g) of the Exchange Act:

Common Stock

---

(Title of Class)


Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past
90 days.      Yes   xNoo

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to
this Form 10-K.oIndicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the
Act).o

State the aggregate market value of the voting common equity held by
non-affiliates of the registrant. The aggregate market value shall be computed
by reference to the price at which the common equity was sold, or the average
bid and asked prices of such common equity, as of a specified date within 60
days prior to the date of the filing of the Form 10-K/A. (See definition of
affiliate in Rule 405.)

$23,372,821

Note: If a determination as to whether a particular person or entity is
an affiliate cannot be made without involving unreasonable effort and expense,
the aggregate market value of the common stock held by non-affiliates may be
calculated on the basis of assumptions reasonable under the circumstances,
provided that the assumptions are set forth in this Form.

Indicate the number of shares outstanding of each of the registrants
classes of common stock, as of the latest practicable date. 5,128,293 shares
of common stock (as of March 19, 2003).

Documents Incorporated by Reference. None





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TABLE OF CONTENTS



|                                                 |                                                                                               |  |  |  |  |  |  | 
|------------------------------------------------ | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                          
|                                                 | ITEM 1. DESCRIPTION OF BUSINESS.                                                             
|                                                 | ITEM 2. PROPERTIES.                                                                          
|                                                 | ITEM 3. LEGAL PROCEEDINGS.                                                                   
|                                                 | ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.                                  
|PART II                                         
|                                                 | ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.                            
|                                                 | ITEM 6. SELECTED FINANCIAL DATA.                                                             
|                                                 | ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
|                                                 | ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.                         
|                                                 | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.                                         
|                                                 | ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
|PART III                                        
|                                                 | ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.                                 
|                                                 | ITEM 11. EXECUTIVE COMPENSATION.                                                             
|                                                 | ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.                     
|                                                 | ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.                                     
|                                                 | ITEM 14. CONTROLS AND PROCEDURES                                                             
|PART IV                                         
|                                                 | ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.                    
|SIGNATURES                                      
|Certification                                   
|Certification                                   
|EX-10.3.1 MULTIFAMILY NOTE                      
|EX-10.3.2 MULTIFAMILY DEED TO SECURE DEBT       
|EX-10.3.3 REPLACEMENT RESERVE AGREEMENT         
|EX-21 SUBSIDIARIES OF THE REGISTRANT            
|EX-23.1 INDEPENDENT AUDITORS' CONSENT           
|EX-23.2 NOTICE OF CONSENT OF ARTHUR ANDERSEN LLP



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TABLE OF CONTENTS

|         |          |  |                                                                                       |  |  |    |      |  | 
|-------- | -------- |  | ------------------------------------------------------------------------------------- |  |  | -- | ---- |  | 
|         |          |  |                                                                                       |  |  |    | PAGE
|         |          |  |                                                                                       |  |  |    |     
|PART I   |          |  |                                                                                       |  |  |    | 2    | 
|        
|         | ITEM 1.  |  | BUSINESS                                                                              |  |  | 2  |     
|        
|         | ITEM 2.  |  | PROPERTIES                                                                            |  |  | 11 |     
|        
|         | ITEM 3.  |  | LEGAL PROCEEDINGS                                                                     |  |  | 23 |     
|        
|         | ITEM 4.  |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                   |  |  | 23 |     
|        
|PART II  |          |  |                                                                                       |  |  |    | 24   | 
|        
|         | ITEM 5.  |  | MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                 |  |  | 24 |     
|        
|         | ITEM 6.  |  | SELECTED FINANCIAL DATA                                                               |  |  | 26 |     
|        
|         | ITEM 7.  |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |  |  | 28 |     
|        
|         | ITEM 7A. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            |  |  | 48 |     
|        
|         | ITEM 8.  |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                           |  |  | 50 |     
|        
|         | ITEM 9.  |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE  |  |  | 50 |     
|        
|PART III |          |  |                                                                                       |  |  |    | 51   | 
|        
|         | ITEM 10. |  | DIRECTORS AND EXECUTIVE OFFICERS                                                      |  |  | 51 |     
|        
|         | ITEM 11. |  | EXECUTIVE COMPENSATION                                                                |  |  | 53 |     
|        
|         | ITEM 12. |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                        |  |  | 54 |     
|        
|         | ITEM 13. |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                        |  |  | 56 |     
|        
|         | ITEM 14. |  | CONTROLS AND PROCEDURES                                                               |  |  | 59 |     
|        
|PART IV  |          |  |                                                                                       |  |  |    | 60   | 
|        
|         | ITEM 15. |  | EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K                      |  |  | 60 |     





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PART I




ITEM 1. DESCRIPTION OF BUSINESS.

This report contains forward-looking statements within the meaning of
the federal securities laws. These statements relate to future economic
performance, plans and objectives of management for future operations and
projections of revenues and other financial items that are based on the beliefs
of our management, as well as assumptions made by, and information currently
available to, our management. The words expect, estimate, anticipate,
believe and similar expressions are intended to identify forward-looking
statements. Those statements involve risks, uncertainties and assumptions,
including industry and economic conditions, competition and other factors
discussed in this and our other filings with the SEC. If one or more of these
risks or uncertainties materialize or underlying assumptions prove incorrect,
actual outcomes may vary materially from those indicated. We will make
forward-looking statements in Items 1, 2, 5, 7 and 7A of this report. See
Disclosure Regarding Forward-Looking Statements at the end of Item 7 for a
description of some of the important factors that may affect actual outcomes.

General

Roberts Realty Investors, Inc. owns and operates multifamily residential
properties as a self-administered, self-managed equity real estate investment
trust, or REIT. We conduct our business through Roberts Properties
Residential, L.P., which we refer to as the operating partnership. The
operating partnership owns all our properties. As of March 19, 2003, Roberts
Realty owns a 71.0% interest in the operating partnership and is its sole
general partner. We expect to continue to conduct our business in this
organizational structure, which is sometimes called an umbrella partnership
or UPREIT.

As of March 19, 2003, we own:



| |  |  | seven existing multifamily apartment communities that are
stabilized containing a total of 1,632 apartment homes;                                                                    
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | one community containing 250 apartment homes that is completing its lease-up phase;                                                                                                  
|
| |  |  | one community under construction that will contain 319 apartment homes;                                                                                                              
|
| |  |  | a 10.9-acre site currently in the planning and design phase
on which we intend to build a 220-unit apartment community (referred
to in this report as the Northridge apartment land);
|
| |  |  | a 42,090 square foot retail center currently under
construction; and                                                                                                                 
|
| |  |  | a 39,907 square foot office building currently under
construction, a part of which we intend to use as our corporate
office building.                                                

Seven of our communities  Addison Place, Bradford Creek, Highland Park,
Plantation Trace, Preston Oaks, River Oaks, and St. Andrews at the Polo Club -
totaling 1,632 apartment homes, are stabilized. Veranda Chase, consisting of
250 apartment homes, is 82% leased as of March 19, 2003, and we expect it to be
stabilized in the second quarter of 2003. Construction of our Charlotte
community is progressing steadily, and we expect it to be substantially
complete by the fourth quarter of 2003. We

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anticipate leasing activity at our Charlotte community to begin in the
second quarter of 2003. All of our communities are located in metropolitan
Atlanta, Georgia, except the Charlotte community and St. Andrews at the Polo
Club, which is located in the city of Wellington, Palm Beach County, Florida.

We consider a community to have achieved stabilized occupancy on the
earlier of (a) attainment of 95% occupancy as of the first day of any month, or
(b) one year after completion of construction. As of March 19, 2003, our seven
stabilized communities totaling 1,632 apartment homes had a physical occupancy
rate of 88.8%.

We are constructing Addison Place Shoppes, a 42,090 square foot retail
center, located at the entrance to our Addison Place apartment community in
Alpharetta, Georgia. We expect to complete construction in the third quarter
of 2003. In June 2001, we purchased land and a partially constructed office
building on Northridge Parkway in North Fulton County, Georgia. When
construction of the office building is completed, which we expect to occur in
the third quarter of 2003, we will use a portion of the building as our
corporate headquarters and lease the remaining space to Roberts Properties,
Inc., Roberts Properties Construction, Inc. and unaffiliated tenants. We are
in the planning and design phase of the Northridge community.

In Atlanta, our primary market, negative job growth and historically low
mortgage interest rates have contributed to lower demand for apartments, while
the supply of multifamily units has increased. To maintain our physical
occupancy, we offer residents incentives in the form of concessions and lower
rents, which result in decreased revenues and income from operations. We
expect rent concessions and lower rents to continue for the foreseeable future,
and we cannot offer any assurances regarding the effects of these conditions on
our business or when multifamily market conditions might improve. To the
extent that these conditions continue and perhaps worsen, particularly in
Atlanta, our business, operating results and liquidity will be affected
adversely.

Our board of directors suspended payment of our quarterly dividends for
the fourth quarter of 2001 and for all four quarters of 2002. Based on current
conditions, the board voted to suspend payment of quarterly dividends for 2003.
In addition to experiencing lower occupancy and operating revenues at our
existing properties, we are completing a major growth program with three
properties under construction and one property in the planning and design
phase. In total, these four new properties required an investment of
approximately $12.5 million of our equity that is currently not producing any
cash flow. The decreased revenues, together with our growth program, have
resulted in decreased cash flow for our company. We believe that our reduced
cash flow from operations will abate, in part, as we finish the lease-up at
Veranda Chase and complete our new properties under development and
construction. Until there is a sustained and broad-based economic recovery
resulting in positive job growth, however, the Atlanta apartment market will
remain soft, and we will continue to experience the negative effects of lower
occupancy and lower rents.

Roberts Realty is a Georgia corporation formed in July 1994. We expect to
continue to qualify as a REIT for federal income tax purposes. A REIT is a
legal entity that holds real estate interests and, through its payment of
distributions, is able to reduce or avoid incurring federal income tax at the
corporate level. This structure allows shareholders to participate in real
estate investments without the double taxation of income  i.e., at both the
corporate and shareholder levels  that generally results from an investment in
shares of a corporation. To maintain our qualification as a REIT, we must,
among other things, distribute annually to our shareholders at least 90% of our
taxable income. Our common stock is traded on the American Stock Exchange
under the symbol RPI.

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We have engaged two entities owned by Mr. Charles S. Roberts, our Chairman
of the Board and Chief Executive Officer, to perform services for the operating
partnership. These entities are Roberts Properties, Inc. and Roberts
Properties Construction, Inc., which we sometimes refer to as the Roberts
Companies. The Roberts Companies developed and constructed all of our existing
communities, except (a) the 24-unit second phase of Preston Oaks, which was
constructed by an independent contractor, and (b) the 200-unit St. Andrews at
the Polo Club, which we acquired on November 6, 2001 while still in the
lease-up phase. We expect that affiliates of Mr. Roberts will continue to
develop and construct properties for us where feasible. Roberts Construction
is the general contractor of our Charlotte community and will oversee the
completion of construction. Roberts Construction began construction on both
the Addison Place Shoppes and the corporate office building before we purchased
them, and we have retained Roberts Construction to finish construction on these
projects. We have retained Roberts Properties to develop our Northridge
community.

Our executive offices are located at 8010 Roswell Road, Suite 120,
Atlanta, Georgia 30350, and our telephone number is (770) 394-6000. We do not
maintain a corporate website. As of March 19, 2003, we have 49 full-time
employees.

The Operating Partnership

We conduct our business and own all of our real estate assets through the
operating partnership. We control the operating partnership as its sole
general partner. Our ownership interest in the operating partnership entitles
us to share in cash distributions from, and in the profits and losses of, the
operating partnership generally in proportion to our ownership percentage. In
this report we refer to units of limited partnership interest in the operating
partnership as units. The holders of units include the former limited
partners in the limited partnerships that were merged into the operating
partnership; Mr. Roberts; and the former owner of a retail center we acquired
and later sold.

Holders of units in the operating partnership, sometimes referred to in
this report as unitholders, generally have the right to require the operating
partnership to redeem their units. A unitholder who submits units for
redemption will receive, at our election, either an equal number of shares or
cash for those units at their fair market value, based upon the then current
trading price of the shares. We have adopted a policy of issuing shares in
exchange for units. We also have the right, at our election, to issue shares
in exchange for all outstanding units. Our articles of incorporation limit
ownership by any one holder to 6% of the outstanding shares of our common
stock, other than by Mr. Roberts, who is limited to 25%. As a result,
unitholders cannot redeem their units if doing so would violate those ownership
limits. Shares issued for units are registered with the SEC and are freely
transferable, other than by affiliates.

Whenever we issue shares, we are obligated to contribute the net proceeds
from that issuance to the operating partnership, and the operating partnership
is obligated to issue the same number of units to us. The operating
partnership agreement permits the operating partnership, without the consent of
the unitholders, to sell additional units and add limited partners.

Growth Strategies

Our business plan and growth strategy are focused on creating cash flow
and capital appreciation by building and managing new apartment homes of the
highest quality and value in excellent high-growth neighborhoods. Our business
objective is to increase the long-term total return to our shareholders through
appreciation in the value of our common stock and the payment of quarterly
dividends. To achieve this objective, we are pursuing the following growth
strategies:

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| | (a) |  | maximize cash flow from operations by seeking through
intensive management to maintain high occupancy levels, obtain
regular rent increases, manage resident turnover efficiently and
control operating expenses; and
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | develop and/or acquire new multifamily apartment communities
in metropolitan Atlanta, North Carolina, Florida and other parts of
the Southeast.                                                                      

We will engage others, including the Roberts Companies, to help us pursue these
strategies, which are described in more detail below.

Property Management Strategy. We believe that managing our communities
intensively is a fundamental element of our growth strategy. As of March 19,
2003, we employ 41 property management personnel, including property managers,
leasing managers, leasing consultants, maintenance supervisors and technicians.
We believe our property management expertise will enable us to continue to
deliver quality services, thereby promoting resident satisfaction, maintaining
high resident retention, and enhancing the value of each of the communities.
Our property management strategy will continue to be:



| |  |  | to increase average occupancy and rental rates as market
conditions permit;                                                 
| | - |  | ----------------------------------------------------------------------------------------------------------------------------
|
| |  |  | to minimize resident turnover and delinquent rental payments
through strict review of each applicants creditworthiness; and
|
| |  |  | to control operating expenses and increase net operating
income at each of our communities.                                 

Development Strategy. We intend to continue to develop high quality
apartment communities for long-term ownership. During the past 18 years, the
Roberts Companies have developed, constructed, and/or managed over 4,400
residential units. We believe that the number and quality of the apartment
units developed by the Roberts Companies, the relationships Mr. Roberts and
employees of the Roberts Companies have developed with local permitting and
governmental authorities, and the Roberts Companies experience with the
development, construction and financing process will minimize the barriers to
new development often faced by less experienced developers and national
developers attempting to enter the Atlanta market. These barriers include
governmental growth control, a difficult rezoning and permitting process, and
the limited availability of well-located sites. We believe that these
restraints on construction, assuming substantial improvement in the Atlanta
economy, offer a continuing opportunity for us to achieve favorable long-term
returns on the development of well-located, high quality apartment home
communities.

We have retained Roberts Properties to develop our Northridge community.
We also expect that Roberts Properties will continue to develop other
communities for us in the future. Although the experience of the Roberts
Companies will be most helpful to us in the Atlanta area, we believe that their
experience will enable us to develop multifamily apartment communities in other
areas in the Southeast, including Charlotte and Palm Beach.

Although we presently intend to engage the Roberts Companies in our
development and construction activities, we may hire other development or
construction companies in Atlanta and elsewhere if we deem it to be in our best
interests to do so. The most likely development scenario for the operating
partnership is for it to acquire properties already under development from
Roberts Properties and/or an entity formed by Mr. Roberts or his affiliates.
We may engage the Roberts Companies to develop properties on a fee basis, we
may enter into joint venture agreements with the Roberts Companies or we may
acquire communities developed by the Roberts Companies and owned by other
affiliates of

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Mr. Roberts. We may also enter into similar arrangements with others who are
independent of Mr. Roberts.

In analyzing the potential development of a particular community, we will
evaluate geographic, demographic, economic, and financial data, including:



| |  |  | 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.                                                                          

We will also consider physical elements regarding a particular site, including
the probability of zoning approval (if required), availability of utilities and
infrastructure, and other physical characteristics of the site.

For information regarding the development and construction of our
Charlotte and Northridge communities, retail center and office building, see
Item 2, Properties.

Environmental and Other Regulatory Matters

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



| | (a) |  | remediation and removal costs; and                                                                        
| | --- |  | ----------------------------------------------------------------------------------------------------------
|
| | (b) |  | damages to persons or property arising from the existence or
maintenance of hazardous or toxic substances.

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

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Costs of Compliance with Americans with Disabilities Act and Similar Laws

Under the American with Disabilities Act of 1990, or the ADA, all places
of public accommodation are required to meet federal requirements related to
access and use by disabled persons. Although we believe that the communities
are substantially in compliance with present requirements of the ADA, we may
incur additional costs of complying with the ADA. A number of additional
federal, state and local laws may also require modifications to the
communities, or restrict further renovations to them, with respect to access by
disabled persons. For example, the Fair Housing Amendments Act of 1988
requires apartment communities first occupied after March 25, 1990 to be
accessible to the handicapped. Noncompliance with this Act could result in the
imposition of fines or an award of damages to private litigants. We believe
that our communities comply with that law.

Additional legislation may impose further burdens or restrictions on
owners with respect to access by disabled persons. We cannot estimate the
ultimate cost of compliance with the ADA or that legislation, and, while those
costs are not expected to have a material adverse effect on us, those costs
could be substantial. Limitations or restrictions on the completion of
renovations may limit application of our investment strategy in some instances
or reduce overall returns on our investments.

Insurance

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

The Terrorism Risk Insurance Act of 2002 was signed into law on November
26, 2002. The law provides that losses resulting from certified acts of
terrorism will be partially reimbursed by the United States after a statutory
deductible amount is paid by the insurance company providing coverage. The law
also requires that the insurance company offer coverage for terrorist acts for
an additional premium. We accepted the offer to include this coverage in our
property and casualty policies.

We believe that our properties are adequately covered by insurance. There
are, however, some types of losses (such as losses arising from acts of war)
that are not generally insured because they are either uninsurable or not
economically insurable. If an uninsured loss or a loss in excess of insured
limits occurs, we could lose our capital invested in a property, as well as the
anticipated future revenues from the property, and we would continue to be
obligated on any mortgage indebtedness or other obligations related to the
property. Any loss of that kind would adversely affect us.

Investment, Financing, and Conflict of Interest Policies

The investment policies, financing policies and conflict of interest
policies set by our board of directors are summarized below. Our board may
amend or revise them from time to time without a vote of our shareholders or
any vote of the partners of the operating partnership, except that:



| | (a) |  | 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
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| | (b) |  | 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. We conduct all of
our investment activities through the operating partnership and will do so for
so long as the operating partnership exists. (The agreement of limited
partnership of the operating partnership provides that it is not required to be
dissolved until 2093.) Our investment objectives are to achieve stable cash
flow available for distributions and, over time, to increase cash flow and
portfolio value by continuing to develop multifamily apartment communities for
long-term ownership as well as acquiring additional multifamily apartment
communities that we anticipate will produce additional cash flow.

Our policy is to develop assets where we believe that favorable investment
opportunities exist based on market conditions at the time of the investment.

We expect to pursue our investment objectives primarily through the direct
ownership of properties by the operating partnership, although, as discussed
below, we may also pursue indirect property ownership opportunities. We intend
to develop multifamily apartment communities primarily in the Atlanta
metropolitan area, Florida, and other parts of the Southeast. Future
development or investment activities will not be limited by our governing
documents to any geographic area, product type or specified percentage of our
assets.

Possible Acquisition of Communities Developed by Mr. Roberts or His
Affiliates. Mr. Roberts and Roberts Properties have been engaged in the
development of residential and commercial real estate since the early 1970s,
and Mr. Roberts expects that he and Roberts Properties will continue to engage
in real estate development. Provided that any transaction or agreement must
comply with the policies discussed under Conflict of Interest Policies, we
may engage in transactions of various types with Mr. Roberts, Roberts
Properties and/or other affiliates of Mr. Roberts to develop or acquire real
estate. Those transactions may include:



| |  |  | hiring Mr. Roberts or Roberts Properties to develop and
construct real estate under a fee arrangement;                                            
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | acquiring undeveloped property from Mr. Roberts or his
affiliates for future development; or                                                      
|
| |  |  | acquiring from Mr. Roberts or his affiliates partially or
completely constructed properties, whether in their lease-up phase
or already leased-up.

No particular arrangements have been determined, other than the communities now
under construction and development as described elsewhere in this report.

Securities of or Interest in Persons Primarily Engaged in Real Estate
Activities and Other Issuers. We and the operating partnership also may invest
in securities of other entities engaged in real estate activities or invest in
securities of other issuers, including investments by us and the operating
partnership for the purpose of exercising control over those entities. We or
the operating partnership may acquire all or substantially all of the
securities or assets of other REITs or similar entities where those investments
would be consistent with our investment policies. We do not currently intend
to invest in the securities of other issuers. In making any of the investments
described in this paragraph we intend to comply with the percentage of
ownership limitations and gross income tests necessary for REIT qualification
under the Internal Revenue Code. Also, we will not make any investments if the
proposed

8



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##### Table of Contents



investment would cause us or the operating partnership to be an investment
company under the Investment Company Act of 1940.

No Investments in Mortgages. We do not own any mortgages and do not
currently intend to invest in mortgages or to engage in originating, servicing
or warehousing mortgages.

Financing Policies

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

To the extent that the board of directors determines to seek additional
capital, we may raise capital through additional equity offerings, debt
financing or retention of cash flow or a combination of these methods. Our
retention of cash flow is subject to provisions in the Internal Revenue Code
requiring a REIT to distribute a specified percentage of taxable income, and we
must also take into account taxes that would be imposed on undistributed
taxable income. As long as the operating partnership is in existence, we will
contribute the net proceeds of all equity capital we raise to the operating
partnership in exchange for units or other interests in the operating
partnership.

We have not established any limit on the number or amount of mortgages on
any single property or on the operating partnerships portfolio as a whole.

Conflict of Interest Policies

The board of directors is subject to provisions of Georgia law that are
designed to eliminate or minimize potential conflicts of interest. We can give
no assurances, however, that these policies will always eliminate the influence
of those conflicts. If these policies are not successful, the board could make
decisions that might fail to reflect fully the interests of all shareholders.

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



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

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.

9



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##### Table of Contents



Other Policies

We and the operating partnership have authority to offer our securities
and to repurchase and otherwise reacquire our securities, and we may engage in
those activities in the future. We have adopted a policy that we will issue
shares to unitholders who exercise their rights of redemption. In the future,
we may make loans to joint ventures in which we participate to meet working
capital needs. We have not engaged in trading, underwriting, agency
distribution or sale of securities of other issuers, and we do not intend to do
so. We intend to make investments in a manner so that we will not be treated
as an investment company under the Investment Company Act of 1940.

In September 1998 our board authorized a stock repurchase plan. See Item
7, Managements Discussion and Analysis of Financial Condition and Results of
Operations  Stock Repurchase Plan, for an explanation of this plan and our
repurchases of our shares since 1998.

At all times, we intend to make investments in a manner to be consistent
with the requirements of the Internal Revenue Code for us to qualify as a REIT
unless, because of changing circumstances or changes in the Internal Revenue
Code or in applicable regulations, the board of directors decides that it is no
longer in our best interests to qualify as a REIT.

For a description of the competition in our markets, see Item 2,
Properties  Competition.

10



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##### Table of Contents






ITEM 2. PROPERTIES.

General

As of March 19, 2003, we own:



| |  |  | seven existing multifamily apartment communities that are
stabilized containing a total of 1,632 apartment homes;                                                                    
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | one community containing 250 apartment homes that is completing its lease-up phase;                                                                                                  
|
| |  |  | one community under construction that will contain 319 apartment homes;                                                                                                              
|
| |  |  | a 10.9-acre site currently in the planning and design phase
on which we intend to build a 220-unit apartment community (referred
to in this report as the Northridge apartment land);
|
| |  |  | a 42,090 square foot retail center currently under
construction; and                                                                                                                 
|
| |  |  | a 39,907 square foot office building currently under
construction, a part of which we intend to use as our corporate
headquarters.                                                   

We sold our 9.5-acre East Fox Court land on November 21, 2002. We sold
our 152-unit Rosewood Plantation community on January 4, 2001, and our 334-unit
Crestmark community on July 11, 2001. We acquired the 200-unit St. Andrews at
the Polo Club on November 6, 2001.

We believe that in the long-term the demand for multifamily housing in
Atlanta will increase due to Atlantas growing population, although recent job
losses in Atlanta have resulted in a weaker apartment market. According to the
Atlanta Regional Commission, which we refer to as the ARC, both population and
job growth in Atlanta are projected to be above the national average for the
foreseeable future. The ARC is the regional planning and governmental
coordination agency for the 10-county Atlanta Region, which is composed of
Fulton, DeKalb, Gwinnett, Cobb, Clayton, Rockdale, Henry, Douglas, Cherokee and
Fayette counties. Its information also includes Coweta, Forsyth and Paulding
counties.

The following information is based on statistical estimates published by
the ARC. The estimated population of the Atlanta Region increased by 46.8%
from 2,653,600 persons in 1990 to 3,895,200 persons in 2002, making it one of
the largest metropolitan areas in the country and the largest in the Southeast.
The population of the Atlanta Region is projected to grow 8.4% from 3,895,200
persons in 2002 to 4,223,300 persons in 2010.

Housing units in the Atlanta Region increased an estimated 30.5%, from
1,052,430 units in 1990 to 1,373,058 units in 2000. Multifamily homes in the
Atlanta Region increased 21.7% from 342,441 units in 1990 to 416,682 units in
2000. The Atlanta Region added 14,823 multifamily units in 2002 and 16,237
units in 2001.

11



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##### Table of Contents



The following table summarizes basic information about our communities.

|                                                     |  |                      |  |           |           |           |  |               |       |               |  |           |           |      |  |                   |       |            |  |                      |       |                  |  |   |      |  |  |  |      |   |  | 
|---------------------------------------------------- |  | -------------------- |  | --------- | --------- | --------- |  | ------------- | ----- | ------------- |  | --------- | --------- | ---- |  | ----------------- | ----- | ---------- |  | -------------------- | ----- | ---------------- |  | - | ---- |  |  |  | ---- | - |  | 
|                                                     |  |                      |  |           |           |           |  |               |       |               |  |           |           |      |  |                   |       |            |  |                      |       | December 2002    |  |   |      | 
|                                                     |  |                      |  |           |           | Year      |  |               |       |               |  |           |           |      |  |                   |       |            |  | Average Rental Rates |       | Average Physical
|                                                     |  |                      |  |           |           | Completed |  | Number        |       | Approximate   |  | Average   |           |      |  | Occupancy for the
|                                                     |  |                      |  |           |           | or to be  |  | of            |       | Rentable Area |  | Unit Size |           |      |  |                   |       | Per Square |  | 12 Months Ended     
|Community                                            |  | Location             |  | Completed |           | Units     |  | (Square Feet) |       | (Square Feet) |  | Per Unit  |           | Foot |  | Dec. 31, 2002    
|                                                     |  |                      |  |           |           |           |  |               |       |               |  |           |           |      |  |                  
|Existing Communities:                                |  |                      |  |           |           |           |  |               |       |               |  |           |           |      |  |                   |       |            |  |                      |       |                  |  |   |      |  |  |  |      |   |  | 
|                                                     |  |                      |  |           |           |           |  |               |       |               |  |           |           |      |  |                   |       |            |  |                      |       |                  |  |   |      |  |  |  |      |   |  | 
|Plantation Trace(1)                                  |  | Atlanta              |  |           | 1990/1998 |           |  |               | 232   |               |  |           | 310,956   |      |  |                   | 1,340 |            |  | $                    | 968   |                  |  | $ | 0.72 |  |  |  | 80.6 | %
|                                                     |  |                      |  |           |           |           |  |               |       |               |  |           |           |      |  |                   |       |            |  |                      |       |                  |  |   |      |  |  |  |      |   |  | 
|River Oaks                                           |  | Atlanta              |  |           | 1992      |           |  |               | 216   |               |  |           | 276,208   |      |  |                   | 1,279 |            |  |                      | 929   |                  |  |   | 0.73 |  |  |  | 95.8 | %
|                                                     |  |                      |  |           |           |           |  |               |       |               |  |           |           |      |  |                   |       |            |  |                      |       |                  |  |   |      |  |  |  |      |   |  | 
|Preston Oaks(2)                                      |  | Atlanta              |  |           | 1995/1998 |           |  |               | 213   |               |  |           | 257,180   |      |  |                   | 1,207 |            |  |                      | 1,025 |                  |  |   | 0.85 |  |  |  | 97.0 | %
|                                                     |  |                      |  |           |           |           |  |               |       |               |  |           |           |      |  |                   |       |            |  |                      |       |                  |  |   |      |  |  |  |      |   |  | 
|Highland Park                                        |  | Atlanta              |  |           | 1995      |           |  |               | 188   |               |  |           | 231,634   |      |  |                   | 1,232 |            |  |                      | 974   |                  |  |   | 0.79 |  |  |  | 95.9 | %
|                                                     |  |                      |  |           |           |           |  |               |       |               |  |           |           |      |  |                   |       |            |  |                      |       |                  |  |   |      |  |  |  |      |   |  | 
|Bradford Creek                                       |  | Atlanta              |  |           | 1998      |           |  |               | 180   |               |  |           | 243,941   |      |  |                   | 1,355 |            |  |                      | 952   |                  |  |   | 0.70 |  |  |  | 94.3 | %
|                                                     |  |                      |  |           |           |           |  |               |       |               |  |           |           |      |  |                   |       |            |  |                      |       |                  |  |   |      |  |  |  |      |   |  | 
|Addison Place(3)                                     |  | Atlanta              |  |           | 1999/2001 |           |  |               | 403   |               |  |           | 603,506   |      |  |                   | 1,498 |            |  |                      | 1,103 |                  |  |   | 0.74 |  |  |  | 69.9 | %
|                                                     |  |                      |  |           |           |           |  |               |       |               |  |           |           |      |  |                   |       |            |  |                      |       |                  |  |   |      |  |  |  |      |   |  | 
|St. Andrews
at the Polo Club(4)                      |  | Palm BeachCounty, FL |  |           | 2001      |           |  |               | 200   |               |  |           | 309,073   |      |  |                   | 1,545 |            |  |                      | 1,327 |                  |  |   | 0.86 |  |  |  | 87.2 | %
|                                                     |  |                      |  |           |           |           |  |               |       |               |  |           |           |      |  |                   |       |            |  |                      |       |                  |  |   |      |  |  |  |      |   |  | 
|Veranda Chase(5)                                     |  | Atlanta              |  |           | 2002      |           |  |               | 250   |               |  |           | 329,572   |      |  |                   | 1,318 |            |  |                      | 860   |                  |  |   | 0.65 |  |  |  | N/A  |  
|                                                     |  |                      |  |           |           |           |  |               |       |               |  |           |           |      |  |                   |       |            |  |                      |       |                  |  |   |      |  |  |  |      |   |  | 
|                                                     |  |                      |  |           |           |           |  |               |       |               |  |           |           |      |  |                   |       |            |  |                      |       |                  |  |   |      |  |  |  |      |   |  | 
|                                                     |  | Subtotal/Average     |  |           |           |           |  |               | 1,882 |               |  |           | 2,562,070 |      |  |                   | 1,361 |            |  |                      |       |                  |  |   |      |  |  |  |      |  
|                                                     |  |                      |  |           |           |           |  |               |       |               |  |           |           |      |  |                   |       |            |  |                      |       |                  |  |   |      |  |  |  |      |   |  | 
|Communities and
Other Properties Under Construction: |  |                      |  |           |           |           |  |               |       |               |  |           |           |      |  |                   |       |            |  |                      |       |                  |  |  
|                                                     |  |                      |  |           |           |           |  |               |       |               |  |           |           |      |  |                   |       |            |  |                      |       |                  |  |   |      |  |  |  |      |   |  | 
|Charlotte                                            |  | Charlotte            |  |           | 2003      |           |  |               | 319   |               |  |           | 411,110   |      |  |                   | 1,289 |            |  |                      | N/A   |                  |  |   | N/A  |  |  |  | N/A  |  
|                                                     |  |                      |  |           |           |           |  |               |       |               |  |           |           |      |  |                   |       |            |  |                      |       |                  |  |   |      |  |  |  |      |   |  | 
|Addison Shoppes                                      |  | Atlanta              |  |           | 2003      |           |  |               | N/A   |               |  |           | 42,090    |      |  |                   | N/A   |            |  |                      | N/A   |                  |  |   | N/A  |  |  |  | N/A  |  
|                                                     |  |                      |  |           |           |           |  |               |       |               |  |           |           |      |  |                   |       |            |  |                      |       |                  |  |   |      |  |  |  |      |   |  | 
|Northridge Office Building                           |  | Atlanta              |  |           | 2003      |           |  |               | N/A   |               |  |           | 39,907    |      |  |                   | N/A   |            |  |                      | N/A   |                  |  |   | N/A  |  |  |  | N/A  |  



---

|(1) |  | Plantation Trace was completed in two phases. The 182-unit first phase
was completed in 1990 and the 50-unit second phase was completed in 1998.                                  
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Preston Oaks was completed in two phases. The 189-unit first phase was
completed in 1995 and the 24-unit second phase was completed in 1998.                                      
|   
|(3) |  | Addison Place was completed in two phases. The 118-unit first phase of
Addison Place was completed in October 1999, and the 285-unit second phase
was completed in September 2001.
|   
|(4) |  | St. Andrews at the Polo Club was purchased on November 6, 2001. The
200-unit community was purchased during its initial lease-up phase.                                           
|   
|(5) |  | Veranda Chase was completed in November 2002 and is in its lease-up
phase. For this reason, its 12-month historical occupancy is not
comparable.                                  

12



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##### Table of Contents



Annual operating data regarding our stabilized communities at December
31, 2002 are summarized in the following table. The second phases of Preston
Oaks, Plantation Trace and Addison Place are described separately for this
purpose. Except for those figures noted with an asterisk, the occupancy rates
shown represent the average physical occupancy of the applicable community
calculated by dividing the total number of vacant days by the total possible
number of vacant days for each year and then subtracting the resulting number
from 100%. The figures noted with asterisks reflect the applicable data on
December 31 of the specified year and are not annualized because the
applicable community was under construction and in its initial lease-up period
during at least a portion of that year. During lease-up, units are leased as
they are constructed and made ready for occupancy building by building, thus
annualization of data is not possible during that period. Throughout this
table, N/A means not applicable, i.e., no unit in the community was
available to be occupied during the relevant year.

|                  |  |                   |       |                         |  |      |     |      |  |      |     |      |  |      |      |         |  |      |      |         |  |      |      |         |  |                                       |        |         |  |      |       |         |  |      |     |  |  |   |      |  |  |   |        |  |  |   |       |  |  |   |        |  |  |   |       |  |  |   |       |  |  |   |      | 
|----------------- |  | ----------------- | ----- | ----------------------- |  | ---- | --- | ---- |  | ---- | --- | ---- |  | ---- | ---- | ------- |  | ---- | ---- | ------- |  | ---- | ---- | ------- |  | ------------------------------------- | ------ | ------- |  | ---- | ----- | ------- |  | ---- | --- |  |  | - | ---- |  |  | - | ------ |  |  | - | ----- |  |  | - | ------ |  |  | - | ----- |  |  | - | ----- |  |  | - | ---- | 
|                  |  |                   |       |                         |  |      |     |      |  |      |     |      |  |      |      |         |  |      |      |         |  |      |      |         |  | Average Effective Annual Rental Rates
|                  |  |                   |       |                         |  |      |     |      |  |      |     |      |  |      |      |         |  |      |      |         |  |      |      |         |  |                                      
|                  |  |                   |       |                         |  |      |     |      |  |      |     |      |  |      |      |         |  |      |      |         |  |      |      |         |  | 1998                                  |        | 1999    |  | 2000 |       | 2001    |  | 2002
|                  |  | Month             |       | Physical Occupancy Rate |  |      |     |      |  |      |     |      |  |     
|                  |  | Completed Initial |       |                         |  | Per  |     | Per  |  | Per  |     | Per  |  | Per  |      | Per     |  | Per  |      | Per     |  | Per  |      | Per    
|Community         |  | Lease up          |       | 1998                    |  | 1999 |     | 2000 |  | 2001 |     | 2002 |  | Unit |      | Sq. Ft. |  | Unit |      | Sq. Ft. |  | Unit |      | Sq. Ft. |  | Unit                                  |        | Sq. Ft. |  | Unit |       | Sq. Ft.
|                  |  |                   |       |                         |  |      |     |      |  |      |     |      |  |      |      |         |  |      |      |         |  |      |      |         |  |                                       |        |         |  |      |       |        
|Plantation        |  |                   | 9/90  |                         |  |      | 94  | %    |  |      | 90  | %    |  |      | 93.7 | %       |  |      | 90.0 | %       |  |      | 80.6 | %       |  | $                                     | 867    |         |  | $    | 0.69  |         |  | $    | 956 |  |  | $ | 0.71 |  |  | $ | 994    |  |  | $ | 0.74  |  |  | $ | 1,030  |  |  | $ | 0.77  |  |  | $ | 978   |  |  | $ | 0.73 | 
|Trace             |  |                   |       |                         |  |      |     |      |  |      |     |      |  |      |      |         |  |      |      |         |  |      |      |         |  |                                       |        |         |  |      |       |         |  |      |     |  |  |   |      |  |  |   |        |  |  |   |       |  |  |   |        |  |  |   |       |  |  |   |       |  |  |   |      | 
|                 
|Plantation        |  |                   | 11/98 |                         |  |      | 92  | %*   |  |      | N/A |      |  |      | N/A  |         |  |      | N/A  |         |  |      | N/A  |         |  | $                                     | 1,171* |         |  | $    | 0.72* |         |  |      | N/A |  |  |   | N/A  |  |  |   | N/A    |  |  |   | N/A   |  |  |   | N/A    |  |  |   | N/A   |  |  |   | N/A   |  |  |   | N/A  | 
|Trace Phase II(1) |  |                   |       |                         |  |      |     |      |  |      |     |      |  |      |      |         |  |      |      |         |  |      |      |         |  |                                       |        |         |  |      |       |         |  |      |     |  |  |   |      |  |  |   |        |  |  |   |       |  |  |   |        |  |  |   |       |  |  |   |       |  |  |   |      | 
|                 
|River Oaks        |  |                   | 2/93  |                         |  |      | 98  | %    |  |      | 93  | %    |  |      | 97.3 | %       |  |      | 94.0 | %       |  |      | 95.8 | %       |  | $                                     | 910    |         |  | $    | 0.71  |         |  | $    | 930 |  |  | $ | 0.73 |  |  | $ | 953    |  |  | $ | 0.75  |  |  | $ | 983    |  |  | $ | 0.77  |  |  | $ | 925   |  |  | $ | 0.72 | 
|                 
|Preston Oaks      |  |                   | 8/95  |                         |  |      | 98  | %    |  |      | 98  | %    |  |      | 98.2 | %       |  |      | 97.1 | %       |  |      | 97.0 | %       |  | $                                     | 981    |         |  | $    | 0.79  |         |  | $    | 994 |  |  | $ | 0.82 |  |  | $ | 1,038  |  |  | $ | 0.86  |  |  | $ | 1,079  |  |  | $ | 0.89  |  |  | $ | 1,033 |  |  | $ | 0.86 | 
|                 
|Preston Oaks      |  |                   | 7/98  |                         |  |      | 100 | %*   |  |      | N/A |      |  |      | N/A  |         |  |      | N/A  |         |  |      | N/A  |         |  | $                                     | 799*   |         |  | $    | 0.83* |         |  |      | N/A |  |  |   | N/A  |  |  |   | N/A    |  |  |   | N/A   |  |  |   | N/A    |  |  |   | N/A   |  |  |   | N/A   |  |  |   | N/A  | 
|Phase II(1)       |  |                   |       |                         |  |      |     |      |  |      |     |      |  |      |      |         |  |      |      |         |  |      |      |         |  |                                       |        |         |  |      |       |         |  |      |     |  |  |   |      |  |  |   |        |  |  |   |       |  |  |   |        |  |  |   |       |  |  |   |       |  |  |   |      | 
|                 
|Highland Park     |  |                   | 3/96  |                         |  |      | 97  | %    |  |      | 97  | %    |  |      | 97.7 | %       |  |      | 94.0 | %       |  |      | 95.9 | %       |  | $                                     | 920    |         |  | $    | 0.75  |         |  | $    | 950 |  |  | $ | 0.77 |  |  | $ | 986    |  |  | $ | 0.80  |  |  | $ | 1,023  |  |  | $ | 0.83  |  |  | $ | 965   |  |  | $ | 0.78 | 
|                 
|Bradford          |  |                   | 8/98  |                         |  |      | 94  | %*   |  |      | 93  | %    |  |      | 93.6 | %       |  |      | 94.1 | %       |  |      | 94.3 | %       |  | $                                     | 926*   |         |  | $    | 0.68* |         |  | $    | 949 |  |  | $ | 0.70 |  |  | $ | 987    |  |  | $ | 0.73  |  |  | $ | 1,024  |  |  | $ | 0.76  |  |  | $ | 956   |  |  | $ | 0.71 | 
|                 
|Creek             |  |                   |       |                         |  |      |     |      |  |      |     |      |  |      |      |         |  |      |      |         |  |      |      |         |  |                                       |        |         |  |      |       |         |  |      |     |  |  |   |      |  |  |   |        |  |  |   |       |  |  |   |        |  |  |   |       |  |  |   |       |  |  |   |      | 
|                 
|Addison Place     |  |                   | 5/00  |                         |  |      | N/A |      |  |      | N/A |      |  |      | 97.4 | %*      |  |      | 90.3 | %       |  |      | 69.9 | %       |  |                                       | N/A    |         |  |      | N/A   |         |  |      | N/A |  |  |   | N/A  |  |  | $ | 1,288* |  |  | $ | 0.76* |  |  | $ | 1,335  |  |  | $ | 0.79  |  |  | $ | 1,127 |  |  | $ | 0.75 | 
|Phase             |  |                   |       |                         |  |      |     |      |  |      |     |      |  |      |      |         |  |      |      |         |  |      |      |         |  |                                       |        |         |  |      |       |         |  |      |     |  |  |   |      |  |  |   |        |  |  |   |       |  |  |   |        |  |  |   |       |  |  |   |       |  |  |   |      | 
|                 
|Addison Place     |  |                   | 9/02  |                         |  |      | N/A |      |  |      | N/A |      |  |      | N/A  |         |  |      | 63.6 | %*      |  |      | N/A  |         |  |                                       | N/A    |         |  |      | N/A   |         |  |      | N/A |  |  |   | N/A  |  |  |   | N/A    |  |  |   | N/A   |  |  | $ | 1,148* |  |  | $ | 0.81* |  |  |   | N/A   |  |  |   | N/A  | 
|Phase II(1)       |  |                   |       |                         |  |      |     |      |  |      |     |      |  |      |      |         |  |      |      |         |  |      |      |         |  |                                       |        |         |  |      |       |         |  |      |     |  |  |   |      |  |  |   |        |  |  |   |       |  |  |   |        |  |  |   |       |  |  |   |       |  |  |   |      | 
|                 
|St. Andrews       |  |                   | 11/02 |                         |  |      | N/A |      |  |      | N/A |      |  |      | N/A  |         |  |      | N/A  |         |  |      | 87.2 | %       |  |                                       | N/A    |         |  |      | N/A   |         |  |      | N/A |  |  |   | N/A  |  |  |   | N/A    |  |  |   | N/A   |  |  |   | N/A    |  |  |   | N/A   |  |  | $ | 1,346 |  |  | $ | 0.87 | 



---

|(1) |  | Plantation Trace Phase II completed its lease-up phase in November 1998
and Preston Oaks Phase II completed its lease-up in August 1998.
Beginning with 1999, both phases of Plantation Trace and Preston Oaks are
combined. Addison Place Phase II completed its lease-up in September
2002; beginning with 2002, both phases are combined.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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As described below, our Atlanta communities are located in Gwinnett and
Fulton counties and four submarkets, or geographic areas, within these
counties. We also have one community in Charlotte and one in Palm Beach
County, Florida. The Charlotte community now under construction and St.
Andrews at the Polo Club are described after the Georgia properties. Each
heading identifies the community or communities within the specified county and
submarket. We obtained population and employment data for each Atlanta
submarket from the ARC. Multiple communities are located in each of the Duluth
and Perimeter Center/North Springs submarkets; thus those communities compete
not only with unaffiliated apartment communities but also with each other.

Gwinnett County

Gwinnett County was one of the fastest growing counties in the U.S. in the
1980s, and from 1985 until 1990 it ranked first in the nation in growth among
counties with a population of more than 100,000. From 1990 to 2002, Gwinnetts
population has increased 79.2% to 638,800 persons. Gwinnetts strong
employment base, transportation networks, excellent public education system and
affordable home prices contribute to the countys growth. Gwinnett is home to
approximately 235 international firms, over 860 manufacturing and 1,300 high
technology firms that generate many of its 364,196 jobs. The average household
income of the county is approximately $91,000. Gwinnett County is home to our
communities located in the City of Duluth and unincorporated Gwinnett.

Duluth Area 
Plantation Trace, River Oaks and Bradford Creek Communities

Duluth. The City of Duluth is located in western Gwinnett County and is
home to our Plantation Trace, River Oaks and Bradford Creek communities.
Duluth has exceeded even Gwinnett County as a whole in percentage of population
growth; its population has increased more than 200% since 1990. Duluth is
located just west of I-85 and Gwinnett Place Mall, a 1,100,000 square foot
regional mall.

Plantation Trace. Plantation Trace is a 232-unit garden apartment
community that was completed in two phases: a 182-unit first phase in 1990 and
a 50-unit second phase in 1998, sometimes referred to below as Phase II.
Plantation Trace consists of 31 two and three story Nantucket-style stone and
wood sided buildings located on a 29.2-acre site on Pleasant Hill Road
approximately one-half mile west of its intersection with Peachtree Industrial
Boulevard. In 1990, the 182-unit first phase received the Aurora Award from
the Southeast Builders Conference for Best Rental Apartment Community in the
Southeast.

The Plantation Trace community, with its award-winning traditional
architecture and landscaped grounds, features a clubhouse, a modern fitness and
exercise facility, two lighted tennis courts, sand volleyball court,
multi-station playground, two free-form swimming pools, a small wading pool, a
stone paver pool deck and a covered whirlpool spa. In addition to upscale
amenities, Plantation Trace offers such interior features as nine foot
ceilings, crown molding, pickled wood cabinetry in the kitchen and bath, marble
vanity tops, fireplaces, vaulted ceilings and Palladian windows in select
units, designer wallcoverings and full laundry rooms with washer and dryer
connections. Phase II provides the Plantation Trace community direct access to
the Chattahoochee River, as well as to jogging trails around the existing lake
and nature areas along the river.

Plantation Trace has a variety of floor plans, including 28 one-bedroom
units ranging from 901 to 929 square feet, 48 two-bedroom standard and 66
two-bedroom roommate units ranging from 1,228 to 1,298 square feet and 40
three-bedroom units ranging from 1,471 to 1,494 square feet. Phase II contains
7 one-bedroom units of approximately 966 square feet each, 6 two-bedroom units
of approximately 1,433 square feet each, 18 two-bedroom townhouses of
approximately 1,490 square feet each, 12 three-bedroom

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townhouses of approximately 1,948 square feet each, 7 four-bedroom townhouses
of approximately 2,314 square feet each and 33 garages of 200 square feet each.
The weighted average unit size is 1,340 square feet. As of December 31, 2002,
rental rates ranged from $699 to $1,736 per month, with a weighted average
monthly rent of $968 per unit and $0.72 per square foot. Local real estate
taxes were $224,000 in 2002. The physical occupancy rate for the entire
Plantation Trace community as of December 31, 2002 was 80.4%.

River Oaks. River Oaks, which was completed in 1992, consists of 22 two
and three story Charleston-style brick and wood sided buildings located on a
31.6 acre site on Pleasant Hill Road adjacent to the Chattahoochee River to the
west and the Plantation Trace community to the east. The River Oaks community,
with its traditional architecture and landscaped grounds, features a large
clubhouse with a fitness center, two lighted tennis courts, sand volleyball
court, multi-station playground, free-form swimming pool, stone paver pool deck
and whirlpool spa. In addition to upscale amenities, River Oaks offers such
interior features as nine foot ceilings, crown molding, garden tubs, pickled
pine cabinetry in the kitchen and bath, marble vanity tops, fireplaces and
vaulted ceilings in select units, designer wallcoverings and full laundry rooms
with washer and dryer connections.

River Oaks has a variety of floor plans, including 40 one-bedroom units at
approximately 907 square feet, 32 two-bedroom roommate units, 24 two-bedroom
deluxe units, 48 two-bedroom standard units ranging from 1,276 to 1,309 square
feet and 72 three-bedroom units with approximately 1,457 square feet. The
weighted average unit size is 1,279 square feet. As of December 31, 2002, the
community was 94.2% occupied, and rental rates ranged from $729 to $973 per
month, with a weighted average monthly rent of $929 per unit and $0.73 per
square foot. Local real estate taxes were $201,000 in 2002.

Bradford Creek. Bradford Creek, which was completed in 1998, consists of
9 two and three story buildings located on an approximately 22.5 acre property
near the southeast corner of Peachtree Industrial Boulevard and Howell Ferry
Road in Duluth, approximately one-mile southeast of Plantation Trace and River
Oaks. The Bradford Creek community, with its unique mountain lodge
architecture and traditional landscaping, features a large clubhouse with a
fitness center, clubroom, laundry room, two lighted tennis courts, free-form
swimming pool, stone paver pool deck, a 12-acre nature area, a courtyard
highlighted by a water fountain and a gated entrance. In addition to the
upscale amenities, Bradford Creek offers such interior features as nine foot
ceilings and a computer room in select units, crown moldings, garden tubs,
white raised-panel cabinetry in the kitchen and bath, marble vanity tops,
breakfast bars, designer wallcoverings and full laundry rooms with washer and
dryer connections. Each building was constructed using cobblestone and vinyl
siding and offers private patios or balconies along with gables and varying
paint colors.

Bradford Creek contains 28 one-bedroom units of approximately 990 square
feet each, 46 two-bedroom standard units of approximately 1,302 square feet
each, 47 two-bedroom roommate units of approximately 1,344 square feet each and
59 three-bedroom units of approximately 1,579 square feet each. The weighted
average unit size is 1,355 square feet. As of December 31, 2002, the community
was 91.7% occupied, and rental rates ranged from $750 to $1,070 per month,
resulting in a weighted average monthly rent of $952 per unit and $0.70 per
square foot. Local real estate taxes were $176,000 in 2002.

Unincorporated
Gwinnett  Veranda Chase (formerly Old Norcross)p

Veranda Chase.The Veranda Chase community, completed in 2002, is located
on a 35.3 acre site at the intersection of Old Norcross Road and Herrington
Road in unincorporated Gwinnett County near the western Lawrenceville area. It
is near I-85, GA-316 and Gwinnett Place Mall, a 1,100,000 square foot regional
mall. This community consists of 15 two and three story buildings and has 250

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garden-style apartments. It includes details such as stacked stone accents,
traditional siding and oversized porches in each unit. Amenities include a
clubhouse, exercise room with weight equipment, swimming pool, lighted tennis
court, childrens playground, extensive nature trails along beautiful streams
and private wooded views.

Veranda Chase has 73 one-bedroom units of approximately 970 square feet
each, 45 two-bedroom standard units of approximately 1,334 square feet each, 66
two-bedroom roommate units of approximately 1,378 square feet each, and 66
three-bedroom units of approximately 1,633 square feet each. The weighted
average unit size is 1,318 square feet. As of December 31, 2002, the community
was in its initial lease-up period and was 50.1% occupied. Rental rates range
from $699 to $1,040 per month, resulting in a weighted average monthly rent of
$860 per unit and $0.65 per square foot. Local real estate taxes were $146,000
in 2002.

Fulton County

Fulton County is the largest county in the Atlanta Region in terms of
population, employment, housing units and land area.

Perimeter Center/North Springs Area  Preston Oaks. Highland Park and
Northridge Communities

Perimeter Center/North Springs. The Perimeter Center/North Springs area
offers convenient proximity and access to both urban and suburban employment
bases and retail conveniences. Georgia 400 and I-285 provide direct access
within minutes to major regional malls such as North Point Mall and Perimeter
Center Mall. The Phipps Plaza/Lenox Mall/Buckhead area and downtown Atlantas
Central Business District are readily accessible via the Georgia 400 extension,
which connects to I-85 South near downtown Atlanta.

Within this corridor is a large base of residential, commercial and office
developments. The south quadrant of the area includes medical facilities such
as Northside Hospital, St. Josephs Hospital and Childrens Healthcare of
Atlanta. Perimeter Center encompasses office developments that exceed
18,500,000 square feet of space, with such upscale facilities as Ravinia,
Northpark Town Center, Concourse and Perimeter Center Office Park. Several
prominent companies such as InterContinental Hotels Group, UPS and
Hewlett-Packard have located their worldwide or regional headquarters within
the Perimeter Center area.

This area, which includes portions of Fulton and DeKalb Counties, has an
average household income of approximately $111,532, which is considerably
higher than the metropolitan Atlanta average of $58,568. The median value of a
single-family home in this area exceeds $200,000.

Preston Oaks. Preston Oaks is a 213-unit garden apartment community that
was completed in two phases: a 189-unit first phase in August 1995 and a
24-unit second phase in 1998. Preston Oaks consists of nine two and three
story buildings located on Mt. Vernon Highway in the Perimeter Center area.
The traditional architecture consists of stacked stone and vinyl siding
incorporating details of gabled roofs, Palladian windows, columns and bay
windows.

The community is located on an 11.5-acre site and features extensive
landscaping. The amenities are similar to those of our other existing
communities, with custom swimming pool, lighted tennis court, fitness center
with individual workout stations and a large clubhouse. Interior features
include garden tubs, oversized walk-in closets, pickled pine cabinetry in the
kitchen and bath, crown molding, mirrored walls and chair railing in the dining
rooms. Phase one consists of 36 one-bedroom units, 92 two-bedroom

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units and 61 three-bedroom units. Phase two consists of 24 one-bedroom
apartment units with 902 square feet each. The weighted average unit size is
1,207 square feet.

Preston Oaks is conveniently located less than one mile from Perimeter
Mall, a 1,200,000 square foot regional mall, and in close proximity to the
areas numerous office developments. Several stand-alone restaurants and major
retail centers either exist or are being developed near the community.

As of December 31, 2002, Preston Oaks was 98.1% occupied, and its rental
rates ranged from $784 to $1,119 per month, resulting in a weighted average
monthly rent of $1,025 per unit and $0.85 per square foot. Local real estate
taxes were $226,000 in 2002.

Highland Park. This community consists of 188 upscale apartment units in
a total of eight buildings on a 10.9-acre site. Located on Dunwoody Place in
the North Springs area of Sandy Springs, Highland Park benefits from its close
proximity to Georgia 400, which provides direct access within minutes to major
retail and employment areas to the north such as North Point Mall and the
Windward mixed use project, and to the south such as Perimeter Mall and
Perimeter Center.

Highland Park has 42 one-bedroom units with 902 square feet, 32
two-bedroom standard units with 1,225 square feet, 62 two-bedroom roommate
units with 1,285 square feet and 52 three-bedroom units with 1,440 square feet.
The weighted average unit size is 1,232 square feet.

The buildings are of a traditional design with stacked stone accents and
vinyl siding with the facades varying from building to building. Exterior
features include gables, bay windows, various paint colors with white trim and
private patios or balconies. Extensive landscaping includes mature trees,
flowers and shrubbery. The interiors feature crown molding in the
living/dining rooms, designer wallcoverings, separate laundry rooms, breakfast
bars, garden tubs and private balconies. Recreational amenities include a
swimming pool, tennis court and fitness center.

As of December 31, 2002, Highland Park was 95.7% occupied, and its monthly
rental rates ranged from $739 to $1,050 per month, resulting in a weighted
average monthly rent of $974 per unit and $0.79 per square foot. Local real
estate taxes were $186,000 in 2002.

Northridge.The Northridge community will be located on a 10.9 acre site
located adjacent to the Highland Park community. We intend to construct a
220-unit upscale apartment community consisting of one- and two-bedroom
apartments with covered parking for residents. We expect to start construction
by the end of 2003, and we estimate the total cost to be approximately $24
million.

Alpharetta Area
 Addison Place

Alpharetta. The Alpharetta area offers convenient proximity and access to
both urban and suburban employment bases and retail conveniences. Georgia 400
provides direct access within minutes to major regional malls such as North
Point Mall and Perimeter Center Mall. The Phipps Plaza/Lenox Mall/Buckhead
area and downtown Atlantas Central Business District are readily accessible
via the Georgia 400 extension, which connects to I-85 South near downtown
Atlanta.

Within this corridor is a large base of residential, commercial and office
developments. North Point Malls success accelerated the already high rate of
residential development, which caters to the upscale consumer. North Fultons
prestigious neighborhoods have been a major factor in the emergence of the
Georgia 400 corridor as a center for corporate headquarters. Between 1990 and
2002, North Fulton added approximately 143,000 residents and 54,272 housing
units. The average household income of North Fulton County in 2002 was
$111,000. The Windward project, which straddles Georgia 400, is the

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regions largest mixed-use development. Based on our market research, we
believe North Fulton County has been adversely affected by the recent economic
downturn. Our indicators include, among others, unemployment rates, apartment


vacancies, business failures and mortgage foreclosures.

Addison Place Phases I and II.Addison Place is a 403-unit community
located on Abbotts Bridge Road near the intersection of Abbotts Bridge and
Jones Bridge roads. The first phase contains 118 townhouses consisting of 60
two-bedroom townhouses of approximately 1,497 square feet each and 58
three-bedroom townhouses of approximately 1,903 square feet each. The second
phase of Addison Place contains 285 garden-style apartment homes. It includes
11 different floor plans, including 60 one-bedroom units ranging from 765 to
1,034 square feet, 147 two-bedroom units ranging from 1,150 to 1,550 square
feet, 58 three-bedroom units at approximately 1,706 square feet and 20
four-bedroom units at approximately 2,074 square feet, along with 40
direct-entry garages. The weighted average unit size is 1,498 square feet.
The buildings are of a traditional design with stacked stone accents, brick and
vinyl siding. The community features two swimming pools, a modern fitness and
exercise facility, a business center, mens and womens saunas and a
playground.

As of December 31, 2002, Addison Place was 75.6% occupied, and its monthly
rental rates ranged from $695 to $1,619 per month, with a weighted average
monthly rent of $1,103 per unit and $0.74 per square foot. Local real estate
taxes were $351,000 in 2002.

Charlotte, North Carolina

The following information is based on statistics and estimates published
by the Charlotte Chamber of Commerce. Between 1990 and 2002, Mecklenburg
Countys population grew from 511,363 to 746,427 persons. It is projected to
grow to 1,015,141 persons by 2011. Employment has grown 363,640 in 2002. Nine
of the nations top 200 banks operate in Charlotte, including Bank of America,
N.A. and Wachovia Corporation (formerly First Union Corporation). Other major
employers include Carolinas Healthcare System, Charlotte-Mecklenburg School
System, Duke Energy Corporation and USAirways. Additionally, 286 of the
nations largest industrial and service corporations listed by FORTUNE magazine
have facilities in the area.

Our Charlotte community is located on a 23.8-acre site at the intersection
of Lancaster Highway (old NC-521) and John J. Delaney Drive in the Ballantyne
area, the largest mixed-use development in Mecklenburg County. This community
will have 319 garden-style apartments, consisting of 110 one-bedroom units
ranging from 766 square feet to 1,030 square feet, 143 two-bedroom units
ranging from 1,144 square feet to 1,550 square feet, 48 three-bedroom units at
1,783 square feet and 18 four-bedroom units at 2,081 square feet, along with 36
direct-entry garages. The weighted average unit size is 1,289 square feet. We
estimate the cost of construction on this development to be approximately
$30,800,000, of which $24,000,000 is being funded with a construction loan that
we obtained in February 2002. The community is located near I-485 and I-77,
which offers convenient access to downtown Charlotte and I-85.

Palm Beach County, Florida  St. Andrews at the Polo Club

According to the Palm Beach Development Board, Palm Beach County is the
third most populated county in Florida behind Dade and Broward counties to the
south. The population of Palm Beach County grew from 870,000 persons in 1990
to 1,165,000 persons in 2001, a 34% increase, and is projected to grow to
1,500,000 persons by 2005. It is considered the most affluent county in
Florida. West Palm Beach and Boca Raton are the two largest cities in the
county, with the downtown West Palm Beach area undergoing a multi-billion
dollar renaissance, which includes the recently completed mixed-use project
City Place.

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St. Andrews at the Polo Club.St. Andrews at the Polo Club community is
located on a 13.7-acre site adjacent to the Palm Beach Polo and Country Club in
Wellington, Palm Beach County, Florida. The property is conveniently located
1.5 miles from The Mall at Wellington Green, a new 1.3 million square foot
regional mall that opened in October 2001. The 200-unit community includes 160
garden apartments and 40 townhouse units, and each of the 200 units has its own
garage. The interiors of each apartment include luxurious features such as
nine- and ten-foot-high ceilings, wood-burning fireplaces, crown molding,
glass-enclosed showers and a top-of-the-line General Electric appliance
package. Amenities for the residents include a swimming pool, spa and gazebo
bar area, business center, indoor racquetball court, lighted tennis court and
clubhouse with a fitness center.

The unit mix includes 80 two-bedroom garden apartments ranging from 1,223
square feet to 1,404 square feet, 80 three-bedroom garden apartments ranging
from 1,492 square feet to 1,627 square feet, and 40 townhouses of approximately
1,427 square feet each. The weighted average unit size is 1,545 square feet.
As of December 31, 2002, the property was 90.7% occupied. Rental rates ranged
from $975 to $1,492 per month, resulting in a weighted average monthly rent of
$1,327 per unit and $0.86 per square foot. Local real estate taxes were
$560,000 in 2002.

The table on the following page summarizes the amenities of each of the
existing communities and of our Charlotte community, which is now under
construction.

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##### Table of Contents



Summary of Amenities of the Communities

|                              |  |         |     |          |  |        |  |         |  |           |  |          |  |         |  |        |  |      |  |          |  |            |  |        |  |         |  |       |  |                                 |  |  |  |  |  |      |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 
|----------------------------- |  | ------- | --- | -------- |  | ------ |  | ------- |  | --------- |  | -------- |  | ------- |  | ------ |  | ---- |  | -------- |  | ---------- |  | ------ |  | ------- |  | ----- |  | ------------------------------- |  |  |  |  |  | ---- |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 
|                              |  | Patio,  |     | Washer   |  |        |  |         |  |           |  |          |  |         |  |        |  |      |  |          |  | Club-house |  |        |  |         |  |       |  |                                 |  |  |  |  |  | Sand |  |  |  |  |  |  |  |  |  |  |  | 
|                              |  | Porch   |     | & Dryer  |  | Garden |  | Fire-   |  | Vaulted   |  | Swimming |  | Fitness |  | Whirl- |  | Car  |  | Tennis   |  | Volley-    |  | Play-  |  | Laundry |  |       |  |                                
|Community                     |  | Balcony |     | Hook-ups |  | Tubs   |  | Places* |  | Ceilings* |  | Pool     |  | Center  |  | pool   |  | Wash |  | Court(s) |  | ball       |  | ground |  | Room    |  | Other
|                              |  |         |     |          |  |        |  |         |  |           |  |          |  |         |  |        |  |      |  |          |  |            |  |        |  |         |  |      
|Existing Communities:         |  |         |     |          |  |        |  |         |  |           |  |          |  |         |  |        |  |      |  |          |  |            |  |        |  |         |  |       |  |                                 |  |  |  |  |  |      |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 
|                             
|Plantation Trace              |  |         | Yes |          |  | Yes    |  | Yes(1)  |  | Yes(2)    |  | Yes      |  | Yes     |  | Yes    |  | Yes  |  | Yes      |  | Yes        |  | Yes    |  | Yes     |  | Yes   |  | Riverfront.Lake, NaturePreserve
|                             
|River Oaks                    |  |         | Yes |          |  | Yes    |  | Yes     |  | Yes       |  | Yes      |  | Yes     |  | Yes    |  | Yes  |  | Yes      |  | Yes        |  | Yes    |  | Yes     |  | Yes   |  | Riverfront,Nature Preserve     
|                             
|Preston Oaks                  |  |         | Yes |          |  | Yes    |  | Yes     |  | No        |  | Yes      |  | Yes     |  | Yes    |  | No   |  | Yes      |  | Yes        |  | No     |  | No      |  | Yes   |  |                                 |  | 
|                             
|Highland Park                 |  |         | Yes |          |  | Yes    |  | Yes     |  | No        |  | Yes      |  | Yes     |  | Yes    |  | No   |  | Yes      |  | Yes        |  | No     |  | No      |  | Yes   |  |                                 |  | 
|                             
|Bradford Creek                |  |         | Yes |          |  | Yes    |  | Yes     |  | No        |  | Yes      |  | Yes     |  | Yes    |  | No   |  | Yes      |  | Yes        |  | No     |  | No      |  | Yes   |  | Nature Preserve                
|                             
|Addison Place                 |  |         | Yes |          |  | Yes    |  | Yes     |  | No        |  | Yes      |  | Yes     |  | Yes    |  | No   |  | Yes      |  | Yes        |  | No     |  | Yes(1)  |  | Yes   |  | Lake, Nature Trail             
|                             
|St. Andrews at The Polo Club  |  |         | Yes |          |  | Yes    |  | Yes     |  | Yes       |  | Yes      |  | Yes     |  | Yes    |  | Yes  |  | No       |  | Yes        |  | No     |  | No      |  | Yes   |  | Located next to golf course    
|                             
|Veranda Chase                 |  |         | Yes |          |  | Yes    |  | Yes     |  | No        |  | Yes      |  | Yes     |  | Yes    |  | No   |  | Yes      |  | Yes        |  | No     |  | Yes     |  | Yes   |  | Nature Trail                   
|                             
|Community Under Construction: |  |         |     |          |  |        |  |         |  |           |  |          |  |         |  |        |  |      |  |          |  |            |  |        |  |         |  |       |  |                                 |  |  |  |  |  |      |  |  |  |  |  |  |  |  |  |  |  |  |  | 
|                             
|Charlotte                     |  |         | Yes |          |  | Yes    |  | Yes     |  | Yes       |  | No       |  | Yes     |  | Yes    |  | No   |  | Yes      |  | Yes        |  | No     |  | No      |  | Yes   |  | Walking Trail, Two Lakes       

* In select units
(1) Phase II only
(2) Phase I only

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Competition

All of the communities are located in developed areas, and numerous other
apartment projects are located within the market area of each community. The
number of competitive apartment communities in the area could have a material
adverse effect on our ability to lease our apartments at the rental rates
anticipated, and we can give no assurances regarding the development of
additional competing multifamily communities in the future. The remainder of
this section summarizes the competition for each of the communities. The
following information reflects our study of apartment communities in each
submarket that we believe to be closely competitive with our community or
communities within that submarket. This section includes summary information
we obtained from various sources  including developers and real estate
brokers, as well as on-site visits  regarding those apartment communities.
Although we have attempted to verify the information and believe that it is
substantially accurate on the whole, information regarding a particular
community may be incorrect due to the sources relied upon or erroneous
information supplied by competitors.

Plantation Trace, River Oaks and Bradford Creek.The Duluth submarket,
which we consider to include the area within a two mile radius from these
communities, currently consists of approximately 19 multifamily communities,
including River Oaks, Plantation Trace and Bradford Creek. Although the
Bridgewater apartment community  which was previously developed and sold by an
affiliate of Mr. Roberts  is located more than two miles from Plantation
Trace, it is also included in the Duluth market area because it offers units
with attached garages and its architecture and amenities are similar to
Plantation Trace. Of the approximately 19 existing communities in the area,
seven were completed in the last five years, including Bradford Creek and the
second phase of Plantation Trace. Due to the quality of construction, age of
the communities, type of amenities, resident profiles and rental rates, we
believe that only 11 of the other 16 communities are in direct competition with
Plantation Trace, River Oaks and Bradford Creek.

Preston Oaks.We believe that the north central Perimeter multifamily
submarket includes the area within a two-mile radius around this community. It
is generally bounded by Roswell Road to the west, Ashford Dunwoody Road to the
east, Spalding Drive to the north and Glenridge Drive to the south, and it
currently consists of approximately 26 multifamily communities, including
Preston Oaks. Of the 25 other existing communities in the market area, only
six were built before 1983. The remaining 19 communities range from
approximately one to 11 years of age. We believe that Preston Oaks competes
with all 25 of these communities.

Highland Park and Northridge.We believe the North Springs multifamily
submarket includes the area within an approximately two-mile radius around this
community. It is generally bounded by the Chattahoochee River to the north and
west, Georgia 400 to the east and Dalrymple Road to the south, and currently
consists of 34 communities, including Highland Park. Of the approximately 34
existing communities in the market area, only five have been built since 1989.
The remaining communities range in age from 15 years to over 20 years. We
believe Highland Park draws residents from all of the other 33 communities
located in the market area, but only 11 of the 33 communities compete closely
with Highland Park.

Addison Place.We believe the Alpharetta multifamily submarket includes
the area within an approximately two-mile radius around the Abbotts Bridge
community. It is generally bounded by the Chattahoochee River to the east, Old
Alabama to the south, Georgia 400 to the west and Windward Parkway to the
north, and it currently consists of approximately 17 communities, including
Addison Place. We believe that Addison Place draws residents from all of the
approximately 16 other communities located in the market area, which compete
closely with Addison Place.

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Veranda Chase. We believe the Veranda Chase multifamily submarket
includes the area within an approximately two-mile radius around the Veranda
Chase community. It is generally bounded by Herrington Road to the east, Club
Drive to the south, Steve Reynolds Boulevard to the west and Sugarloaf Parkway
to the north and east, and it currently consists of approximately 24
communities, including Veranda Chase. We believe that Veranda Chase draws
residents from all of the approximately 23 other communities located in the
market area, but due to their amenities, quality of construction and resident
profile, only seven of the 23 other communities compete closely with Veranda
Chase.

Charlotte. We consider the Charlotte multifamily submarket to include the
area within an approximately two-mile radius around the community. It is
generally bounded by the Providence Road to the east, Providence Road West to
the south, Lancaster Highway (old NC-521) to the west and I-485 to the north,
and it currently consists of approximately nine communities, including our
community. We believe that once construction of our Charlotte community is
complete, it will draw residents from all of the approximately eight other
existing communities located in the market area.

St. Andrews at the Polo Club. We consider the West Palm Beach County
submarket to include the area within an approximate three mile radius around
the community. It is generally bordered by the Florida Turnpike to the east,
Lake Worth Road to the south, and Okechobee Road to the north. The submarket
consists of six existing apartment communities (including ours), and one new
community currently under construction. Of our six competitors, four were
built during the last five years. St. Andrews competes with five of the six
communities in its market area.

Summary of Debt Secured by Our Properties

See Item 7, Managements Discussion and Analysis of Financial Condition
and Results of Operations  Liquidity and Capital Resources  Debt Summary
Schedule, for an explanation of our current debt structure, including for each
loan: the principal balance at March 19, 2003 and at its scheduled maturity,
interest rate, maturity date, amortization schedule and monthly principal and
interest payment.

Possible Additional Communities to Be Developed

From time to time Roberts Properties plans the development of other
apartment communities to be located on property owned by Roberts Properties or
other affiliates of Mr. Roberts, or on property that one of those entities is
interested in acquiring. Mr. Roberts may elect to raise the required equity by
syndicating a limited partnership or limited liability company. Alternatively,
we may seek to raise the equity required to purchase and develop the community
by selling shares. If Mr. Roberts elects to raise equity through a limited
partnership or limited liability company, Mr. Roberts may seek to cause the
partnership to be merged into the operating partnership at a later date. A
transaction of that nature would require the consent of a majority in interest
of the limited partners of the partnership and of a majority of the
disinterested members of our board of directors, and we can give no assurances
regarding whether Mr. Roberts will ultimately determine to seek a merger in
that manner, or whether such a merger would in fact be approved by the
requisite majority in interest of limited partners in the partnership and by a
majority of the disinterested members of the Board.

See Item 13, Certain Relationships and Related Transactions  Payments to
the Roberts Companies, for more information about the payment of fees to the
Roberts Companies in connection with the development and construction of the
Charlotte and Northridge communities.

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Other Real Estate Assets

In addition to the communities, we also own a retail center and a
corporate office building, both of which are under construction. Addison Place
Shoppes is a 42,090 square foot retail center at the intersection of Abbotts
Bridge Road and Jones Bridge Road in Alpharetta, Georgia and located directly
in front of our Addison Place apartment community. We entered into a cost plus
5% contract with Roberts Construction to build the Addison Place Shoppes, which
we expect to be completed by the third quarter of 2003.

On June 28, 2001, we acquired a partially constructed office building
located adjacent to our Highland Park community and to our Northridge land on
which we are developing a new community. The three story, 39,907 square foot
building will serve as our corporate headquarters, and we will lease the
remaining space to Roberts Properties, Roberts Construction and unaffiliated
tenants. We have entered into a fixed cost contract with Roberts Construction
to construct the building for $4,670,000, of which $1,616,000 was incurred at
closing. We also intend to retain Roberts Construction to perform tenant
finish work for approximately $600,000. Roberts Construction will construct
the building and the tenant finish work for cost. We expect construction of
the office building will be substantially complete by the third quarter of
2003. We expect to begin leasing activities in the second quarter of 2003.

See Item 13, Certain Relationships and Related Transactions  Payments to
the Roberts Companies, for more information about the payment of fees to the
Roberts Companies in connection with the development and construction of these
projects.




ITEM 3. LEGAL PROCEEDINGS.

Neither Roberts Realty, the operating partnership nor the communities are
presently subject to any material litigation nor, to our knowledge, is any
material litigation threatened against any of them. Routine litigation arising
in the ordinary course of business is not expected to result in any material
losses to us or the operating partnership.




ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matter was submitted to a vote of security holders during the fourth quarter of 2002.

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PART II




ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Our common stock trades on the American Stock Exchange, or AMEX, under the
symbol RPI. The following table sets forth the quarterly high and low
closing sales prices per share reported on the AMEX during 2002 and 2001, as
well as the quarterly dividends declared per share:

|               |  |      |      |     |  |          |       |  |  |           |      | 
|-------------- |  | ---- | ---- | --- |  | -------- | ----- |  |  | --------- | ---- | 
|               |  |      |      |     |  |          |       |  |  | Dividends
|Quarter Ended  |  | High |      | Low |  | Declared
|               |  |      |      |     |  |         
|2002           |  |      |      |     |  |          |       |  |  |           |      | 
|First Quarter  |  | $    | 7.25 |     |  | $        | 6.60  |  |  | None     
|Second Quarter |  |      | 8.22 |     |  |          | 7.35  |  |  | None     
|Third Quarter  |  |      | 7.35 |     |  |          | 6.45  |  |  | None     
|Fourth Quarter |  |      | 6.75 |     |  |          | 5.90  |  |  | None     
|               |  |      |      |     |  |          |       |  |  |           |      | 
|2001           |  |      |      |     |  |          |       |  |  |           |      | 
|First Quarter  |  | $    | 8.06 |     |  | $        | 7.875 |  |  | $         | 0.11 | 
|Second Quarter |  |      | 8.29 |     |  |          | 7.75  |  |  |           | 0.11 | 
|Third Quarter  |  |      | 8.88 |     |  |          | 7.99  |  |  |           | 0.11 | 
|Fourth Quarter |  |      | 8.49 |     |  |          | 6.25  |  |  | None     

On March 19, 2003, there were approximately 405 holders of record of the
common stock.

As of March 19, 2003, we had 5,128,293 shares outstanding (excluding
shares held in treasury). In addition, 2,095,280 shares are reserved for
issuance to unitholders from time to time upon their exercise of redemption
rights as explained in Item 1, Description of Business  The Operating
Partnership. There is no established public trading market for the units. As
of March 19, 2003, the operating partnership had 238 unitholders of record.

We depend upon distributions from the operating partnership to fund our
distributions to shareholders. Distributions by the operating partnership, and
thus distributions by us, will continue to be at the discretion of the board of
directors and will be equal in amount for each unit and share. We and the
operating partnership declared no distributions for 2002.

Our board of directors has suspended payment of our quarterly dividends
for the fourth quarter of 2001 and for all four quarters of 2002. Based on
current conditions, the board voted to suspend payment of quarterly dividends
for 2003. In addition to experiencing lower occupancy and operating revenues
at our existing properties, we are completing a major growth program with three
properties under construction and one property in the planning and design
phase. In total, these four new properties required an investment of
approximately $12.5 million of our equity that is currently not producing any
cash flow. The decreased revenues, together with our growth program, have
resulted in decreased cash flow for our company. We believe that our reduced
cash flow from operations will abate, in part, as we finish the lease-up at
Veranda Chase and complete our new properties under development and
construction. Until there is a sustained and broad-based economic recovery
resulting in positive job growth, however, the Atlanta apartment market will
remain soft and we will continue to experience the negative effects of lower
occupancy and lower rents.

To maintain our qualification as a REIT under the Internal Revenue Code,
we must make annual distributions to shareholders of at least 90% of our
taxable income, which does not include net capital gains. Under some
circumstances, we may be required to make distributions in excess of cash
available for distribution to meet those distribution requirements.

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During the fourth quarter of 2002, we issued a total of 5,440 shares of
restricted common stock to seven employees as incentive compensation. The
restrictions on transfer lapse at specified dates three years after the
respective grant date. The grants were exempt from registration as private
placements under section 4(2) of the Securities Act. We affixed appropriate
legends to the share certificates we issued in these transactions. All
recipients of these securities had adequate access, through their relationships
with us, to information about us. All of these securities are deemed to be
restricted securities for purposes of the Securities Act.

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ITEM 6. SELECTED FINANCIAL DATA.

OPERATING DATA:
(Dollars in Thousands, Except Per Share Amounts)

|                                                                                                                                    |                                                                                            |                |        |                          |        |      |       |        |        |      |       |        |        |   |       |        |        |   |       |        |        | 
|----------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------ | -------------- | ------ | ------------------------ | ------ | ---- | ----- | ------ | ------ | ---- | ----- | ------ | ------ | - | ----- | ------ | ------ | - | ----- | ------ | ------ | 
|                                                                                                                                    |                                                                                            |                |        | YEARS ENDED DECEMBER 31,
|                                                                                                                                    |                                                                                            |                |        |                         
|                                                                                                                                    |                                                                                            |                |        | 2002                     |        | 2001 |       | 2000   |        | 1999 |       | 1998  
|                                                                                                                                    |                                                                                            |                |        |                          |        |      |       |        |        |      |       |       
|OPERATING DATA:                                                                                                                     |                                                                                            |                |        |                          |        |      |       |        |        |      |       |        |        |   |       |        |        |   |       |       
|REVENUES:                                                                                                                           |                                                                                            |                |        |                          |        |      |       |        |        |      |       |        |        |   |       |        |        |   |       |       
|                                                                                                                                    | Rental operations                                                                          |                | $      | 17,935                   |        |      | $     | 17,070 |        |      | $     | 18,768 |        |   | $     | 18,163 |        |   | $     | 16,521 |       
|                                                                                                                                    | Other operating income                                                                     |                |        | 1,076                    |        |      |       | 1,155  |        |      |       | 1,410  |        |   |       | 1,221  |        |   |       | 833    |       
|                                                                                                                                    |                                                                                            |                |        |                          |        |      |       |        |        |      |       |        |        |   |       |        |        |   |       |       
|                                                                                                                                    |                                                                                            | Total revenues |        |                          | 19,011 |      |       |        | 18,225 |      |       |        | 20,178 |   |       |        | 19,384 |   |       |        | 17,354 | 
|                                                                                                                                    |                                                                                            |                |        |                          |        |      |       |        |        |      |       |        |        |   |       |        |        |   |       |       
|EXPENSES:                                                                                                                           |                                                                                            |                |        |                          |        |      |       |        |        |      |       |        |        |   |       |        |        |   |       |       
|                                                                                                                                    | Property operating and maintenance expense (exclusive of
depreciation and amortization)(1) |                |        | 7,620                    |        |      |       | 6,125  |        |      |       | 6,759  |        |   |       | 6,688  |        |   |       | 6,192  |       
|                                                                                                                                    | Depreciation of real estate assets                                                         |                |        | 7,001                    |        |      |       | 5,501  |        |      |       | 5,463  |        |   |       | 5,529  |        |   |       | 5,017  |       
|                                                                                                                                    | Interest expense                                                                           |                |        | 6,951                    |        |      |       | 5,086  |        |      |       | 4,951  |        |   |       | 5,244  |        |   |       | 4,555  |       
|                                                                                                                                    | Interest income                                                                            |                |        | (39                      | )      |      |       | (263   | )      |      |       | (214   | )      |   |       | (159   | )      |   |       | (384   | )     
|                                                                                                                                    | Amortization of deferred financing costs                                                   |                |        | 336                      |        |      |       | 219    |        |      |       | 209    |        |   |       | 219    |        |   |       | 139    |       
|                                                                                                                                    | Other amortization expense                                                                 |                |        | 0                        |        |      |       | 0      |        |      |       | 0      |        |   |       | 11     |        |   |       | 52     |       
|                                                                                                                                    | General and administrative expense                                                         |                |        | 2,155                    |        |      |       | 1,732  |        |      |       | 2,197  |        |   |       | 1,964  |        |   |       | 1,727  |       
|                                                                                                                                    | Loss on disposal of assets                                                                 |                |        | 33                       |        |      |       | 27     |        |      |       | 83     |        |   |       | 81     |        |   |       | 94     |       
|                                                                                                                                    |                                                                                            |                |        |                          |        |      |       |        |        |      |       |        |        |   |       |        |        |   |       |       
|                                                                                                                                    |                                                                                            | Total expenses |        |                          | 24,057 |      |       |        | 18,427 |      |       |        | 19,448 |   |       |        | 19,577 |   |       |        | 17,392 | 
|                                                                                                                                    |                                                                                            |                |        |                          |        |      |       |        |        |      |       |        |        |   |       |        |        |   |       |       
|INCOME (LOSS) BEFORE MINORITY INTEREST, GAINS ON SALE
OF REAL ESTATE ASSETS AND EXTRAORDINARY ITEMS                                 |                                                                                            |                | (5,046 | )                        |        |      | (202  | )      |        |      | 730   |        |        |   | (193  | )      |        |   | (38   | )     
|MINORITY INTEREST OF UNITHOLDERS
IN THE OPERATING PARTNERSHIP                                                                       |                                                                                            |                | 1,589  |                          |        |      | 66    |        |        |      | (246  | )      |        |   | 70    |        |        |   | 15    |       
|INCOME (LOSS) BEFORE GAINS ON SALE OF REAL ESTATE
ASSETS AND EXTRAORDINARY ITEMS                                                    |                                                                                            |                | (3,457 | )                        |        |      | (136  | )      |        |      | 484   |        |        |   | (123  | )      |        |   | (23   | )     
|GAINS ON SALE OF REAL ESTATE ASSETS, net of minority interest
of unitholders in the operating partnership                           |                                                                                            |                | 941    |                          |        |      | 7,981 |        |        |      | 2,416 |        |        |   | 1,023 |        |        |   | 1,218 |       
|INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS                                                                                            |                                                                                            |                | (2,516 | )                        |        |      | 7,845 |        |        |      | 2,900 |        |        |   | 900   |        |        |   | 1,195 |       
|EXTRAORDINARY ITEMS, loss on early extinguishments of debt, net
of minority interest of unitholders in the operating partnership(2) |                                                                                            |                | 0      |                          |        |      | (405  | )      |        |      | (68   | )      |        |   | (184  | )      |        |   | (487  | )     
|                                                                                                                                    |                                                                                            |                |        |                          |        |      |       |        |        |      |       |        |        |   |       |        |        |   |       |       
|Net income (loss)                                                                                                                   |                                                                                            | $              | (2,516 | )                        |        | $    | 7,440 |        |        | $    | 2,832 |        |        | $ | 716   |        |        | $ | 708   |       
|                                                                                                                                    |                                                                                            |                |        |                          |        |      |       |        |        |      |       |        |        |   |       |        |        |   |       |       
|INCOME (LOSS) PER COMMON SHARE  BASIC AND DILUTED:                                                                                 |                                                                                            |                |        |                          |        |      |       |        |        |      |       |        |        |   |       |        |        |   |       |       
|                                                                                                                                    | Income (loss) before extraordinary items                                                   |                | $      | (0.51                    | )      |      | $     | 1.61   |        |      | $     | 0.59   |        |   | $     | 0.19   |        |   | $     | 0.26   |       
|                                                                                                                                    | Extraordinary items                                                                        |                |        | 0.00                     |        |      |       | (0.08  | )      |      |       | (0.01  | )      |   |       | (0.04  | )      |   |       | (0.11  | )     
|                                                                                                                                    |                                                                                            |                |        |                          |        |      |       |        |        |      |       |        |        |   |       |        |        |   |       |       
|                                                                                                                                    | Net income (loss)                                                                          |                | $      | (0.51                    | )      |      | $     | 1.53   |        |      | $     | 0.58   |        |   | $     | 0.15   |        |   | $     | 0.15   |       
|                                                                                                                                    |                                                                                            |                |        |                          |        |      |       |        |        |      |       |        |        |   |       |        |        |   |       |       
|                                                                                                                                    | Dividends declared(3)                                                                      |                | $      | 0.0000                   |        |      | $     | 0.3300 |        |      | $     | 0.7400 |        |   | $     | 1.0850 |        |   | $     | 0.5775 |       

Footnotes are on the following page.

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|                    |                                                               |  |              |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |           |  
|------------------- | ------------------------------------------------------------- |  | ------------ | --------- | ---- |  | ---- | --------- | ---- |  | ---- | --------- | - |  | - | --------- | - |  | - | --------- | -
|                    |                                                               |  | December 31,
|                    |                                                               |  |             
|                    |                                                               |  | 2002         |           | 2001 |  | 2000 |           | 1999 |  | 1998
|                    |                                                               |  |              |           |      |  |      |           |      |  |     
|BALANCE SHEET DATA: |                                                               |  |              |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |          
|                    | Real estate assets, before accumulated depreciation           |  | $            | 164,217   |      |  | $    | 141,786   |      |  | $    | 123,680   |   |  | $ | 128,898   |   |  | $ | 122,830   |  
|                    | Real estate assets, net of accumulated depreciation           |  |              | 135,988   |      |  |      | 120,323   |      |  |      | 99,619    |   |  |   | 107,869   |   |  |   | 105,916   |  
|                    | Total assets                                                  |  |              | 179,007   |      |  |      | 165,503   |      |  |      | 131,529   |   |  |   | 127,078   |   |  |   | 125,090   |  
|                    | Total debt                                                    |  |              | 137,417   |      |  |      | 120,581   |      |  |      | 93,690    |   |  |   | 88,850    |   |  |   | 79,973    |  
|                    | Minority interest of unitholders in the operating partnership |  |              | 9,361     |      |  |      | 11,996    |      |  |      | 10,607    |   |  |   | 12,013    |   |  |   | 15,579    |  
|                    | Shareholders equity                                          |  |              | 22,479    |      |  |      | 25,374    |      |  |      | 21,437    |   |  |   | 22,310    |   |  |   | 26,526    |  
|OTHER DATA:         |                                                               |  |              |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |          
|                    | Cash flow provided from (used in):                            |  |              |           |      |  |      |           |      |  |      |           |   |  |   |           |   |  |   |           |  
|                    | Operating activities                                          |  | $            | 2,619     |      |  | $    | 5,986     |      |  | $    | 6,485     |   |  | $ | 5,917     |   |  | $ | 5,295     |  
|                    | Investing activities                                          |  |              | (16,071   | )    |  |      | (49,684   | )    |  |      | (11,565   | ) |  |   | (7,003    | ) |  |   | (18,235   | )
|                    | Financing activities                                          |  |              | 16,377    |      |  |      | 44,820    |      |  |      | 4,902     |   |  |   | (1,347    | ) |  |   | 9,929     |  
|                    | Net increase (decrease) in cash and cash equivalents          |  |              | 2,925     |      |  |      | 1,122     |      |  |      | (178      | ) |  |   | (2,433    | ) |  |   | (3,011    | )
|                    | Cash and cash equivalents, beginning of year                  |  |              | 2,617     |      |  |      | 1,495     |      |  |      | 1,673     |   |  |   | 4,106     |   |  |   | 7,117     |  
|                    | Cash and cash equivalents, end of year                        |  |              | 5,542     |      |  |      | 2,617     |      |  |      | 1,495     |   |  |   | 1,673     |   |  |   | 4,106     |  
|                    | Funds from operations(4)                                      |  | $            | 1,988     |      |  | $    | 5,326     |      |  | $    | 6,276     |   |  | $ | 5,417     |   |  | $ | 5,114     |  
|                    | Weighted average common shares outstanding  basic            |  |              | 4,943,280 |      |  |      | 4,870,117 |      |  |      | 4,881,601 |   |  |   | 4,737,008 |   |  |   | 4,638,265 |  
|                    | Weighted average common shares outstanding  diluted          |  |              | 7,220,593 |      |  |      | 7,226,123 |      |  |      | 7,367,068 |   |  |   | 7,448,757 |   |  |   | 7,547,978 |  
|                    | Total stabilized communities (at end of year)                 |  |              | 7         |      |  |      | 5         |      |  |      | 8         |   |  |   | 9         |   |  |   | 9         |  
|                    | Total stabilized apartments (at end of year)                  |  |              | 1,632     |      |  |      | 1,029     |      |  |      | 1,633     |   |  |   | 1,779     |   |  |   | 1,778     |  
|                    | Average physical occupancy (stabilized communities)(5)        |  |              | 86.2      | %    |  |      | 93.3      | %    |  |      | 95.9      | % |  |   | 93.7      | % |  |   | 96.3      | %



---

|(1) |  | Property operating expenses include personnel, utilities, real
estate taxes, insurance, maintenance, landscaping, marketing and
property administration expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The extraordinary items resulted from costs associated with the
early extinguishment of indebtedness. The extraordinary items have
been reduced by the portion related to the minority interest of the
unitholders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|(3) |  | We began paying dividends and distributions on our common stock and
units beginning on April 15, 1996.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(4) |  | Funds from Operations, or FFO, is defined by the National
Association of Real Estate Investment Trusts as net income (loss),
computed in accordance with accounting principles generally accepted
in the United States (GAAP), excluding gains (or losses) from debt
restructuring and sales of property and non-recurring items, plus real
estate related depreciation and amortization. We use the current
NAREIT definition of FFO. Effective January 1, 2000, NAREIT amended
its definition of FFO to include all non-recurring items, except those
defined as extraordinary items under GAAP and gains and losses from
sales of depreciable operating property. We consider FFO to be an
important measure of our operating performance; however, FFO does not
represent amounts available for managements discretionary use for
payment of capital replacement or expansion, debt service obligations,
property acquisitions, development and distributions or other
commitments and uncertainties. FFO should not be considered as an
alternative to net income (determined in accordance with GAAP) as an
indication of our financial performance or cash flows from operating
activities (determined in accordance with GAAP) as a measure of our
liquidity, nor is it indicative of funds available to fund our cash
needs, including our ability to make distributions. We consider FFO
to be an important measure of our operating performance. While FFO
does not represent cash flows from operating, investing or financing
activities as defined by GAAP, FFO does provide investors with
additional information with which to evaluate the ability of a REIT to
pay dividends, meet required debt service payments and fund capital
expenditures. We believe that to gain a clear understanding of our
operating results, FFO should be evaluated in conjunction with net
income (determined in accordance with GAAP). FFO represents funds
from operations available for shareholders and unitholders. See Item
7, Managements Discussion and Analysis of Financial Condition and
Results of Operations  Supplemental Disclosure of Funds From
Operations, for a reconciliation of net income to FFO.
|   
|(5) |  | 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%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

27



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##### Table of Contents






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

Overview

We own multifamily residential properties as a self-administered and
self-managed equity real estate investment trust. At December 31, 2002, we
owned seven completed and stabilized multifamily apartment communities,
consisting of 1,632 apartment homes and one other completed community in
lease-up consisting of 250 apartment homes. Also, we have a community under
construction consisting of 319 apartment homes, which when completed, will
increase the size of our portfolio to 2,201 apartment homes.

In Atlanta, our primary market, negative job growth and historically low
mortgage interest rates have contributed to lower demand for apartments, while
the supply of multifamily units has increased. As of December 31, 2002, our
average stabilized occupancy was 87.8%. To maintain our physical occupancy we
offer residents incentives in the form of concessions and lower rents, which
result in decreased revenues and income from operations. We expect rent
concessions and lower rents to continue for the foreseeable future and we
cannot offer any assurances regarding the effects of these conditions on our
business or when multifamily market conditions might improve. To the extent
that these conditions continue and perhaps worsen, particularly in Atlanta, our
business, operating results and liquidity will be affected adversely. In light
of these issues, our board of directors suspended payment of our quarterly
dividends for the fourth quarter of 2001 and for all four quarters of 2002.
Based on current conditions, our board voted to suspend payment of quarterly
dividends for 2003.

We sold our 9.5-acre East Fox Court land in November 2002 for $3,200,000
plus reimbursement of $302,000 of previously paid sewer costs. We were able to
take advantage of its appreciation in value and elected to divest it because it
did not fit with our long-term development plans. Because there was no debt on
the property, the full amount of proceeds was available for our general
corporate working capital purposes.

Part of our business plan and growth strategy involves divesting smaller
properties that are less efficient to lease and maintain. Following this
strategy, we sold our 146-unit Ivey Brook community in June 2000 and our
152-unit Rosewood Plantation community in January 2001 and redeployed the net
cash proceeds into new properties where we expect the yield and long-term
growth to be greater.

In 2001 we used the proceeds from the sale of our Rosewood Plantation
community plus loan proceeds to purchase two parcels of undeveloped land (one
of which was the East Fox Court land referred to above); a partially
constructed retail center; and a partially constructed office building, for a
total of approximately $13.4 million as part of a Section 1031 tax-deferred
exchange. We are developing and intend to build a 220-unit apartment community
on the second parcel of land located in north Atlanta. We expect construction
to be complete in the third quarter of 2003 on Addison Place Shoppes, a 42,090
square foot retail center located at the entrance of our Addison Place
apartment community. We anticipate finishing construction of our office
building in the third quarter of 2003 and intend to use a portion of the
building as our corporate headquarters and lease the remaining space to Roberts
Properties, Roberts Construction and unaffiliated tenants.

We sold Crestmark in July 2001 and reinvested the proceeds in November
2001 through a Section 1031 tax-deferred exchange into the 200-unit St. Andrews
at the Polo Club apartment community located in the City of Wellington,
Florida. This exchange redeployed our equity from Douglas County, Georgia to
Palm Beach County, Florida, a substantially stronger growth market.

28



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##### Table of Contents



Results of Operations for the Years Ended December 31, 2002, 2001 and 2000

For the year ended December 31, 2002, we recorded a net loss of
($2,516,000) or ($0.51) per share compared to net income of $7,440,000 or $1.53
per share for the year ended December 31, 2001 and net income of $2,832,000 or
$0.58 per share for the year ended December 31, 2000. The $9,956,000 decrease
from net income of $7,440,000 in 2001 to a net loss of ($2,516,000) in 2002 is
due primarily to the following:



| | (a) |  | gains on the sales of real estate assets, net of minority
interest, of $5,188,000 on the sale of Rosewood Plantation in
January 2001 and $2,793,000 on the sale of Crestmark in July 2001;                                                                               
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | a $660,000 decrease in same-property operating revenues;                                                                                                                                                                                                                 
|
| | (c) |  | a $1,958,000 decrease in operating revenues due to the sale
of Crestmark in July 2001;                                                                                                                                                                                   
|
| | (d) |  | an increase of depreciation expense due to the completion of
Addison Place Phase II in September 2001, the purchase of St.
Andrews at the Polo Club in November 2001, and the completion of
Veranda Chase in November 2002, offset by the sale of Crestmark in
July 2001;
|
| | (e) |  | higher interest expense associated with:                                                                                                                                                                                                                                 



| |  |  | Addison Place Phase II, which was completed in the third quarter of 2001;  
| | - |  | ---------------------------------------------------------------------------
|
| |  |  | the purchase of St. Andrews at the Polo Club in November 2001;             
|
| |  |  | Veranda Chase, which was completed in the fourth quarter of 2002;offset by:
|
| |  |  | the sale of Crestmark in July 2001;                                        



| | (f) |  | an increase of $1,495,000 in property operating expenses
(excluding depreciation and general and administrative expenses)
primarily due to the purchase of St. Andrews at the Polo Club in
November 2001, the completion of Addison Place Phase II in September
2001, the completion of Veranda Chase in November 2002, offset by a
$676,000 decrease in property operating expenses due to the sale of
Crestmark in July 2001;
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (g) |  | a $423,000 increase in general and administrative expenses;                                                                                                                                                                                                                                                                                                                                                                    
|
| | (h) |  | a $224,000 decrease in interest income due to lower cash
balances after funds were invested in real estate assets and to
lower interest rates;                                                                                                                                                                                                                                                                                 
|
| | (i) |  | an increase of $117,000 in amortization of loan costs;                                                                                                                                                                                                                                                                                                                                                                         
|
| |     |  | offset by:                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | (j) |  | increases in operating revenues at St. Andrews at the Polo
Club by $2,561,000 and at Addison Place by $449,000;                                                                                                                                                                                                                                                                                                                
|
| | (k) |  | a $405,000 increase in operating revenues from Veranda Chase;                                                                                                                                                                                                                                                                                                                                                                  
|
| | (l) |  | a $1,523,000 increase in the minority interest in the loss
before gains on the sale of real estate assets and extraordinary
items; and                                                                                                                                                                                                                                                                                         

29



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##### Table of Contents





| | (m) |  | a $405,000 extraordinary loss relating to the early
extinguishment of debt, net of minority interest in 2001.
| | --- |  | -------------------------------------------------------------------------------------------------------------

The $4,608,000 increase in net income from $2,832,000 in 2000 to
$7,440,000 in 2001 is due primarily to the following:



| | (a) |  | increases in the gain on sale of real estate assets net of
minority interest of $5,188,000 from the sale of Rosewood Plantation
in January 2001 and $2,793,000 from the sale of Crestmark in July
2001, compared to the $2,285,000 gain on the sale of Ivey Brook in
June 2000;                                                                                                                                                                                      
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | an increase in interest income from $214,000 to $263,000 due
to the interest earned on the Rosewood and Crestmark sales proceeds;                                                                                                                                                                                                                                                                                                                                    
|
| | (c) |  | a decrease of $634,000 in property operating expenses
(excluding depreciation and general and administrative expenses)
mainly due to the sales of Ivey Brook in June 2000, Rosewood
Plantation in January 2001 and Crestmark in July 2001, offset by
increased expenses due to the completion of Addison Place Phase II
in September 2001, the stabilization of Addison Place Phase I in
July 2000 and the purchase of St. Andrews at the Polo Club in
November 2001;
|
| | (d) |  | a $465,000 decrease in general and administrative expenses;                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | (e) |  | a $56,000 decrease in the loss on disposal of assets;                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | (f) |  | a $393,000 increase in operating revenues due to the purchase
of St. Andrews at the Polo Club in November 2001;                                                                                                                                                                                                                                                                                                                                                      
|
| | (g) |  | an $84,000 increase in same-property operating revenues; and                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | (h) |  | a $1,828,000 increase in operating revenues at Addison Place;                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |     |  | offset by:                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | (i) |  | a $43,000 increase in same-property operating expenses from 2000 to
2001;                                                                                                                                                                                                                                                                                                                                                                                            
|
| | (j) |  | a $4,266,000 decrease in operating revenues due to the sales
of Ivey Brook in June 2000, Rosewood Plantation in January 2001 and
Crestmark in July 2001;                                                                                                                                                                                                                                                                                                             
|
| | (k) |  | increased depreciation expense due to the completion of
Addison Place Phase II in September 2001, the purchase of St.
Andrews at the Polo Club in November 2001, offset by the sales of
Ivey Brook in June 2000, Rosewood Plantation in January 2001 and
Crestmark in July 2001; and                                                                                                                                                                                 
|
| | (l) |  | higher interest expense due to:                                                                                                                                                                                                                                                                                                                                                                                                                                      



| |  |  | the refinancing of Preston Oaks for a higher loan amount in February 2001;
| | - |  | --------------------------------------------------------------------------
|
| |  |  | construction loan interest on Addison Place Phase II in 2001;             
|
| |  |  | the purchase of St. Andrews at the Polo Club in November 2001;            
|
| |   |  | offset by                                                                 
|

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##### Table of Contents





| |  |  | the sales of Ivey Brook in June 2000, Rosewood
Plantation in January 2001, and Crestmark in July 2001; and        
| | - |  | ------------------------------------------------------------------------------------------------------------------
|
| |  |  | an increase in construction period interest due
to having more properties under construction in 2001 than in
2000.

Our operating performance for all communities is summarized in the following
table:

|                                    |  |                         |        |                         |  |        |        |      |  |      |      |        |  |   |        |   |  |   |        |   |  |  |       |   
|----------------------------------- |  | ----------------------- | ------ | ----------------------- |  | ------ | ------ | ---- |  | ---- | ---- | ------ |  | - | ------ | - |  | - | ------ | - |  |  | ----- | --
|                                    |  | Year Ended December 31, |        | Year Ended December 31,
|                                    |  |                         |        |                        
|                                    |  |                         |        |                         |  |        |        |      |  | %    |      |        |  |   |        |   |  |   |        | %
|(dollars in thousands)              |  | 2002                    |        | 2001                    |  | Change |        | 2001 |  | 2000 |      | Change
|                                    |  |                         |        |                         |  |        |        |      |  |      |      |       
|Total operating revenues            |  | $                       | 19,011 |                         |  | $      | 18,225 |      |  |      | 4.3  | %      |  | $ | 18,225 |   |  | $ | 20,178 |   |  |  | (9.7  | )%
|Property operating expenses(1)      |  | $                       | 7,620  |                         |  | $      | 6,125  |      |  |      | 24.4 | %      |  | $ | 6,125  |   |  | $ | 6,759  |   |  |  | (9.4  | )%
|General and administrative expenses |  | $                       | 2,155  |                         |  | $      | 1,732  |      |  |      | 24.4 | %      |  | $ | 1,732  |   |  | $ | 2,197  |   |  |  | (21.2 | )%
|Net operating income(2)             |  | $                       | 11,391 |                         |  | $      | 12,100 |      |  |      | (5.9 | )%     |  | $ | 12,100 |   |  | $ | 13,419 |   |  |  | (9.8  | )%
|Depreciation of real estate assets  |  | $                       | 7,001  |                         |  | $      | 5,501  |      |  |      | 27.3 | %      |  | $ | 5,501  |   |  | $ | 5,463  |   |  |  | 0.7   | % 
|Average stabilized occupancy(3)     |  |                         | 86.2   | %                       |  |        | 91.3   | %    |  |      | (5.1 | )%     |  |   | 91.3   | % |  |   | 95.9   | % |  |  | (4.6  | )%
|Operating expense ratio(4)          |  |                         | 40.1   | %                       |  |        | 33.6   | %    |  |      | 6.5  | %      |  |   | 33.6   | % |  |   | 33.5   | % |  |  | 0.1   | % 



---

|(1) |  | Property operating expenses include personnel, utilities, real estate
taxes, insurance, maintenance, landscaping, marketing and property
administration expenses.                                                                                                                                                                                                                                                                                                                                                             
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Net operating income is equal to total operating revenues minus property
operating expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(3) |  | Represents the average physical occupancy of our stabilized properties
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%. The calculation includes the following
properties only through the dates shown, which are the dates we sold each
respective property: (a) Rosewood Plantation only through January 4,
2001; (b) Crestmark only through July 11, 2001; and (c) Ivey Brook only
through June 23, 2000.
|   
|(4) |  | Represents the total of property operating expenses divided by property
operating revenues, expressed as a percentage.                                                                                                                                                                                                                                                                                                                                                                                                        

Our 2002 same-property operating performance, when compared to 2001,
includes a 5.3% decrease in operating revenues, a 10.3% decrease in net
operating income, a 0.9% decrease in average occupancy from 93.3% to 92.4%, a
5.4% decrease in average monthly rent and a 4.3% increase in our lease renewal
percentage.

Our 2001 same-property operating performance, when compared to 2000,
includes a 0.7% increase in operating revenues, an 0.5% increase in net
operating income, a 2.8% decrease in average occupancy from 96.1% to 93.3%, a
3.6% increase in average monthly rent and a 3.3% decline in our lease renewal
percentage.

Same-property results for the five communities that were fully stabilized
during the three years ended December 31, 2002, 2001 and 2000 (Bradford Creek,
Highland Park, River Oaks, Plantation Trace and Preston Oaks) are summarized in
the table below.

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|                                        |  |                         |        |                         |  |        |        |      |  |      |       |        |  |   |        |   |  |   |        |   |  |  |      |   
|--------------------------------------- |  | ----------------------- | ------ | ----------------------- |  | ------ | ------ | ---- |  | ---- | ----- | ------ |  | - | ------ | - |  | - | ------ | - |  |  | ---- | --
|                                        |  | Year Ended December 31, |        | Year Ended December 31,
|                                        |  |                         |        |                        
|                                        |  |                         |        |                         |  |        |        |      |  | %    |       |        |  |   |        |   |  |   |        | %
|(dollars in thousands)                  |  | 2002                    |        | 2001                    |  | Change |        | 2001 |  | 2000 |       | Change
|                                        |  |                         |        |                         |  |        |        |      |  |      |       |       
|Rental income                           |  | $                       | 11,033 |                         |  | $      | 11,632 |      |  |      | (5.1  | )%     |  | $ | 11,632 |   |  | $ | 11,533 |   |  |  | 0.9  | % 
|Total operating revenues                |  |                         | 11,706 |                         |  |        | 12,366 |      |  |      | (5.3  | )%     |  |   | 12,366 |   |  |   | 12,282 |   |  |  | 0.7  | % 
|Property operating expenses(1)          |  |                         | 4,235  |                         |  |        | 4,033  |      |  |      | 5.0   | %      |  |   | 4,033  |   |  |   | 3,990  |   |  |  | 1.1  | % 
|Net operating income(2)                 |  |                         | 7,471  |                         |  |        | 8,333  |      |  |      | (10.3 | )%     |  |   | 8,333  |   |  |   | 8,292  |   |  |  | 0.5  | % 
|Average stabilized occupancy(3)         |  |                         | 92.4   | %                       |  |        | 93.3   | %    |  |      | (0.9  | )%     |  |   | 93.3   | % |  |   | 96.1   | % |  |  | (2.8 | )%
|Operating expense ratio(4)              |  |                         | 36.2   | %                       |  |        | 32.6   | %    |  |      | 3.6   | %      |  |   | 32.6   | % |  |   | 32.5   | % |  |  | 0.1  | % 
|Average monthly rent per apartment home |  | $                       | 972    |                         |  | $      | 1,028  |      |  |      | (5.4  | )%     |  | $ | 1,028  |   |  | $ | 992    |   |  |  | 3.6  | % 
|Lease renewal percentage(5)             |  |                         | 57.7   | %                       |  |        | 53.4   | %    |  |      | 4.3   | %      |  |   | 53.4   | % |  |   | 56.7   | % |  |  | (3.3 | )%



---

|(1) |  | Property operating expenses include personnel, utilities, real estate
taxes, insurance, maintenance, landscaping, marketing and property
administration expenses.                                                                         
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Net operating income is equal to total operating revenues minus property
operating expenses.                                                                                                                                              
|   
|(3) |  | 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%.
|   
|(4) |  | Represents the total of property operating expenses divided by property
operating revenues expressed as a percentage.                                                                                                                     
|   
|(5) |  | Represents the number of leases renewed divided by the number of leases
expired during the period presented, expressed as a percentage.                                                                                                   

The following discussion compares our statements of operations for the
years ended December 31, 2002, 2001 and 2000.

Property operating revenue increased $786,000 or 4.3% from $18,225,000 for
the year ended December 31, 2001 to $19,011,000 for the year ended December 31,
2002. The increase is due primarily to the following:



| | (a) |  | a $2,561,000 increase in operating revenues due to the
purchase of St. Andrews at the Polo Club in November 2001;            
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | a $449,000 increase in operating revenues at Addison Place
due to the completion of Addison Place Phase II in September 2001;
|
| | (c) |  | a $405,000 increase in operating revenues due to the
completion of Veranda Chase in November 2002;
offset by:                
|
| | (d) |  | a $1,958,000 decrease in operating revenues due to the sale
of Crestmark in July 2001; and                                   
|
| | (e) |  | a $660,000 decrease in same-property operating revenues.                                                                     

32



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##### Table of Contents



Property operating revenue decreased $1,953,000 or 9.7% from $20,178,000
for the year ended December 31, 2000 to $18,225,000 for the year ended December
31, 2001. The decrease is due primarily to the following:



| | (a) |  | a $4,266,000 decrease in operating revenues due to the sales
of Ivey Brook in June 2000, Rosewood Plantation in January 2001 and
Crestmark in July 2001;                                       
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | offset by:                                                                                                                                                                                     
|
| | (b) |  | a $393,000 increase in operating revenues due to the purchase
of St. Andrews at the Polo Club in November 2001;                                                                                
|
| | (c) |  | a $1,828,000 increase in operating revenues at Addison Place
due to the completion of Addison Place Phase II in September 2001
and the stabilization of Addison Place Phase I in July 2000; and
|
| | (d) |  | an $84,000 increase in same-property operating revenue.                                                                                                                                        

Property operating expenses (excluding depreciation and general and
administrative expenses) increased $1,495,000 or 24.4% from $6,125,000 for the
year ended December 31, 2001 to $7,620,000 for the year ended December 31,
2002. The increase in property operating expenses is due primarily to the
following:



| | (a) |  | a $1,205,000 increase due to the purchase of the St. Andrews
at the Polo Club community in November 2001;
| | --- |  | ---------------------------------------------------------------------------------------------------------
|
| | (b) |  | a $400,000 increase due to the completion of Addison Place
Phase II in September 2001;                   
|
| | (c) |  | a $366,000 increase due to the completion of Veranda Chase in
November 2002;                             
|
| | (d) |  | a $202,000 increase in same-property expenses;                                                           
|
| |     |  | offset by:                                                                                               
|
| | (e) |  | a $676,000 decrease due to the sale of Crestmark in July
2001.                                           

Property operating expenses (excluding depreciation and general and
administrative expenses) decreased $634,000 or 9.4% from $6,759,000 for the
year ended December 31, 2000 to $6,125,000 for the year ended December 31,
2001. The decrease in property operating expenses is due primarily to the
following:



| | (a) |  | a $1,383,000 decrease due to the sales of Ivey Brook in June
2000, Rosewood Plantation in January 2001 and Crestmark in July
2001;                                                   
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | offset by:                                                                                                                                                                           
|
| | (b) |  | a $43,000 increase in same-property expenses;                                                                                                                                        
|
| | (c) |  | a $547,000 increase in property operating expenses due to the
completion of Addison Place Phase II in September 2001 and the
stabilization of Addison Place Phase I in July 2000; and

33



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##### Table of Contents





| | (d) |  | an increase of $153,000 in property operating expenses due to
the purchase of the St. Andrews at the Polo Club community in
November 2001.
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------

General and administrative expenses increased $423,000 or 24.4% from
$1,732,000 for the year ended December 31, 2001 to $2,155,000 for the year
ended December 31, 2002 and include salaries, legal, accounting and tax fees,
recruiting, travel and lodging, director fees, marketing and printing fees and
other costs. This increase is due primarily to increases in corporate office
salaries, recruiting, marketing, and travel expenses. General and
administrative expenses as a percentage of operating revenues increased from
9.5% for the year ended December 31, 2001 to 11.3% for the year ended December
31, 2002.

General and administrative expenses decreased $465,000 or 21.2% from
$2,197,000 for the year ended December 31, 2000 to $1,732,000 for the year
ended December 31, 2001 and include salaries, legal, accounting and tax fees,
marketing and printing fees, salaries, director fees and other costs. The
decrease is due primarily to decreases in expenses for incentive-based employee
trips, contributions, legal fees, financial reporting fees and bonus expenses.
General and administrative expenses as a percentage of operating revenues
decreased from 10.9% for the year ended December 31, 2000 to 9.5% for the year
ended December 31, 2001.

Depreciation expense increased $1,500,000 or 27.3% from $5,501,000 for the
year ended December 31, 2001 to $7,001,000 for the year ended December 31,
2002. The increase is due primarily to the purchase of St. Andrews at the Polo
Club in November 2001, the completion of the second phase of Addison Place in
September 2001, the completion of Veranda Chase in November 2002, offset by the
sale of Crestmark in July 2001.

Depreciation expense increased $38,000 or 0.7% from $5,463,000 for the
year ended December 31, 2000 to $5,501,000 for the year ended December 31,
2001. The increase is due primarily to the completion of the second phase of
Addison Place in September 2001, the purchase of St. Andrews at the Polo Club
in November 2001, offset by the sales of Ivey Brook in June 2000, Rosewood
Plantation in January 2001 and Crestmark in July 2001.

Interest expense increased $1,865,000 or 36.7% from $5,086,000 for the
year ended December 31, 2001 to $6,951,000 for the year ended December 31,
2002. The increase is due primarily to:



| | (a) |  | an increase of $693,000 in interest expense due to the
completion of Addison Place Phase II in September 2001;                       
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | an increase of $1,229,000 associated with the loan obtained
to finance the purchase of St. Andrews at the Polo Club in November
2001;
|
| | (c) |  | $501,000 associated with the loan to finance Veranda Chase;                                                                          
|
| |     |  | offset by:                                                                                                                           
|
| | (d) |  | a decrease of $539,000 due to the sale of Crestmark in July
2001.                                                                    

Interest expense increased $135,000 or 2.7% from $4,951,000 for the year
ended December 31, 2000 to $5,086,000 for the year ended December 31, 2001.
The increase is due primarily to:

34



---



##### Table of Contents





| | (a) |  | an increase of $2,040,000 in interest expense due to the
completion of Addison Place Phase II in September 2001, refinancing
of the Preston Oaks mortgage with a larger loan balance at a lower
interest rate and the loan obtained to finance the purchase of St.
Andrews at the Polo Club in November 2001;
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | offset by:                                                                                                                                                                                                                                                                                                   
|
| | (b) |  | a decrease of $1,224,000 due to the sales of Ivey Brook in
June 2000, Rosewood Plantation in January 2001 and Crestmark in July
2001; and                                                                                                                                                                    
|
| | (c) |  | an increase of $598,000 in interest capitalized on
construction projects.                                                                                                                                                                                                                                    

On June 23, 2000, we sold the Ivey Brook community for $14,550,000 in cash
resulting in a gain, net of minority interest, of $2,285,000. Net sales
proceeds were $7,371,000 after deduction for the loan assumed by the buyer of
$6,190,000, closing costs and accrued interest totaling $263,000 and a
partnership profits interest of $726,000 paid to Roberts Properties under the
amended partnership agreement of the operating partnership. We used the net
proceeds to fund a $1,841,000 special distribution to shareholders and
unitholders on July 27, 2000 and the balance to fund construction projects.
Unamortized loan costs of $68,000 were charged to expense as an extraordinary
item, net of the $35,000 allocated to the minority interest of unitholders in
the operating partnership. In addition, during the fourth quarter of 2000, we
received $198,000 from a settlement relating to the sale of Bentley Place; we
recorded this amount as an additional gain (before minority interest of
$67,000).

On January 4, 2001, we sold the 152-unit Rosewood Plantation community for
$14,800,000. The sale resulted in a gain of $5,188,000, net of minority
interest of $2,554,000. Net sales proceeds were $5,820,000 after deducting
$7,400,000 for the mortgage note payable assumed by the buyer, $476,000 for a
loan paydown, $364,000 for closing costs and prorations and $740,000 for a
partnership profits interest paid to Roberts Properties. Unamortized loan
costs of $291,000 were charged to expense as an extraordinary item, net of
minority interest of $143,000. In April 2002, we settled a claim under the
warranty provisions of the sale contract and paid the buyer $150,000, which is
shown in the 2002 financial statements as a reduction of the gain on sale of
real estate assets (before minority interest of $48,000).

On May 30, 2001, we purchased from Roberts Properties approximately 9.5
acres of undeveloped land located at the corner of Jones Bridge Road and East
Fox Court, in Alpharetta, Georgia across Jones Bridge Road from Addison Place.
Roberts Properties had purchased the property for $1,070,000, and the
$1,447,000 price we paid includes approximately $377,000 in development-related
work previously performed by Roberts Properties. The purchase price was
reduced by $356,000 as a result of a sewer moratorium.

On June 20, 2001, we purchased approximately 6.84 acres of land from REES
59 for $4,470,000, including closing costs, to construct a 42,090 square foot
retail center at the intersection of Abbotts Bridge Road and Jones Bridge Road
in Alpharetta, Georgia in front of the Addison Place community. REES 59 had
previously purchased the land for $3,514,000 from Roberts Properties Jones
Bridge, LLC, of which Mr. Roberts owned a 90% interest. The purchase was
funded by the Rosewood Plantation sales proceeds as part of a Section 1031
tax-deferred exchange.

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On June 28, 2001, we purchased approximately 10.9 acres from Roberts
Properties to construct a 220-unit upscale apartment community located adjacent
to our Highland Park community. The purchase price was $5,376,000, including
closing costs, and the transaction was part of a Section 1031 tax-deferred
exchange partially funded by sales proceeds from the sale of Rosewood
Plantation. We estimate that the total cost of the project will be
approximately $24,000,000.

On June 28, 2001, we purchased a partially constructed office building and
approximately 3.9 acres of land from Roberts Properties for $2,147,000,
including closing costs. We intend to complete construction and use a portion
of the building as our corporate headquarters and will lease the remaining
space in the building to Roberts Properties, Roberts Construction and to
unaffiliated tenants.

On July 11, 2001, we completed the sale of our 334-unit Crestmark
community for $25,000,000. The sale resulted in a gain of $2,793,000, net of
minority interest of $1,325,000. Net cash proceeds were $8,013,000 after
deducting $15,485,000 for the mortgage note payable assumed by the buyer,
$574,000 for closing costs and prorations and $928,000 for a partnership
profits interest paid to Roberts Properties. Unamortized loan costs of
$114,000 were charged to expense as an extraordinary item, net of the minority
interest.

On November 6, 2001, we purchased the 200-unit St. Andrews at the Polo
Club apartment community located in the City of Wellington, Palm Beach County,
Florida from an unrelated party for a purchase price of $27,778,000, including
closing costs, as part of a Section 1031 tax-deferred exchange partially funded
by net proceeds from the sale of Crestmark. To provide the balance of the
funds needed to purchase St. Andrews at the Polo Club, we obtained a
$21,000,000 permanent loan from State Farm Life Insurance Company. The loan
bears a fixed interest rate of 6.95% per annum and has a 10-year term.

On November 21, 2002, we sold the 9.5 acres of land located at the corner
of Jones Bridge Road and East Fox Court, in Alpharetta, Georgia for $3,200,000
plus a reimbursement of previously paid sewer costs of $302,000. The sale
resulted in a gain of $1,043,000, net of minority interest of $480,000.

Liquidity and Capital Resources

Comparison of
Years Ended December 31, 2002, 2001 and 2000. Cash and cash
equivalents increased $2,925,000 from $2,617,000 as of December 31, 2001 to
$5,542,000 as of December 31, 2002. The increase was due to our investing and
financing activities offset by a decrease in cash provided by operating
activities. Cash and cash equivalents increased $1,122,000 from $1,495,000 as
of December 31, 2000 to $2,617,000 as of December 31, 2001. The increase was
due to an increase in cash provided by financing activities, offset by an
increase in cash used in investing activities and a decrease in cash provided
by operating activities.

A primary source of liquidity for us is cash flow from operations.
Operating cash flows have historically been determined by the number of
apartment homes, rental rates and operating expenses with respect to those
apartment homes. Net cash provided by operating activities decreased
$3,367,000 from $5,986,000 during 2001 to $2,619,000 during 2002. The decrease
is primarily due to decrease in operating income from our same-properties, a
decrease from the sale of Crestmark in July 2001, and higher interest expense,
offset by the additional cash flow from St. Andrews at the Polo Club.

Net cash provided by operations decreased $499,000 from $6,485,000 during
2000 to $5,986,000 during 2001. The decrease in cash flow from operations is
due primarily to the decrease in cash flow that resulted from the sales of
Rosewood Plantation, Crestmark and Ivey Brook communities, offset by the
additional cash flow from Addison Place and St. Andrews at the Polo Club.

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To address the decline in our cash flow from operations, our board of
directors suspended payment of our quarterly dividends for the fourth quarter
of 2001 and for all four quarters of 2002. Based on current conditions, our
board of directors voted to suspend payment of quarterly dividends for 2003.
In addition to experiencing lower occupancy and operating revenues at our
existing properties, we are completing a major growth program with three
properties under construction and one property in the planning and design
phase. In total, these four new properties required an investment of
approximately $12.5 million of our equity that is currently not producing any
cash flow. The decreased revenue, together with our growth program, has
resulted in decreased cash flow for our company. We believe that our reduced
cash flow from operations will abate, in part, as we finish the lease-up at
Veranda Chase and complete our new properties under development and
construction. Until there is a sustained and broad-based economic recovery
resulting in positive job growth, however, the Atlanta apartment market will
remain soft, and we will continue to experience the negative effects of lower
occupancies and rents.

Net cash used in investing activities decreased $33,613,000 from
$49,684,000 during 2001 to $16,071,000 during 2002. The decrease is due
primarily to the following:



| | (a) |  | construction and development costs of $19,542,000 in 2002
related to Veranda Chase, Charlotte, the corporate office building
and Addison Place Shoppes compared to acquisition, construction and
development costs of $64,364,000 in 2001 related to our Addison
Place Phase II, Veranda Chase, Charlotte, East Fox Court and
Northridge communities, the Addison Place Shoppes, the corporate
office building, and the purchase of St. Andrews at the Polo Club;
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | offset by:                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | (b) |  | proceeds of $3,471,000 from the sale of East Fox Court land
in 2002 compared to proceeds of $6,368,000 and $8,312,000 from the
sales of Rosewood Plantation and Crestmark, respectively, in 2001.                                                                                                                                                                                                                                                                

Net cash used in investing activities increased $38,119,000 from
$11,565,000 during 2000 to $49,684,000 during 2001. This increase is due
primarily to the following:



| | (a) |  | acquisition, construction and development costs of
$64,364,000 in 2001 related to our Addison Place Phase II, Veranda
Chase, Charlotte, East Fox Court and Northridge communities; the
Addison Place Shoppes; the corporate office building; and the
purchase of St. Andrews at the Polo Club, compared to construction
and development costs of $19,134,000 in 2000 related to Addison
Place, Veranda Chase and Charlotte;
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | offset by:                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | (b) |  | proceeds of $7,569,000 from the sale of Ivey Brook and from a
settlement relating to the sale of Bentley Place in 2000 compared to
proceeds of $6,368,000 and $8,312,000 from the sales of Rosewood
Plantation and Crestmark, respectively, in 2001.                                                                                                                                                                       

Net cash provided by financing activities decreased $28,443,000 from
$44,820,000 of net cash provided in 2001 to $16,377,000 of net cash provided
during 2002. This decrease is due primarily to the following:



| | (a) |  | net increase of $3,730,000 from the refinancing of the
Preston Oaks mortgage loan, plus $21,000,000 from the mortgage loan
to finance the St. Andrews at the Polo Club
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |     |  | acquisition in 2001, compared to a net increase of $2,372,000 from
the refinancing of Highland Park in 2002;                                                                                                                                                                                                       
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | net repayments of $2,000,000 on the line of credit in 2002,
compared to borrowings on the line of credit of $2,000,000 in 2001;                                                                                                                                                                                    
|
| | (c) |  | a decrease related to no borrowings for land loans in 2002
compared to the $6,700,000 proceeds received from land notes payable
in connection with borrowings to finance the construction of Addison
Shoppes and the Northridge community, plus $1,300,000 to fund the
purchase of the East Fox Court land in 2001;
|
| |     |  | offset by:                                                                                                                                                                                                                                                                                                         
|
| | (d) |  | an increase of $1,135,000 from the $18,687,000 proceeds
received from construction loans in 2002 compared to the $17,552,000
received in 2001;                                                                                                                                                                     
|
| | (e) |  | a decrease in payoffs of land notes payable of $700,000 due
to the payoff of the $1,300,000 East Fox Court land loan in 2002
compared to the payoff of the $2,000,000 Veranda Chase loan in 2001;                                                                                                                  
|
| | (f) |  | a decrease in cash used to repurchase treasury stock due to
the repurchase of 69,500 shares for $554,000 in 2001 compared to
none in 2002; and                                                                                                                                                                     
|
| | (g) |  | a decrease in cash used for dividends and distributions paid
from $3,190,000 in 2001 compared to none in 2002.                                                                                                                                                                                                     

Net cash provided by financing activities increased $39,918,000 from
$4,902,000 of net cash provided in 2000 to $44,820,000 of net cash provided
during 2001. This increase is due primarily to the following:



| | (a) |  | a net increase of $3,730,000 from the refinancing of the
Preston Oaks mortgage loan, plus an additional $21,000,000 from the
November 2001 mortgage loan to finance the St. Andrews at the Polo
Club acquisition;                                                                                                                                  
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | an increase of $6,000,000 from the $6,700,000 proceeds
received in 2001 from land notes payable in connection with
borrowings to finance the construction of Addison Shoppes and the
Northridge community, plus $1,300,000 to fund the purchase of the
East Fox Court land compared to the $2,000,000 received in 2000 from
the Veranda Chase loan;
|
| | (c) |  | borrowings of $2,000,000 on the line of credit in 2001,
compared to net repayments on the line of credit of $1,235,000 in
2000;                                                                                                                                                                                                                    
|
| | (d) |  | a decrease in payoffs of land notes payable of $1,000,000 due
to the payoff of the $2,000,000 Veranda Chase loan in 2001 compared
to the payoff of the $3,000,000 Addison Place Phase II loan in 2000;                                                                                                                                             
|
| | (e) |  | a decrease in cash used to repurchase treasury stock of
$602,000 due to the repurchase of 69,500 shares for $554,000 in 2001
compared to the repurchase of 152,588 shares for $1,156,000 in 2000;                                                                                                                                                  

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| | (f) |  | an increase of $3,400,000 from the $17,552,000 proceeds
received from construction loans in 2001 compared to the $14,152,000
received in 2000;                                                                                                                                  
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (g) |  | a decrease of $2,457,000 in quarterly dividends and
distributions paid, from $5,647,000 in 2000 to $3,190,000 in 2001,
mainly due to a special distribution of $0.25 per share paid in 2000
from the Ivey Brook proceeds and the suspension of the fourth
quarter 2001 dividend;
|
| | (h) |  | the receipt of proceeds held in escrow from mortgage notes
payable of $843,000 during 2000 compared to none being received
during 2001; and                                                                                                                                     
|
| | (i) |  | a $738,000 increase from loan costs paid during 2000 of
$168,000 compared to $906,000 in loan costs paid in 2001.                                                                                                                                                               

The table and accompanying footnotes on the following two pages explain
our current debt structure, including for each loan: the principal balance at
March 19, 2003 and at its scheduled maturity, interest rate, maturity date,
amortization schedule and monthly principal and interest payment.

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ROBERTS REALTY INVESTORS, INC.
DEBT SUMMARY SCHEDULE
(Listed in order of maturity)
March 19, 2003

|                                 |        |                       |        |                       |                |  |         |   |      |  |          |  |          |   |            |  |         |               |         |             |            |  |            |  |  |  |   |             | 
|-------------------------------- | ------ | --------------------- | ------ | --------------------- | -------------- |  | ------- | - | ---- |  | -------- |  | -------- | - | ---------- |  | ------- | ------------- | ------- | ----------- | ---------- |  | ---------- |  |  |  | - | ----------- | 
|                                 |        |                       |        |                       |                |  |         |   |      |  | Interest |  | Maturity |   | Balance at |  | Monthly |               | Current
|                                 |        |                       | Lender |                       | Interest Terms |  | Rate(1) |   | Date |  | Maturity |  | Payment  |   | Balance   
|                                 |        |                       |        |                       |                |  |         |   |      |  |          |  |          |   |           
|Revolving $1 million credit line |        | Bank of North Georgia |        | LIBOR plus 200 b.p    |                |  | 3.34    | % |      |  | 05/20/03 |  |          | $ | 0          |  |         | Interest only |         | $           | 0          | 
|Addison Shoppes land loan        |        | AmSouth Bank          |        | LIBOR plus 185 b.p    |                |  | 3.19    |   |      |  | 05/30/03 |  |          |   | 3,700,000  |  |         | Interest only |         |             | 3,700,000  | 
|Northridge Apartments land loan  |        | SouthTrust Bank       |        | LIBOR plus 175 b.p    |                |  | 3.09    |   |      |  | 07/10/03 |  |          |   | 3,000,000  |  |         | Interest only |         |             | 3,000,000  | 
|Revolving $2 million credit line |        | Compass Bank          |        | LIBOR plus 175 b.p    |                |  | 3.09    |   |      |  | 08/01/03 |  |          |   | 0          |  |         | Interest only |         |             | 0          | 
|River
Oaks (3)                   |        | Nationwide Life       |        | Fixed-rate permanent  |                |  | 7.15    |   |      |  | 11/15/03 |  |          |   | 8,513,000  |  |         | $             | 62,475  |             |            |  | 8,545,000  | 
|Office Building (7)              |        | Bank of North Georgia |        | LIBOR plus 200 b.p    |                |  | 3.34    |   |      |  | 06/01/04 |  |          |   | 5,280,000  |  |         | Interest only |         |             | 3,116,000  | 
|Addison Place Phase II (6)       |        | First Union Bank      |        | Fixed-rate const/perm |                |  | 8.62    |   |      |  | 05/10/05 |  |          |   | 22,071,000 |  |         | Variable(5)   |         |             | 22,385,000 | 
|Preston Oaks(4)                  |        | Freddie Mac           |        | Fixed-rate permanent  |                |  | 7.18    |   |      |  | 02/01/08 |  |          |   | 11,694,000 |  |         | $             | 86,034  |             |            |  | 12,430,000 | 
|Charlotte(7)                     |        | AmSouth Bank          |        | LIBOR plus 200 b.p    |                |  | 3.34    |   |      |  | 03/10/08 |  |          |   | 19,642,000 |  |         | Interest only |         |             | 10,675,000 | 
|Veranda Chase(7)                 |        | Compass Bank          |        | Fixed-rate const/perm |                |  | 7.38    |   |      |  | 04/25/08 |  |          |   | 16,348,000 |  |         | Interest only |         |             | 16,504,000 | 
|Bradford Creek(3)                |        | Nationwide Life       |        | Fixed-rate permanent  |                |  | 7.15    |   |      |  | 06/15/08 |  |          |   | 7,290,000  |  |         | $             | 56,734  |             |            |  | 7,948,000  | 
|Plantation Trace(2)              |        | Prudential Life       |        | Fixed-rate permanent  |                |  | 7.09    |   |      |  | 10/15/08 |  |          |   | 10,313,000 |  |         | $             | 79,892  |             |            |  | 11,306,000 | 
|Addison Place Phase I(2)         |        | Prudential Life       |        | Fixed-rate permanent  |                |  | 6.95    |   |      |  | 11/15/09 |  |          |   | 8,387,000  |  |         | $             | 62,885  |             |            |  | 9,262,000  | 
|St. Andrews at the Polo Club(5)  |        | State Farm            |        | Fixed-rate permanent  |                |  | 6.95    |   |      |  | 12/01/11 |  |          |   | 18,138,000 |  |         | $             | 139,009 |             |            |  | 20,728,000 | 
|Highland
Park(4)                 |        | Freddie Mac           |        | Fixed-rate permanent  |                |  | 6.76    |   |      |  | 12/01/12 |  |          |   | 8,597,000  |  |         | $             | 64,926  |             |            |  | 9,974,000  | 
|                                 |        |                       |        |                       |                |  |         |   |      |  |          |  |          |   |            |  |         |               |         |             |            |  |            |  |  |  |   |            
|                                 | Totals |                       |        |                       |                |  |         |   |      |  |          |  |          |   |            |  |         |               | $       | 142,973,000 |            |  |            |  |  |  | $ | 139,573,000 | 
|                                 |        |                       |        |                       |                |  |         |   |      |  |          |  |          |   |            |  |         |               |         |             |            |  |            |  |  |  |   |            

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---

|(1) |  | The interest rate shown for variable-rate debt is as of March 19, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Each of the loans secured by the Plantation Trace and Addison Place
Phase I communities may be prepaid upon payment of a premium equal to
the greater of (a) 1% 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. Each
loan may be prepaid in full during the last 30 days before its maturity
date without any prepayment premium.                                                                                                                                                                                                                 
|   
|(3) |  | Each of the loans secured by the River Oaks and Bradford Creek
communities may be prepaid in full upon payment of a premium equal to
the greater of (a) 1% of the outstanding principal balance of the loan
or (b) the sum of the present value of the scheduled monthly payments to
the maturity date and the present value of the balloon payment due on
the maturity date, less the outstanding principal balance of the loan on
the date of prepayment. Each loan may be prepaid in full during the
last 90 days before its maturity date without any prepayment premium.                                                                                                                                                                                  
|   
|(4) |  | Each of the loan secured by the Preston Oaks and Highland Park
communities may be prepaid upon the payment of a premium equal to the
greater of (a) 1% of the outstanding principal balance, or (b) the
product obtained by multiplying the amount of principal being prepaid by
the excess (if any) of the monthly note rate over the assumed
reinvestment rate by the present value factor. If the loan is prepaid
after expiration of the yield maintenance period, but more than 90 days
before the maturity date, the prepayment premium shall be 1% of the
unpaid principal balance of the note. The loan may be prepaid in full
during the last 90 days before its maturity date without any prepayment
premium.                                        
|   
|(5) |  | The St. Andrews at the Polo Club loan may not be prepaid for a period
of three years (no earlier than December 1, 2004). We must give written
notice at least 30 days before the date selected by us as the prepayment
date, at which time the entire outstanding principal may be prepaid
along with a prepayment fee equal to the greater of (a) 1% of the entire
principal amount to be prepaid or (b) the sum of the present value of
the scheduled monthly payments to the maturity date and the present
value of the balloon payment due on the maturity date, less the
outstanding principal balance of the loan on the date of prepayment.
The loan may be prepaid in full after September 1, 2011 without any
prepayment premium.                     
|   
|(6) |  | The loan secured by Addison Place Phase II is a floating rate loan with
no prepayment premium for early termination. The interest rate on the
loan was synthetically fixed with an interest rate swap agreement, which
may result in a prepayment premium depending upon market interest rates.
The prepayment premium (if any) is equal to the present value of the
difference between the existing fixed interest rate on the interest rate
swap agreement and the current replacement rate for a similar structure
in the marketplace at the time of prepayment. There is no minimum
prepayment fee. Principal payments on the loan are scheduled as
follows: 2003  $145,000; 2004  $152,000; 2005  $59,000, plus the
balloon payment due of $22,071,000.
|   
|(7) |  | The construction loans for Veranda Chase, Charlotte, and the office
building are not yet fully drawn. The amount shown in the column titled
Balance at Maturity assumes the full amount of each of these loans is
drawn and is the balance due at maturity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

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Our existing mortgage loans will require balloon payments (in addition to
monthly principal amortization) coming due over the years 2003 to 2012 as
summarized below:

Debt Maturity Schedule:

|      |  |          |   |                                      |  |  |                                                                             | 
|----- |  | -------- | - | ------------------------------------ |  |  | --------------------------------------------------------------------------- | 
|      |  |          |   | Aggregate Balloon                    |  | 
|Year  |  | Payments |   | Applicable Communities or Properties
|      |  |          |   |                                     
|2003  |  |          | $ | 15,213,000                           |  |  | Addison Shoppes land loan, Northridge
Apartments land loan and River Oaks  
|2004  |  |          |   | 5,280,000                            |  |  | Northridge office building                                                 
|2005  |  |          |   | 22,071,000                           |  |  | Addison Place Phase II                                                     
|2006  |  |          |   | 0                                    |  |  |                                                                            
|2007  |  |          |   | 0                                    |  |  |                                                                            
|2008  |  |          |   | 65,287,000                           |  |  | Preston Oaks, Bradford Creek, Plantation
Trace, Charlotte and Veranda Chase
|2009  |  |          |   | 8,387,000                            |  |  | Addison Place Phase I                                                      
|2010  |  |          |   | 0                                    |  |  |                                                                            
|2011  |  |          |   | 18,138,000                           |  |  | St. Andrews at the Polo Club                                               
|2012  |  |          |   | 8,597,000                            |  |  | Highland Park                                                              
|      |  |          |   |                                      |  |  |                                                                            
|Total |  |          | $ | 142,973,000                          |  |  |                                                                             | 
|      |  |          |   |                                      |  |  |                                                                            

We intend to refinance or extend the loans that are scheduled to mature in 2003
as described in the following paragraphs. In certain instances our plans are
subject to lender approval that we have not yet obtained, and we cannot provide
assurances that we will obtain that approval.

We have lines of credit with two banks aggregating $3,000,000 to provide
funds for short-term working capital purposes. One facility in the amount of
$1,000,000 expires May 20, 2003. The other credit facility in the amount of
$2,000,000 expires August 1, 2003. No principal or interest is currently
outstanding on either facility. Although we intend to renew both lines of
credit, there is no assurance that the banks will offer renewals or, if those
renewals are offered, they will on favorable terms.

On September 6, 2001, we closed on a $2,700,000 loan to fund the initial
construction of the Addison Place Shoppes retail center. The loan, which is
secured by the land and improvements, was increased to $3,700,000 on December
21, 2001 and, as amended, has a maturity date of May 30, 2003. We intend to
extend the maturity date of the loan and roll it into a construction/permanent
loan by the second quarter of 2003. There is no assurance that financing will
be available or, if it is available, it will be on favorable terms.

On June 28, 2001, we closed a $3,000,000 loan secured by the Northridge
land located next to our Highland Park community. We intend to construct a
220-unit apartment community on this property. The loan has a balance of
$3,000,000 and matures on July 10, 2003. We intend to extend the maturity date
of the loan prior to maturity and roll it into a construction loan upon
starting construction of the project. There is no assurance that financing
will be available or, if it is available, it will be on favorable terms.

On December 23, 2002, we signed a $10,750,000 loan commitment with Freddie
Mac to refinance our River Oaks community for ten years at a fixed interest
rate of 5.54%. The existing loan on River Oaks matures in November 2003 and
as of March 19, 2003 has a current balance of $8,545,000. We expect to close
the new loan in August 2003.

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With respect to the debt that matures after 2003, we anticipate that we
will repay only a small portion of the principal of that indebtedness before
maturity and that we will not have funds on hand sufficient to repay that
indebtedness at maturity. Therefore, it will be necessary for us to refinance
that debt through (a) debt financing collateralized by mortgages on individual
communities or groups of communities and/or (b) equity offerings.

Other than as described above, we anticipate that each propertys rental
and other operating revenues will be adequate to provide short-term (less than
12 months) liquidity for the payment of direct rental operating expenses,
interest and amortization of principal on related mortgage notes payable and
capital expenditures. We expect to meet our other short-term liquidity
requirements generally through our net cash provided by operations, which we
believe will be adequate to meet our operating requirements in both the short
term and in the long term (greater than 12 months). We also expect to fund
improvements and renovations at existing communities from property operations.
We expect to meet our long-term liquidity requirements, including future
developments and debt maturities, from the proceeds of construction and
permanent loans.

Critical Accounting Policies

Our financial statements are prepared in accordance with accounting
principles generally accepted in the United States (GAAP). A summary of the
significant accounting policies we use is included in Note 2 to the
consolidated financial statements. A summary of recent accounting
pronouncements and the expected impact on our financial statements is also
included in Note 2. Because we are in the business of owning, operating, and
developing apartment communities, our critical accounting policies relate to
cost capitalization and asset impairment evaluation. The following is a
summary of our overall accounting policy in this area.

Our real estate assets are stated at the lower of depreciated cost or fair
value, if deemed impaired. The cost of buildings and improvements includes
interest, property taxes, insurance, and development fees incurred (see Note 10
to the consolidated financial statements) during the construction period.
Ordinary repairs and maintenance are expensed as incurred; major replacements
and betterments are capitalized and depreciated over their estimated useful
lives. Depreciation expense is computed on a straight-line basis over the
estimated useful lives of 27.5 years for buildings and improvements, 15 years
for land improvements, and five to seven years for furniture, fixtures and
equipment. We periodically evaluate our real estate assets to determine if
there has been any impairment in the carrying value of the assets in accordance
with Statement of Financial Accounting Standards (SFAS) No. 144 Accounting
for the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets carrying amounts. At
December 31, 2002, we did not own any real estate assets that meet the
impairment criteria of SFAS No. 144.

We capitalize direct costs associated with the development and
construction of our apartment communities (see Note 10 to the consolidated
financial statements). We expense all internal costs associated with the
acquisition of operating apartment communities to general and administrative
expense in the period we incur those costs. We capitalize interest on
qualifying construction expenditures in accordance with FAS No. 34 for our real
estate assets. We capitalize interest and other carry costs such as property
taxes and insurance during the construction period and begin to expense those
items as the residential apartment homes in a community become substantially
complete and available for occupancy. Capitalization of interest and other
carry costs such as property taxes and insurance ceases entirely upon
completion of development and construction activities.

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Hedging Strategy

We generally enter into fixed rate debt instruments. In certain
situations, we may utilize derivative financial instruments in the form of
interest rate swaps to hedge interest rate exposure on variable-rate debt. We
do not use such instruments for trading or speculative purposes. We entered
into two interest rate swap agreements to effectively fix the variable interest
rates on our $22,500,000 and $17,000,000 construction/permanent loans.

Effective January 1, 2001, we adopted 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 in 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. Our swap agreements have
been designated as cash flow hedges and, accordingly, are recorded at fair
value in the consolidated balance sheet, and the related gains or losses are
deferred in stockholders equity, net of minority interest, as a component of
other comprehensive income. Amounts received or paid in connection with the
swap agreements are recognized as adjustments to interest related to the
designated debt. The net effect of this accounting is that interest on the
variable rate-debt is generally recorded based on fixed interest rates. No
portion of these interest rate swaps was considered ineffective for the year
ended December 31, 2002.

The fair value of our interest rate swap agreements at December 31, 2002
was a liability of $4,813,000, which is a result of lower market interest rates
compared to the synthetically fixed rates. This liability was recorded against
a decrease in shareholders equity of $3,398,000 (accumulated other
comprehensive income), net of minority interest of $1,415,000. We have no
other derivative or hedging instruments. For additional information related to
this topic, see Item 7A, Quantitative and Qualitative Disclosure About Market
Risk.

Stock Repurchase Plan

On September 3, 1998, we announced our intention to repurchase up to
300,000 shares of our outstanding common stock. In October 2000, we announced
our intention to repurchase another 50,000 shares. On May 15, 2001, our board
authorized the purchase of an additional 50,000 shares, bringing the total
authorized to 400,000. We currently have authority to repurchase an additional
37,412 shares. Our repurchases under this program are as follows:

|       |      |                  |         |                |  |   |           |           | 
|------ | ---- | ---------------- | ------- | -------------- |  | - | --------- | --------- | 
|       |      |                  |         |                |  |   | Aggregate
|Year   |      | Number of Shares |         | Purchase Price
|       |      |                  |         |               
|       | 1998 |                  |         | 19,300         |  |   | $         | 145,000   | 
|       | 1999 |                  |         | 121,200        |  |   |           | 909,000   | 
|       | 2000 |                  |         | 152,588        |  |   |           | 1,156,000 | 
|       | 2001 |                  |         | 69,500         |  |   |           | 554,000   | 
|       |      |                  |         |                |  |   |           |          
|Totals |      |                  | 362,588 |                |  | $ | 2,764,000 |          
|       |      |                  |         |                |  |   |           |          

We did not repurchase any shares during 2002 and do not anticipate doing so
until it is justified by our financial position and current market conditions.

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Supplemental Disclosure of Funds From Operations

Funds from Operations, or FFO, is defined by the National Association of
Real Estate Investment Trusts as net income (loss), computed in accordance with
generally accepted accounting principles, excluding gains (or losses) from debt
restructuring and sales of property and non-recurring items, plus real estate
related depreciation and amortization. We compute FFO in accordance with the
current NAREIT definition, which may differ from the methodology for
calculating FFO utilized by other equity REITs and, accordingly, may not be
comparable to those other REITs. FFO does not represent amounts available for
managements discretionary use for payment of capital replacement or expansion,
debt service obligations, property acquisitions, development and distributions
or other commitments and uncertainties. FFO should not be considered as an
alternative to net income (determined in accordance with GAAP) as an indication
of our financial performance or cash flows from operating activities
(determined in accordance with GAAP) as a measure of our liquidity, nor is it
indicative of funds available to fund our cash needs, including our ability to
make distributions. We consider FFO to be an important measure of our
operating performance. While FFO does not represent cash flows from operating,
investing or financing activities as defined by GAAP, FFO does provide
investors with additional information with which to evaluate the ability of a
REIT to pay dividends, meet required debt service payments and fund capital
expenditures. We believe that to gain a clear understanding of our operating
results, FFO should be evaluated in conjunction with net income (determined in
accordance with GAAP). FFO represents funds from operations available for
shareholders and unitholders. The following table reconciles net income to FFO
(dollars in thousands).

|                                                                |  |                                  |           |      |  |      |           |   |  |   |           |  
|--------------------------------------------------------------- |  | -------------------------------- | --------- | ---- |  | ---- | --------- | - |  | - | --------- | -
|                                                                |  | Twelve Months Ended December 31,
|                                                                |  |                                 
|                                                                |  | 2002                             |           | 2001 |  | 2000
|                                                                |  |                                  |           |      |  |     
|Net income (loss)                                               |  |                                  | (2,516    | )    |  | $    | 7,440     |   |  | $ | 2,832     |  
|Minority interest of unitholders in the operating partnership   |  |                                  | (1,589    | )    |  |      | (66       | ) |  |   | 246       |  
|Extraordinary item                                              |  |                                  | 0         |      |  |      | 405       |   |  |   | 68        |  
|Loss on disposal of real estate  related assets                |  |                                  | 33        |      |  |      | 27        |   |  |   | 83        |  
|Gain on sale of real estate assets                              |  |                                  | (941      | )    |  |      | (7,981    | ) |  |   | (2,416    | )
|Depreciation expense                                            |  |                                  | 7,001     |      |  |      | 5,501     |   |  |   | 5,463     |  
|                                                                |  |                                  |           |      |  |      |           |   |  |   |           |  
|Funds From Operations                                           |  | $                                | 1,988     |      |  | $    | 5,326     |   |  | $ | 6,276     |  
|                                                                |  |                                  |           |      |  |      |           |   |  |   |           |  
|Weighted average shares and units
outstanding during the period |  |                                  | 7,220,593 |      |  |      | 7,226,123 |   |  |   | 7,367,068 |  

New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB) issued
SFAS No. 141, Business Combinations (effective July 1, 2001) and SFAS No.
142, Goodwill and Other Intangible Assets (effective January 1, 2002). SFAS
No. 141 prohibits pooling-of-interests accounting for acquisitions. SFAS No.
142 specifies that goodwill and some intangible assets will no longer be
amortized but instead will be subject to periodic impairment testing. The
adoption of SFAS No. 141 and 142 did not have a material impact on our
financial position or results of operations.

In August 2001, the FASB issued Statement No. 144, Accounting for the
Impairment for Disposal of Long-Lived Assets, (SFAS No. 144). SFAS 144
establishes new rules for measuring impairment of long-lived assets and
accounting for discontinued operations. SFAS No. 144 supersedes SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of, and among other factors, establishes criteria beyond those
previously specified in SFAS No. 121 to determine when a long-lived asset is to
be considered held for sale. We adopted the standard effective January 1,
2002, which did not have a material effect on our financial position or results
of

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operations. SFAS No. 144 may, however, modify the presentation of our
operating results from real estate held for sale in our statement of operations
in the future. We believe that the impairment provisions of SFAS No. 144 are
similar to those in SFAS No. 121 and that the adoption of them will not have a
material impact on our financial position or results of operations.

In April 2002, SFAS No. 145 Rescission of SFAS Nos. 4, 44, 64 and
Amendment of SFAS No. 13 and Technical Corrections was issued. SFAS No. 145
prevents treatment as extraordinary gains or losses on extinguishment of debt
not meeting the criteria of Accounting Principles Board Opinion No. 30. SFAS
No. 145 is effective for fiscal years beginning after May 15, 2002. The
adoption will affect the classifications of those amounts in our financial
statements of subsequent periods and comparative prior periods. We intend to
adopt SFAS No. 145 effective January 1, 2003.

In June 2002, SFAS No. 146, Accounting for Costs Associated with Exit or
Disposal Activities, was issued. SFAS No. 146 addresses financial accounting
and reporting for costs associated with exit or disposal activities and
nullifies Emerging Issues Task Force (EITF) Issue No 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity (including certain costs incurred in a restructuring). SFAS No.
146 requires recognition of a liability for a cost associated with an exit or
disposal activity when the liability is incurred as opposed to when the entity
commits to an exit plan under EITF No. 94-3. SFAS No. 146 is effective for
exit or disposal activities initiated after December 31, 2002. We believe the
adoption of SFAS No. 146 will not have a material impact on our financial
position or results of operations.

In November 2002, the FASB issued FASB Interpretation No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others  an Interpretation of SFAS Nos. 5, 57,
and 107, and recession of FASB Interpretation No. 34 (FIN 45). FIN 45
elaborates on the disclosures to be made by a guarantor in its financial
statements. It also requires a guarantor to recognize a liability for the fair
value of the obligation undertaken in issuing the guarantee at the inception of
a guarantee. The disclosure requirements of FIN 45 are effective for us as of
December 31, 2002. The recognition provisions of FIN 45 will be applied on a
prospective basis to guarantees issued after December 31, 2002. We do not
expect the requirements of FIN 45 to have a material impact on our financial
position and results of operations. In June 2001, the Financial Accounting
Standards Board issued SFAS No. 141, Business Combinations (effective July 1,
2001) and SFAS No. 142, Goodwill and Other Intangible Assets (effective
January 1, 2002). SFAS No. 141 prohibits pooling-of-interests accounting for
acquisitions. SFAS No. 142 specifies that goodwill and some intangible assets
will no longer be amortized but instead will be subject to periodic impairment
testing. The adoption of SFAS No. 141 and 142 did not have a material impact
on our financial position or results of operations.

Inflation

Because substantially all of our apartment leases are for an initial term
of not more than 12 months, we are able, if market conditions permit, to seek
increases in rents after the expiration of each lease. The short-term nature
of these leases serves to reduce the risk to us of the adverse effects of
inflation.

Disclosure Regarding Forward-Looking Statements

This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These statements appear in a number of places in this
report and include all statements that are not historical facts. Some of the
forward-looking statements relate to our intent, belief or expectations
regarding our strategies and plans

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for operations and growth, including development and construction of new
multifamily apartment communities. Other forward-looking statements relate to
trends affecting our financial condition and results of operations and our
anticipated capital needs and expenditures. These forward-looking statements
are not guarantees of future performance and involve risks and uncertainties,
and actual results may differ materially from those that are anticipated in the
forward-looking statements. These risks include the following:



| |  |  | The current unfavorable market and economic conditions in
Atlanta, Charlotte and Palm Beach County could continue to depress
our occupancy and rental rates and adversely affect our financial
performance.                                                                                                                                                                                                                                                                                  
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Further unfavorable changes in market and occupancy
conditions, perhaps as a result of war or terrorism, could depress
our occupancy and rental rates even further and worsen our financial
performance.                                                                                                                                                                                                                                                                                     
|
| |  |  | Increased competition in the Atlanta, Charlotte and Palm
Beach County markets could limit our ability to lease our apartment
homes or increase or maintain rents.                                                                                                                                                                                                                                                                                                                            
|
| |  |  | Conflicts of interest inherent in business transactions
between or among Roberts Realty and/or the operating partnership on
one hand, and Mr. Roberts and/or his affiliates on the other hand,
could result in our paying more for property or services than we
would pay an independent seller or provider.                                                                                                                                                                                 
|
| |  |  | Construction risks inherent in our development of the
Charlotte and Northridge communities, our corporate office building
and our Addison Shoppes retail center, and the other communities we
may develop in the future, could adversely affect our financial
performance.                                                                                                                                                                                                                   
|
| |  |  | If we are unable to lease-up our Veranda Chase, Charlotte and
Northridge communities as we expect, our financial performance will
be adversely affected.                                                                                                                                                                                                                                                                                                                                     
|
| |  |  | We may be unable to extend the maturity dates or otherwise
refinance some or all of our $6,700,000 in outstanding land loans
that mature in 2003, or we may be able to do so only on unfavorable
terms. If we are unable to extend these maturity dates or refinance
this debt and we are required to pay off these loans, we could be
required to sell one or more of our properties to fund these
repayments, and doing so could materially and adversely affect our
financial performance.
|
| |  |  | We might not be able to obtain replacement financing to make
balloon payments on our long-term debt as it matures, or we might
have to refinance our debt on less favorable terms.                                                                                                                                                                                                                                                                                                           
|
| |  |  | Because our organizational documents do not limit the amount
of debt we may incur, we could increase the amount of our debt as a
percentage of the estimated value of our properties.                                                                                                                                                                                                                                                                                                        
|
| |  |  | Our operations could be adversely affected if we lose key
personnel, particularly Mr. Roberts.                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  |  | We could incur costs from environmental problems even though
we did not cause, contribute to or know about them.                                                                                                                                                                                                                                                                                                                                                                             
|
| |  |  | Compliance or failure to comply with the Americans with
Disabilities Act and other similar laws could result in substantial
costs.                                                                                                                                                                                                                                                                                                                                                           

In addition, the market price of the common stock may from time to time
fluctuate materially as a result of, among other things:



| |  |  | our operating results;                                                 
| | - |  | -----------------------------------------------------------------------
|
| |  |  | the operating results of other REITs, particularly apartment REITs; and
|
| |  |  | changes in the performance of the stock market in general.             

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

Because some of our debt bears interest at rates that are not fixed, we
are exposed to market risk from changes in interest rates, which may adversely
affect our financial position, results of operations and cash flows. In
seeking to minimize the risks from interest rate fluctuations, we manage
exposures through our regular operating and financing activities. We do not
use financial instruments for trading or other speculative purposes. We are
exposed to interest rate risk primarily through our borrowing activities, which
are described in Notes 4 and 5 to the consolidated financial statements
included in this report. All of our permanent mortgage loans secured by our
existing communities bear interest at fixed rates except our mortgage loan on
Addison Place Phase II. These permanent mortgage loans had an aggregate
outstanding principal balance of $80,399,000 at December 31, 2002. Our Addison
Place Phase II loan and our Veranda Chase construction loan have synthetically
fixed interest rates. These loans had an aggregate outstanding principal
balance of $38,203,000 at December 31, 2002. When we closed each of these
loans, we entered into interest rate swap agreements that synthetically fixed
the interest rates on those loans. The fair value of those interest rate swap
agreements at December 31, 2002 was a liability of $4,813,000 as a result of
lower market interest rates compared to the synthetically fixed rates.
Provided that we hold these instruments until maturity, as we intend, we will
not pay any interest other than that stated in the loan and swap agreements.
The liability recorded at December 31, 2002 will be reduced as we perform under
these instruments, as the difference between the market interest rate and the
fixed rates decrease, and as these obligations mature.

The remaining long-term construction loans, which had an aggregate
outstanding balance of $12,115,000 at December 31, 2002, bear interest at 200
basis points over the 30-day LIBOR rate. Our lines of credit and land loan
interest rates range from 175 to 200 basis points over the 30-day LIBOR rate.
At December 31, 2002, those loans had an aggregate outstanding principal
balance of $6,700,000. Given our interest rate swap agreements and the current
interest rate environment, we believe there is no material market risk exposure
to our consolidated financial position, results of operations or cash flows.

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The table below presents principal reductions and related weighted average
interest rates by year of expected maturity for our debt obligations.

|                                                                           |  |       |       |       |  |       |       |       |  |       |        |            |  |       |       |          |  |   |       |   |  |   |        |   |  |   |        |   |  |            |         |  
|-------------------------------------------------------------------------- |  | ----- | ----- | ----- |  | ----- | ----- | ----- |  | ----- | ------ | ---------- |  | ----- | ----- | -------- |  | - | ----- | - |  | - | ------ | - |  | - | ------ | - |  | ---------- | ------- | -
|                                                                           |  |       |       |       |  |       |       |       |  |       |        |            |  |       |       |          |  |   |       |   |  |   |        |   |  |   |        |   |  | Fair Value
|                                                                           |  |       |       |       |  |       |       |       |  |       |        |            |  |       |       |          |  |   |       |   |  |   |        |   |  |   |        |   |  |           
|(Dollars In Thousands)                                                     |  | 2003  |       | 2004  |  | 2005  |       | 2006  |  | 2007  |        | Thereafter |  | Total |       | 12/31/02
|                                                                           |  |       |       |       |  |       |       |       |  |       |        |            |  |       |       |         
|Principal reductions
in fixed rate
mortgage notes                          |  | $     | 9,447 |       |  | $     | 932   |       |  | $     | 999    |            |  | $     | 1,071 |          |  | $ | 1,149 |   |  | $ | 66,801 |   |  | $ | 80,399 |   |  | $          | 83,513  |  
|Average interest rates                                                     |  |       | 7.37  | %     |  |       | 7.39  | %     |  |       | 7.39   | %          |  |       | 7.01  | %        |  |   | 7.01  | % |  |   | 7.01   | % |  |   | 7.37   | % |  |            | 6.13    | %
|Principal reductions
in variable rate
mortgage notes                       |  | $     | 146   |       |  | $     | 162   |       |  | $     | 22,119 |            |  | $     | 0     |          |  | $ | 0     |   |  | $ | 0      |   |  | $ | 22,427 |   |  | $          | 22,427  |  
|Principal reductions
in construction/
permanent loans                      |  | $     | 0     |       |  | $     | 3,013 |       |  | $     | 518    |            |  | $     | 678   |          |  | $ | 727   |   |  | $ | 22,955 |   |  | $ | 27,891 |   |  | $          | 27,891  |  
|Principal reductions
in land loan                                          |  | $     | 6,700 |       |  | $     | 0     |       |  | $     | 0      |            |  | $     | 0     |          |  | $ | 0     |   |  | $ | 0      |   |  | $ | 6,700  |   |  | $          | 6,700   |  
|Interest Rate Swap
(Notional Principal
Amount)
Pay fixed/ Receive
variable |  | $     | 146   |       |  | $     | 268   |       |  | $     | 22,287 |            |  | $     | 181   |          |  | $ | 195   |   |  | $ | 15,126 |   |  | $ | 38,203 |   |  |            | ($4,813 | )
|Average Pay rate                                                           |  |       | 8.11  | %     |  |       | 8.11  | %     |  |       | 8.11   | %          |  |       | 7.38  | %        |  |   | 7.38  | % |  |   | 7.38   | % |  |   | 8.11   | % |  |            | 6.00    | %
|Receive rate                                                               |  | LIBOR |       | LIBOR |  | LIBOR |       | LIBOR |  | LIBOR |        | LIBOR      |  | LIBOR |       | LIBOR   

We estimate the fair value of our debt based on current borrowing rates
for issuance of debt with similar terms and remaining maturities.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

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

|                                                                                                                                          |  |  |     | 
|----------------------------------------------------------------------------------------------------------------------------------------- |  |  | --- | 
|Independent Auditors Report (Deloitte & Touche LLP)                                                                                      |  |  | F-1 | 
|Copy of Report of Independent Public Accountants (Arthur Andersen LLP)                                                                    |  |  | F-2 | 
|Consolidated Financial Statements and Schedule as of December 31, 2002 and
2001 and for the Years Ended December 31, 2002, 2001 and 2000: |  |  |     | 
|Consolidated Balance Sheets                                                                                                               |  |  | F-3 | 
|Consolidated Statements of Operations                                                                                                     |  |  | F-4 | 
|Consolidated Statements of Shareholders Equity                                                                                           |  |  | F-5 | 
|Consolidated Statements of Cash Flows                                                                                                     |  |  | F-6 | 
|Notes to Consolidated Financial Statements                                                                                                |  |  | F-7 | 
|Schedule III  Real Estate and Accumulated Depreciation                                                                                   |  |  | S-1 | 




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

Upon the recommendation of our audit committee, the board of directors of
Roberts Realty voted to dismiss Arthur Andersen LLP as our independent auditors
and appoint Deloitte & Touche, LLP to serve as our independent auditors for the
current fiscal year, which ended on December 31, 2002. Pursuant to the boards
action, the dismissal of Arthur Andersen and the appointment of Deloitte &
Touche became effective on June 19, 2002. As discussed in our Form 8-K dated
June 19, 2002, there were no disagreements with or reportable events concerning
Arthur Andersen, and we had not engaged Deloitte & Touche in any consultation.

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PART III




ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Directors and Executive Officers

Charles S.
Roberts, age 56, has served as our Chairman of the Board, Chief
Executive Officer and President since July 1994. Mr. Roberts term as a
director expires at the 2003 annual meeting of shareholders. Mr. Roberts owns,
directly or indirectly, all of the outstanding stock of, and is the president
and sole director of, Roberts Properties, Inc. and Roberts Properties
Construction, Inc. Mr. Roberts also owned substantially all of the outstanding
interests in Roberts Properties Management, L.L.C. until its acquisition by
Roberts Properties Residential, L.P. on April 1, 1997.

In October 1970, Mr. Roberts established Roberts Properties, Inc. to
develop, construct and manage real estate. Beginning in 1985, Mr. Roberts and
Roberts Properties began to focus on developing upscale multifamily residential
communities and have won numerous local, regional and national awards for the
development of these communities. Mr. Roberts has been a frequent national
speaker on the topic of developing upscale multifamily housing and has been
recognized as a leader in this industry. In April 1995, Roberts Properties
Management, Inc. was recognized as the Property Management Company of the Year
by the National Association of Home Builders. On a regional level, Roberts
Properties was awarded the prestigious Southeast Builders Conference Aurora
Award for the best rental apartment community eight out of nine years during
the period 1988 through 1996. On a national level, Roberts Properties was
awarded the prestigious Pillars of the Industry Award from the National
Association of Home Builders for the best low-rise apartments in 1991 and 1992.
In 1993, Roberts Properties was awarded the coveted Golden Aurora Award for
best overall development in the Southeast.

Wm. Jarell Jones, age 54, a director since October 1994, is an attorney
and has practiced law with the firm of Wm. Jarell Jones, P.C., in Statesboro
and St. Simons, Georgia since November 1993. Mr. Jones term expires at the
2005 annual meeting of shareholders. Mr. Jones is also a Certified Public
Accountant, and in 1976 he formed the public accounting firm of Jones & Kolb in
Atlanta, Georgia and served as Senior Tax Partner and Co-Managing Partner until
December 1988. In 1990 Mr. Jones moved to Statesboro and practiced law with
the firm of Edenfield, Stone & Cox until November 1992 and then with the firm
of Jones & Rutledge from November 1992 until November 1993. Mr. Jones is the
Chief Executive Officer of JQUAD, Inc., a family owned holding company of
timber, farming and development interests. Mr. Jones was a former director for
six years and the former Chairman for two years of the Downtown Statesboro
Development Authority.

Ben A. Spalding, age 68, a director since October 1994, is Executive Vice
President of DHR International, Inc., an executive search firm. Mr. Spalding
was the sole shareholder of Spalding & Company, a former NASD member
broker-dealer that served from 1980 to 1996 as the exclusive broker-dealer for
limited partnerships sponsored by Mr. Roberts. Mr. Spaldings term expires at
the 2004 annual meeting of shareholders. Mr. Spalding served as President of
Spalding & Company from 1980 until 1994. For the 20-year period through 1983,
Mr. Spalding served in several positions with Johnson & Johnson in the health
care field, most recently as Healthcare Division Sales Manager for several
states in the Southeast. Mr. Spalding has a bachelors degree in Business
Administration from Bellarmine College. He has served in numerous positions
with civic and charitable organizations, including serving as a National
Trustee of the Cystic Fibrosis Foundation and a member of the Board of Trustees
of the Metro-Atlanta Crime Commission. He received the Cystic Fibrosis Dick
Goldschmidt Award in 1986 for his efforts on behalf of the Cystic Fibrosis
Foundation.

George W. Wray, Jr., age 66, a director since February 1995, is a private
investor and Senior Partner of the Wray Partnership, a family investment group.
Mr. Wrays term expires at the 2004 annual

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meeting of shareholders. He was employed with International Silver
Company from the early 1960s to July 1993, most recently as a Vice President
engaged in sales management for the eastern United States. From the July 1993
acquisition of International Silver Company by World Crisa Corporation (a
division of Vitro S.A.) through September 1997, Mr. Wray was an independent
sales agent for the successor organization. Mr. Wray also served as a Vice
President of Spalding & Company, an NASD registered broker-dealer, from 1991 to
1997 and was a registered associate of Spalding & Company from 1983 to 1997.
Mr. Wray holds a bachelors degree in Industrial Relations from the University
of North Carolina at Chapel Hill and serves as an elder of the Peachtree
Presbyterian Church in Atlanta.

Dennis H. James, age 55, a director since June 1995, is a Managing
Director of L. J. Melody & Company (formerly Shoptaw-James, Inc.), a commercial
mortgage banking firm. Mr. James term expires at the 2005 annual meeting of
shareholders. Mr. James has over 25 years experience in the mortgage banking
industry and has been involved in the production of income property straight
debt loans, participating mortgages, debt/equity joint ventures and sales. As
Managing Director of L. J. Melody & Company, he is responsible for the
Southeast Regions overall production and investor relations. He has served on
both the Allstate Life Insurance Company Correspondent Advisory Council and
State Farm Life Insurance Advisory Council. Mr. James has a bachelors degree
in Industrial Management from Georgia Tech, and his professional education
includes attendance at numerous real estate institutes.

Charles R. Elliott, age 49, is our Chief Operating Officer, serving in
this position since February 17, 2003. Previously he was our Secretary and
Treasurer from our inception until July 15, 2002, and our Chief Financial
Officer from April 1995 until July 15, 2002, when he became our Senior Vice
President  Real Estate. He left Roberts Realty as a full-time employee on
August 30, 2002 and returned on a full-time basis on February 17, 2003. In
this interim period he provided limited consulting services for which he was
paid a fee. Mr. Elliott also served as a director of Roberts Realty from
October 1994 to February 1995 and became a director again in 2000. Mr.
Elliotts term expires at the 2004 annual meeting of shareholders. He worked
for Hunneman Real Estate Corporation in Boston, Massachusetts from 1979 to
1993, most recently as a Senior Vice-President of Accounting and Finance. Mr.
Elliott joined Roberts Properties in August 1993 as Chief Financial Officer and
served in that role until April 1995. He holds an undergraduate degree in
Accounting and a masters degree in Finance.

Stephen M. McAleer, age 54, joined Roberts Realty as Chief Financial
Officer, Secretary and Treasurer on July 15, 2002. He served as Senior Vice
President and Chief Financial Officer of Cavanagh Group International, Inc.
from 1999 until joining Roberts Realty. He was Vice President  Finance and
Administration of Grieshaber & Co., Inc. from 1992 to 1999. He served as a
management consultant and interim Chief Financial Officer to emerging companies
from 1987 to 1991 and as Vice President and Chief Financial Officer of Hoffman
Surgical Equipment Co. from 1982 to 1986. Mr. McAleer is a Certified Public
Accountant and worked for Price Waterhouse LLP in the audit practice of the
Philadelphia office from 1970 to 1982. He holds a Bachelor of Science degree
in Business Administration from the Pennsylvania State University.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires Roberts
Realtys directors and executive officers and persons who own beneficially more
than 10% of our outstanding common stock to file with the SEC initial reports
of ownership and reports of changes in their ownership of our common stock.
Directors, executive officers and greater than 10% shareholders are required by
SEC regulations to furnish us with copies of the forms they file. Except as
noted in this paragraph, to our knowledge, based solely on a review of the
copies of such reports furnished to us, during the fiscal year ended December
31, 2002, our directors, executive officers and greater than 10% shareholders
complied with all applicable

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Section 16(a) filing requirements. Our Chief Financial Officer, Stephen
M. McAleer (who owns none of our shares), filed his Form 3, Initial Statement
of Beneficial Ownership of Securities, after its due date; and our Vice
President  Property Maintenance, Ronald L. Johnson, filed a Form 4, Statement
of Changes in Beneficial Ownership, disclosing one transaction, after its due
date.




ITEM 11. EXECUTIVE COMPENSATION.

Compensation of Executive Officers

Mr. Charles S. Roberts, our Chairman of the Board, Chief Executive Officer
and President and Mr. Charles R. Elliott, our Secretary and Treasurer from our
inception until July 15, 2002 and our Chief Financial Officer from April 1995
until July 15, 2002, are our only executive officers whose total salary and
bonus exceeded $100,000 during 2002. Mr. Roberts and Mr. Elliott are our
named executive officers. (Mr. Elliott left us as a full-time employee on
July 15, 2002 and returned as our Chief Operating Officer on February 17,
2003.)

Summary Compensation Table

|                            |                                 |      |                     |            |  |           |         |         |  |  |   |        | 
|--------------------------- | ------------------------------- | ---- | ------------------- | ---------- |  | --------- | ------- | ------- |  |  | - | ------ | 
|                            |                                 |      | Annual Compensation
|                            |                                 |      |                    
|Name and Principal Position |                                 | Year |                     | Salary ($) |  | Bonus ($)
|                            |                                 |      |                     |            |  |          
|Charles S. Roberts          |                                 |      | 2002                |            |  |           | 150,000 |         |  |  | 0 |       
|                            | Chairman of the Board, Chief    |      |                     | 2001       |  |           |         | 150,000 |  |  |   | 0      | 
|                            | Executive Officer and President |      |                     | 2000       |  |           |         | 150,000 |  |  |   | 0      | 
|                           
|Charles R. Elliott          |                                 |      | 2002                |            |  |           | 103,671 | *       |  |  | 0 |       
|                            | Secretary, Treasurer and        |      |                     | 2001       |  |           |         | 137,077 |  |  |   | 15,000 | 
|                            | Chief Financial Officer         |      |                     | 2000       |  |           |         | 123,000 |  |  |   | 30,000 | 



---

|* |  | Includes consulting fees of $6,575 paid for services performed after July
15, 2002.
|- |  | -----------------------------------------------------------------------------------

We are not a party to any employment agreements. Although our board of
directors has from time to time in the past made individual grants of shares of
restricted stock to our officers, we have no equity compensation plans under
which we could issue stock, restricted stock or restricted stock units, phantom
stock, stock options, SARs, stock options in tandem with SARs, warrants,
convertible securities, performance units and performance shares, or similar
instruments. The board of directors may elect to grant restrictive shares in
the future, and in each such event, the board will approve the specific
issuance of shares to an individual officer or officers. No shares are
presently reserved for that purpose.

We make payments to affiliates of Mr. Roberts under various agreements and
arrangements. See Item 13, Certain Relationships and Related Transactions 
Payments to the Roberts Companies.

Compensation of Directors

We pay our directors who are not officers of Roberts Realty fees for their
services as directors. Mr. Roberts, who is an officer, is not paid any
director fees. Mr. Elliott was not paid directors fees during the time he was
employed as an officer. He was paid directors fees of $4,000 in 2002 during
the time he was not employed as an officer. Other non-officer directors
receive an annual fee of $12,000 for attendance, in person or by telephone, at
meetings of the board of directors. In addition, we reimburse our

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directors for reasonable travel expenses and out-of-pocket expenses
incurred in connection with their activities on our behalf.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee of the Board of Directors is composed of Mr.
James and Mr. Jones. Neither of them was during 2002, or at any previous time,
an officer or employee of Roberts Realty or Roberts Properties Residential,
L.P.




ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table describes the beneficial ownership of shares of our
common stock as of March 19, 2003 for:



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

Except as noted in the footnotes, the person owns all shares and
partnership units directly and has sole voting and investment power. Each of
the persons known by us to beneficially own more than 5% of the common stock
has an address in care of our principal office, except for Dr. James M.
Goodrich, whose address is 524 Manor Ridge Drive, Atlanta, Georgia 30304. The
Number of Shares Owned column in the table includes the shares owned by the
persons named but does not include shares they may acquire by exchanging units
of partnership interest in Roberts Properties Residential, L.P., our operating
partnership, for shares of common stock as explained in the following
paragraph. The Number of Units Beneficially Owned column in the table reflects
all shares that each person has the right to acquire by exchanging units for
shares. Under SEC rules, the shares that can be acquired in exchange for units
are deemed to be outstanding and to be beneficially owned by the person or
group holding those units when computing the percentage ownership of that
person or group, but are not treated as outstanding for the purpose of
computing the percentage ownership of any other person or group.

Except as described in this paragraph, unitholders generally have the
right to require the operating partnership to redeem their units. Our articles
of incorporation limit ownership by any one holder to 6% of our outstanding
shares, other than by Mr. Roberts, who is limited to 25%. Accordingly, a
unitholder cannot redeem units if upon their redemption he would hold more
shares than permitted under the applicable percentage limit. Given the total
number of shares and units they own, each of Mr. Roberts, Dr. Goodrich and Mr.
Wray may be unable to redeem all the units they own unless and until other
unitholders redeem a sufficient number of units to cause the number of
outstanding shares of common stock to be increased to a level sufficient to
permit their redemption. A unitholder who submits units for redemption will
receive, at our election, either (a) an equal number of shares or (b) cash in
the amount of the average of the daily market prices of the common stock for
the 10 consecutive trading days before the date of submission multiplied by the
number of units submitted. Our policy is to issue shares in exchange for units
submitted for redemption.

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|                                                                |  |                  |           |              |  |                 |         |          |  |            |           |  |  |  |      |  
|--------------------------------------------------------------- |  | ---------------- | --------- | ------------ |  | --------------- | ------- | -------- |  | ---------- | --------- |  |  |  | ---- | -
|                                                                |  |                  |           |              |  | Number of Units |         |          |  |            |           |  |  | 
|Name of                                                         |  | Number of Shares |           | Beneficially |  |                 |         |          |  | Percent of
|Beneficial Owner                                                |  | Owned            |           | Owned        |  | Total           |         | Class(1)
|                                                                |  |                  |           |              |  |                 |         |         
|Charles
S. Roberts(2)                                           |  |                  | 937,018   |              |  |                 | 738,012 |          |  |            | 1,675,030 |  |  |  | 28.6 | %
|George
W. Wray, Jr.(3)                                          |  |                  | 247,880   |              |  |                 | 119,266 |          |  |            | 367,146   |  |  |  | 7.0  |  
|James
M. Goodrich(4)                                            |  |                  | 281,847   |              |  |                 | 0       |          |  |            | 281,847   |  |  |  | 5.5  |  
|Dennis H. James                                                 |  |                  | 71,646    |              |  |                 | 2,405   |          |  |            | 74,051    |  |  |  | 1.4  |  
|Ben
A. Spalding(5)                                              |  |                  | 21,252    |              |  |                 | 27,318  |          |  |            | 48,570    |  |  |  | *    |  
|Wm.
Jarell Jones(6)                                             |  |                  | 7,012     |              |  |                 | 0       |          |  |            | 7,012     |  |  |  | *    |  
|Charles R. Elliott                                              |  |                  | 11,875    |              |  |                 | 0       |          |  |            | 11,875    |  |  |  | *    |  
|All directors and
executive officers as
a group: (7 persons)(7) |  |                  | 1,296,683 |              |  |                 | 887,001 |          |  |            | 2,183,684 |  |  |  | 36.3 | %



---

|*   |  | Less than 1%.                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) |  | The total number of shares outstanding used in calculating this percentage
is 5,128,293, the number of shares outstanding as of March 19, 2003.                                                                                                                                                                                                                                                                                               
|   
|(2) |  | Includes 2,744 shares owned by Mr. Roberts minor daughter. A trust for
his minor daughter of which he is the sole trustee owns 29,500 units.                                                                                                                                                                                                                                                                                                 
|   
|(3) |  | Includes 214,065 shares owned by a partnership, over which shares Mr. Wray
has voting and investment power as the managing partner of such partnership;
and 27,257 shares owned by his wife and 5,058 shares owned by a trust of which
she is a co-trustee. Mr. Wray disclaims beneficial ownership of the 27,257
shares owned by Mrs. Wray and 5,058 shares owned by a trust of which she is a
co-trustee. The partnership owns 95,568 units.
|   
|(4) |  | Includes 110,507 shares owned jointly by Dr. Goodrich and his wife; 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. Dr.
Goodrichs beneficial ownership of units includes 48,075 units owned jointly by
Dr. and Mrs. Goodrich.                                                                                                              
|   
|(5) |  | 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.                 
|   
|(6) |  | Includes 1,745 shares owned by Mr. Jones wife, to which Mr. Jones
disclaims beneficial ownership.                                                                                                                                                                                                                                                                                                                                            
|   
|(7) |  | Includes an aggregate of 41,624 shares and 27,318 units beneficially owned
by three directors wives, as to which shares such directors disclaim
beneficial ownership.                                                                                                                                                                                                                                                                        

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

General

Roberts Realty conducts its business through Roberts Properties
Residential, L.P., which we refer to as the operating partnership; owns a 71.0%
interest in it as of March 19, 2003, and is its sole general partner. Mr.
Charles S. Roberts owns all of the outstanding shares of both Roberts
Properties, Inc. and Roberts Properties Construction, Inc., which we refer to
together as the Roberts Companies. These companies perform certain services
for us as explained below. Notes 3 and 10 to our consolidated financial
statements included in this report provide further detail regarding some of the
transactions described in this section.

Payments to the Roberts Companies

Overview. We have paid substantial fees to the Roberts Companies for
various types of services and will continue to do so in the future. These
various arrangements are summarized below.

Transactions with Affiliates of Mr. Roberts. On January 4, 2001,
we sold our 152-unit Rosewood Plantation community. We used the net proceeds
from that sale to complete a Section 1031 tax-deferred exchange for four
properties in 2001 to defer taxes we would otherwise have incurred on the gain
from the sale. These transactions are described in more detail in Notes 3 and
10 to the consolidated financial statements included in this report. Our
agreements to pay development and construction fees with respect to these four
properties are described below. Those agreements are also included in the
summaries of development fees and construction fees that follow this
subsection.

Addison Place Shoppes. On February 27, 2001, we signed an exchange
agreement with an intermediary to acquire land previously owned by Roberts
Properties Jones Bridge, LLC, of which Mr. Roberts owned a 90% interest. We
are constructing a 42,090 square foot retail center on the 6.84-acre property,
which is located at the intersection of Abbotts Bridge Road and Jones Bridge
Road in front of our Addison Place community in Alpharetta, Georgia. We
acquired the property on June 30, 2001 for approximately $4,460,000. In
connection with these transactions, Roberts Properties Jones Bridge, LLC
received $3,498,000 for the property. We entered into a cost plus 5% contract
with Roberts Construction to complete the retail center, and through March 19,
2003, we have paid Roberts Construction approximately $1,898,000 for
construction-related work on the property.

Northridge Community. On June 28, 2001, we purchased 10.9 acres of
undeveloped land from Roberts Properties. We are developing a 220-unit
apartment community on this site, which is located on Northridge Parkway in
Atlanta adjacent to our Highland Park community. We have retained Roberts
Properties to complete the design and development work for a fee of $2,500 per
unit, or $550,000. We intend to enter into a cost plus 10% contract with
Roberts Construction to build the 220 apartment units.

East Fox Court. On May 30, 2001, we purchased 9.5 acres of undeveloped
land from Roberts Properties for the construction of 80 townhouse units located
at the corner of Jones Bridge Road and East Fox Court, across from our Addison
Place community. In 2002, we paid Roberts Properties $180,000 to complete the
design and development work, and we sold the property in November 2002.

Corporate Office Building. On June 28, 2001, we purchased a partially
constructed office building and approximately 3.9 acres of land from Roberts
Properties. Roberts Construction will complete construction of the building
for a fixed price of $3,054,000 and will perform tenant finish work

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for approximately $600,000. Roberts Construction will not earn a profit
on the construction of the building or on the tenant finish work.

Development Fees. From time to time we pay Roberts Properties fees for
various development services that include market studies, business plans,
design, finish selection, interior design and construction administration.
These fees (which in some cases include amounts paid before 2002) are
summarized as follows:

|                          |  |                |           |                  |  |             |           |              |  |   |         |  |  |   |       | 
|------------------------- |  | -------------- | --------- | ---------------- |  | ----------- | --------- | ------------ |  | - | ------- |  |  | - | ----- | 
|                          |  | Actual/        |           | Total            |  | Estimated   |           |              |  |  
|                          |  | Estimated      |           | Amount           |  | Remaining   |           |              |  |  
|                          |  | Total Contract |           | Incurred through |  | Contractual |           |              |  |  
|                          |  | Amount         |           | 3/19/03          |  | Commitment  |           | Fee Per Unit
|                          |  |                |           |                  |  |             |           |             
|Veranda Chase             |  | $              | 1,250,000 |                  |  | $           | 1,250,000 |              |  | $ | 0       |  |  | $ | 5,000 | 
|Charlotte                 |  |                | 1,595,000 |                  |  |             | 1,595,000 |              |  |   | 0       |  |  |   | 5,000 | 
|Corporate Office Building |  |                | 0         |                  |  |             | 0         |              |  |   | 0       |  |  |   | N/A   | 
|Addison Place Shoppes     |  |                | 0         |                  |  |             | 0         |              |  |   | 0       |  |  |   | N/A   | 
|Northridge Community      |  |                | 550,000   |                  |  |             | 0         |              |  |   | 550,000 |  |  |   | 2,500 | 
|East Fox Court            |  |                | 180,000   |                  |  |             | 180,000   |              |  |   | 0       |  |  |   | 2,250 | 
|                          |  |                |           |                  |  |             |           |              |  |   |         |  |  |   |       | 
|                          |  | $              | 3,575,000 |                  |  | $           | 3,025,000 |              |  | $ | 550,000 |  |  |   |       | 
|                          |  |                |           |                  |  |             |           |              |  |   |         |  |  |   |       | 

Construction Contracts. Roberts Realty enters into contracts in the
normal course of business with Roberts Construction, of which Mr. Roberts
beneficially owns all of the outstanding shares. The following table
summarizes certain information regarding payments to Roberts Construction for
other construction projects through March 19, 2003 (in some cases the amounts
shown include payments made before 2002). For the Addison Place Phase II,
Veranda Chase and Charlotte projects, we pay Roberts Construction its cost,
plus a fee of 10% of its cost. For the Addison Place Shoppes, we pay Roberts
Construction its cost, plus a fee of 5% of its cost. We pay Roberts
Construction its cost, but no additional fee, for construction of the corporate
office building.

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|                          |  |                |            |                  |  |             |            |  |  |   |            | 
|------------------------- |  | -------------- | ---------- | ---------------- |  | ----------- | ---------- |  |  | - | ---------- | 
|                          |  | Actual/        |            | Total            |  | Estimated  
|                          |  | Estimated      |            | Amount           |  | Remaining  
|                          |  | Total Contract |            | Incurred through |  | Contractual
|                          |  | Amount         |            | 3/19/03          |  | Commitment 
|                          |  |                |            |                  |  |            
|Addison Place Phase II    |  | $              | 22,314,000 |                  |  | $           | 22,148,000 |  |  | $ | 166,000    | 
|Veranda Chase             |  |                | 15,710,000 |                  |  |             | 15,448,000 |  |  |   | 262,000    | 
|Charlotte                 |  |                | 23,193,000 |                  |  |             | 11,822,000 |  |  |   | 11,371,000 | 
|Corporate Office Building |  |                | 4,670,000  |                  |  |             | 3,862,000  |  |  |   | 808,000    | 
|Addison Place Shoppes     |  |                | 1,782,000  |                  |  |             | 1,701,000  |  |  |   | 81,000     | 
|                          |  |                |            |                  |  |             |            |  |  |   |            | 
|                          |  | $              | 67,669,000 |                  |  | $           | 54,981,000 |  |  | $ | 12,688,000 | 
|                          |  |                |            |                  |  |             |            |  |  |   |            | 

Partnership Profits Interest. 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 has been formalized
as a profits interest in the operating partnership. As the holder of the
profits interest, Roberts Properties may receive distributions in certain
circumstances. Upon a sale of any of the acquired properties, Roberts
Properties will receive a distribution of a specified percentage of the gross
sales proceeds. Upon a change in control of Roberts Realty or the operating
partnership, Roberts Properties will receive a distribution of the applicable
percentages of the fair market value of each of the properties up to the
maximum amount. The amount to be distributed to Roberts Properties with
respect to each affected property will be limited to the amount by which the
gross proceeds from the sale of that property, or, in connection with a change
in control, its fair market value, exceeds the sum of:



| |  |  | 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.                                 

The percentages that apply to the sales proceeds, or fair market value, of
the four properties subject to this arrangement are shown in the following
table:

|                         |  |  |   |  
|------------------------ |  |  | - | -
|River Oaks               |  |  | 5 | %
|Preston Oaks Phase I     |  |  | 5 | %
|Highland Park            |  |  | 5 | %
|Plantation Trace Phase I |  |  | 6 | %

If Roberts Realty exercises its option to acquire all of the outstanding
units for shares, it must simultaneously purchase the profits interest for cash
in the amount the holder of that interest would receive if a change in control
occurred at that time.

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Except for units and the partnership profits interest related to the
original nine limited partnerships acquired between 1994 and 1996, no
partnership interests have been, or are presently expected to be, issued or
assumed by the operating partnership. We made no profits interest
distributions to Roberts Properties from January 1, 2002 through March 19,
2003.

Other Fees. From January 1, 2002 to March 19, 2003, we paid Roberts
Properties $234,000 for reimbursement of operating costs and expenses, and we
paid Roberts Construction $116,000 for project work done at our communities.

Compensation to L. J. Melody & Company

Dennis H. James, one
of our directors, is Executive Vice President of L. J. Melody & Company, a commercial mortgage banking firm that has originated
loans for us. We have paid L. J. Melody fees in the past for originating loans
for us. L. J. Melody will assist us in originating the $10,750,000 loan to
refinance our River Oaks community in 2003, for which we will pay it a fee of
approximately $81,000.




ITEM 14. CONTROLS AND PROCEDURES

Within 90 days prior to the filing date of this annual report on Form
10-K, we carried out an evaluation, under the supervision and with the
participation of our management, including our Chief Executive Officer and
Chief Financial Officer, of the effectiveness of our disclosure controls and
procedures as defined in Exchange Act Rule 13a-14. Based upon that evaluation,
our Chief Executive Officer and Chief Financial Officer have concluded that our
current disclosure controls and procedures are effective. There have been no
significant changes in our internal controls or in other factors that could
significantly affect internal controls subsequent to the date of the evaluation
by our Chief Executive Officer and Chief Financial Officer.

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

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PART IV




ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.



|(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

|                                                                                                                                          |                                                         |  |      |     | 
|----------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------- |  | ---- | --- | 
|                                                                                                                                          |                                                         |  | Page
|INDEPENDENT AUDITORS REPORT (Deloitte & Touche LLP)                                                                                      |                                                         |  | F-1  |    
|COPY OF REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS (Arthur Andersen LLP)                                                                    |                                                         |  | F-2  |    
|CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE AS OF DECEMBER 31, 2002
AND 2001 AND FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000: |                                                         |  |      |    
|                                                                                                                                          | Consolidated Balance Sheets                             |  |      | F-3 | 
|                                                                                                                                          | Consolidated Statements of Operations                   |  |      | F-4 | 
|                                                                                                                                          | Consolidated Statements of Shareholders Equity         |  |      | F-5 | 
|                                                                                                                                          | Consolidated Statements of Cash Flows                   |  |      | F-6 | 
|                                                                                                                                          | Notes to Consolidated Financial Statements              |  |      | F-7 | 
|                                                                                                                                          | Schedule III  Real Estate and Accumulated Depreciation |  |      | S-1 | 

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INDEPENDENT AUDITORS REPORT

To Roberts Realty Investors, Inc.:

We have audited the accompanying consolidated balance sheet of Roberts Realty
Investors, Inc. (a Georgia corporation) and its subsidiary (the Company) as
of December 31, 2002, and the related consolidated statements of operations,
cash flows and shareholders equity for the year then ended. Our audit also
included the financial statement schedule listed in the Index at Item 8. These
financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The consolidated financial statements of Roberts Realty Investors,
Inc. as of December 31, 2001, and for each of the two years in the period ended
December 31, 2001, were audited by other auditors who have ceased operations.
Those auditors expressed an unqualified opinion on those financial statements
in their report dated February 22, 2002.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, such 2002 consolidated financial statements present fairly, in
all material respects, the financial position of the Company as of December 31,
2002 and the results of their operations and their cash flows for the year then
ended in conformity with accounting principles generally accepted in the United
States of America. Also, in our opinion, such financial statement schedule,
when considered in relation to the basic 2002 consolidated financial statements
taken as a whole, presents fairly in all material respects the information set
forth therein.

/s/ Deloitte & Touche LLP

Atlanta, Georgia
February 28, 2003

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The following report of Arthur Andersen LLP (Andersen) is a copy of the
report previously issued by Andersen on February 22, 2002. The report of
Andersen is included in this annual report on Form 10-K pursuant to rule
2-02(e) of regulation S-X. Roberts Realty has not been able to obtain a
reissued report from Andersen. Andersen has not consented to the inclusion of
its report in this annual report on Form 10-K. Because Andersen has not
consented to the inclusion of its report in this annual report, it may be
difficult to seek remedies against Andersen, and the ability to seek relief
against Andersen may be impaired.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Roberts Realty Investors, Inc.:

We have audited the accompanying consolidated balance sheets of Roberts Realty
Investors, Inc. (a Georgia corporation) and its subsidiary as of December 31,
2001 and 2000 and the related consolidated statements of operations,
shareholders equity, and cash flows for each of the three years in the period
ended December 31, 2001. These financial statements and the schedule referred
to below are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Roberts Realty Investors, Inc.
and its subsidiary as of December 31, 2001 and 2000 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001 in conformity with accounting principles generally accepted
in the United States.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
financial statements is presented for purposes of complying with the Securities
and Exchange Commissions rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion,
fairly states in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken as a whole.

/s/ ARTHUR ANDERSEN LLP

Atlanta, Georgia
February 22, 2002

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ROBERTS REALTY INVESTORS, INC.

CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Data)

|                                                                                                                        |                                                                                                                                                 |                              |         |              |         |              |         |         |         | 
|----------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------- | ------- | ------------ | ------- | ------------ | ------- | ------- | ------- | 
|                                                                                                                        |                                                                                                                                                 |                              |         | December 31, |         | December 31,
|                                                                                                                        |                                                                                                                                                 |                              |         | 2002         |         | 2001        
|                                                                                                                        |                                                                                                                                                 |                              |         |              |         |             
|ASSETS                                                                                                                  |                                                                                                                                                 |                              |         |              |         |              |         |        
|REAL ESTATE ASSETS  At cost:                                                                                           |                                                                                                                                                 |                              |         |              |         |              |         |        
|                                                                                                                        | Land                                                                                                                                            |                              | $       | 22,308       |         |              | $       | 19,729  |        
|                                                                                                                        | Buildings and improvements                                                                                                                      |                              |         | 127,611      |         |              |         | 109,166 |        
|                                                                                                                        | Furniture, fixtures and equipment                                                                                                               |                              |         | 14,298       |         |              |         | 12,891  |        
|                                                                                                                        |                                                                                                                                                 |                              |         |              |         |              |         |        
|                                                                                                                        |                                                                                                                                                 |                              | 164,217 |              |         |              | 141,786 |        
|                                                                                                                        | Less accumulated depreciation                                                                                                                   |                              |         | (28,229      | )       |              |         | (21,463 | )      
|                                                                                                                        |                                                                                                                                                 |                              |         |              |         |              |         |        
|                                                                                                                        |                                                                                                                                                 | Operating real estate assets |         |              | 135,988 |              |         |         | 120,323 | 
|                                                                                                                        | Land held for future development                                                                                                                |                              |         | 0            |         |              |         | 1,741   |        
|                                                                                                                        | Construction in progress and real estate under development                                                                                      |                              |         | 35,015       |         |              |         | 38,809  |        
|                                                                                                                        |                                                                                                                                                 |                              |         |              |         |              |         |        
|                                                                                                                        |                                                                                                                                                 | Net real estate assets       |         |              | 171,003 |              |         |         | 160,873 | 
|CASH AND CASH EQUIVALENTS                                                                                               |                                                                                                                                                 |                              | 5,542   |              |         |              | 2,617   |        
|RESTRICTED CASH                                                                                                         |                                                                                                                                                 |                              | 340     |              |         |              | 336     |        
|DEFERRED FINANCING COSTS  Net of accumulated amortization of
$671 and $464 at December 31, 2002 and 2001, respectively |                                                                                                                                                 |                              | 1,349   |              |         |              | 1,225   |        
|OTHER ASSETS  Net                                                                                                      |                                                                                                                                                 |                              | 773     |              |         |              | 452     |        
|                                                                                                                        |                                                                                                                                                 |                              |         |              |         |              |         |        
|                                                                                                                        |                                                                                                                                                 | $                            | 179,007 |              |         | $            | 165,503 |        
|                                                                                                                        |                                                                                                                                                 |                              |         |              |         |              |         |        
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                    |                                                                                                                                                 |                              |         |              |         |              |         |        
|LIABILITIES:                                                                                                            |                                                                                                                                                 |                              |         |              |         |              |         |        
|                                                                                                                        | Mortgage notes payable                                                                                                                          |                              | $       | 102,826      |         |              | $       | 78,877  |        
|                                                                                                                        | Construction loans payable                                                                                                                      |                              |         | 27,891       |         |              |         | 31,704  |        
|                                                                                                                        | Land notes payable                                                                                                                              |                              |         | 6,700        |         |              |         | 8,000   |        
|                                                                                                                        | Line of credit                                                                                                                                  |                              |         | 0            |         |              |         | 2,000   |        
|                                                                                                                        | Interest rate swap contract payable                                                                                                             |                              |         | 4,813        |         |              |         | 2,880   |        
|                                                                                                                        | Accounts payable and accrued expenses                                                                                                           |                              |         | 2,221        |         |              |         | 1,851   |        
|                                                                                                                        | Dividends and distributions payable                                                                                                             |                              |         |              |         |              |         | 8       |        
|                                                                                                                        | Due to affiliates (including retainage payable of $1,122 and $1,143 at
December 31, 2002 and 2001, respectively)                                |                              |         | 2,258        |         |              |         | 2,397   |        
|                                                                                                                        | Security deposits and prepaid rents                                                                                                             |                              |         | 458          |         |              |         | 416     |        
|                                                                                                                        |                                                                                                                                                 |                              |         |              |         |              |         |        
|                                                                                                                        |                                                                                                                                                 | Total liabilities            |         |              | 147,167 |              |         |         | 128,133 | 
|                                                                                                                        |                                                                                                                                                 |                              |         |              |         |              |         |        
|COMMITMENTS AND CONTINGENCIES (Note 11)                                                                                 |                                                                                                                                                 |                              |         |              |         |              |         |        
|MINORITY INTEREST OF UNITHOLDERS IN THE OPERATING PARTNERSHIP                                                           |                                                                                                                                                 |                              | 9,361   |              |         |              | 11,996  |        
|                                                                                                                        |                                                                                                                                                 |                              |         |              |         |              |         |        
|SHAREHOLDERS 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, 5,459,391 and
5,266,567 shares issued at December 31, 2002 and 2001, respectively |                              |         | 55           |         |              |         | 53      |        
|                                                                                                                        | Additional paid-in capital                                                                                                                      |                              |         | 25,408       |         |              |         | 24,410  |        
|                                                                                                                        | Less treasury shares, at cost (362,588 shares at
December 31, 2002 and 2001)                                                                    |                              |         | (2,764       | )       |              |         | (2,764  | )      
|                                                                                                                        | Unamortized deferred compensation                                                                                                               |                              |         | (139         | )       |              |         | (202    | )      
|                                                                                                                        | Retained earnings                                                                                                                               |                              |         | 3,317        |         |              |         | 5,833   |        
|                                                                                                                        | Accumulated other comprehensive loss                                                                                                            |                              |         | (3,398       | )       |              |         | (1,956  | )      
|                                                                                                                        |                                                                                                                                                 |                              |         |              |         |              |         |        
|                                                                                                                        |                                                                                                                                                 | Total shareholders equity   |         |              | 22,479  |              |         |         | 25,374  | 
|                                                                                                                        |                                                                                                                                                 |                              |         |              |         |              |         |        
|                                                                                                                        |                                                                                                                                                 | $                            | 179,007 |              |         | $            | 165,503 |        
|                                                                                                                        |                                                                                                                                                 |                              |         |              |         |              |         |        

See notes to the consolidated financial statements.

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ROBERTS REALTY INVESTORS, INC.

CONSOLIDATED STATEMENTS OF
OPERATIONS
(Dollars in Thousands, Except Per Share Data)

|                                                                                                                                 |                                          |                                                                                  |        |                          |           |      |       |        |           |   |       |        |           |  
|-------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------- | -------------------------------------------------------------------------------- | ------ | ------------------------ | --------- | ---- | ----- | ------ | --------- | - | ----- | ------ | --------- | -
|                                                                                                                                 |                                          |                                                                                  |        | Years Ended December 31,
|                                                                                                                                 |                                          |                                                                                  |        |                         
|                                                                                                                                 |                                          |                                                                                  |        | 2002                     |           | 2001 |       | 2000  
|                                                                                                                                 |                                          |                                                                                  |        |                          |           |      |       |       
|OPERATING REVENUES:                                                                                                              |                                          |                                                                                  |        |                          |           |      |       |        |           |   |       |       
|                                                                                                                                 | Rental operations                        |                                                                                  | $      | 17,935                   |           |      | $     | 17,070 |           |   | $     | 18,768 |          
|                                                                                                                                 | Other operating income                   |                                                                                  |        | 1,076                    |           |      |       | 1,155  |           |   |       | 1,410  |          
|                                                                                                                                 |                                          |                                                                                  |        |                          |           |      |       |        |           |   |       |       
|                                                                                                                                 |                                          | Total operating revenues                                                         |        |                          | 19,011    |      |       |        | 18,225    |   |       |        | 20,178    |  
|OPERATING EXPENSES:                                                                                                              |                                          |                                                                                  |        |                          |           |      |       |        |           |   |       |       
|                                                                                                                                 | Personnel                                |                                                                                  |        | 2,046                    |           |      |       | 1,739  |           |   |       | 1,920  |          
|                                                                                                                                 | Utilities                                |                                                                                  |        | 1,205                    |           |      |       | 1,075  |           |   |       | 1,243  |          
|                                                                                                                                 | Repairs, maintenance and landscaping     |                                                                                  |        | 1,179                    |           |      |       | 1,049  |           |   |       | 1,200  |          
|                                                                                                                                 | Real estate taxes                        |                                                                                  |        | 1,997                    |           |      |       | 1,413  |           |   |       | 1,561  |          
|                                                                                                                                 | Marketing, insurance and other           |                                                                                  |        | 1,193                    |           |      |       | 849    |           |   |       | 835    |          
|                                                                                                                                 | General and administrative expenses      |                                                                                  |        | 2,155                    |           |      |       | 1,732  |           |   |       | 2,197  |          
|                                                                                                                                 | Depreciation expense                     |                                                                                  |        | 7,001                    |           |      |       | 5,501  |           |   |       | 5,463  |          
|                                                                                                                                 |                                          |                                                                                  |        |                          |           |      |       |        |           |   |       |       
|                                                                                                                                 |                                          | Total operating expenses                                                         |        |                          | 16,776    |      |       |        | 13,358    |   |       |        | 14,419    |  
|INCOME FROM OPERATIONS                                                                                                           |                                          |                                                                                  | 2,235  |                          |           |      | 4,867 |        |           |   | 5,759 |       
|OTHER INCOME (EXPENSE):                                                                                                          |                                          |                                                                                  |        |                          |           |      |       |        |           |   |       |       
|                                                                                                                                 | Interest income                          |                                                                                  |        | 39                       |           |      |       | 263    |           |   |       | 214    |          
|                                                                                                                                 | Interest expense                         |                                                                                  |        | (6,951                   | )         |      |       | (5,086 | )         |   |       | (4,951 | )        
|                                                                                                                                 | Loss on disposal of assets               |                                                                                  |        | (33                      | )         |      |       | (27    | )         |   |       | (83    | )        
|                                                                                                                                 | Amortization of deferred financing costs |                                                                                  |        | (336                     | )         |      |       | (219   | )         |   |       | (209   | )        
|                                                                                                                                 |                                          |                                                                                  |        |                          |           |      |       |        |           |   |       |       
|                                                                                                                                 |                                          | Total other expense                                                              |        |                          | (7,281    | )    |       |        | (5,069    | ) |       |        | (5,029    | )
|INCOME (LOSS) BEFORE MINORITY INTEREST, GAINS ON SALE OF
REAL ESTATE ASSETS AND EXTRAORDINARY ITEMS                              |                                          |                                                                                  | (5,046 | )                        |           |      | (202  | )      |           |   | 730   |       
|MINORITY INTEREST OF UNITHOLDERS IN THE OPERATING PARTNERSHIP                                                                    |                                          |                                                                                  | 1,589  |                          |           |      | 66    |        |           |   | (246  | )     
|                                                                                                                                 |                                          |                                                                                  |        |                          |           |      |       |        |           |   |       |       
|INCOME (LOSS) BEFORE GAINS ON SALE OF REAL ESTATE ASSETS
AND EXTRAORDINARY ITEMS                                                 |                                          |                                                                                  | (3,457 | )                        |           |      | (136  | )      |           |   | 484   |       
|GAINS ON SALE OF REAL ESTATE ASSETS, net of minority interest
of unitholders in the operating partnership                        |                                          |                                                                                  | 941    |                          |           |      | 7,981 |        |           |   | 2,416 |       
|                                                                                                                                 |                                          |                                                                                  |        |                          |           |      |       |        |           |   |       |       
|INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS                                                                                         |                                          |                                                                                  | (2,516 | )                        |           |      | 7,845 |        |           |   | 2,900 |       
|EXTRAORDINARY ITEMS  Loss on early extinguishment of debt, net of
minority interest of unitholders in the operating partnership |                                          |                                                                                  | 0      |                          |           |      | (405  | )      |           |   | (68   | )     
|                                                                                                                                 |                                          |                                                                                  |        |                          |           |      |       |        |           |   |       |       
|                                                                                                                                 |                                          | NET INCOME (LOSS)                                                                |        | $                        | (2,516    | )    |       | $      | 7,440     |   |       | $      | 2,832     |  
|                                                                                                                                 |                                          |                                                                                  |        |                          |           |      |       |        |           |   |       |       
|INCOME (LOSS) PER COMMON SHARE  BASIC AND DILUTED (Note 8):                                                                     |                                          |                                                                                  |        |                          |           |      |       |        |           |   |       |       
|                                                                                                                                 |                                          | Income before extraordinary items                                                |        | $                        | (0.51     | )    |       | $      | 1.61      |   |       | $      | 0.59      |  
|                                                                                                                                 |                                          | Extraordinary items                                                              |        |                          | 0.00      |      |       |        | (0.08     | ) |       |        | (0.01     | )
|                                                                                                                                 |                                          |                                                                                  |        |                          |           |      |       |        |           |   |       |       
|                                                                                                                                 |                                          | Net income                                                                       |        | $                        | (0.51     | )    |       | $      | 1.53      |   |       | $      | 0.58      |  
|                                                                                                                                 |                                          |                                                                                  |        |                          |           |      |       |        |           |   |       |       
|                                                                                                                                 |                                          | Weighted average common shares  basic                                           |        |                          | 4,943,280 |      |       |        | 4,870,117 |   |       |        | 4,881,601 |  
|                                                                                                                                 |                                          | Weighted average common shares  diluted (effect of
operating partnership units) |        |                          | 7,220,593 |      |       |        | 7,226,123 |   |       |        | 7,367,068 |  

See notes to the consolidated financial statements.

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ROBERTS REALTY INVESTORS, INC.

CONSOLIDATED STATEMENTS OF
SHAREHOLDERS EQUITY
(Dollars in Thousands, Except Share and Per Share Data)

|                                |  |                                                               |           |                                   |         |               |    |        |   |         |        |         |        |              |        |          |        |               |      |          |      |               |        |   |        |       |        |   |        |   |        |  |        |   |        |  
|------------------------------- |  | ------------------------------------------------------------- | --------- | --------------------------------- | ------- | ------------- | -- | ------ | - | ------- | ------ | ------- | ------ | ------------ | ------ | -------- | ------ | ------------- | ---- | -------- | ---- | ------------- | ------ | - | ------ | ----- | ------ | - | ------ | - | ------ |  | ------ | - | ------ | -
|                                |  |                                                               |           |                                   |         | Common Shares |    |        |   |         |        |         |        |              |        |          |        |               |      |          |      |               |        |   |        |       |        |   |        |  
|                                |  |                                                               |           |                                   |         |               |    |        |   |         |        |         |        |              |        |          |        |               |      | Other    |      |               |        |   |        | Total
|                                |  |                                                               |           |                                   |         | Number of     |    |        |   |         |        | Paid-In |        | Treasury     |        | Deferred |        | Comprehensive |      | Retained |      | Shareholders'
|                                |  |                                                               |           |                                   |         | Shares Issued |    | Amount |   | Capital |        | Shares  |        | Compensation |        | Income   |        | Earnings      |      | Equity  
|                                |  |                                                               |           |                                   |         |               |    |        |   |         |        |         |        |              |        |          |        |               |      |         
|BALANCE AS OF DECEMBER 31, 1999 |  |                                                               | 4,959,697 |                                   |         | $             | 49 |        |   | $       | 25,354 |         |        | $            | (1,054 | )        |        | $             | (136 | )        |      | $             | 0      |   |        | $     | (1,903 | ) |        | $ | 22,310 | 
|                                |  | Conversion of units to shares                                 |           |                                   | 191,341 |               |    |        | 3 |         |        |         | 941    |              |        |          |        |               |      |          |      |               |        |   |        |       |        |   |        |   |        |  | 944    |  
|                                |  | Dividends declared ($0.74 per share)                          |           |                                   |         |               |    |        |   |         |        |         | (2,705 | )            |        |          |        |               |      |          |      |               |        |   |        |       |        |   | (929   | ) |        |  | (3,634 | )
|                                |  | Adjustment for minority interest in
the operating partnership |           |                                   |         |               |    |        |   |         |        |         | 74     |              |        |          |        |               |      |          |      |               |        |   |        |       |        |   |        |   |        |  | 74     |  
|                                |  | Restricted shares issued to employees                         |           |                                   | 10,261  |               |    |        |   |         |        |         | 77     |              |        |          |        |               |      |          | (77  | )             |        |   |        |       |        |   |        |   |        |  | 0      |  
|                                |  | Amortization of deferred
compensation                         |           |                                   |         |               |    |        |   |         |        |         |        |              |        |          |        |               |      |          | 67   |               |        |   |        |       |        |   |        |   |        |  | 67     |  
|                                |  | Treasury shares (121,200 shares at
cost)                      |           |                                   |         |               |    |        |   |         |        |         |        |              |        |          | (1,156 | )             |      |          |      |               |        |   |        |       |        |   |        |   |        |  | (1,156 | )
|                                |  | Net income                                                    |           |                                   |         |               |    |        |   |         |        |         |        |              |        |          |        |               |      |          |      |               |        |   |        |       |        |   | 2,832  |   |        |  | 2,832  |  
|                                |  |                                                               |           |                                   |         |               |    |        |   |         |        |         |        |              |        |          |        |               |      |          |      |               |        |   |        |       |        |   |        |   |        | 
|BALANCE AS OF DECEMBER 31, 2000 |  |                                                               | 5,161,299 |                                   |         |               | 52 |        |   |         | 23,741 |         |        |              | (2,210 | )        |        |               | (146 | )        |      |               | 0      |   |        |       | 0      |   |        |   | 21,437 | 
|                                |  | Conversion of units to shares                                 |           |                                   | 86,978  |               |    |        | 1 |         |        |         | 435    |              |        |          |        |               |      |          |      |               |        |   |        |       |        |   |        |   |        |  | 436    |  
|                                |  | Dividends declared ($0.33 per share)                          |           |                                   |         |               |    |        |   |         |        |         |        |              |        |          |        |               |      |          |      |               |        |   |        |       |        |   | (1,607 | ) |        |  | (1,607 | )
|                                |  | Adjustment for minority interest in
the operating partnership |           |                                   |         |               |    |        |   |         |        |         | 1,017  |              |        |          |        |               |      |          |      |               |        |   |        |       |        |   |        |   |        |  | 1,017  |  
|                                |  | Restricted shares issued to employees                         |           |                                   | 18,290  |               |    |        |   |         |        |         | 141    |              |        |          |        |               |      |          | (141 | )             |        |   |        |       |        |   |        |   |        |  | 0      |  
|                                |  | Amortization of deferred compensation                         |           |                                   |         |               |    |        |   |         |        |         |        |              |        |          |        |               |      |          | 85   |               |        |   |        |       |        |   |        |   |        |  | 85     |  
|                                |  | Treasury shares (69,500 shares at cost)                       |           |                                   |         |               |    |        |   |         |        |         |        |              |        |          | (554   | )             |      |          |      |               |        |   |        |       |        |   |        |   |        |  | (554   | )
|                                |  | Cumulative effect of change in
accounting principle           |           |                                   |         |               |    |        |   |         |        |         | (278   | )            |        |          |        |               |      |          |      |               |        |   | (564   | )     |        |   |        |   |        |  | (842   | )
|                                |  | Other comprehensive income                                    |           |                                   |         |               |    |        |   |         |        |         | (646   | )            |        |          |        |               |      |          |      |               |        |   | (1,392 | )     |        |   |        |   |        |  | (2,038 | )
|                                |  | Net income                                                    |           |                                   |         |               |    |        |   |         |        |         |        |              |        |          |        |               |      |          |      |               |        |   |        |       |        |   | 7,440  |   |        |  | 7,440  |  
|                                |  |                                                               |           |                                   |         |               |    |        |   |         |        |         |        |              |        |          |        |               |      |          |      |               |        |   |        |       |        |   |        |   |        | 
|BALANCE AS OF DECEMBER 31, 2001 |  |                                                               | 5,266,567 |                                   |         |               | 53 |        |   |         | 24,410 |         |        |              | (2,764 | )        |        |               | (202 | )        |      |               | (1,956 | ) |        |       | 5,833  |   |        |   | 25,374 | 
|                                |  | Comprehensive income (loss)                                   |           |                                   |         |               |    |        |   |         |        |         |        |              |        |          |        |               |      |          |      |               |        |   |        |       |        |   |        |   |        |  |        |  
|                                |  | Net loss                                                      |           |                                   |         |               |    |        |   |         |        |         |        |              |        |          |        |               |      |          |      |               |        |   |        |       |        |   | (2,516 | ) |        |  | (2,516 | )
|                                |  | Unrealized loss on interest rate swaps                        |           |                                   |         |               |    |        |   |         |        |         |        |              |        |          |        |               |      |          |      |               |        |   | (1,442 | )     |        |   |        |   |        |  | (1,442 | )
|                                |  |                                                               |           |                                   |         |               |    |        |   |         |        |         |        |              |        |          |        |               |      |          |      |               |        |   |        |       |        |   |        |   |        | 
|                                |  |                                                               |           | Total comprehensive income (loss) |         |               |    |        |   |         |        |         |        |              |        |          |        |               |      |          |      |               |        |   |        |       |        |   |        |   |        |  |        |   | (3,958 | )
|                                |  |                                                               |           |                                   |         |               |    |        |   |         |        |         |        |              |        |          |        |               |      |          |      |               |        |   |        |       |        |   |        |   |        | 
|                                |  | Conversion of units to shares                                 |           |                                   | 189,747 |               |    |        | 2 |         |        |         | 952    |              |        |          |        |               |      |          |      |               |        |   |        |       |        |   |        |   |        |  | 954    |  
|                                |  | Restricted shares issued to employees,
net of forfeitures     |           |                                   | 3,077   |               |    |        |   |         |        |         | 13     |              |        |          |        |               |      |          | (13  | )             |        |   |        |       |        |   |        |   |        |  | 0      |  
|                                |  | Amortization of deferred compensation                         |           |                                   |         |               |    |        |   |         |        |         |        |              |        |          |        |               |      |          | 76   |               |        |   |        |       |        |   |        |   |        |  | 76     |  
|                                |  | Adjustment for minority interest in
the operating partnership |           |                                   |         |               |    |        |   |         |        |         | 33     |              |        |          |        |               |      |          |      |               |        |   |        |       |        |   |        |   |        |  | 33     |  
|                                |  |                                                               |           |                                   |         |               |    |        |   |         |        |         |        |              |        |          |        |               |      |          |      |               |        |   |        |       |        |   |        |   |        | 
|BALANCE AS OF DECEMBER 31, 2002 |  |                                                               | 5,459,391 |                                   |         | $             | 55 |        |   | $       | 25,408 |         |        | $            | (2,764 | )        |        | $             | (139 | )        |      | $             | (3,398 | ) |        | $     | 3,317  |   |        | $ | 22,479 | 
|                                |  |                                                               |           |                                   |         |               |    |        |   |         |        |         |        |              |        |          |        |               |      |          |      |               |        |   |        |       |        |   |        |   |        | 

See notes to the consolidated financial statements.

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##### Table of Contents



ROBERTS REALTY INVESTORS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)






|                                                     |                        |                                                                                          |                                                                          |                                           |         |                          |         |       |         |        |         |       |         |        |         |  
|---------------------------------------------------- | ---------------------- | ---------------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | ----------------------------------------- | ------- | ------------------------ | ------- | ----- | ------- | ------ | ------- | ----- | ------- | ------ | ------- | -
|                                                     |                        |                                                                                          |                                                                          |                                           |         | Years Ended December 31,
|                                                     |                        |                                                                                          |                                                                          |                                           |         |                         
|                                                     |                        |                                                                                          |                                                                          |                                           |         | 2002                     |         | 2001  |         | 2000  
|                                                     |                        |                                                                                          |                                                                          |                                           |         |                          |         |       |         |       
|OPERATING ACTIVITIES:                                |                        |                                                                                          |                                                                          |                                           |         |                          |         |       |         |        |         |      
|                                                     |                        | Net income (loss)                                                                        |                                                                          | $                                         | (2,516  | )                        |         | $     | 7,440   |        |         | $     | 2,832   |       
|                                                     |                        | Adjustments to reconcile net income (loss) to net cash provided by operating activities: |                                                                          |                                           |         |                          |         |       |         |        |         |       |         |       
|                                                     |                        |                                                                                          | Minority interest of unitholders in the operating partnership            |                                           |         | (1,589                   | )       |       |         | (66    | )       |       |         | 246    |        
|                                                     |                        |                                                                                          | Gain on sale of real estate assets, net of minority interest             |                                           |         | (1,091                   | )       |       |         | (7,981 | )       |       |         | (2,416 | )      
|                                                     |                        |                                                                                          | Loss on disposal of assets                                               |                                           |         | 33                       |         |       |         | 27     |         |       |         | 83     |        
|                                                     |                        |                                                                                          | Depreciation and amortization                                            |                                           |         | 7,353                    |         |       |         | 5,731  |         |       |         | 5,700  |        
|                                                     |                        |                                                                                          | Extraordinary items, net of minority interest                            |                                           |         | 0                        |         |       |         | 405    |         |       |         | 68     |        
|                                                     |                        |                                                                                          | Amortization of deferred compensation                                    |                                           |         | 76                       |         |       |         | 85     |         |       |         | 67     |        
|                                                     |                        | Changes in assets and liabilities:                                                       |                                                                          |                                           |         |                          |         |       |         |        |         |       |         |       
|                                                     |                        |                                                                                          | Decrease (increase) in restricted cash                                   |                                           |         | (4                       | )       |       |         | 52     |         |       |         | (29    | )      
|                                                     |                        |                                                                                          | Decrease (increase) in other assets                                      |                                           |         | (321                     | )       |       |         | 285    |         |       |         | (375   | )      
|                                                     |                        |                                                                                          | Increase in accounts payable and accrued expenses relating to operations |                                           |         | 636                      |         |       |         | 82     |         |       |         | 262    |        
|                                                     |                        |                                                                                          | (Decrease) increase in security deposits and prepaid rent                |                                           |         | 42                       |         |       |         | (74    | )       |       |         | 47     |        
|                                                     |                        |                                                                                          |                                                                          |                                           |         |                          |         |       |         |        |         |      
|                                                     |                        |                                                                                          |                                                                          | Net cash provided by operating activities |         |                          | 2,619   |       |         |        | 5,986   |       |         |        | 6,485   |  
|                                                     |                        |                                                                                          |                                                                          |                                           |         |                          |         |       |         |        |         |      
|INVESTING ACTIVITIES:                                |                        |                                                                                          |                                                                          |                                           |         |                          |         |       |         |        |         |      
|                                                     |                        | Proceeds from sale of real estate assets                                                 |                                                                          |                                           | 3,471   |                          |         |       | 14,680  |        |         |       | 7,569   |       
|                                                     |                        | Acquisition and construction of real estate assets                                       |                                                                          |                                           | (19,542 | )                        |         |       | (64,364 | )      |         |       | (19,134 | )     
|                                                     |                        |                                                                                          |                                                                          |                                           |         |                          |         |       |         |        |         |      
|                                                     |                        |                                                                                          |                                                                          | Net cash used in investing activities     |         |                          | (16,071 | )     |         |        | (49,684 | )     |         |        | (11,565 | )
|                                                     |                        |                                                                                          |                                                                          |                                           |         |                          |         |       |         |        |         |      
|FINANCING ACTIVITIES:                                |                        |                                                                                          |                                                                          |                                           |         |                          |         |       |         |        |         |      
|                                                     |                        | Proceeds from mortgage notes payable                                                     |                                                                          |                                           | 32,500  |                          |         |       | 33,700  |        |         |       | 0       |       
|                                                     |                        | Proceeds from mortgage notes payable held in escrow                                      |                                                                          |                                           | 0       |                          |         |       | 0       |        |         |       | 843     |       
|                                                     |                        | Payoff of mortgage notes, including prepayment penalty                                   |                                                                          |                                           | (7,519  | )                        |         |       | (8,970  | )      |         |       | 0       |       
|                                                     |                        | Principal repayments on mortgage notes payable                                           |                                                                          |                                           | (1,032  | )                        |         |       | (812    | )      |         |       | (887    | )     
|                                                     |                        | Proceeds from land notes payable                                                         |                                                                          |                                           | 0       |                          |         |       | 8,000   |        |         |       | 2,000   |       
|                                                     |                        | Payoff of land notes payable                                                             |                                                                          |                                           | (1,300  | )                        |         |       | (2,000  | )      |         |       | (3,000  | )     
|                                                     |                        | Payment of loan costs                                                                    |                                                                          |                                           | (459    | )                        |         |       | (906    | )      |         |       | (168    | )     
|                                                     |                        | Proceeds from line of credit                                                             |                                                                          |                                           | 802     |                          |         |       | 2,000   |        |         |       | 765     |       
|                                                     |                        | Payoff of line of credit                                                                 |                                                                          |                                           | (2,802  | )                        |         |       | 0       |        |         |       | (2,000  | )     
|                                                     |                        | Proceeds from construction loans                                                         |                                                                          |                                           | 18,687  |                          |         |       | 17,552  |        |         |       | 14,152  |       
|                                                     |                        | Payoff of construction loans                                                             |                                                                          |                                           | (22,500 | )                        |         |       | 0       |        |         |       | 0       |       
|                                                     |                        | Repurchase of treasury stock                                                             |                                                                          |                                           | 0       |                          |         |       | (554    | )      |         |       | (1,156  | )     
|                                                     |                        | Payment of dividends and distributions                                                   |                                                                          |                                           | 0       |                          |         |       | (3,190  | )      |         |       | (5,647  | )     
|                                                     |                        |                                                                                          |                                                                          |                                           |         |                          |         |       |         |        |         |      
|                                                     |                        |                                                                                          |                                                                          | Net cash provided by financing activities |         |                          | 16,377  |       |         |        | 44,820  |       |         |        | 4,902   |  
|                                                     |                        |                                                                                          |                                                                          |                                           |         |                          |         |       |         |        |         |      
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |                        |                                                                                          | 2,925                                                                    |                                           |         |                          | 1,122   |       |         |        | (178    | )    
|CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR         |                        |                                                                                          | 2,617                                                                    |                                           |         |                          | 1,495   |       |         |        | 1,673   |      
|                                                     |                        |                                                                                          |                                                                          |                                           |         |                          |         |       |         |        |         |      
|CASH AND CASH EQUIVALENTS, END OF YEAR               |                        | $                                                                                        | 5,542                                                                    |                                           |         | $                        | 2,617   |       |         | $      | 1,495   |      
|                                                     |                        |                                                                                          |                                                                          |                                           |         |                          |         |       |         |        |         |      
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:    |                        |                                                                                          |                                                                          |                                           |         |                          |         |       |         |        |         |      
|                                                     | Cash paid for interest |                                                                                          | $                                                                        | 9,058                                     |         |                          | $       | 7,009 |         |        | $       | 5,964 |        
|                                                     |                        |                                                                                          |                                                                          |                                           |         |                          |         |       |         |        |         |      

See notes to the consolidated financial statements.

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##### Table of Contents



ROBERTS REALTY INVESTORS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




1. BUSINESS AND ORGANIZATION



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Roberts Realty Investors, Inc., 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 primarily of
multifamily apartment communities. Roberts Realty owns and operates
multifamily residential properties as a self-administered, self-managed
equity real estate investment trust (a REIT). Seven of Roberts
Realtys completed apartment communities are located in the Atlanta
metropolitan area with the eighth located in Palm Beach County, Florida.                                                                                              
|
| | 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), of which Roberts Realty is the
sole general partner and had a 70.6% and 67.9% ownership interest at
December 30, 2002 and December 31, 2001, respectively. As the sole
general partner and owner of a majority interest of the operating
partnership, Roberts Realty controls the operating partnership.                                                                                                                                                                       
|
| | Roberts Realty, as the general partner of the operating partnership, does
not hold any limited partner interests in the operating partnership.
Units of limited partnership interest (units) in the operating
partnership outstanding at December 31, 2002 and 2001 were 2,126,770 and
2,316,517, respectively. Units held by the minority interest as a
percentage of total Units and shares of common stock (shares) of
Roberts Realty outstanding were 29.4% and 32.1% at December 31, 2002 and
2001, respectively. The minority interest percentage reflects the number
of Shares and Units outstanding and will change as additional Shares and
Units are issued.
|
| | At December 31, 2002, Roberts Realty owned eight completed multifamily
apartment communities totaling 1,882 apartment homes (1,682 in the
Atlanta metropolitan area and 200 in Palm Beach County, Florida); an
additional 319 apartment homes were under construction in Charlotte,
North Carolina, and a 220-unit apartment home in Atlanta was in the
planning and design phase. In addition, Roberts Realty has a 39,907
square foot commercial office building and a 42,090 square foot retail
center under construction at December 31, 2002.                                                                                                                        

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Basis of Presentation. The accompanying consolidated financial
statements include the consolidated accounts of Roberts Realty and the
operating partnership. All significant inter-company accounts and
transactions have been eliminated in consolidation. The financial
statements of Roberts Realty have been adjusted for the 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 based on the minority
interest ownership percentage multiplied by the operating partnerships
net assets (total assets less total liabilities). The minority interest
percentage reflects the number of shares and units outstanding and will
change as additional shares and units are issued and redeemed. 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 31.5%,

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 32.6% and 33.7% for the years ended December 31, 2002, 2001 and 2000,
respectively. The minority interest of the unitholders was $9,361,000
and $11,996,000 at December 31, 2002 and 2001, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | Holders of partnership units generally have the right to require the
operating partnership to redeem their units for shares. 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.                                                                                                                                                                                                                    
|
| | Real Estate Assets and Depreciation. Real estate assets are recorded at
depreciated cost less reductions for impairment, if any. In identifying
potential impairment, management considers such factors as declines in a
propertys operating performance or market value, a change in use, or
adverse changes in general market conditions. In determining whether an
asset is impaired, management estimates the future cash flows expected to
be generated from 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 have required
write-downs.
|
| | Expenditures directly related to the development, acquisition and
improvement of real estate assets are capitalized at cost as land,
buildings and improvements. 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
five to seven years.                                                                                                                                                                                                                               
|
| | Cash and Cash Equivalents. All investments purchased with an original
maturity of three months or less, are considered to be cash equivalents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | Restricted Cash. Restricted cash consists of resident security deposits
of $340,000 and $336,000 at December 31, 2002 and 2001, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| | Interest and Real Estate Taxes. Interest and real estate taxes incurred
during the construction period are capitalized and depreciated over the
estimated useful lives of the constructed assets. Interest capitalized
was $2,196,000, $1,910,000 and $1,477,000 for the years ended December
31, 2002, 2001, and 2000, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | Revenue Recognition. Roberts Realty leases its residential properties
under operating leases with terms generally one year or less. Rental
income is recognized when earned, which materially approximates revenue
recognition on a straight-line basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | 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
corporate level to the extent it distributes annually at least 90% of its
taxable income, as defined in the Code, to its shareholders and satisfies
certain other requirements. Provided that qualification as a REIT is
maintained, Roberts Realty generally will not be subject to federal                                                                                                                                                            

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | Earnings Per Share. Basic earnings per share is computed based upon the
weighted average number of common Shares outstanding during the period.
Diluted earnings per share is computed to reflect the potential dilution
of all instruments or securities that are convertible into Shares of
common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | 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 and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| | New Accounting Pronouncements. In June 2001, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 141, Business Combinations (effective July 1,
2001) and SFAS No. 142, Goodwill and Other Intangible Assets (effective
January 1, 2002). SFAS No. 141 prohibits pooling-of-interests accounting
for acquisitions. SFAS No. 142 specifies that goodwill and some
intangible assets will no longer be amortized but instead will be subject
to periodic impairment testing. The adoption of SFAS No. 141 and 142 did
not have a material impact on the financial position or results of
operations.                                                                                                                                                                                                                                                      
|
| | In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS No.144 establishes
new rules for measuring impairment of long-lived assets and accounting
for discontinued operations. SFAS No. 144 supersedes SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of, and among other factors, establishes criteria
beyond that previously specified in SFAS No. 121 to determine when a
long-lived asset is to be considered held for sale. On January 1, 2002,
Roberts Realty adopted SFAS No. 144, which did not have a material effect
on financial position or results of operations. However, SFAS No. 144
may modify the presentation of the operating results from real estate
held for sale in Roberts Realtys statement of operations in the future.                                            
|
| | In April 2002, SFAS No. 145 Rescission of SFAS Nos. 4, 44, 64 and
Amendment of SFAS No. 13 and Technical Corrections was issued. SFAS No.
145 prevents treatment as extraordinary, gains or losses on
extinguishment of debt not meeting the criteria of Accounting Principles
Board Opinion No. 30. SFAS No. 145 is effective for fiscal years
beginning after May 15, 2002. The adoption will affect the
classifications of those amounts in the financial statements of
subsequent periods and comparative prior periods. Roberts Realty adopted
SFAS No. 145 effective January 1, 2003.                                                                                                                                                                                                                                                                                                                            
|
| | In June 2002, SFAS No. 146, Accounting for Costs Associated with Exit or
Disposal Activities, was issued. SFAS No. 146 addresses financial
accounting and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force (EITF) Issue No.
94-3, Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including certain costs incurred in
a restructuring). SFAS No. 146 requires recognition of a liability for
a cost associated with an exit or disposal activity when the liability is
incurred as opposed to when the entity commits to an exit plan under EITF
Issue No. 94-3. SFAS No. 146 is effective for exit or disposal
activities initiated after December 31, 2002. Roberts Realty believes
the adoption of SFAS No. 146 will not have a material impact on its
financial position or results of operations.

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In November 2002, the FASB issued FASB Interpretation No. 45,
Guarantors Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others  an
Interpretation of SFAS Nos. 5, 57, and 107, and recession of FASB
Interpretation No. 34 (FIN 45). FIN 45 elaborates on the disclosures
to be made by a guarantor in its financial statements. It also requires
a guarantor to recognize a liability for the fair value of the obligation
undertaken in issuing the guarantee at the inception of a guarantee. The
disclosure requirements of FIN 45 are effective for Roberts Realty as of
December 31, 2002. The recognition provisions of FIN 45 will be applied
on a prospective basis to guarantees issued after December 31, 2002.
Roberts Realty does not expect the requirements of FIN 45 to have a
material impact on its financial position or results of operations.

3. ACQUISITIONS AND DISPOSITIONS



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On June 23, 2000, the Roberts Realty completed the sale of its Ivey Brook
community to Ivey Brook Apartments, Inc. for $14,550,000. Ivey Brook is a
146-unit apartment community located in Atlanta, Georgia. Net cash
proceeds were $7,371,000, resulting in a gain, net of minority interest,
of $2,285,000 after deducting $6,190,000 for the mortgage note payable
which was assumed by the buyer, $263,000 for closing costs and accrued
interest and $726,000 for a partnership profits interest paid to Roberts
Properties in July 2000. Roberts Realty used the net proceeds of
$7,371,000 to fund a special distribution to shareholders and unitholders
on July 27, 2000 and to fund construction projects. See Note 10

Related Party Transactions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | In the fourth quarter of 2000, Roberts Realty received $198,000 from a
settlement relating to the sale of Bentley Place and recorded the amount
as additional gain (before minority interest of $67,000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | On January 4, 2001, Roberts Realty sold the Rosewood Plantation community
for $14,800,000. The sale resulted in a gain of $5,188,000, net of
minority interest of the unitholders in the operating partnership.
Roberts Realty acquired the property in October 1994. Rosewood
Plantation is a 152-unit apartment home community located in Gwinnett
County in the Atlanta metropolitan area. Net sales proceeds were
$5,820,000 after deducting $7,400,000 for the mortgage note payable
assumed by the buyer, $476,000 for a loan pay down, $364,000 for closing
costs and prorations, and $740,000 for a partnership profits interest
paid to Roberts Properties, under the terms of the agreement of limited
partnership of the operating partnership. Roberts Realty invested the
net sales proceeds in replacement properties in connection with a Section
1031 tax deferred exchange. See Note 10  Related Party Transactions.
On April 25, 2002, Roberts Realty entered into a mutual release agreement
in settlement of a lawsuit filed December 28, 2001 by the buyer of
Rosewood Plantation under the terms of the warranty provisions of the
sales contract. The lawsuit was settled for $150,000 and is shown in the
2002 financial statements as a loss on sale of real estate asset of
$102,000 (net of minority interest of $48,000).
|
| | On February 27, 2001, Roberts Realty signed an exchange agreement with an
intermediary to acquire land previously owned by Roberts Properties Jones
Bridge, LLC, of which Mr. Roberts owned a 90% interest. Roberts Realty
is constructing a 42,090 square foot retail center on the 6.84-acre
property, which is located at the intersection of Abbotts Bridge Road and
Jones Bridge Road in front of its Addison Place community in Alpharetta,
Georgia. Roberts Realty acquired the property on June 30, 2001 for
approximately $4,460,000. In connection with these transactions, Roberts
Properties Jones Bridge, LLC received $3,498,000 for the property.
Through December 31, 2002, Roberts Realty paid Roberts Construction
approximately                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | $1,883,000 for construction-related work on the property. Roberts Realty
entered into a cost plus 5% contract with Roberts Construction to
complete the retail center. See Note 10  Related Party Transactions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | On May 30, 2001, Roberts Realty purchased from Roberts Properties 9.5
acres of undeveloped land located at the corner of Jones Bridge Road and
East Fox Court, across Jones Bridge Road from Addison Place. Roberts
Properties had purchased the property for $1,070,000; Roberts Realty paid
$1,627,000, which includes approximately $557,000 in development-related
work performed by Roberts Properties. The purchase price was reduced by
$356,000 as a result of a sewer moratorium.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | On June 28, 2001, Roberts Realty purchased approximately 10.9 acres from
Roberts Properties to construct a 220-unit upscale apartment community
located adjacent to its Highland Park community. The purchase price was
$5,376,000 including closing costs, and the transaction was part of a
Section 1031 tax-deferred exchange partially funded by sales proceeds
from the sale of Rosewood Plantation. The total cost of the project is
estimated to be $23,100,000. Roberts Realty has retained Roberts
Properties to complete the design and development work for a fee of
$2,500 per unit, or $550,000. Roberts Realty intends to enter into a
cost plus 10% contract with Roberts Construction to build the 220
apartment units. See Note 10  Related Party Transactions.                                                                                                                                                                                                                                            
|
| | On June 28, 2001, Roberts Realty purchased a partially constructed office
building and approximately 3.9 acres of land from Roberts Properties for
$2,147,000, including closing costs. Roberts Realty intends to complete
construction and estimates total project costs of $6,300,000, including
the amount paid at closing. Roberts Construction will complete
construction of the building for a fixed price of $3,054,000 and will
perform tenant finish work for approximately $600,000. The balance of
$499,000 of project costs will be paid to unrelated parties. Roberts
Construction will not earn a profit on the construction of the building
or on the tenant finish work. Roberts Properties did not earn a profit
on the sale of the land to Roberts Realty nor will it be paid a
development fee for this project. Roberts Realty will use a portion of
the building as its corporate headquarters and lease the remaining space
to Roberts Properties, Roberts Construction and other unaffiliated
tenants.
|
| | On July 11, 2001, Roberts Realty closed the sale of its Crestmark
community for $25,000,000. The sale resulted in a gain of $2,793,000,
net of minority interest of unitholders in the operating partnership.
Crestmark is a 334-unit apartment community located in Douglasville,
Georgia. Net cash proceeds were $8,013,000 after deducting $15,485,000
for the mortgage note payable assumed by the buyer, $574,000 for closing
costs and prorations, and $928,000 for a partnership profits interest
paid to Roberts Properties under the terms of the amended agreement of
limited partnership of the operating partnership. Roberts Realty
invested the net sales proceeds in a replacement property (St. Andrews at
the Polo Club, as described in the following paragraph) in connection
with a Section 1031 tax deferred exchange. See Note 10  Related Party
Transactions.                                                                                                                                        
|
| | On November 6, 2001, Roberts Realty purchased the 200-unit St. Andrews at
the Polo Club apartment community located in the City of Wellington, Palm
Beach County, Florida from an unrelated party for a purchase price of
$27,778,000, including closing costs, as part of a Section 1031
tax-deferred exchange partially funded by sales proceeds from the
Crestmark sale. To provide the balance of the funds needed to purchase
St. Andrews, Roberts Realty obtained a $21,000,000 permanent loan from
State Farm Life Insurance Company. The loan bears a fixed interest rate
of 6.95% and has a 10-year term.                                                                                                                                                                                                                                                                                                                                                                                                           

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On November 21, 2002, Roberts Realty sold the 9.5 acres of land located
at the corner of Jones Bridge Road and East Fox Court, in Alpharetta,
Georgia for $3,200,000 plus a reimbursement of previously paid sewer
costs of $302,000. The sale resulted in a gain of $1,043,000, net of
minority interest of unitholders in the operating partnership.                                                                                                                                                                                                                     
|
| | Unaudited pro forma amounts for the years ended December 31, 2001 and
2000 assuming the purchase of St. Andrews at the Polo Club and the sales
of Ivey Brook, Rosewood Plantation and Crestmark had taken place as of
January 1 for the periods presented, are presented below (dollars in
thousands, except 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 periods presented, nor is it indicative of future results.

|                                                                   |  |      |        |      |  |   |        |  
|------------------------------------------------------------------ |  | ---- | ------ | ---- |  | - | ------ | -
|                                                                   |  | 2001 |        | 2000
|                                                                   |  |      |        |     
|Total operating revenues                                           |  | $    | 17,037 |      |  | $ | 13,947 |  
|Loss before extraordinary items                                    |  |      | (1,404 | )    |  |   | (25    | )
|Net loss                                                           |  |      | (1,634 | )    |  |   | (25    | )
|Per Share Data  Basic and Diluted
Loss before extraordinary items |  | $    | (0.29  | )    |  | $ | (0.01  | )
|Net loss                                                           |  |      | (0.34  | )    |  |   | (0.01  | )

4. NOTES PAYABLE



| |                                                                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Lines of Credit. Roberts Realty has unsecured lines of credit with two
banks aggregating $3,000,000 to provide funds for short-term working
capital needs. One facility, in the amount of $1,000,000, expires May
20, 2003. The other facility, in the amount of $2,000,000, expires
August 1, 2003. At December 31, 2002, there were no borrowings under
either line of credit.
|
| | Mortgage Notes. The permanent mortgage notes payable secured by Roberts
Realtys completed apartment communities at December 31, 2002 and
December 31, 2001 were as follows:                                                                                                                                                                                                    

|                             |  |          |          |          |  |                |      |                       |   |   |             |  |           |   |            | 
|---------------------------- |  | -------- | -------- | -------- |  | -------------- | ---- | --------------------- | - | - | ----------- |  | --------- | - | ---------- | 
|                             |  |          |          |          |  | Fixed Interest |      | Principal Outstanding
|                             |  |          |          |          |  | Rate as of     |      |                      
|Property Securing Mortgage   |  | Maturity |          | 12/31/02 |  | 12/31/02       |      | 12/31/01             
|                             |  |          |          |          |  |                |      |                      
|Addison Place  Phase I      |  |          | 11/15/09 |          |  |                | 6.95 | %                     |   | $ | 9,289,000   |  |           | $ | 9,394,000  | 
|Addison
Place  Phase II (1) |  |          | 5/10/05  |          |  |                | 8.62 | %                     |   |   | 22,427,000  |  |           |   | 0          | 
|Bradford Creek               |  |          | 6/15/08  |          |  |                | 7.15 | %                     |   |   | 7,976,000   |  |           |   | 8,082,000  | 
|Highland
Park (2)            |  |          | N/A      |          |  | N/A            |      |                       | 0 |   |             |  | 7,629,000 |  
|Highland
Park (2)            |  |          | 12/01/12 |          |  |                | 6.76 | %                     |   |   | 9,991,000   |  |           |   | 0          | 
|Plantation Trace             |  |          | 10/15/08 |          |  |                | 7.09 | %                     |   |   | 11,345,000  |  |           |   | 11,493,000 | 
|Preston Oaks                 |  |          | 2/01/08  |          |  |                | 7.18 | %                     |   |   | 12,453,000  |  |           |   | 12,586,000 | 
|River
Oaks (3)               |  |          | 11/15/03 |          |  |                | 7.15 | %                     |   |   | 8,579,000   |  |           |   | 8,710,000  | 
|St. Andrews at the Polo Club |  |          | 12/01/11 |          |  |                | 6.95 | %                     |   |   | 20,766,000  |  |           |   | 20,983,000 | 
|                             |  |          |          |          |  |                |      |                       |   |   |             |  |           |   |            | 
|                             |  |          |          |          |  |                |      |                       |   | $ | 102,826,000 |  |           | $ | 78,877,000 | 
|                             |  |          |          |          |  |                |      |                       |   |   |             |  |           |   |            | 



---

| | (footnotes begin on following page)
| | -----------------------------------

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##### Table of Contents



| | (1) |  | As explained below in Construction Loans, the interest rate on
this loan has been synthetically fixed at the rate shown.                                                                                                                                                                                                                                                                                                                   
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (2) |  | On November 21, 2002, Roberts Realty refinanced the Highland Park
mortgage note with a new loan from Primary Capital Advisors. This
$10,000,000 loan has a ten-year term with a fixed interest rate of 6.76%
payable in monthly installments of $64,926 based on a 30-year
amortization schedule.                                                                                                                                            
|
| | (3) |  | On December 23, 2002, Roberts Realty signed a commitment to
refinance the River Oaks mortgage note with a new $10,750,000 loan from
L. J. Melody & Company. See Note 10  Related Party Transactions. The
terms of the new loan include a ten-year term with a fixed interest rate
of 5.54% payable in monthly installments of $61,307 based on a 30-year
amortization schedule. Roberts Realty expects to close the new loan in
August 2003.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Construction Loans. On May 3, 2000, Roberts Realty closed a $22,500,000
construction/permanent loan to fund the construction of Addison Place

Phase II. The loan has a 5-year term and bears interest at the 30-day
LIBOR rate plus 150 basis points. Roberts Realty entered into a separate
agreement that synthetically fixed the interest rate at 8.62% (Note 5).
On May 1, 2002, the construction loan automatically converted to a
permanent loan with principal and interest payments due monthly for the
remaining term of the loan.                                                                                                                                                                      
|
| | On April 26, 2001, Roberts Realty closed a $17,000,000
construction/permanent loan to fund the construction of its 250-unit
Veranda Chase community located in Atlanta. The loan has a seven-year
term and bears an interest rate of the 30-day LIBOR plus 150 basis
points. Monthly payments are interest only for the first three years of
the loan and thereafter include principal and interest based on a 30-year
amortization schedule for the remaining four years. At the closing of
the loan, Roberts Realty entered into a separate agreement that
synthetically fixed the interest rate at 7.38% (Note 5) for the first
five years of the loan. At December 31, 2002, $15,776,000 was drawn on
the loan.
|
| | On June 28, 2001, Roberts Realty closed a $5,280,000 loan to fund the
construction of the Northridge commercial office building. The loan is
secured by the land and improvements, has a 35-month term, and bears
interest at the 30-day LIBOR plus 200 basis points. At December 31,
2002, $2,907,000 was drawn on the loan.                                                                                                                                                                                                                                                                                                                                                                                      
|
| | On February 21, 2002, Roberts Realty closed a $24,000,000
construction/permanent loan to fund the construction of its 319-unit
apartment community in Charlotte, North Carolina. The loan matures on
March 10, 2006, with Roberts Realty having the option to exercise two
additional one-year extensions. Monthly payments are interest only
through March 10, 2005 at the 30-day LIBOR plus 200 basis points;
thereafter, principal and interest will be payable in monthly
installments calculated using a 30-year amortization schedule and an
assumed interest rate of 7.0% plus actual interest. At December 31,
2002, $9,208,000 was drawn on the loan.                                                     
|
| | Land Loans. On February 1, 2000, Roberts Realty closed a $2,000,000 land
loan to fund the initial construction of its Veranda Chase apartment
community. The loan was secured by the Veranda Chase land and had an
interest rate of the 30-day LIBOR plus 150 basis points. The loan was
repaid in full upon the closing of the $17,000,000 Veranda Chase
construction loan on April 26, 2001.                                                                                                                                                                                                                                                                                                                     
|
| | On June 28, 2001, Roberts Realty closed a $3,000,000 land loan to fund
the initial construction of the Northridge apartment community. The loan
matures on July 10, 2003, is secured by the                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Northridge land, and bears an interest rate of the 30-day LIBOR plus 175
basis points. At December 30, 2002, $3,000,000 was drawn on the loan.
Roberts Realty intends to extend the maturity date of the loan prior to
maturity and roll it into a construction loan upon starting construction
of the project.                                                                                                                                                                                                                                                   
|
| | On September 6, 2001, Roberts Realty closed a $2,700,000 loan to fund the
initial construction of the Addison Place Shoppes retail center. The
loan, which is secured by the land and the improvements, was increased to
$3,700,000 on December 21, 2001, bears interest at the 30-day LIBOR plus
185 basis points, and, as amended, matures on May 30, 2003. At December
31, 2002, $3,700,000 was drawn on the loan. Roberts Realty intends to
extend the maturity date of the loan and roll it into a
construction/permanent loan by the second quarter of 2003.
|
| | On December 19, 2001, Roberts Realty closed a $1,300,000 land loan with
the cash proceeds being used for working capital. The loan was secured
by the East Fox Court land, had a 12-month term, and bore interest at the
30-day LIBOR rate plus 200 basis points. On May 22, 2002, this agreement
was terminated and the loan was repaid.                                                                                                                                                                                                                         
|
| | The scheduled principal payments of all debt outstanding at December 31,
2002 for each of the years ending December 31 are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                            

|           |  |   |             | 
|---------- |  | - | ----------- | 
|2003       |  | $ | 16,293,000  | 
|2004       |  |   | 4,107,000   | 
|2005       |  |   | 23,636,000  | 
|2006       |  |   | 1,749,000   | 
|2007       |  |   | 1,876,000   | 
|Thereafter |  |   | 89,756,000  | 
|           |  |   |             | 
|           |  | $ | 137,417,000 | 
|           |  |   |             | 



| |                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------
| | Real estate assets having a combined depreciated cost of $115,128,000
served as collateral for the outstanding mortgage debt at December 31,
2002.

5. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Effective January 1, 2001, Roberts Realty adopted 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 in 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. 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. Such instruments are not used for
trading or speculative purposes. Roberts Realty has entered into two
interest rate swap agreements to effectively fix the variable interest
rates on its $22,500,000 and $17,000,000 construction/permanent loans.
The swap agreements have been designated as cash flow hedges and,
accordingly, are recorded at fair value in the consolidated balance
sheet, and the related                               

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | gains or losses are deferred in stockholders equity, net of minority
interest, as a component of other comprehensive income. Amounts received
or paid in connection with the swap agreements are recognized as
adjustments to interest related to the designated debt. No portion of
these interest rate swaps was considered ineffective for the year ended
December 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | At December 31, 2002, Roberts Realty recorded a liability of $4,813,000
relating to the estimated fair value of the swaps as a result of lower
market interest rates. This resulted in a decrease in shareholders
equity of $3,398,000 (accumulated other comprehensive income), net of
minority interest of $1,415,000. At December 31, 2001 the liability
relating to the estimated fair value of the swaps was $2,880,000, which
resulted in a decrease in shareholders equity of $1,956,000 (accumulated
other comprehensive income), net of minority interest of $924,000.
Roberts Realty estimates that $2,008,000 will be reclassified from other
comprehensive income to interest expense in 2003 relating to the change
in the fair value of the interest rate swaps. Provided that Roberts
Realty holds these instruments until maturity, as it intends, it will not
pay any interest other than that stated in the loan and swap agreements.
The liability recorded at December 31, 2002 will be reduced as Roberts
Realty performs under these instruments, as the difference between the
market interest rate and the fixed rates decrease, and as these
obligations mature.

6. EXTRAORDINARY ITEMS



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The 2001 extraordinary item is the write-off of unamortized loan costs
and prepayment fees related to (a) the Preston Oaks mortgage note, which
was refinanced in February 2001, and (b) the Rosewood community, which
was sold in January 2001, and (c) the Crestmark community which was sold
in July 2001. The extraordinary items  $230,000 related to Preston
Oaks, $62,000 related to Rosewood and $114,000 related to Crestmark
 are
net of $113,000, $31,000, and $55,000, respectively, allocated to the
minority interest of the unitholders in the operating partnership.
|
| | The 2000 extraordinary item relates to the write-off of unamortized loan
costs for the extinguishment of the mortgage loan secured by the Ivey
Brook community, which Roberts Realty sold in June 2000. This
extraordinary item is net of $35,000 allocated to the minority interest
of the unitholders in the operating partnership.                                                                                                                                                                                                                                                 

7. FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The following disclosures of estimated fair value were determined by
management using available market information and appropriate valuation
methodologies. Because considerable judgment is necessary to interpret
market data and develop the related estimates of fair value, the
estimates presented herein are not necessarily indicative of the amounts
that could be realized upon disposition of the financial instruments.
The use of different market assumptions and/or estimation methodologies
may have a material effect on the estimated fair value amounts.
|
| | The fair value of Roberts Realtys interest rate swap agreements on its
construction/permanent loans was a liability of $4,813,000 and $2,880,000
at December 31, 2002 and 2001, respectively.                                                                                                                                                                                                                                                                                                                                                                             
|
| | Cash and cash equivalents, accounts payable, accrued expenses, security
deposits and other liabilities, due to their short-term nature, are
carried at amounts which reasonably approximate their fair values at
December 31, 2002 and 2001. Fixed rate mortgage debt with an aggregate
carrying value of $80,399,000 at December 31, 2002 has an estimated
approximate fair value of                                                                                                                                                                                      

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##### Table of Contents





| |                                                                                                            
| | -----------------------------------------------------------------------------------------------------------
| | $83,513,000 based on interest rates available to Roberts Realty for debt
with similar terms and maturities.

8. SHAREHOLDERS EQUITY



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Exchanges of Units for Shares. During the years ended December 31, 2002,
2001, and 2000, a total of 189,747, 86,978, and 191,341 units,
respectively, were exchanged for the same number of shares. Each
conversion was reflected in the accompanying consolidated financial
statements at book value.                                                                                                                                                                                                                                                                                                           
|
| | Restricted Share Awards. During the years ended December 31, 2002, 2001,
and 2000, Roberts Realty granted 3,077, 18,290 and 10,261 shares, net of
forfeitures, of restricted stock to certain employees. The market value
of these restricted stock grants totaled $13,000, $141,000 and $77,000
respectively, which was recorded as unamortized deferred compensation and
is shown as a separate component of shareholders equity. These
restricted shares vest 100% at the end of a three or four-year vesting
period and are being amortized to compensation expense ratably over the
vesting period.        
|
| | Treasury Share Repurchases. During the years ended December 31, 2001,
and 2000, Roberts Realty repurchased 69,500 and 152,588 treasury shares
at a total cost of $554,000 and $1,156,000, respectively. Roberts
Realty did not repurchase any treasury shares in 2002.                                                                                                                                                                                                                                                                                                                                           
|
| | Dividends. Roberts Realty suspended the quarterly dividend payment for
the fourth quarter of 2001 and for all four quarters of 2002. Of the
dividends declared for 2001 totaling $0.33 per share, approximately $0.14
per share represents ordinary income, $0.05 per share represents capital
gain and $0.14 per share represents a return of capital to the
shareholders. Of the dividends declared for 2000 totaling $0.74 per
share,approximately $0.18 per share represents ordinary income, $0.42
per share represents capital gain and $0.14 per share represents a return
of capital to the shareholders.
|
| | Earnings Per Share. 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).                                                                                                                                                                                                                                                                                                                                                                       

|                                                                                                   |  |      |           |      |  |      |           |  |  |   |           | 
|-------------------------------------------------------------------------------------------------- |  | ---- | --------- | ---- |  | ---- | --------- |  |  | - | --------- | 
|                                                                                                   |  | 2002 |           | 2001 |  | 2000
|                                                                                                   |  |      |           |      |  |     
|Income
(loss) before extraordinary items  basic                                                   |  | $    | (2,516    | )    |  | $    | 7,845     |  |  | $ | 2,900     | 
|Minority interest of unitholders in the operating
partnership in income before extraordinary items |  |      | (1,157    | )    |  |      | 3,814     |  |  |   | 1,478     | 
|                                                                                                   |  |      |           |      |  |      |           |  |  |   |           | 
|Income before extraordinary items  diluted                                                        |  | $    | (3,673    | )    |  | $    | 11,659    |  |  | $ | 4,378     | 
|                                                                                                   |  |      |           |      |  |      |           |  |  |   |           | 
|Net income (loss)  basic                                                                          |  | $    | (2,516    | )    |  | $    | 7,440     |  |  | $ | 2,832     | 
|Minority interest of unitholders in operating
partnership in net income                            |  |      | (1,157    | )    |  |      | 3,614     |  |  |   | 1,443     | 
|                                                                                                   |  |      |           |      |  |      |           |  |  |   |           | 
|Net income  diluted                                                                               |  | $    | (3,673    | )    |  | $    | 11,054    |  |  | $ | 4,275     | 
|                                                                                                   |  |      |           |      |  |      |           |  |  |   |           | 
|Weighted average shares  basic                                                                    |  |      | 4,943,280 |      |  |      | 4,870,117 |  |  |   | 4,881,601 | 
|Dilutive securities  weighted average units                                                       |  |      | 2,277,313 |      |  |      | 2,356,006 |  |  |   | 2,485,467 | 
|                                                                                                   |  |      |           |      |  |      |           |  |  |   |           | 
|Weighted average shares  diluted                                                                  |  |      | 7,220,593 |      |  |      | 7,226,123 |  |  |   | 7,367,068 | 
|                                                                                                   |  |      |           |      |  |      |           |  |  |   |           | 

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9. SEGMENT REPORTING



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | SFAS No. 131 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 owns, operates, develops and constructs multifamily
apartment communities located in Georgia and Florida and is constructing
a community in North Carolina. These apartment communities generate
rental revenue and other income through the leasing of apartment homes.
Roberts Realty evaluates the performance of each of its apartment
communities on an individual basis. However, because each of the
apartment communities has similar economic characteristics, residents,
and products and services, the apartment communities have been aggregated
into one reportable segment. This segment comprises 100% of Roberts
Realtys total revenues for each of the three years ended December 31,
2002.
|
| | Roberts Realty is constructing a 42,090 square foot retail center located
adjacent to its Addison Place apartment community and a 39,907 square
foot office building located adjacent to its Northridge apartment land.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | The primary financial measure for Roberts Realtys reportable business
segment is net operating income (NOI), which represents total property
revenues less total property operating expenses, excluding general and
administrative and depreciation expenses. Current year NOI is compared
to prior year NOI and current year budgeted NOI as measures of financial
performance. NOI from apartment communities totaled $11,391,000,
$12,100,000, and $13,419,000 for the years ended December 31, 2002, 2001
and 2000, respectively.                                                                                                                                                                                    

10. RELATED PARTY TRANSACTIONS



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Roberts Realty enters into transactions with Roberts Properties and
Roberts Construction, affiliates of Mr. Roberts, the Chairman of the
Board, Chief Executive Officer, and President of Roberts Realty
Investors, Inc., in the ordinary course of business. These transactions
are discussed below.                                                                                                                                                                                                                                       
|
| | Land Acquisitions. On May 30, 2001, Roberts Realty purchased the East
Fox Court land from Roberts Properties for $1,447,000. Roberts
Properties had purchased the property for $1,070,000, and the $1,447,000
price Roberts Realty paid included $377,000 in development-related work
previously performed by Roberts Properties. Roberts Properties completed
the design and development work in 2002 for a fee of $180,000. The
independent members of the board of directors approved the foregoing
arrangements with Roberts Properties.
|
| | On June 20, 2001, Roberts Realty purchased the Addison Shoppes land from
REES 59 L.L.C. for $4,470,000. REES 59 had previously purchased the land
from Roberts Properties Jones Bridge, LLC, of which Mr. Roberts owned a
90% interest. Roberts Realty entered into a cost plus 5% contract with
Roberts Construction to complete the retail center. The independent
members of the board of directors approved the foregoing arrangements
with Roberts Properties and Roberts Construction.                                                

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On June 28, 2001, Roberts Realty purchased the Northridge apartment land
from Roberts Properties for $5,376,000. Roberts Realty has retained
Roberts Properties to complete the design and development work for a fee
of $2,500 per unit, or $550,000. Roberts Realty also intends to enter
into a cost plus 10% contract with Roberts Construction to build the 220
apartment units. The independent members of the board of directors
approved the foregoing arrangements with Roberts Properties and Roberts
Construction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | On June 28, 2001, Roberts Realty purchased land and the partially
constructed Northridge office building from Roberts Properties for
$2,147,000. Roberts Realty will use a portion of the building for its
corporate office headquarters and will lease the remaining space to
Roberts Properties, Roberts Construction and unaffiliated tenants.
Roberts Realty entered into a fixed cost contract with Roberts
Construction to complete construction of the building for $3,054,000 and
intends to retain Roberts Construction to perform tenant finish work for
approximately $600,000. Roberts Construction will not earn a profit on
the construction of the building or on the tenant finish work. Roberts
Properties did not earn a profit on the sale of the land to Roberts
Realty nor will it be paid a development fee for this project. The
independent members of the board of directors approved the foregoing
arrangements with Roberts Properties and Roberts Construction.                                                                                  
|
| | Construction Contracts. Roberts Realty enters into contractual
commitments with Roberts Construction in the normal course of business
related to the construction of real estate assets. Mr. Roberts
beneficially owns all of the outstanding shares of Roberts Construction.
Roberts Construction constructed Addison Place Phase I, Addison Place
Phase II and Veranda Chase under cost plus 10% contracts. Roberts
Construction is constructing the Charlotte apartment community under a
cost plus 10% arrangement. In 2001, Roberts Realty entered into a cost
plus 5% contract with Roberts Construction related to the construction of
the 42,090 square foot Addison Shoppes retail center. Also, in 2001,
Roberts Realty entered into a fixed price contract with Roberts
Construction related to the construction of the Northridge corporate
office building. The contractual amounts for projects started and/or
completed with Roberts Construction during the last three years, from
inception through December 31, 2002 are summarized in the following
table:

|                           |  |                  |            |          |  |             |            |           |  |   |            | 
|-------------------------- |  | ---------------- | ---------- | -------- |  | ----------- | ---------- | --------- |  | - | ---------- | 
|                           |  | Actual/Estimated |            |          |  |             |            | Estimated
|                           |  | Total            |            |          |  |             |            | Remaining
|                           |  | Contract         |            | Amount   |  | Contractual
|                           |  | Amount           |            | Incurred |  | Commitment 
|                           |  |                  |            |          |  |            
|Addison Shoppes            |  | $                | 1,782,000  |          |  | $           | 1,686,000  |           |  | $ | 96,000     | 
|Northridge Office Building |  |                  | 4,670,000  |          |  |             | 3,753,000  |           |  |   | 917,000    | 
|Charlotte                  |  |                  | 23,193,000 |          |  |             | 11,039,000 |           |  |   | 12,154,000 | 
|Veranda Chase              |  |                  | 15,710,000 |          |  |             | 15,416,000 |           |  |   | 294,000    | 
|Addison Place  Phase II   |  |                  | 22,314,000 |          |  |             | 22,148,000 |           |  |   | 166,000    | 
|                           |  |                  |            |          |  |             |            |           |  |   |            | 
|                           |  | $                | 67,669,000 |          |  | $           | 54,042,000 |           |  | $ | 13,627,000 | 
|                           |  |                  |            |          |  |             |            |           |  |   |            | 



| |                                                                                                            
| | -----------------------------------------------------------------------------------------------------------
| | Roberts Realty estimates the remaining contractual commitment will be
paid to Roberts Construction in 2003.

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##### Table of Contents





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Roberts Realty paid Roberts Construction for labor and materials to
perform capital improvements for the communities in the amount of
$43,000, $161,000 and $33,000 in 2002, 2001 and 2000, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | Development Fees. Roberts Properties received fees for various
development services including market studies, business plans, design,
finish selection, interior design and construction administration
(including amounts described in Land Acquisitions above). Fees
incurred totaled $180,000, $109,000 and $2,148,000 for the years ended
December 31, 2002, 2001 and 2000, respectively.                                                                                                                                                                                                                                                                                                                                                                   
|
| | Partnership Profits Interests. Between 1994 and 1996, the operating
partnership acquired nine limited partnerships of which Mr. Roberts was
the sole general partner. As a part of each acquisition, the operating
partnership assumed an existing financial obligation to an affiliate of
Mr. Roberts. That financial obligation has been formalized as a profits
interest in the operating partnership (Profits Interests). There were
four remaining Profits Interests as of December 31, 2002.                                                                                                                                                                                                                                                              
|
| | As the holder of the Profits Interests, Roberts Properties may receive
distributions in certain circumstances. Upon a sale of any of the
acquired properties, Roberts Properties will receive a distribution of a
specified percentage of the gross sales proceeds. Upon a change in
control of Roberts Realty or the operating partnership, Roberts
Properties will receive a distribution of the applicable percentages of
the fair market values of all of the properties. The amount to be
distributed to Roberts Properties with respect to each affected property
will, however, be limited to the amount by which the gross proceeds from
the sale of that property, or, in connection with a change in control,
its fair market value, exceeds the sum of:



| |  |  | 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.                                 



| |                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------
| | The percentages that apply to the sales prices, or fair market values, of
the affected properties are shown in the following table as of December
31, 2002:

|                         |  |  |   |  
|------------------------ |  |  | - | -
|River Oaks               |  |  | 5 | %
|Preston Oaks Phase I     |  |  | 5 | %
|Highland Park            |  |  | 5 | %
|Plantation Trace Phase I |  |  | 6 | %



| |                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If Roberts Realty exercises its option to acquire all of the outstanding
units for shares, it must simultaneously purchase the Profits Interests
for cash in the amount the holder of that interest would receive if a
change in control occurred at that time.
|
| | Except for units and the partnership profits interest related to the
original nine limited partnerships acquired between 1994 and 1996, no
partnership interests have been, or are presently expected to be, issued
or assumed by the operating partnership.   
|
| | During 2001 and 2000, Profits Interests of $1,668,000, and $726,000,
respectively, were paid to Roberts Properties (none in 2002).                                                                                                                             

F-19



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##### Table of Contents





| |                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Other Fees. During 2002, 2001 and 2000, affiliates of Mr. Roberts
received miscellaneous fees and cost reimbursements of $184,000,
$145,000, and $192,000 for the years ended December 31, 2002, 2001 and
2000, respectively.                                             
|
| | Loan Origination Fees. A director of Roberts Realty is executive vice
president of L.J. Melody & Company, a commercial mortgage banking firm
that has originated loans for Roberts Realty. Loan origination fees
incurred were $125,000 in 2001 (none in 2002 or in 2000).

11. COMMITMENTS AND CONTINGENCIES



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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,
Roberts Realty 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | 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 2,126,770 units outstanding at December 31, 2002 that could be
exchanged for shares, subject to the conditions described above.
|
| | Roberts Realty enters into contractual commitments in the normal course
of business related to the development of real estate assets. Management
does not believe that the completion of these commitments will result in
a material adverse effect on Roberts Realtys financial position or
results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

12. SUPPLEMENTAL CASH FLOW INFORMATION



| |                                                                                                                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Roberts Realty paid $150,000 in April 2002 in connection with the
settlement of a lawsuit with the buyer of Rosewood Plantation under the
terms of the warranty provisions of the sales contract (Note 3). This
amount is shown in the financial statements as a loss on the sale of real
estate assets, net of minority interest of $48,000.
|
| | Non-cash investing and financing activities for the years ended December
31, 2002, 2001, and 2000 were as follows:                                                                                                                                                                                                                           



| | A. |  | On June 23, 2000, Roberts Realty sold the Ivey Brook
community. As a condition of the sale, the purchaser assumed the
mortgage note payable associated with the property in the amount of
$6,190,000.                                                                                                                                       
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | B. |  | On January 4, 2001, Roberts Realty sold the Rosewood
Plantation community. As a condition of the sale, the purchaser
assumed the mortgage note payable associated with the property in
the amount of $7,400,000. At closing, there was a $476,000
reduction in the sales proceeds which represented a pay down on the
mortgage note payable.

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##### Table of Contents





| | C. |  | On July 11, 2001, Roberts Realty sold the Crestmark
community. As a condition of the sale, the purchaser assumed the
mortgage note payable associated with the property in the amount of
$15,485,000.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

13. SUMMARIZED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

(In thousands, except per share data)

|                                                                                     |                                              |   |               |       |         |   |              |       |             |   |        |       |   |   |       |       |  
|------------------------------------------------------------------------------------ | -------------------------------------------- | - | ------------- | ----- | ------- | - | ------------ | ----- | ----------- | - | ------ | ----- | - | - | ----- | ----- | -
|                                                                                     |                                              |   | Quarter Ended
|                                                                                     |                                              |   |              
|                                                                                     |                                              |   | March 31      |       | June 30 |   | September 30 |       | December 31
|                                                                                     |                                              |   |               |       |         |   |              |       |            
|Year Ended December 31, 2002                                                         |                                              |   |               |       |         |   |              |       |             |   |        |       |   |   |       |      
|Total operating revenues                                                             |                                              | $ | 4,668         |       |         | $ | 4,630        |       |             | $ | 4,709  |       |   | $ | 5,004 |      
|Income from operations                                                               |                                              |   | 736           |       |         |   | 617          |       |             |   | 293    |       |   |   | 589   |      
|Net income (loss)                                                                    |                                              |   | (733          | )     |         |   | (784         | )     |             |   | (1,041 | )     |   |   | 42    |      
|Per share (basic and diluted):                                                       |                                              |   |               |       |         |   |              |       |             |   |        |       |   |   |       |      
|                                                                                     | Net income (loss)                            |   | $             | (0.15 | )       |   | $            | (0.16 | )           |   | $      | (0.21 | ) |   | $     | 0.01  |  
|Year Ended December 31, 2001                                                         |                                              |   |               |       |         |   |              |       |             |   |        |       |   |   |       |      
|Total operating revenues                                                             |                                              | $ | 4,805         |       |         |   | 4,933        |       |             | $ | 4,101  |       |   | $ | 4,386 |      
|Income from operations                                                               |                                              |   | 1,495         |       |         |   | 1,491        |       |             |   | 1,046  |       |   |   | 835   |      
|Net income (loss) before extraordinary items                                         |                                              |   | 5,439         |       |         |   | 109          |       |             |   | 2,738  |       |   |   | (441  | )    
|Extraordinary items  Loss on early
extinguishment of debt, net of minority
interest |                                              |   | (291          | )     |         |   |             |       |             |   | (114   | )     |   |   |      |      
|Net income (loss)                                                                    |                                              |   | 5,148         |       |         |   | 109          |       |             |   | 2,624  |       |   |   | (441  | )    
|Per share (basic and diluted):                                                       |                                              |   |               |       |         |   |              |       |             |   |        |       |   |   |       |      
|                                                                                     | Net income (loss) before extraordinary items |   | $             | 1.12  |         |   | $            | 0.02  |             |   | $      | 0.56  |   |   | $     | (0.09 | )
|                                                                                     | Extraordinary items                          |   |               | (0.06 | )       |   |              |      |             |   |        | (0.02 | ) |   |       |      |  
|                                                                                     | Net income (loss)                            |   |               | 1.06  |         |   |              | 0.02  |             |   |        | 0.54  |   |   |       | (0.09 | )

14. SUBSEQUENT EVENT



| |                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On February 28, 2003, Roberts Realty received an aggregate of $381,000 in
connection with the sale of land, reimbursement for land improvements and
conveyances of temporary construction easements to Fulton County, Georgia
for road right-of-way projects, which resulted in a gain of $77,000, net of
minority interest of unitholders in the operating partnership.

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SCHEDULE III  REAL ESTATE AND ACCUMULATED DEPRECIATION

ROBERTS REALTY INVESTORS, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 2002
(Dollars in Thousands)

|                                     |  |             |         |      |  |                         |        |              |  |                            |        |              |  |       |        |  |  |           |        |  |  |   |         |  |  |   |         | 
|------------------------------------ |  | ----------- | ------- | ---- |  | ----------------------- | ------ | ------------ |  | -------------------------- | ------ | ------------ |  | ----- | ------ |  |  | --------- | ------ |  |  | - | ------- |  |  | - | ------- | 
|                                     |  |             |         |      |  | Initial Cost to Company |        | Improvements |  | Carried at Close of Period |        |              |  |      
|                                     |  |             |         |      |  |                         |        | Capitalized  |  |                            |        |              |  |      
|                                     |  |             |         |      |  |                         |        |              |  | Buildings                  |        | After        |  |       |        |  |  | Buildings |        |  |  |  
|                                     |  |             |         |      |  |                         |        |              |  | and                        |        | Acquisition/ |  |       |        |  |  | and       |        |  |  |  
|Description                          |  | Encumbrance |         | Land |  | Improvements            |        | Construction |  | Land                       |        | Improvements |  | Total
|                                     |  |             |         |      |  |                         |        |              |  |                            |        |              |  |      
|River Oaks                           |  | $           | 8,579   |      |  | $                       | 1,837  |              |  | $                          | 9,718  |              |  | $     | 1,024  |  |  | $         | 1,833  |  |  | $ | 10,746  |  |  | $ | 12,579  | 
|Preston Oaks                         |  |             | 12,453  |      |  |                         | 2,570  |              |  |                            | 11,278 |              |  |       | 361    |  |  |           | 2,570  |  |  |   | 11,639  |  |  |   | 14,209  | 
|Highland Park                        |  |             | 9,991   |      |  |                         | 1,827  |              |  |                            | 10,003 |              |  |       | 323    |  |  |           | 1,827  |  |  |   | 10,326  |  |  |   | 12,153  | 
|Addison Place Phase II               |  |             | 22,427  |      |  |                         | 696    |              |  |                            | 5,168  |              |  |       | 23,524 |  |  |           | 3,195  |  |  |   | 26,193  |  |  |   | 29,388  | 
|Plantation Trace                     |  |             | 11,345  |      |  |                         | 2,385  |              |  |                            | 15,802 |              |  |       | 1,367  |  |  |           | 2,385  |  |  |   | 17,169  |  |  |   | 19,554  | 
|Veranda Chase(A)                     |  |             | 15,776  |      |  |                         | 2,559  |              |  |                            | 0      |              |  |       | 18,717 |  |  |           | 2,579  |  |  |   | 18,697  |  |  |   | 21,276  | 
|Charlotte                            |  |             | 9,208   |      |  |                         | 0      |              |  |                            | 0      |              |  |       | 0      |  |  |           | 0      |  |  |   | 0       |  |  |   | 0       | 
|Northridge Corporate Office Bldg.(A) |  |             | 2,907   |      |  |                         | 0      |              |  |                            | 0      |              |  |       | 0      |  |  |           | 0      |  |  |   | 0       |  |  |   | 0       | 
|Northridge Apartments(A)             |  |             | 3,000   |      |  |                         | 0      |              |  |                            | 0      |              |  |       | 0      |  |  |           | 0      |  |  |   | 0       |  |  |   | 0       | 
|Addison Shoppes(A)                   |  |             | 3,700   |      |  |                         | 0      |              |  |                            | 0      |              |  |       | 0      |  |  |           | 0      |  |  |   | 0       |  |  |   | 0       | 
|Bradford Creek                       |  |             | 7,976   |      |  |                         | 1,672  |              |  |                            | 12,174 |              |  |       | 148    |  |  |           | 1,672  |  |  |   | 12,322  |  |  |   | 13,994  | 
|St. Andrews at the Polo Club         |  |             | 20,766  |      |  |                         | 4,167  |              |  |                            | 23,651 |              |  |       | 141    |  |  |           | 4,167  |  |  |   | 23,792  |  |  |   | 27,959  | 
|Addison Place Phase I                |  |             | 9,289   |      |  |                         | 2,080  |              |  |                            | 10,440 |              |  |       | 585    |  |  |           | 2,080  |  |  |   | 11,025  |  |  |   | 13,105  | 
|                                     |  |             |         |      |  |                         |        |              |  |                            |        |              |  |       |        |  |  |           |        |  |  |   |         |  |  |   |         | 
|Total                                |  | $           | 137,417 |      |  | $                       | 19,793 |              |  | $                          | 98,234 |              |  | $     | 46,190 |  |  | $         | 22,308 |  |  | $ | 141,909 |  |  | $ | 164,217 | 
|                                     |  |             |         |      |  |                         |        |              |  |                            |        |              |  |       |        |  |  |           |        |  |  |   |         |  |  |   |         | 

|                             |  |              |        |              |  |                |  |              |  |  |      |         |  |  |  | 
|---------------------------- |  | ------------ | ------ | ------------ |  | -------------- |  | ------------ |  |  | ---- | ------- |  |  |  | 
|                             |  |              |        |              |  | Life on which  |  |              |  |  |      | Date of
|                             |  | Accumulated  |        | Depreciation |  | Date           |  | Original    
|Description                  |  | Depreciation |        | is Computed  |  | Acquired       |  | Construction
|                             |  |              |        |              |  |                |  |             
|River Oaks                   |  | $            | 4,564  |              |  | 3  27.5 Years |  | Oct  94     |  |  | 1992 |        
|Preston Oaks                 |  |              | 4,231  |              |  | 3  27.5 Years |  | Oct  94     |  |  | 1995 |        
|Highland Park                |  |              | 3,793  |              |  | 3  27.5 Years |  | Oct  94     |  |  | 1995 |        
|Addison Place Phase II       |  |              | 2,739  |              |  | 3  27.5 Years |  | Jun  98     |  |  | 1999 |        
|Plantation Trace             |  |              | 5,453  |              |  | 3  27.5 Years |  | May  95     |  |  | 1990 |        
|Veranda Chase                |  |              | 416    |              |  | 3  27.5 Years |  | Nov  02     |  |  | 2000 |        
|Bradford Creek               |  |              | 3,055  |              |  | 3  27.5 Years |  | Mar  96     |  |  | 1998 |        
|St. Andrews at the Polo Club |  |              | 1,880  |              |  | 3  27.5 Years |  | Nov  01     |  |  | 2000 |        
|Addison Place Phase I        |  |              | 2,098  |              |  | 3  27.5 Years |  | Sep  99     |  |  | 1999 |        
|                             |  |              |        |              |  |                |  |              |  |  |      |         |  |  |  | 
|Total                        |  | $            | 28,229 |              |  |                |  |              |  |  |      |         |  |  |  | 
|                             |  |              |        |              |  |                |  |              |  |  |      |         |  |  |  | 

The accompanying notes are an integral part of this schedule.

S-1



---



##### Table of Contents





|(A) |  | A portion of Addison Place Shoppes, Charlotte, Northridge community,
Northridge corporate office building and the Veranda Chase community were
under construction as of December 31, 2002. Construction in progress and
real estate under development of $35,015,000 as of December 31, 2002
(which is excluded from Schedule III) includes these properties.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(B) |  | Roberts Realty enters into contractual commitments in the normal course
of business related to the construction of real estate assets with Roberts
Construction  see Note 10 to the Consolidated Financial Statements.                                                                                                                                      
|   
|(C) |  | Gross capitalized costs of real estate assets are summarized as follows:                                                                                                                                                                                                                                                                                     

|                               |                           |                 |                 |  |        |        |         |  |         |        |         |  |         |       | 
|------------------------------ | ------------------------- | --------------- | --------------- |  | ------ | ------ | ------- |  | ------- | ------ | ------- |  | ------- | ----- | 
|                               |                           |                 |                 |  | 2002   |        | 2001    |  | 2000   
|                               |                           |                 |                 |  |        |        |         |  |        
|BALANCE AT BEGINNING OF PERIOD |                           | $               | 143,527         |  |        | $      | 123,680 |  |         | $      | 128,898 | 
|                               | Additions during period:  |                 |                 |  |        |        |         |  |         |        |         |  |        
|                               |                           | Other additions |                 |  | 22,487 |        |         |  | 53,316  |        |         |  | 6,555   |      
|                               |                           | Improvements    |                 |  | 227    |        |         |  | 380     |        |         |  | 902     |      
|                               |                           |                 |                 |  |        |        |         |  |         |        |         | 
|                               |                           |                 | Total Additions |  |        | 22,714 |         |  |         | 53,696 |         |  |         | 7,457 | 
|                               |                           |                 |                 |  |        |        |         |  |         |        |         | 
|                               | Deductions during period: |                 |                 |  |        |        |         |  |         |        |         |  |        
|                               |                           | Sales           |                 |  | (1,741 | )      |         |  | (33,564 | )      |         |  | (12,068 | )    
|                               |                           | Other disposals |                 |  | (283   | )      |         |  | (285    | )      |         |  | (607    | )    
|                               |                           |                 |                 |  |        |        |         |  |         |        |         | 
|                               |                           | Total disposals |                 |  | (2,024 | )      |         |  | (33,849 | )      |         |  | (12,675 | )    
|                               |                           |                 |                 |  |        |        |         |  |         |        |         | 
|Balance at close of period     |                           | $               | 164,217         |  |        | $      | 143,527 |  |         | $      | 123,680 | 
|                               |                           |                 |                 |  |        |        |         |  |         |        |         | 



|(D) |  | Accumulated depreciation on real estate assets is as follows:
|--- |  | -------------------------------------------------------------

|                               |                          |                          |        |      |       |      |        |      |        |   |        |  |        |  
|------------------------------ | ------------------------ | ------------------------ | ------ | ---- | ----- | ---- | ------ | ---- | ------ | - | ------ |  | ------ | -
|                               |                          |                          |        | 2002 |       | 2001 |        | 2000
|                               |                          |                          |        |      |       |      |        |     
|BALANCE AT BEGINNING OF PERIOD |                          | $                        | 21,463 |      |       | $    | 24,061 |      |        | $ | 21,029 | 
|                               | Additions during period: |                          |        |      |       |      |        |      |        |   |        |  |       
|                               |                          | Depreciation expense     |        |      | 7,001 |      |        |      | 5,501  |   |        |  | 5,463  |  
|                               |                          |                          |        |      |       |      |        |      |        |   |        | 
|                               |                          | DEDUCTIONS DURING PERIOD |        |      |       |      |        |      |        |   |        |  |        |  
|                               |                          | Sales                    |        |      | 0     |      |        |      | (7,864 | ) |        |  | (1,959 | )
|                               |                          | Other disposals:         |        |      | (235  | )    |        |      | (235   | ) |        |  | (472   | )
|                               |                          |                          |        |      |       |      |        |      |        |   |        | 
|                               |                          | Total disposals          |        |      | (235  | )    |        |      | (8,099 | ) |        |  | (2,431 | )
|                               |                          |                          |        |      |       |      |        |      |        |   |        | 
|Balance at close of period     |                          | $                        | 28,229 |      |       | $    | 21,463 |      |        | $ | 24,061 | 
|                               |                          |                          |        |      |       |      |        |      |        |   |        | 

S-2



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##### Table of Contents





|3. |  | Exhibits.
|-- |  | ---------

We have filed some of the exhibits required by Item 601 of Regulation S-K
with previous registration statements or reports. As specifically noted in the
following Index to Exhibits, those previously filed exhibits are incorporated
into this annual report on Form 10-K by reference. All exhibits contained in
the following Index to Exhibits that are designated with an asterisk are
incorporated into this annual report by reference from our initial Registration
Statement on Form 10-SB filed with the SEC on March 22, 1996; the applicable
exhibit number in that Registration Statement is provided beside the asterisk.

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

|        |  |                                                                                                                                                                                                                                                                                                                                                     
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                     
|No.     |  | Description                                                                                                                                                                                                                                                                                                                                         
|        |  |                                                                                                                                                                                                                                                                                                                                                     
|        |  | Articles of Incorporation, Bylaws and Certificates and Articles of Merger:                                                                                                                                                                                                                                                                          
|       
|3.1     |  | Articles of Incorporation of Roberts Realty Investors, Inc. filed with
the Georgia Secretary of State on July 22, 1994. [* 2.1]                                                                                                                                                                                                                     
|       
|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. [* 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 from 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]                                                                                                                            

61



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|        |  |                                                                                                                                                                                                                                                                                                                                        
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                        
|No.     |  | Description                                                                                                                                                                                                                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                                                                                        
|4.2.3   |  | Certificate of Merger filed with the Georgia Secretary of State on May
16, 1995, merging Roberts Properties Plantation Trace, L.P. with and into
Roberts Properties Residential, L.P. (Plantation Trace Merger). [*
3.2.3]                                                                                                             
|       
|4.2.4   |  | Certificate of Merger filed with the Georgia Secretary of State on
September 27, 1995, merging Roberts Properties-St. Simons, 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 from 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 from 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 from our current report on Form 8-K dated April 1,
1997.]                                   
|       
|        |  | Material Agreements with Affiliates:                                                                                                                                                                                                                                                                                                   
|       
|10.1.1  |  | Amended and Restated Consulting Agreement between Roberts Properties
Residential, L.P. and Roberts Properties, Inc., dated June 26, 1996.
[Incorporated by reference to Exhibit 10.23.1 from our quarterly report
on Form 10-QSB for the quarter ended June 30, 1996.]                                                                 
|       
|10.1.2  |  | Amended and Restated Consulting Agreement between Roberts Properties
Residential, L.P. and Roberts Properties Group, Inc., dated June 26,
1996. [Incorporated by reference to Exhibit 10.23.2 from our quarterly
report on Form 10-QSB for the quarter ended June 30, 1996.]                                                           
|       
|10.1.3  |  | Design and Development Agreement between Roberts Properties Residential,
L.P. and Roberts Properties, Inc. (Addison Place). [Incorporated by
reference to Exhibit 10.14.11 from our quarterly report on Form 10-Q for
the quarter ended June 30, 2000.]                                                                                
|       
|10.1.4  |  | Design and Development Agreement between Roberts Properties Residential,
L.P. and Roberts Properties, Inc. (Veranda Chase). [Incorporated by
reference to Exhibit 10.16.04 from our quarterly report on Form 10-Q for
the quarter ended June 30, 2000.]                                                                                
|       
|10.1.5  |  | Construction Administration Agreement between Roberts Residential, L.P.
and Roberts Properties, Inc. (Veranda Chase). [Incorporated by reference
to Exhibit 10.16.05 from our quarterly report on Form 10-Q for the
quarter ended June 30, 2000.]                                                                                      
|       
|10.1.6  |  | Design and Development Agreement between Roberts Properties Residential,
L.P. and Roberts Properties, Inc. (Charlotte). [Incorporated by reference
to Exhibit 10.17.01 from our quarterly report on Form 10-Q for the
quarter ended June 30, 2000.]                                                                                    

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|        |  |                                                                                                                                                                                                                                                                            
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                            
|No.     |  | Description                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                            
|10.1.7  |  | Construction Administration Agreement between Roberts Residential, L.P.
and Roberts Properties, Inc. (Charlotte). [Incorporated by reference to
Exhibit 10.17.02 from our quarterly report on Form 10-Q for the quarter
ended June 30, 2000.]                              
|       
|10.1.8  |  | Agreement and Plan of Merger by and between Roberts Properties
Residential, L.P. and Roberts Properties Management, L.L.C., dated April
1, 1997 [Incorporated by reference to Exhibit 2.1 from our current
report on Form 8-K dated April 1, 1997.]                        
|       
|10.1.9  |  | Sales Contract between Roberts Properties, Inc. and Roberts Properties
Residential, L.P., dated May 25, 2001 (East Fox Court). [Incorporated by
reference to Exhibit 10.18.1 from our quarterly report on Form 10-Q for
the quarter ended June 30, 2001.]                  
|       
|10.1.10 |  | Design and Development Agreement between Roberts Properties Residential,
L.P. and Roberts Properties, Inc. dated June 15, 2001 (East Fox Court).
[Incorporated by reference to Exhibit 10.18.2 from our quarterly report
on Form 10-Q for the quarter ended June 30, 2001.]
|       
|10.1.11 |  | Sales Contract between Roberts Properties, Inc. and Roberts Properties
Residential, L.P. dated June 27, 2001 (Northridge). [Incorporated by
reference to Exhibit 10.19.1 from our quarterly report on Form 10-Q for
the quarter ended June 30, 2001.]                      
|       
|10.1.12 |  | Sales Contract between Roberts Properties, Inc. and Roberts Properties
Residential, L.P., dated June 27, 2001 (Corporate Office Building).
[Incorporated by reference to Exhibit 10.20.1 from our quarterly report
on Form 10-Q for the quarter ended June 30, 2001.]      
|       
|10.1.13 |  | Construction Administration Agreement between Roberts Residential, L.P.
and Roberts Properties, Inc. (Corporate Office Building). [Incorporated
by reference to Exhibit 10.20.5 from our quarterly report on Form 10-Q
for the quarter ended September 30, 2001.]          
|       
|10.1.14 |  | Restricted Stock Award Agreement between Roberts Realty Investors, Inc.
and Charles R. Elliott, dated March 20, 2001. [Incorporated by reference
to Exhibit 10.17.1 from our annual report on Form 10-K for the year ended
December 31, 2001.]                             
|       
|10.1.15 |  | Restricted Stock Award Agreement between Roberts Realty Investors, Inc.
and Ronald L. Johnson, dated February 2, 2001. [Incorporated by
reference to Exhibit 10.17.2 from our annual report on Form 10-K for the
year ended December 31, 2001.]                            
|       
|10.1.16 |  | Construction Administration Agreement between Roberts Residential, L.P.
and Roberts Properties, Inc. (Addison Place Shoppes). [Incorporated by
reference to Exhibit 10.21.3 from our quarterly report on Form 10-Q for
the quarter ended September 30, 2001.]              
|       
|10.1.17 |  | 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 from our annual report on
Form 10-K for the year ended December 31, 2001.]      

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|        |  |                                                                                                                                                                                                                                                                                                                                                                                            
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                            
|No.     |  | Description                                                                                                                                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                            
|        |  | Preston Oaks Financing Documents:                                                                                                                                                                                                                                                                                                                                                          
|       
|10.2.1  |  | Multifamily Note executed by Roberts Properties Residential,
L.P. in favor of Primary Capital Advisors LC, dated February 1,
2001, in the original principal amount of $12,700,000 (Preston
Oaks). [Incorporated by reference to Exhibit 10.1.3 from our
quarterly report on Form 10-Q for the quarter ended March 31,
2001.]                                                              
|       
|10.2.2  |  | Multifamily Deed to Secure Debt, Assignment of Rents and
Security Agreement executed by Roberts Properties Residential,
L.P. in favor of Primary Capital Advisors LC, dated February 1,
2001 (Preston Oaks). [Incorporated by reference to Exhibit
10.1.4 from our quarterly report on Form 10-Q for the quarter
ended March 31, 2001.]                                                    
|       
|        |  | Highland Park Financing Documents:                                                                                                                                                                                                                                                                                                                                                         
|       
|10.3.1  |  | Multifamily Note executed by Roberts Properties Residential,
L.P. in favor of Primary Capital Advisors LC, dated November 21,
2002, in the original principal amount of $10,000,000 (Highland
Park).                                                                                                                                                                                       
|       
|10.3.2  |  | Multifamily Deed to Secure Debt, Assignment of Rents and
Security Agreement executed by Roberts Properties Residential,
L.P. in favor of Primary Capital Advisors LC, dated November 21,
2002 (Highland Park).                                                                                                                                                                             
|       
|10.3.3  |  | Replacement Reserve Agreement executed by Roberts Properties
Residential, L.P. in favor of Primary Capital Advisors LC, dated
November 21, 2002 (Highland Park).                                                                                                                                                                                                                           
|       
|        |  | River Oaks Financing Documents:                                                                                                                                                                                                                                                                                                                                                            
|       
|10.4.1  |  | Real Estate Note A executed by Roberts Properties Residential,
L.P. in favor of Nationwide Life Insurance Company, dated
October 17, 1996, in the original principal amount of
$7,250,000.00 (River Oaks). [Incorporated by reference to
Exhibit 10.3.3 from our annual report on Form 10-KSB for the
year ended December 31, 1996.]                                                       
|       
|10.4.2  |  | Real Estate Note B executed by Roberts Properties Residential,
L.P. in favor of Nationwide Life & Annuity Insurance Company,
dated October 17, 1996, in the original principal amount of
$2,000,000.00 (River Oaks). [Incorporated by reference to
Exhibit 10.3.4 from our annual report on Form 10-KSB for the
year ended December 31, 1996.]                                             
|       
|10.4.3  |  | Deed to Secure Debt and Security Agreement executed by Roberts
Properties Residential, L.P. in favor of Nationwide Life
Insurance Company and Nationwide Life & Annuity Insurance
Company, dated October 17, 1996, and related collateral
documents (River Oaks). [Incorporated by reference to Exhibit
10.3.5 from our annual report on Form 10-KSB for the year ended
December 31, 1996.]
|       
|        |  | Plantation Trace Financing Documents:                                                                                                                                                                                                                                                                                                                                                      
|       
|10.5.1  |  | Promissory Note executed by Roberts Properties Residential, L.P.
in favor of The Prudential Insurance Company of America, dated
September 29, 1998, in the original principal amount of
$11,900,000 (Plantation Trace). [Incorporated by reference to
Exhibit 10.07.04 from our quarterly report on Form 10-Q for the
quarter ended September 30, 1998.]                                   

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|        |  |                                                                                                                                                                                                                                                                                                                                                                     
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                     
|No.     |  | Description                                                                                                                                                                                                                                                                                                                                                         
|        |  |                                                                                                                                                                                                                                                                                                                                                                     
|10.5.2  |  | Deed to Secure Debt and Security Agreement executed by Roberts
Properties Residential, L.P. in favor of The Prudential
Insurance Company of America, dated September 29, 1998, and
related collateral documents (Plantation Trace). [Incorporated
by reference to Exhibit 10.07.05 from our quarterly report on
Form 10-Q for the quarter ended September 30, 1998.]
|       
|10.5.3  |  | Limited Guaranty executed by Roberts Realty Investors, Inc. in
favor of The Prudential Insurance Company of America, dated
September 29, 1998 (Plantation Trace). [Incorporated by
reference to Exhibit 10.07.06 from our quarterly report on Form
10-Q for the quarter ended September 30, 1998.]                                                                  
|       
|        |  | Bradford Creek Financing Documents:                                                                                                                                                                                                                                                                                                                                 
|       
|10.6.1  |  | Real Estate Note executed by Roberts Properties Residential,
L.P. in favor of Nationwide Life Insurance Company, dated June
1, 1998, in the original principal amount of $8,400,000.00
(Bradford Creek). [Incorporated by reference to Exhibit 10.8.6
from our quarterly report on Form 10-Q for the quarter ended
June 30, 1998.]                                  
|       
|10.6.2  |  | Deed to Secure Debt and Security Agreement executed by Roberts
Properties Residential, L.P. in favor of Nationwide Life
Insurance Company of America, dated June 1, 1998, and related
collateral documents (Bradford Creek). [Incorporated by
reference to Exhibit 10.8.7 from our quarterly report on Form
10-Q for the quarter ended June 30, 1998.]              
|       
|10.6.3  |  | Guaranty between Roberts Realty Investors, Inc. and Nationwide
Life Insurance Company of America, dated June 1, 1998 (Bradford
Creek). [Incorporated by reference to Exhibit 10.8.8 from our
quarterly report on Form 10-Q for the quarter ended June 30,
1998.]                                                                                                    
|       
|        |  | Addison Place Phases I and II Financing Documents:                                                                                                                                                                                                                                                                                                                  
|       
|10.7.1  |  | 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 Phase I). [Incorporated by reference to Exhibit
10.14.04 from our annual report on Form 10-K for the year ended
December 31, 1999.]                 
|       
|10.7.2  |  | 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 Phase I).
[Incorporated by reference to Exhibit 10.14.05 from our annual
report on Form 10-K for the year ended December 31, 1999.]    
|       
|10.7.3  |  | Guaranty executed by Roberts Realty Investors, Inc. in favor of
The Prudential Insurance Company of America, dated October 25,
1999 (Addison Place Phase I). [Incorporated by reference to
Exhibit 10.14.06 from our annual report on Form 10-K for the
year ended December 31, 1999.]                                                                              
|       
|10.8.1  |  | 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 Phase
II). [Incorporated by reference to Exhibit 10.14.09 from our
quarterly report on Form 10-Q for the quarter ended June 30,
2000.]                                    

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|        |  |                                                                                                                                                                                                                                                                                                                                                     
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                     
|No.     |  | Description                                                                                                                                                                                                                                                                                                                                         
|        |  |                                                                                                                                                                                                                                                                                                                                                     
|10.8.2  |  | 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 Phase II). [Incorporated by reference to Exhibit
10.14.10 from our quarterly report on Form 10-Q for the quarter
ended June 30, 2000.]
|       
|        |  | Veranda Chase (formerly Old Norcross) Financing Documents:                                                                                                                                                                                                                                                                                          
|       
|10.9.1  |  | Promissory Note executed by Roberts Realty Residential, L.P. in
favor of Compass Bank, dated April 25, 2001, in the original
principal amount of $17,000,000 (Veranda Chase). [Incorporated
by reference to Exhibit 10.16.4 from our quarterly report on
Form 10-Q for the quarter ended June 30, 2001.]                                            
|       
|10.9.2  |  | Future Advance Deed to Secure Debt, Assignment of Rents and
Leases and Security Agreement executed by Roberts Properties
Residential, L.P. in favor of Compass Bank, dated April 25, 2001
(Veranda Chase). [Incorporated by reference to Exhibit 10.16.4
from our quarterly report on Form 10-Q for the quarter ended
June 30, 2001.]               
|       
|10.9.3  |  | Construction Loan Agreement executed by Roberts Properties
Residential, L.P. in favor of Compass Bank, dated April 25, 2001
(Veranda Chase). [Incorporated by reference to Exhibit 10.16.5
from our quarterly report on Form 10-Q for the quarter ended
June 30, 2001.]                                                                             
|       
|        |  | Northridge Community Financing Documents:                                                                                                                                                                                                                                                                                                           
|       
|10.10.1 |  | Promissory Note executed by Roberts Property Residential, L.P.
in favor SouthTrust Bank, dated June 28, 2001, in the original
principal amount of $3,000,000 (Northridge). [Incorporated by
reference to Exhibit 10.19.2 from our quarterly report on Form
10-Q for the quarter ended June 30, 2001.]                                               
|       
|10.10.2 |  | Deed to Secure Debt, Assignment of Leases and Rents and Security
Agreement executed by Roberts Realty Residential, L.P. in favor
of SouthTrust Bank, dated June 28, 2001 (Northridge).
[Incorporated by reference to Exhibit 10.19.3 from our quarterly
report on Form 10-Q for the quarter ended June 30, 2001.]                                   
|       
|10.10.3 |  | Assignment of Leases and Rents executed by Roberts Realty
Residential, L.P. in favor of SouthTrust Bank, dated June 28,
2001 (Northridge). [Incorporated by reference to Exhibit 10.19.4
from our quarterly report on Form 10-Q for the quarter ended
June 30, 2001.]                                                                               
|       
|10.10.4 |  | First Amendment to Security Instrument and Other Loan Documents
dated June 25, 2002 by and among Roberts Properties Residential.
L.P., Roberts Realty Investors, Inc. and SouthTrust Bank.
[Incorporated by reference to Exhibit 10.10.4 from our quarterly
report on Form 10-Q for the quarter ended June 30, 2002.]                               
|       
|        |  | Corporate Office Building Financing Documents:                                                                                                                                                                                                                                                                                                      
|       
|10.11.1 |  | Promissory Note executed by Roberts Property Residential, L.P.
in favor of Bank of North Georgia, dated June 28, 2001 in the
original principal amount of $5,280,000 (Corporate Office
Building). [Incorporated by reference to Exhibit 10.20.2 from
our quarterly report on Form 10-Q for the quarter ended June 30,
2001.]                        

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|        |  |                                                                                                                                                                                                                                                                                                                                                          
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                          
|No.     |  | Description                                                                                                                                                                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                          
|10.11.2 |  | Construction Loan Agreement executed by Roberts Properties
Residential, L.P. in favor of the Bank of North Georgia, dated
June 28, 2001 (Corporate Office Building). [Incorporated by
reference to Exhibit 10.20.3 from our quarterly report on Form
10-Q for the quarter ended June 30, 2001.]                                                          
|       
|10.11.3 |  | Deed to Secure Debt executed by Roberts Properties Residential,
L.P. in favor of the Bank of North Georgia, dated June 28, 2001
(Corporate Office Building). [Incorporated by reference to
Exhibit 10.20.4 from our quarterly report on Form 10-Q for the
quarter ended June 30, 2001.]                                                                  
|       
|        |  | Addison Place Shoppes Financing Documents:                                                                                                                                                                                                                                                                                                               
|       
|10.12.1 |  | Promissory Note executed by Roberts Properties Residential, L.P.
in favor of AmSouth Bank, dated August 31, 2001 in the original
principal amount of $2,700,000 (Addison Place Shoppes).
[Incorporated by reference to Exhibit 10.21.1 from our quarterly
report on Form 10-Q for the quarter ended September 30, 2001.]                                 
|       
|10.12.2 |  | Deed to Secure Debt, Security Agreement and Assignment of Rents
and Leases executed by Roberts Realty Residential, L.P. in favor
of AmSouth Bank, dated August 31, 2001 (Addison Place Shoppes).
[Incorporated by reference to Exhibit 10.21.2 from our quarterly
report on Form 10-Q for the quarter ended September 30, 2001.]                         
|       
|10.12.3 |  | Promissory Note (Increased, Amended and Restated) executed by
Roberts Properties Residential, L.P. in favor of AmSouth Bank,
dated December 21, 2001 in the original principal amount of
$3,700,000 (Addison Place Shoppes). [Incorporated by reference
to Exhibit 10.1 from our quarterly report on Form 10-Q for the
quarter ended September 30, 2002.]
|       
|10.12.4 |  | First Amendment to Deed to Secure Debt, Security Agreement and
Assignment of Rents and Leases executed by Roberts Realty
Residential, L.P. in favor of AmSouth Bank, dated December 21,
2001 (Addison Place Shoppes). [Incorporated by reference to
Exhibit 10.2 from our quarterly report on Form 10-Q for the
quarter ended September 30, 2002.]       
|       
|10.12.5 |  | Second Amendment to Promissory Note executed by Roberts
Properties Residential, L.P. in favor of AmSouth Bank, dated
April 30, 2002 in the original principal amount of $3,700,000
(Addison Place Shoppes). [Incorporated by reference to Exhibit
10.3 from our quarterly report on Form 10-Q for the quarter
ended September 30, 2002.]                 
|       
|10.12.6 |  | Second Amendment to Deed to Secure Debt, Security Agreement and
Assignment of Rents and Leases executed by Roberts Realty
Residential, L.P. in favor of AmSouth Bank, dated April 30, 2002
(Addison Place Shoppes). [Incorporated by reference to Exhibit
10.4 from our quarterly report on Form 10-Q for the quarter
ended September 30, 2002.]         
|       
|10.12.7 |  | Third Amendment to Promissory Note executed by Roberts
Properties Residential, L.P. in favor of AmSouth Bank, dated
August 30, 2002 in the original principal amount of $3,700,000
(Addison Place Shoppes). [Incorporated by reference to Exhibit
10.5 from our quarterly report on Form 10-Q for the quarter
ended September 30, 2002.]                 

67



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|        |  |                                                                                                                                                                                                                                                                                                                                                 
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                 
|No.     |  | Description                                                                                                                                                                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                                                                                                                 
|10.12.8 |  | Third Amendment to Deed to Secure Debt, Security Agreement and
Assignment of Rents and Leases executed by Roberts Realty
Residential, L.P. in favor of AmSouth Bank, dated August 30,
2002 (Addison Place Shoppes). [Incorporated by reference to
Exhibit 10.6 from our quarterly report on Form 10-Q for the
quarter ended September 30, 2002.]
|       
|        |  | St. Andrews at the Polo Club Financing Documents:                                                                                                                                                                                                                                                                                               
|       
|10.13.1 |  | Promissory Note executed by Roberts Properties Residential, L.P.
in favor of State Farm Life Insurance Company, dated November 6,
2001 in the original principal amount of $ $21,000,000 (St.
Andrews at the Polo Club) [Incorporated by reference to
Exhibit 10.13.1 from our Annual Report on Form 10-K for the
year ended December 31, 2001.]
|       
|10.13.2 |  | Mortgage and Security Agreement executed by Roberts Realty
Residential, L.P. in favor of State Farm Life Insurance Company,
dated November 6, 2001 (St. Andrews at the Polo Club) [Incorporated by reference to
Exhibit 10.13.2 from our Annual Report on Form 10-K for the
year ended December 31, 2001.]                                      
|       
|10.13.3 |  | Assignment of Rents and Lease executed by Roberts Realty
Residential, L.P. in favor of State Farm Life Insurance Company,
dated November 6, 2001 (St. Andrews at the Polo Club) [Incorporated by reference to
Exhibit 10.13.3 from our Annual Report on Form 10-K for the
year ended December 31, 2001.]                                        
|       
|10.13.4 |  | Guaranty Agreement (Rental Achievement) executed by Roberts
Realty Investors, Inc. in favor of State Farm Life Insurance
Company, dated November 6, 2001 (St. Andrews at the Polo Club) [Incorporated by reference to
Exhibit 10.13.4 from our Annual Report on Form 10-K for the
year ended December 31, 2001.]                                
|       
|10.13.5 |  | Guaranty Agreement (Carve out) executed by Roberts Realty
Investors, Inc. in favor of State Farm Life Insurance Company,
dated November 6, 2001 (St. Andrews at the Polo Club) [Incorporated by reference to
Exhibit 10.13.5 from our Annual Report on Form 10-K for the
year ended December 31, 2001.]                                         
|       
|        |  | Charlotte Financing Documents:                                                                                                                                                                                                                                                                                                                  
|       
|10.14.1 |  | Construction Loan Agreement executed by Roberts Properties
Residential, L.P. in favor of AmSouth Bank, dated February 21,
2002 (Charlotte construction loan) [Incorporated by reference to
Exhibit 10.4.1 from 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 (Charlotte construction
loan). [Incorporated by reference to Exhibit 10.4.2 from 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 (Charlotte construction
loan). [Incorporated by reference to Exhibit 10.4.3 from 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 (Charlotte
construction loan). [Incorporated by reference to Exhibit 10.4.4
from 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                                                                                                                                                                                                                                                                                                                   

68



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##### Table of Contents



|        |  |                                                            
|------- |  | -----------------------------------------------------------
|Exhibit |  |                                                            
|No.     |  | Description                                                
|        |  |                                                            
|23.2    |  | Notice Regarding Consent of Arthur Andersen LLP            
|       
|24.1    |  | Power of Attorney (contained on the signature page hereof).



---

|(b) |  | Current Reports on Form 8-K during the quarter ended December 31, 2002.
|--- |  | -----------------------------------------------------------------------



| | 1. |  | Form 8-K dated and filed on November 14,
2002, furnishing under Item 9 the Statement under Oath of
the Principal Executive and Financial Officers of Roberts
Realty, Inc. regarding facts and circumstances relating to
exchange act filings for the three and nine months ended
September 30, 2002.
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

69



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##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

|      |  |                                                                                  |  | 
|----- |  | -------------------------------------------------------------------------------- |  | 
|      |  | ROBERTS REALTY INVESTORS, INC                                                    |  | 
|     
|By:   |  | /s/ Charles S. Roberts                                                           |  | 
|      |  |                                                                                  |  | 
|      |  | Charles S. Roberts, Chairman of the Board,
Chief Executive Officer and President |  | 
|Date: |  | March 25, 2003                                                                   |  | 

POWER OF ATTORNEY

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

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

|                                            |  |                                                                                                              |  |               
|------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------ |  | --------------
|Signature                                   |  | Title                                                                                                        |  | Date          
|                                            |  |                                                                                                              |  |               
|/s/  Charles S. RobertsCharles S. Roberts   |  | Chairman of the Board, Chief
Executive Officer and President                                                 |  | March 25, 2003
|                                           
|/s/  Stephen M. McAleerStephen M. McAleer   |  | Secretary, Treasurer, Chief
Financial Officer (Principal Financial
Officer and Principal Accounting Officer) |  | March 25, 2003
|                                           
|/s/  Charles R. ElliottCharles R. Elliott   |  | Chief Operating Officer and Director                                                                         |  | March 25, 2003
|                                           
|/s/  Dennis H. JamesDennis H. James         |  | Director                                                                                                     |  | March 25, 2003
|                                           
|/s/  Wm. Jarell JonesWm. Jarell Jones       |  | Director                                                                                                     |  | March 25, 2003
|                                           
|/s/  Ben A. SpaldingBen A. Spalding         |  | Director                                                                                                     |  | March 25, 2003
|                                           
|/s/  George W. Wray, Jr.George W. Wray, Jr. |  | Director                                                                                                     |  | March 25, 2003

70



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##### Table of Contents






Certification

I, Charles S. Roberts, certify that:

1.I have reviewed this annual report on Form 10-K of Roberts Realty
Investors, Inc;

2.Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3.Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:



| |                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
|
| | b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the Evaluation Date); and                                                                                                  
|
| | c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of
the Evaluation Date;                                                                                                                        

5.The registrants other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrants auditors and the audit committee of
registrants board of directors (or persons performing the equivalent
function):



| |                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and
|
| | b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        

6.The registrants other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|               |  |                                                                                       
|-------------- |  | --------------------------------------------------------------------------------------
|March 25, 2003 |  | /s/ Charles S. Roberts                                                                
|               |  |                                                                                       
|Date           |  | CHARLES S. ROBERTS
President and Chief Executive Officer
(principal executive officer)





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##### Table of Contents






Certification

I, Stephen M. McAleer, certify that:

1.I have reviewed this annual report on Form 10-K of Roberts Realty
Investors, Inc;

2.Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3.Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:



| |                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
|
| | b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the Evaluation Date); and                                                                                                  
|
| | c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of
the Evaluation Date;                                                                                                                        

5.The registrants other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrants auditors and the audit committee of
registrants board of directors (or persons performing the equivalent
function):



| |                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and
|
| | b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        

6.The registrants other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|               |  |                                                                                        
|-------------- |  | ---------------------------------------------------------------------------------------
|March 25, 2003 |  | /s/ Stephen M. McAleer                                                                 
|               |  |                                                                                        
|Date           |  | STEPHEN M. McALEER
Chief Financial Officer
(principal financial and accounting officer)