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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For
the transition period from_________ to_________
 Commission file number: 001-13183
 ROBERTS REALTY INVESTORS, INC.
  Georgia
    
    58-2122873(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)450 Northridge Parkway,
Suite 302, Atlanta, GA
    
    30350(Address of principal executive offices)
    
    (Zip Code)
 (770) 394-6000
   Title of each class
    
    Name of each exchange on which registeredCommon Stock, $.01 par value per share
    
    American Stock Exchange
  o þ
 o þ
 þ o
 o
 o þ
   Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
  Class
    
    Outstanding at March 21, 2008Common Stock, $.01 par value per share
    
    5,812,463 shares
 DOCUMENTS INCORPORATED BY REFERENCE
 Document
    
    Parts into which incorporatedNone
    
    N/A




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TABLE OF CONTENTS
 PAGENOTE REGARDING FORWARD-LOOKING STATEMENTS
    
    
    2PART I
    
    
    
    
    3ITEM 1.
    
    BUSINESS
    
    
    3ITEM 1A.
    
    RISK FACTORS
    
    
    14ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
    
    
    24ITEM 2.
    
    PROPERTIES
    
    
    25ITEM 3.
    
    LEGAL PROCEEDINGS
    
    
    32ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    33PART II
    
    
    
    
    34ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    34ITEM 6.
    
    SELECTED FINANCIAL DATA
    
    
    34ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
    
    
    35ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    47ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    48ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    49ITEM 9A(T).
    
    CONTROLS AND PROCEDURES
    
    
    49ITEM 9B.
    
    OTHER INFORMATION
    
    
    51PART III
    
    
    
    
    52ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    52ITEM 11.
    
    EXECUTIVE COMPENSATION
    
    
    56ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    58ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
    
    
    61ITEM 14.
    
    PRINCIPAL ACCOUNTING FEES AND SERVICES
    
    
    67PART IV
    
    
    
    
    69ITEM 15.
    
    EXHIBITS, FINANCIAL STATEMENT SCHEDULES
    
    
    69EX-10.1.6 LEASE RENEWAL AGREEMENTEX-10.1.7 LEASE RENEWAL AGREEMENTEX-21 SUBSIDIARIES OF ROBERTS REALTY INVESTORS, INC.EX-23 CONSENT OF REZNICK GROUP, P.C.EX-31 CERTIFICATION OF CHARLES S. ROBERTS AND CHARLES R. ELLIOTTEX-32 CERTIFICATION OF CHARLES S. ROBERTS AND CHARLES R. ELLIOTT




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NOTE REGARDING FORWARD-LOOKING STATEMENTS
   2




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PART I
 
 ITEM 1. BUSINESS.
 General
    (1)
    
    the multifamily segment consisting of an operating apartment community
(Addison Place);(2)
    
    the retail/office segment consisting of operating retail centers (Grand
Pavilion, Bassett Shopping Center, Spectrum at the Mall of Georgia, and the Addison
Place Shops) and an office building (Northridge Office Building);(3)
    
    the land segment consisting of various tracts of land that are either
under development and construction (Northridge, Peachtree Parkway, North Springs,
Sawmill Village, and Highway 20) or held for investment (Westside); and(4)
    
    the corporate segment consisting primarily of operating cash and cash
equivalents plus miscellaneous other assets.
   3




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The Operating Partnership
    Recent Developments
 Listing of Addison Place Community for Sale
  4




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Term Sheet for Extension of Loans from Wachovia Bank
      5




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Trends
     6




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Business Plan
 Overview
 7




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Property Management Strategy
 
    
    increasing occupancy and rental rates as market conditions permit;
    
    minimizing resident turnover and delinquent rental payments through strict review
of each applicants creditworthiness;
    
    providing our retail and office tenants with attractive facilities;
    
    controlling operating expenses and increasing net operating income at each of our
properties; and
    
    providing superior customer service to our apartment residents and commercial
tenants.
 Development and Construction Strategy
   
    
    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;
 8




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
    
    traffic volume, transportation access, proximity to commercial centers and regional
malls; and
    
    proximity to and quality of the areas schools.
  Determination of Investment, Financing, and Conflict of Interest Policies
  
    
    we cannot change our policy of holding our assets and conducting our business
exclusively through the operating partnership without amending the operating
partnership agreement, which will generally require the consent of the holders of a
majority in interest of the limited partners in the operating partnership including, if
applicable, Roberts Realty; and
    
    any changes in our conflicts of interest policies must be approved by a majority of
the independent directors and otherwise be consistent with legal requirements.
 Investment Policies
 Investments in Real Estate or Interests in Real Estate
  Possible Acquisition of Properties from Mr. Roberts or His Affiliates
 
    
    we may hire Mr. Roberts or the Roberts Companies to develop and construct real
estate assets under a fee arrangement;
    
    we may acquire undeveloped property from Mr. Roberts or his affiliates for future
development, which we did in 2004 and 2005; or
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
    
    we may acquire from Mr. Roberts or his affiliates partially or completely
constructed properties, whether in their lease-up phase or already leased and
stabilized.
   Securities of or Interest in Persons Primarily Engaged in Real Estate Activities and Other
Issuers
 No Investments in Mortgages
 Financing Policies
    10




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Conflict of Interest Policies
   
    
    the transaction is approved, after disclosure of the interest, by the affirmative
vote of a majority of the disinterested directors, or by the affirmative vote of a
majority of the votes cast by disinterested shareholders; or
    
    the transaction is established to have been fair to us.
  Other Policies
   Competition
  11




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Environmental and Other Regulatory Matters
  
    
    remediation and removal costs; and
    
    damages to persons or property arising from the existence or maintenance of
hazardous or toxic substances.
  12




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Insurance
    13




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ITEM 1A. RISK FACTORS
  1.
    
    financing risks;2.
    
    real estate related risks;3.
    
    tax risks;4.
    
    environmental and other legal risks; and5.
    
    risks for investors in our stock.
  Financing Risks
 We face the immediate maturity of an $8,175,000 loan we owe to Wachovia bank, and we may be unable
to extend this loan.
  We face the maturity of our other short-term debt, and we may be unable to repay, extend, or
refinance this debt.
  14




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We may not be able to obtain the debt and equity we need to carry out our planned development and
construction program.
  We face the normal risks associated with debt financing.
  
    
    the risk that our cash flow will be insufficient to meet required payments of
principal and interest; and
    
    the risk that we will not be able to renew, repay, or refinance our debt when it
matures or that the terms of any renewal or refinancing will not be as favorable as the
existing terms of that debt.
  Rising interest rates could materially and adversely affect the cost of our indebtedness.
  Increased debt and leverage could affect our financial position and impair our ability to make
distributions to our investors.
  
    
    increase our vulnerability to general adverse economic and industry conditions;
 15




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
    
    limit our flexibility in planning for, or reacting to, changes in our business and
the REIT industry, which may place us at a competitive disadvantage compared to our
competitors that have less debt; and
    
    limit, along with the possible financial and other restrictive covenants in our
indebtedness, our ability to borrow additional funds.
  If we incur additional debt, the agreements covering that debt could contain various covenants that
limit our discretion in the operation of our business.
  
    
    incur additional debt and issue preferred stock;
    
    pay dividends and make other distributions;
    
    make investments and other payments;
    
    redeem or repurchase our capital stock;
    
    consolidate or merge;
    
    create liens;
    
    sell assets; or
    
    enter into certain transactions with our affiliates.
  Our interest rate hedging activities may not effectively protect us from fluctuations in interest
rates.
  16




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Real Estate Related Risks
 Our business currently operates at a loss
  Real estate properties are illiquid and may be difficult to sell, particularly in a poor market
environment like the present.
  Construction risks inherent in the development and construction of new properties could negatively
affect our financial performance.
  
    
    increased costs for or any unavailability of materials or labor;
    
    building restrictions;
    
    environmental impact studies by the government;
    
    weather delays;
    
    increased interest costs due to rising interest rates; and
    
    any financial instability of the developer (Roberts Properties, Inc., which is owned
by Mr. Charles S. Roberts, our President, Chief Executive Officer and Chairman of our
Board of Directors), general contractor (Roberts Properties Construction, Inc., also
owned by Mr. Roberts) or any subcontractor.
  17




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We face leasing risks in our planned development and construction program.
  We are currently concentrated in metropolitan Atlanta, and adverse changes in economic or market
conditions in Atlanta could negatively affect our financial performance and condition.
  
    
    lack of employment growth;
    
    supply and demand for properties;
    
    neighborhood values in the submarkets in which our properties are located;
    
    zoning and other regulatory conditions;
    
    competition from other properties;
    
    property taxes;
    
    weather problems; and
    
    price increases for materials or labor.
  We face conflicts of interest because of our business dealings with our Chief Executive Officer and
his affiliates.
  
    
    the possibility that the Roberts Companies might incur severe financial problems or
even become bankrupt;
 18




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
    
    the possibility that the Roberts Companies may at any time have economic or business
interests or goals that are or that become inconsistent with our business interests or
goals; or
    
    the possibility that the Roberts Companies may be in a position to take action
contrary to our instructions or requests or contrary to our policies or objectives.
 We face substantial competition.
  Favorable conditions for purchasing residential properties could adversely affect our revenues from
our apartment communities.
  Changes in market or economic conditions may affect our business negatively.
  Terrorism could impair our business.
  Our retail and office tenants may go bankrupt or be unable to make lease payments.
  19




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Losses from natural catastrophes may exceed our insurance coverage.
  Our business depends on key personnel.
  If we are unable to lease up our Addison Place Shops and our Northridge office building as we
intend, our financial performance and condition could suffer.
  Tax Risks
 Our company may fail to qualify for REIT status under federal income tax laws.
  20




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Our operating partnership may fail to be treated as a partnership for federal income tax purposes.
  Environmental and Other Legal Risks
 We may have liability under environmental laws.
  
    
    we may have to pay for property damage and for investigation and clean-up costs
incurred in connection with the contamination;
    
    the law typically imposes clean-up responsibility and liability regardless of
whether the owner or operator knew of or caused the contamination;
    
    even if more than one person may be responsible for the contamination, each person
who shares legal liability under the environmental laws may be held responsible for all
of the clean-up costs; and
    
    governmental entities or other third parties may sue the owner or operator of a
contaminated site for damages and costs.
  21




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We face risks related to mold.
  We may acquire properties that are subject to liabilities for which we have no recourse, or only
limited recourse, against the seller.
  
    
    claims by tenants, vendors, or other persons dealing with the former owners of the
properties;
    
    liabilities incurred in the ordinary course of business; and
    
    claims for indemnification by directors, officers, and others indemnified by the
former owners of the properties.
  We face risks in complying with Section 404 of the Sarbanes-Oxley Act of 2002.
    22




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Failure to comply with the Americans with Disabilities Act or other similar laws could result in
substantial costs.
  Risks for Investors in Our Stock
 We do not pay regular quarterly dividends, and we do not anticipate making distributions to
investors for the indefinite future, other than possibly to preserve our REIT status if so
required.
  The market price of our stock is subject to fluctuation as a result of our operating results, the
operating results of other REITs, and changes in the stock market in general.
  Additional issuances of equity securities may dilute the investment of our current shareholders.
  23




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Restrictions on changes of control could prevent a beneficial takeover for investors.
   
    
    our classified board of directors, which may render more difficult a change in
control of the company or removal of incumbent management, because the term of office
of only one-third of the directors expires in a given year;
    
    the ability of our board of directors to issue preferred stock;
    
    provisions in the articles of incorporation to the effect that no transaction of a
fundamental nature, including mergers in which the company is not the survivor, share
exchanges, consolidations, or sale of all or substantially all of the assets of the
Company, may be effectuated without the affirmative vote of at least three-quarters of
the votes entitled to vote generally in any such matter;
    
    provisions in the articles of incorporation to the effect that they may not be
amended (except for certain limited matters) without the affirmative vote of at least
three-quarters of the votes entitled to be voted generally in the election of
directors;
    
    provisions in the bylaws to the effect that they may be amended by either the
affirmative vote of three-quarters of all shares outstanding and entitled to vote
generally in the election of the directors, or the affirmative vote of a majority of
the companys directors then holding office, unless the shareholders prescribed that
any such bylaw may not be amended or repealed by the board of directors;
    
    Georgia anti-takeover statutes under which the company may elect to be protected;
and
    
    provisions to the effect that directors elected by the holders of common stock may
be removed only by the affirmative vote of shareholders holding at least 75% of all of
the votes entitled to be cast for the election of directors.
 A redemption of units is taxable.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS.
  24




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ITEM 2.
    
    PROPERTIES.
 General
  Multifamily
  Retail/Office
 1.
    
    Grand Pavilion, a 62,323 square foot retail center located in Johns
Creek that is 61.7% occupied.2.
    
    Bassett Shopping Center, a 19,949 square foot retail center located
directly across from the Mall of Georgia in Gwinnett County that is 82.9% occupied.3.
    
    Spectrum at the Mall of Georgia, a 30,050 square foot retail center
located directly across from the Mall of Georgia in Gwinnett County that is 57.0%
occupied.4.
    
    Addison Place Shops, a 44,293-square-foot retail center located at the
entrance to our Addison Place apartment community in Johns Creek. The Addison
Place Shops is in its lease-up phase and is 36.7% occupied.5.
    
    Northridge Office Building, a 37,864 square foot building located in
Sandy Springs. We occupy a portion of the third floor of the building as our
corporate headquarters, and we have entered into leases for the remaining space on
the third floor with Roberts Properties and Roberts Construction, each of which is
owned by Mr. Charles S. Roberts, our President, Chief Executive Officer, and
Chairman of our Board of Directors. In addition, we have signed leases with two
unrelated companies for portions of the first and second floors. The building is
in its lease-up phase and is 59.0% leased and 44.1% occupied.
 Land
 Properties Held for Development
 1.
    
    Northridge, a 10.9-acre site located adjacent to our Northridge office
building in Sandy Springs; the property is zoned for mixed-use that includes zoning
for 220 apartments.2.
    
    Peachtree Parkway, a 23.5-acre site fronting Peachtree Parkway (Highway
141) in Gwinnett County; the property is zoned for 292 apartments.3.
    
    North Springs, a 9.8-acre site located on Peachtree Dunwoody Road in
Sandy Springs; the property is zoned for 356 residential units, 210,000 square feet
of office space, and 56,000 square feet of retail space.
 25




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4.
    
    Sawmill Village, a 22.0-acre site located in Forsyth County; the
property is zoned for 154 apartments.5.
    
    Highway 20, a 38.2-acre site located in Cumming; the property is zoned
for 210 apartments.
 Land Held for Investment
    26




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PhysicalYear
    
    Number
    
    Approximate
    
    Average
    
    December 2007
    
    Occupancy(2)Residential
    
    
    
    
    
    Completed or
    
    of
    
    Rentable Area
    
    Unit Size
    
    Average Monthly Rental Rates
    
    as ofProperty
    
    Location
    
    Acquired
    
    Units
    
    (Square Feet)
    
    (Square Feet)
    
    Per Unit
    
    Per Sq. Ft.
    
    12/31/07ResidentialAddison Place
Townhomes
(1)
    
    Johns Creek
    
    
    1999
    
    
    
    118
    
    
    
    200,194
    
    
    
    1,697
    
    
    
    1,293
    
    
    
    0.76
    
    
    
    99.2
    %Addison Place
Apartments
(1)
    
    Johns Creek
    
    
    2001
    
    
    
    285
    
    
    
    386,864
    
    
    
    1,357
    
    
    
    1,129
    
    
    
    0.83
    
    
    
    97.2
    %Total Residential
(1)
    
    
    
    
    
    
    
    
    
    
    403
    
    
    
    587,058
    
    
    
    1,457
    
    
    
    1,177
    
    
    
    0.81
    
    
    
    97.8
    %
 
 (1)
    
    Addison Place was completed in two phases. Addison Place townhomes, the 118-unit first
phase, was completed in October 1999, and Addison Place apartments, the 285-unit second phase,
was completed in September 2001.(2)
    
    Physical Occupancy represents the total number of occupied units as of the date shown divided
by the total number of rentable units.  Month
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Average Effective Annual Rental RatesCompleted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2003
    
    2004
    
    2005
    
    2006
    
    2007Initial
    
    Physical Occupancy Rate
    
    Per
    
    Per
    
    Per
    
    Per
    
    Per
    
    Per
    
    Per
    
    Per
    
    Per
    
    PerCommunity
    
    Lease up
    
    2003
    
    2004
    
    2005
    
    2006
    
    2007
    
    Unit
    
    Sq. Ft.
    
    Unit
    
    Sq. Ft.
    
    Unit
    
    Sq. Ft.
    
    Unit
    
    Sq. Ft.
    
    Unit
    
    Sq. Ft.Addison Place
Townhomes
    
    
    5/00
    
    
    
    88.5
    %
    
    
    94.0
    %
    
    
    93.4
    %
    
    
    92.8
    %
    
    
    93.6
    %
    
    $
    1,195
    
    
    $
    0.70
    
    
    $
    1,157
    
    
    $
    0.68
    
    
    $
    1,207
    
    
    $
    0.71
    
    
    $
    1,253
    
    
    $
    0.74
    
    
    $
    1,270
    
    
    $
    0.75Addison Place
Apartments
    
    
    9/02
    
    
    
    90.3
    %
    
    
    94.2
    %
    
    
    94.2
    %
    
    
    91.4
    %
    
    
    91.3
    %
    
    $
    1,007
    
    
    $
    0.74
    
    
    $
    994
    
    
    $
    0.73
    
    
    $
    1,032
    
    
    $
    0.76
    
    
    $
    1,085
    
    
    $
    0.80
    
    
    $
    1,115
    
    
    $
    0.82Total Addison
Place
    
    
    N/A
    
    
    
    89.8
    %
    
    
    94.2
    %
    
    
    94.0
    %
    
    
    91.8
    %
    
    
    92.0
    %
    
    $
    1,061
    
    
    $
    0.73
    
    
    $
    1,041
    
    
    $
    0.71
    
    
    $
    1,083
    
    
    $
    0.74
    
    
    $
    1,134
    
    
    $
    0.78
    
    
    $
    1,161
    
    
    $
    0.80
 27




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Approximate
    
    
    AverageRetail or
    
    
    
    
    
    Year
    
    
    Year
    
    
    Rentable Area
    
    
    Base Rent per
    
    
    Physical OccupancyOffice Property
    
    Location
    
    
    Completed
    
    
    Acquired
    
    
    (Square Feet)
    
    
    Square Foot
    
    
    as of 12/31/07Retail:Grand Pavilion
    
    Johns Creek
    
    
    1999
    
    
    
    2005
    
    
    
    62,323
    
    
    $
    17.64
    
    
    
    55.9
    %Bassett Center
    
    Gwinnett County
    
    
    1999
    
    
    
    2005
    
    
    
    19,949
    
    
    
    19.47
    
    
    
    82.9
    %Spectrum Center
    
    Gwinnett County
    
    
    2002
    
    
    
    2005
    
    
    
    30,050
    
    
    
    25.43
    
    
    
    57.3
    %Addison Place Shops (1)
    
    Johns Creek
    
    
    2005
    
    
    
    2001
    
    
    
    39,205
    
    
    
    24.25
    
    
    
    38.4
    %Total Retail
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    151,527
    
    
    $
    21.14
    
    
    
    55.2
    %Northridge Office Building(2)
    
    Atlanta
    
    
    2004
    
    
    
    2001
    
    
    
    37,864
    
    
    $
    19.20
    
    
    
    44.1
    %
 
 (1)
    
    The Addison Place Shops retail center, building A, B, & C, was completed in May 2005 and is
in its lease-up phase.(2)
    
    The Northridge office building is in its lease-up phase. A total of 6,245 square feet of the
occupied space is allocated to Roberts Realty Investors, Inc.  Expiring
    
    
    % of TotalNumber of
    
    
    Approximate
    
    
    Approximate
    
    
    Expiring
    
    
    % of TotalExpiring
    
    
    Rentable Area
    
    
    Rentable Area
    
    
    Annualized
    
    
    AnnualizedYear
    

Leases (1)
    
    
    (Square Feet)
    
    
    (Square Feet)
    
    
    Base Rent
    
    
    Base Rent2008
    
    
    9
    
    
    
    26,259
    
    
    
    25.3
    %
    
    $
    520,235
    
    
    
    23.9
    %2009
    
    
    7
    
    
    
    15,440
    
    
    
    14.9
    %
    
    
    343,992
    
    
    
    15.8
    %2010
    
    
    6
    
    
    
    16,527
    
    
    
    15.9
    %
    
    
    278,917
    
    
    
    12.8
    %2011
    
    
    4
    
    
    
    9,035
    
    
    
    8.7
    %
    
    
    209,808
    
    
    
    9.6
    %2012
    
    
    10
    
    
    
    16,160
    
    
    
    15.6
    %
    
    
    394,516
    
    
    
    18.1
    %2013 and later
    
    
    2
    
    
    
    20,370
    
    
    
    19.6
    %
    
    
    428,880
    
    
    
    19.8
    %Total
    
    
    38
    
    
    
    103,791
    
    
    
    100.0
    %
    
    $
    2,176,348
    
    
    
    100.0
    %
 
 (1)
    
    Lease expiration table does not include option periods. 28




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##### Table of Contents



Fulton County
  Johns Creek
 th
 
    
    from 2000 to 2007, the population of Johns Creek increased 16.1% from 60,343 to
70,050;
    
    during this same period, the number of households increased 11.2% from 20,115 to
23,013;
    
    also during this same period, the median annual income increased 43% from
$105,015 to $150,592;
    
    approximately 37% of Johns Creeks residents are between the ages of 35 and 54;
    
    the top three employers in Johns Creek include State Farm Insurance, CIBA Vision
Corp, and Federated Systems Group;
    
    between 2000 and 2007, the median home price increased 41% from $250,675 to
$353,936, with 77% of homes currently valued at $250,000 or higher and 27% of homes
valued at over $500,000; and
    
    Johns Creek was listed by RelocateAmerica as one of the top 25 Places to Live to
go to School in 2007.
   Addison Place Apartments and Townhomes.
 28




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##### Table of Contents



Addison Place Shops.
 Grand Pavilion.
 Alpharetta
  29




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##### Table of Contents



Westside
 Perimeter Center/North Springs Area
   North Springs.
 30




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##### Table of Contents



Northridge Office Building
 Northridge Apartment Community.
 Gwinnett County
  Peachtree Corners Area
  Peachtree Parkway.
 Mall of Georgia Area
  Bassett Shopping Center.
 Spectrum Shopping Center.
 31




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##### Table of Contents



Forsyth County/Cumming
  Sawmill Village
 Highway 20
 Summary of Debt Secured by Our Properties
  Possible Additional Communities to Be Developed
  
 ITEM 3. LEGAL PROCEEDINGS.
  32




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##### Table of Contents



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  33




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##### Table of Contents



PART II
 
 ITEM 5.
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
  DividendsQuarter Ended
    
    High
    
    Low
    
    Declared2007
    
    First Quarter
    
    $
    8.00
    
    
    $
    7.50
    
    
    NoneSecond Quarter
    
    
    8.00
    
    
    
    6.87
    
    
    NoneThird Quarter
    
    
    7.73
    
    
    
    7.30
    
    
    NoneFourth Quarter
    
    
    7.55
    
    
    
    6.19
    
    
    None2006
    
    First Quarter
    
    $
    8.09
    
    
    $
    7.65
    
    
    NoneSecond Quarter
    
    
    8.10
    
    
    
    7.60
    
    
    NoneThird Quarter
    
    
    8.10
    
    
    
    7.75
    
    
    NoneFourth Quarter
    
    
    8.10
    
    
    
    7.55
    
    
    None
      
 ITEM 6. SELECTED FINANCIAL DATA.
  34




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##### Table of Contents



ITEM 7.
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
 Overview
  Recent Developments
 Listing of Addison Place Community for Sale
  Term Sheet for Extension of Loans from Wachovia Bank
   Trends
  35




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##### Table of Contents



36




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##### Table of Contents



Results of Operations
 Comparison of the Year Ended December 31, 2007 to the Year Ended December 31, 2006
        37




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##### Table of Contents



Liquidity and Capital Resources
   38




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##### Table of Contents



Comparison of the Year Ended December 31, 2007 to the Year Ended December 31, 2006
    39




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##### Table of Contents



Debt Summary
  The following table does not
reflect the extensions we expect to obtain from Wachovia.
 40




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##### Table of Contents



ROBERTS REALTY INVESTORS, INC.
DEBT SUMMARY SCHEDULE
(Listed in order of maturity)
As of December 31, 2007
 December 31,Interest
    

    Maturity
    
    Balance at
    
    Monthly
    
    
    2007Lender
    
    Interest Terms
    
    Rate(1)
    
    Date
    
    Maturity
    
    Payment
    
    
    BalancePeachtree Parkway Land Loan (2)
    
    Wachovia Bank
    
    LIBOR plus 250 b.p.
    
    
    7.10
    %
    
    03/31/08
    
    $
    8,175,000
    
    
    Interest only
    
    
    $
    8,175,000Highway 20 Land Loan (3)
    
    Wachovia Bank
    
    LIBOR plus 250 b.p.
    
    
    7.10
    %
    
    04/30/08
    
    
    4,077,000
    
    
    Interest only
    
    
    
    4,077,000Insurance Premium Loan
    
    AICCO, Inc.
    
    Fixed-rate permanent
    
    
    6.25
    %
    
    07/01/08
    
    
    
    
    
    $
    15,289
    
    
    
    90,000Revolving $2,500,000 Line
of Credit (4)
    
    Compass Bank
    
    LIBOR plus 175 b.p.
    
    
    6.35
    %
    
    07/31/08
    
    
    2,500,000
    
    
    Interest only
    
    
    
    400,000Westside Land Loan (4)
    
    Compass Bank
    
    LIBOR plus 175 b.p.
    
    
    6.35
    %
    
    08/27/08
    
    
    6,480,000
    
    
    Interest only
    
    
    
    6,480,000Sawmill Village Land Loan (4)
    
    Bank of North Georgia
    
    LIBOR plus 175 b.p.
    
    
    6.35
    %
    
    08/29/08
    
    
    3,335,000
    
    
    Interest only
    
    
    
    3,335,000Northridge Office Building (4)
    
    Bank of North Georgia
    
    LIBOR plus 200 b.p.
    
    
    6.60
    %
    
    09/10/08
    
    
    3,606,000
    
    
    $
    13,333
    (5)
    
    
    3,712,000Addison Place Shops (6)
    
    Compass Bank
    
    LIBOR plus 185 b.p.
    
    
    6.45
    %
    
    10/31/08
    
    
    6,500,000
    
    
    Interest only
    
    
    
    6,364,000Addison Place Townhomes (7)
    
    Prudential Life
    
    Fixed-rate permanent
    
    
    6.95
    %
    
    11/15/09
    
    
    8,339,000
    
    
    $
    62,885
    
    
    
    8,639,000Grand Pavilion Shopping 
Center (8)
    
    LaSalle Bank
    
    Fixed-rate permanent
    
    
    5.43
    %
    
    07/11/13
    
    
    6,016,000
    
    
    $
    40,565
    
    
    
    6,743,000Spectrum Shopping Center (8)
    
    LaSalle Bank
    
    Fixed-rate permanent
    
    
    5.68
    %
    
    05/01/14
    
    
    4,546,000
    
    
    $
    31,273
    
    
    
    5,140,000Addison Place Apartments (9)
    
    Freddie Mac
    
    Fixed-rate permanent
    
    
    6.35
    %
    
    05/01/15
    
    
    18,027,000
    
    
    $
    130,669
    
    
    
    20,380,000Bassett Shopping Center (8)
    
    LaSalle Bank
    
    Fixed-rate permanent
    
    
    8.47
    %
    
    10/01/19
    
    
    1,943,000
    
    
    $
    21,853
    
    
    
    2,644,000Totals
    
    
    
    
    
    
    
    
    
    
    
    $
    73,544,000
    
    
    
    
    
    
    $
    76,179,000
 
 (Footnotes are on following page.) 41




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##### Table of Contents



(1)
    
    The interest rate shown for variable-rate debt is as of December 31, 2007.(2)
    
    See page 5 for a discussion of the possible extension of the maturity date of this loan
to September 30, 2008.(3)
    
    See page 5 for a discussion of the possible extension of the maturity date of this loan
to October 31, 2008.(4)
    
    Each of these loans has an interest rate floor of 3.75%.(5)
    
    The monthly payment on this loan consists of a fixed principal amount of $13,333 per
month plus interest at the stated rate on the unpaid balance.(6)
    
    This loan has an interest rate floor of 3.50%.(7)
    
    We may prepay the loan secured by the Addison Place townhomes upon payment of a premium
equal to the greater of (a) 1% of the principal amount being prepaid multiplied by a
fraction having as its numerator the number of months to maturity and its denominator
the number of months in the full term of the loan or (b) the present value of the loan
less the amount of principal and accrued interest being repaid. We may prepay the loan
in full during the last 30 days before its maturity date without any prepayment premium.(8)
    
    The lender acts as trustee for the actual lender. Additional monthly payments are
required to sustain escrow reserves. Prepayment of the loan is not an option.(9)
    
    We may prepay the loan secured by the Addison Place apartments upon payment of a
premium equal to the greater of (a) 1% of the principal amount being prepaid or (b) the
product obtained by multiplying: (1) the amount of principal being prepaid or
accelerated, by (2) the excess (if any) of the Monthly Note Rate over the Assumed
Reinvestment Rate, by (3) the Present Value Factor. We may prepay the loan in full
during the last 30 days before its maturity date without any prepayment premium. 42




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##### Table of Contents



Debt Maturities
  Debt Maturity ScheduleAs
of December 31, 2007PrincipalYear
    
    Payments
    
    
    Properties with Balloon Payments2008
    
    $
    33,286,000
    
    
    Northridge Office, Addison Place Shops, Peachtree Parkway land, Highway 20 land, Westside land, Sawmill Village land2009
    
    
    9,013,000
    
    
    Addison Place townhomes2010
    
    
    567,0002011
    
    
    603,0002012
    
    
    637,000Thereafter
    
    
    32,073,000
    
    
    Addison Place apartments; Grand Pavilion, Spectrum, and Bassett retail centersTotal
    
    $
    76,179,000
 Short-Term Debt
  Peachtree Parkway Land Loan
 
    
    we used $2,284,043, plus closing costs of $22,108, to acquire from an unrelated
seller the remaining 18% undivided interest in the Peachtree Parkway land;
    
    we used $1,350,858 to pay off the existing balance on our unsecured line of credit;
and
    
    we used the remainder for working capital and general corporate purposes, including
funding part of our development and construction program.
  Highway 20 Land Loan
 43




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##### Table of Contents



Insurance Premium Loan
 Unsecured Line of Credit
 Westside Land Loan
 Sawmill Village Land Loan
 Northridge Office Building
 Addison Place Shops
 44




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##### Table of Contents



Long-Term Debt
  Floating Rate Debt
   Critical Accounting Policies
  Cost Capitalization
  45




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##### Table of Contents



Purchase Valuation
  Asset Impairment Evaluation
  Derivatives and Hedging Activities
   46




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##### Table of Contents



Stock Repurchase Plan
  
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
  47




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
  Report of Independent Registered Public Accounting Firm
    
    
    F-1Consolidated Financial Statements and Schedule as of December 31, 2007 and
2006 and for the Years Ended December 31, 2007 and 2006:Consolidated Balance Sheets
    
    
    F-2Consolidated Statements of Operations
    
    
    F-3Consolidated Statements of Shareholders Equity
    
    
    F-4Consolidated Statements of Cash Flows
    
    
    F-5Notes to Consolidated Financial Statements
    
    
    F-6Schedule III  Real Estate and Accumulated Depreciation
    
    
    S-1
 48




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##### Table of Contents



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
  
 ITEM 9A(T). CONTROLS AND PROCEDURES.
 Disclosure Controls and Procedures
  Managements Report on Internal Control over Financial Reporting
   Internal
Control over Financial Reporting Guidance for Smaller Public Companies
   49




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##### Table of Contents




    
    lack of formal change management procedures in approving and implementing
changes to IT applications or systems;
    
    inadequate backup process and log review; and
    
    inadequate controls over restriction of logical access to IT systems,
applications, and data.
   Managements Remediation Plan
  
    
    standardized change management process to increase the discipline with which we
document, test, approve, and implement changes to our IT environment;
    
    operations management procedures to improve our daily backup process and review
of our backup and operations log; and
    
    new IT configurations and security management controls to limit and monitor
logical access to our IT systems, applications, and data.
  Changes in Internal Controls
   50




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##### Table of Contents



ITEM 9B. OTHER INFORMATION.
    51




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##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
 Directors and Executive Officers
  Term asDirectorName
    
    Age
    
    Expires
    
    PositionCharles S. Roberts
    
    
    61
    
    
    
    2009
    
    
    Chairman of the Board, Chief
Executive Officer and
PresidentCharles R. Elliott
    
    
    54
    
    
    
    2009
    
    
    Director, Chief Financial
Officer, Secretary and
TreasurerWm. Jarell Jones
    
    
    59
    
    
    
    2008
    
    
    Director, Chairman of Audit
Committee and Chairman of
Nominating and Governance
CommitteeDennis H. James
    
    
    60
    
    
    
    2008
    
    
    Director, Chairman of
Compensation CommitteeDr. James M. Goodrich
    
    
    67
    
    
    
    2010
    
    
    DirectorBen A. Spalding
    
    
    73
    
    
    
    2010
    
    
    Director
 Biographical Information
 Charles S. Roberts
  52




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##### Table of Contents



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




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##### Table of Contents



Ben A. Spalding
 Section 16(a) Beneficial Ownership Reporting Compliance
  Code of Ethics and Business Conduct
  (1)
    
    honest and ethical conduct, including the ethical handling of corporate
opportunities and actual or apparent conflicts of interest between personal and
professional relationships;(2)
    
    full, fair, accurate, timely, and understandable disclosure in reports and
documents that we file with, or submit to, the SEC and in other public
communications we make;(3)
    
    compliance with applicable governmental laws, rules, and regulations;(4)
    
    confidentiality;(5)
    
    protection and proper use of company assets;
 54




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##### Table of Contents



(6)
    
    equal employment opportunities and prohibition of discrimination or
harassment;(7)
    
    the prompt internal reporting of violations of the code to an appropriate
person or persons identified in the code; and(8)
    
    accountability for adherence to the code.
  Audit Committee
  55




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##### Table of Contents



ITEM 11. EXECUTIVE COMPENSATION.
 Compensation of Executive Officers
  Summary
Compensation Table for 2007 and 2006
 All OtherSalary
    
    Bonus
    
    Stock Awards
    
    Compensation
    
    TotalName and Principal Position
    
    Year
    
    ($)
    
    ($)
    
    ($) (1)
    
    ($)
    
    ($)Charles S. Roberts,
    
    
    2007
    
    
    
    224,519
    (1)(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    224,519Chief Executive Officer,
    
    
    2006
    
    
    
    199,519
    (1)(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    199,032President, and Chairman
of the BoardCharles R. Elliott,
    
    
    2007
    
    
    
    127,413
    (1)(2)
    
    
    
    
    
    
    48,063
    
    
    
    
    
    
    
    175,476Chief Financial Officer,
    
    
    2006
    
    
    
    100,812
    (1)(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,812Secretary, and Treasurer
 
 (1)
    
    On February 28, 2007, our compensation committee granted a $25,000 salary increase to Mr.
Roberts for his performance as Chief Executive Officer and granted 6,250 shares of restricted
stock to Mr. Elliott for his performance as Chief Financial Officer. Mr. Elliotts restricted
shares vested on June 1, 2007. The salary increase to Mr. Roberts and the grant of restricted
shares to Mr. Elliott in 2006 were not intended as additional compensation for 2006 and,
accordingly, are reflected as 2007 compensation in the table above.(2)
    
    Effective May 31, 2006, we hired Mr. Elliott as our Chief Financial Officer, Secretary, and
Treasurer. Under an arrangement we negotiated with Mr. Elliott, we pay him $70 per hour for
his service in those positions. Mr. Elliott receives no employee benefits, i.e. medical,
vacation, holidays, etc., and he is paid only for the actual hours he works. In addition,
because Mr. Elliott is one of our directors, he continues to receive our standard director fee
of $12,000 per year, which is included in the salary amount shown in the table. (We do not
compensate Mr. Roberts for his service as a director.) 56




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##### Table of Contents



Director Compensation for 2007
  Fees Earnedor Paid in Cash
    
    TotalName
    
    ($)
    
    ($)Dr. James M. Goodrich
    
    
    12,000
    
    
    
    12,000Dennis H. James
    
    
    21,000
    
    
    
    21,000Wm. Jarell Jones
    
    
    24,000
    
    
    
    24,000Ben A. Spalding
    
    
    12,000
    
    
    
    12,000
   57




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##### Table of Contents



ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
 Ownership of Common Stock and Units
  
    
    each person or entity known by us to be the beneficial owner of more than 5% of the
outstanding shares of common stock;
    
    each director and our named executive officers; and
    
    our directors and executive officers as a group.
   58




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##### Table of Contents



Number of UnitsName of
    
    Number of Shares
    
    Beneficially
    
    
    
    
    
    Percent ofBeneficial Owner
    
    Owned
    
    Owned
    
    Total
    
    Class(1)Charles S. Roberts (2)
    
    
    1,661,503
    
    
    
    1,017,723
    
    
    
    2,679,226
    
    
    
    39.2
    %James M. Goodrich (3)
    
    
    281,847
    
    
    
    0
    
    
    
    281,847
    
    
    
    4.8
    %Dennis H. James
    
    
    123,067
    
    
    
    2,405
    
    
    
    125,472
    
    
    
    2.2
    %Ben A. Spalding (4)
    
    
    23,252
    
    
    
    27,318
    
    
    
    50,570
    
    
    
    *Wm. Jarell Jones(5)
    
    
    32,012
    
    
    
    0
    
    
    
    32,012
    
    
    
    *Charles R. Elliott
    
    
    19,300
    
    
    
    0
    
    
    
    19,300
    
    
    
    *All directors and executive
officers as a group: (6 persons)
(6)
    
    
    2,140,981
    
    
    
    1,047,446
    
    
    
    3,188,427
    
    
    
    46.5
    %
 
 *
    
    Less than 1%.(1)
    
    The total number of shares outstanding used in calculating this percentage is 5,812,463, the
number of shares outstanding as of March 21, 2008. Percent of class is not the equivalent of
share ownership because it also reflects the units owned by the individual, as described in
the second paragraph on the preceding page.(2)
    
    Includes 2,744 shares and 29,500 units owned by a family limited liability company of which
Mr. Roberts is the manager. Mr. Roberts disclaims beneficial ownership of those shares and
units.(3)
    
    Includes 158,582 shares owned jointly by Dr. Goodrich and his wife, Penelope; and 108,478
shares owned by Goodrich Enterprises, Inc., all of the outstanding shares of which are owned
by Dr. and Mrs. Goodrich and their sons. Each of Dr. and Mrs. Goodrich disclaims beneficial
ownership of the shares held by the corporation except to the extent of their respective
pecuniary interests in those shares. Dr. Goodrichs total also includes 14,787 shares he owns
through an IRA. Dr. Goodrichs ownership is permitted to exceed the 3.7% limit because he
beneficially owned more than 3.7% of our outstanding common shares on July 22, 2004, as
explained on the preceding page.(4)
    
    Includes 7,564 shares owned by partnerships of which Mr. Spaldings wife is the managing
partner. Mr. Spaldings beneficial ownership of units includes 2,917 units owned by Mrs.
Spalding and 24,401 units owned by partnerships of which Mrs. Spalding is the managing
partner. Mr. Spalding disclaims beneficial ownership of all units and shares owned by his
wife or partnerships of which she is the managing partner.(5)
    
    Includes 1,745 shares owned by Mr. Jones wife, to which Mr. Jones disclaims beneficial
ownership.(6)
    
    Includes an aggregate of 9,309 shares and 27,318 units beneficially owned by two directors
wives, as to which shares such directors disclaim beneficial ownership. 59




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##### Table of Contents



Equity Compensation Plan Information
  Equity Compensation Plan Information
 Number ofsecurities
    
    
    
    
    
    Number of securitiesto be issued
    
    Weighted-average
    
    remaining available for futureupon exercise of
    
    exercise price of
    
    issuances under equityoutstanding
    
    outstanding
    
    compensation plans (excludingoptions, warrants
    
    options, warrants
    
    securities reflected inand rights
    
    and rights
    
    column (a)Plan category
    
    (a)
    
    (b)
    
    (c)Equity compensation
plans approved by
security holders
    
    
    N/A
    
    
    
    N/A
    
    
    
    374,364Equity compensation
plans not approved
by security holders
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/ATotal
    
    
    
    
    
    
    
    
    
    
    374,364
  60




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##### Table of Contents



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
 General
   Transactions with the Roberts Companies
 Overview
 Northridge Community
 Northridge Office Building
  61




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##### Table of Contents



Peachtree Parkway Land
   (a)
    
    Roberts Properties, or any entity designated by Mr. Roberts, will be engaged as
the development company for the project and will be paid a development fee in an amount
equal to $5,000 per residential unit multiplied by the number of residential units that
are developed on the property, with such fee to be paid in equal monthly amounts over
the contemplated development period; and(b)
    
    Roberts Construction, or any other entity designated by Mr. Roberts, will be
engaged as the general contractor for the project on a cost plus basis and will be paid
the cost of constructing the project plus 10% (5% profit and 5% overhead) with such
payments to be paid commencing with the start of construction.
  62




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##### Table of Contents



North Springs Land
 Development Fees
 TotalAmountTotal
    
    
    Incurred
    
    
    RemainingContract
    
    
    through
    
    
    ContractualAmount
    
    
    2/29/08
    
    
    CommitmentNorth Springs
    
    $
    1,780,000
    
    
    $
    1,780,000
    
    
    $
    0Peachtree Parkway
    
    
    1,460,000
    
    
    
    1,460,000
    
    
    
    0Sawmill Village
    
    
    770,000
    
    
    
    100,000
    
    
    
    670,000Highway 20
    
    
    1,050,000
    
    
    
    100,000
    
    
    
    950,000$
    5,060,000
    
    
    $
    3,440,000
    
    
    $
    1,620,000
 Construction Contracts
 63




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##### Table of Contents



Other Fees and Reimbursements
  Approval of Transactions with Related Persons
   
    
    the transaction is approved, after disclosure of the interest, by the affirmative
vote of a majority of the disinterested directors, or by the affirmative vote of a
majority of the votes cast by disinterested shareholders; or
    
    the transaction is established to have been fair to us.
   64




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##### Table of Contents




    
    any significant ownership interest in any service provider;
    
    any consulting or employment relationship with any service provider, supplier, or
competitor;
    
    any outside business activity that detracts from an individuals ability to devote
appropriate time and attention to his or her responsibilities with the company;
    
    the receipt of other than nominal gifts or excessive entertainment from any company
with which the company has current or prospective business dealings;
    
    being in the position of supervising, reviewing, or having any influence on the job
evaluation, pay, or benefit of any immediate family member; and
    
    selling anything to the company or buying anything from the company.
    Determination of Director Independence
  65




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##### Table of Contents



66




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##### Table of Contents



ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
  Audit Fees
 For 2006
   For 2007
  Audit-Related Fees
  Tax Fees
 For 2006
  For 2007
  All Other Fees
  67




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##### Table of Contents



Pre-Approval Policy
  General.
 Audit Services.
 Audit-related Services.
 Tax Services.
 All Other Services
 Pre-Approval Fee Levels
 68




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##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
 (a)
    
    (1) and (2). Financial Statements and Schedules.The financial statements and schedules listed below are filed as part of this annual report
on the pages indicated.
 INDEX TO FINANCIAL STATEMENTS
 PageREPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS
    
    
    F-1CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE AS OF DECEMBER 31,
2007 AND 2006 AND FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006:Consolidated Balance Sheets
    
    
    F-2Consolidated Statements of Operations
    
    
    F-3Consolidated Statements of Shareholders Equity
    
    
    F-4Consolidated Statements of Cash Flows
    
    
    F-5Notes to Consolidated Financial Statements
    
    
    F-6Schedule III  Real Estate and Accumulated Depreciation
    
    
    S-1
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
 F-1




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##### Table of Contents



ROBERTS REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Data)
 December 31,
    
    
    December 31,2007
    
    
    2006ASSETSREAL ESTATE ASSETS  At cost:Land
    
    $
    16,322
    
    
    $
    16,322Buildings and improvements
    
    
    61,018
    
    
    
    60,970Furniture, fixtures and equipment
    
    
    4,289
    
    
    
    4,09881,629
    
    
    
    81,390Less accumulated depreciation
    
    
    (15,208
    )
    
    
    (12,814
    )Operating real estate assets
    
    
    66,421
    
    
    
    68,576Construction in progress and real estate under development
    
    
    49,488
    
    
    
    47,480Land held for investment
    
    
    9,009
    
    
    
    9,019Net real estate assets
    
    
    124,918
    
    
    
    125,075CASH AND CASH EQUIVALENTS
    
    
    604
    
    
    
    4,408RESTRICTED CASH
    
    
    498
    
    
    
    416DEFERRED FINANCING & LEASING COSTS  Net of accumulated amortization of
$565 and $377 at December 31, 2007 and 2006, respectively
    
    
    501
    
    
    
    561FAIR VALUE OF LEASES  Net of accumulated amortization of $399 and
$320 at December 31, 2007 and 2006, respectively
    
    
    519
    
    
    
    806OTHER ASSETS  Net
    
    
    411
    
    
    
    501$
    127,451
    
    
    $
    131,767LIABILITIES AND SHAREHOLDERS EQUITYLIABILITIES:Mortgage notes payable
    
    $
    43,546
    
    
    $
    44,165Construction loans payable
    
    
    10,076
    
    
    
    10,209Land notes payable
    
    
    22,067
    
    
    
    22,067Line of credit payable
    
    
    400
    
    
    
    Insurance premium note payable
    
    
    90
    
    
    
    109Accounts payable and accrued expenses
    
    
    960
    
    
    
    791Due to affiliates
    
    
    210
    
    
    
    14Security deposits and prepaid rents
    
    
    334
    
    
    
    251Total liabilities
    
    
    77,683
    
    
    
    77,606COMMITMENTS AND CONTINGENCIES (Note 9)MINORITY INTEREST OF UNITHOLDERS IN THE OPERATING PARTNERSHIP
    
    
    11,716
    
    
    
    12,863SHAREHOLDERS 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, 5,812,463 and
5,777,458 shares issued at December 31, 2007 and 2006, respectively
    
    
    58
    
    
    
    58Additional paid-in capital
    
    
    27,713
    
    
    
    27,429Unamortized deferred compensation
    
    
    (123
    )
    
    
    (5
    )Retained earnings
    
    
    10,404
    
    
    
    13,816Total shareholders equity
    
    
    38,052
    
    
    
    41,298$
    127,451
    
    
    $
    131,767
  F-2




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##### Table of Contents



ROBERTS REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Data)
 Years Ended December 31,2007
    
    
    2006OPERATING REVENUES:Rental operations
    
    $
    7,216
    
    
    $
    7,276Other operating income
    
    
    636
    
    
    
    781Total operating revenues
    
    
    7,852
    
    
    
    8,057OPERATING EXPENSES:Personnel
    
    
    598
    
    
    
    608Utilities
    
    
    505
    
    
    
    455Repairs, maintenance and landscaping
    
    
    616
    
    
    
    571Real estate taxes
    
    
    1,316
    
    
    
    1,121Marketing, insurance and other
    
    
    397
    
    
    
    422General and administrative expenses
    
    
    1,685
    
    
    
    1,730Bad debt expense
    
    
    2
    
    
    
    188Write-off of fair value/market value of leases (net)
    
    
    46
    
    
    
    389Depreciation and amortization expense
    
    
    2,711
    
    
    
    2,962Total operating expenses
    
    
    7,876
    
    
    
    8,446LOSS FROM OPERATIONS
    
    
    (24
    )
    
    
    (389
    )OTHER INCOME (EXPENSE):Interest income
    
    
    137
    
    
    
    96Interest expense
    
    
    (4,444
    )
    
    
    (4,587
    )Legal settlement
    
    
    78
    
    
    
    (28
    )Loss on disposal of assets
    
    
    (24
    )
    
    
    Amortization of deferred financing and leasing costs
    
    
    (189
    )
    
    
    (191
    )Total other expense
    
    
    (4,442
    )
    
    
    (4,710
    )LOSS FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST
    
    
    (4,466
    )
    
    
    (5,099
    )MINORITY INTEREST OF UNITHOLDERS IN THE OPERATING PARTNERSHIP
    
    
    1,054
    
    
    
    1,241LOSS FROM CONTINUING OPERATIONS
    
    
    (3,412
    )
    
    
    (3,858
    )INCOME FROM DISCONTINUED OPERATIONS, net of minority interest
of unitholders in the operating partnership (Note 4)
    
    
    
    
    
    
    NET (LOSS) INCOME
    
    $
    (3,412
    )
    
    $
    (3,858
    )INCOME (LOSS) PER COMMON SHARE  BASIC AND DILUTED (Note 6):(Loss) from continuing operations-basic
    
    $
    (0.59
    )
    
    $
    (0.67
    )(Loss) income from discontinued operations-basic
    
    
    
    
    
    
    Net (loss) income-basic
    
    $
    (0.59
    )
    
    $
    (0.67
    )(Loss) from continuing operations-diluted
    
    $
    (0.59
    )
    
    $
    (0.67
    )(Loss) income from discontinued operations-diluted
    
    
    
    
    
    
    Net (loss) income-diluted
    
    $
    (0.59
    )
    
    $
    (0.67
    )
  F-3




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##### Table of Contents



ROBERTS REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
(Dollars in Thousands, Except Share and Per Share Data)
 Common Shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    

    Other

    
    
    
    
    
    TotalNumber of
    
    
    
    
    
    

    Paid-In
    
    
    Treasury

    

    Deferred
    
    
    Comprehensive

    

    Retained
    
    
    ShareholdersShares Issued

    
    

    Amount
    
    

    Capital
    
    
    
    Shares
    
    

    Compensation
    
    
    
    Income
    
    


    Earnings
    
    
    
    EquityBALANCE AS OF DECEMBER 31, 2005
    
    
    5,727,429
    
    
    
    57
    
    
    
    27,067
    
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    17,674
    
    
    
    44,794Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,858
    )
    
    
    (3,858
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3.858
    )Conversion of units to shares
    
    
    49,876
    
    
    
    1
    
    
    
    357
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    358Restricted shares issued to
employees, net
of forfeitures
    
    
    153
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    (5
    )Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    4Adjustment for minority interest in
the operating partnershipBALANCE AS OF DECEMBER 31, 2006
    
    
    5,777,458
    
    
    
    $58
    
    
    
    $27,429
    
    
    
    $       
    
    
    
    ($5
    )
    
    
    $       
    
    
    
    $13,816
    
    
    
    $41,298Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,412
    )
    
    
    (3,412
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3.412
    )Conversion of units to shares
    
    
    10,005
    
    
    
    
    
    
    
    92
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    92Restricted shares issued to
employees, net
of forfeitures
    
    
    25,000
    
    
    
    
    
    
    
    192
    
    
    
    
    
    
    
    (192
    )Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74
    
    
    
    
    
    
    
    
    
    
    
    74Adjustment for minority interest in
the operating partnershipBALANCE AS OF DECEMBER 31, 2007
    
    
    5,812,463
    
    
    
    $58
    
    
    
    $27,713
    
    
    
    $       
    
    
    
    ($123
    )
    
    
    $       
    
    
    
    $10,404
    
    
    
    $38,052
  F-4




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##### Table of Contents



ROBERTS REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
 Years Ended December 31,2007
    
    
    2006OPERATING ACTIVITIES:Net (loss) income
    
    $
    (3,412
    )
    
    $
    (3,858
    )Adjustments to reconcile net income to net cash provided by operating activities:Minority interest of unitholders in the operating partnership
    
    
    (1,054
    )
    
    
    (1,241
    )Depreciation and amortization
    
    
    2,900
    
    
    
    3,153Amortization of above and below market leases
    
    
    83
    
    
    
    63Amortization of deferred compensation
    
    
    74
    
    
    
    4Loss on disposal of assets (net)
    
    
    24
    
    
    
    Write-off of fair value/market value of leases (net)
    
    
    46
    
    
    
    389Changes in assets and liabilities:(Increase) in restricted cash
    
    
    (81
    )
    
    
    (76
    )(Increase) decrease in other assets
    
    
    (16
    )
    
    
    438Increase in due to affiliates
    
    
    117
    
    
    
    9Increase (decrease) in accounts payable and other liabilities relating to operations
    
    
    201
    
    
    
    (207
    )Net cash used in operating activities
    
    
    (1,118
    )
    
    
    (1,326
    )INVESTING ACTIVITIES:Payment of leasing costs
    
    
    (54
    )
    
    
    (58
    )Increase in accounts payable and other liabilities relating to investing
    
    
    50
    
    
    
    374Increase (decrease) in due to affiliates
    
    
    79
    
    
    
    (92
    )Acquisition and construction of real estate assets
    
    
    (2,316
    )
    
    
    (5,420
    )Net cash used in investing activities
    
    
    (2,241
    )
    
    
    (5,196
    )FINANCING ACTIVITIES:Principal repayments on mortgage notes payable
    
    
    (619
    )
    
    
    (581
    )Principal repayment on construction notes payable
    
    
    (133
    )
    
    
    (154
    )Proceeds from land notes payable
    
    
    
    
    
    
    12,252Proceeds from line of credit
    
    
    400
    
    
    
    1,335Repayment of line of credit
    
    
    
    
    
    
    (3,335
    )Proceeds from insurance premium note payable
    
    
    199
    
    
    
    195Payment of insurance premium note payable
    
    
    (218
    )
    
    
    (86
    )Payment of loan costs
    
    
    (74
    )
    
    
    (118
    )Forfeiture of dividends payable on restricted stock
    
    
    
    
    
    
    3Net cash (used in) provided by financing activities
    
    
    (445
    )
    
    
    9,511NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    (3,804
    )
    
    
    2,989CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
    
    
    4,408
    
    
    
    1,419CASH AND CASH EQUIVALENTS, END OF YEAR
    
    $
    604
    
    
    $
    4,408SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for interest, net of capitalized interest of $691 and $0 for 2007 and 2006, respectively
    
    $
    4,424
    
    
    $
    4,595
  F-5




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##### Table of Contents



ROBERTS REALTY INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1.
    
    BUSINESS AND ORGANIZATIONRoberts Realty Investors, Inc. (Roberts Realty), a Georgia corporation, was formed July
22, 1994 to serve as a vehicle for investments in, and ownership of, a professionally
managed real estate portfolio consisting of multifamily residential communities and
commercial properties. Roberts Realty owns and manages its real estate assets as a
self-administered, self-managed equity real estate investment trust (REIT).Roberts Realty conducts all of its operations and owns all of its assets in and through
Roberts Properties Residential, L.P., a Georgia limited partnership (the operating
partnership), or its three wholly owned subsidiaries, each of which is a Georgia limited
liability company. Roberts Realty is the sole general partner of the operating partnership.
Roberts Realty had a 76.46% ownership interest in the operating partnership at December 31,
2007 and a 76.25% ownership interest in the operating partnership at December 31, 2006. As
the sole general partner and owner of a majority interest of the operating partnership,
Roberts Realty controls the operating partnership.At December 31, 2007, Roberts Realty owned the following real estate assets, all of which
are located in the north Atlanta metropolitan area:
 
    
    one multifamily apartment community, consisting of 285 garden apartments and
118 townhomes;
    
    four neighborhood retail centers totaling 151,527 square feet, which includes a
39,205 square foot retail center that is in its lease-up phase;
    
    a 5,088 square foot retail center addition that is under construction;
    
    a 37,864 square foot commercial office building that is in its lease-up phase,
part of which serves as Roberts Realtys corporate headquarters;
    
    five tracts of undeveloped land totaling 104 acres in various phases of
development; and
    
    a 44-acre tract of land that is held for investment.
 2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESBasis of Presentation.The accompanying consolidated financial statements include the
consolidated accounts of Roberts Realty and the operating partnership. All significant
inter-company accounts and transactions have been eliminated in consolidation. The
financial statements of Roberts Realty have been adjusted for the minority interest of the
unitholders in the operating partnership.The minority interest of the unitholders in the operating partnership on the accompanying
balance sheets is calculated by multiplying the minority interest ownership percentage at
the balance sheet date by the operating partnerships net assets (total assets less total
liabilities). The minority interest ownership percentage is calculated by dividing the
number of units outstanding by the combined total of shares and units outstanding at a
specific point in time. The minority interest ownership percentage will change as
additional shares and/or units are issued or as units are redeemed for shares of Roberts
Realty. The minority interest of the unitholders in the earnings or loss of the operating
partnership on the accompanying statements of operations is calculated based on the weighted
average number of units outstanding during the period, which was 23.61%, and 24.34% for the
years ended December 31, 2007 and 2006, respectively. The minority interest of the
unitholders was $11,716,000 and $12,863,000 at December 31, 2007 and 2006, respectively.
 F-6




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##### Table of Contents



Holders of operating partnership units generally have the right to require the operating
partnership to redeem their units for shares of Roberts Realty. Upon submittal of units for
redemption, the operating partnership has the option either (a) to acquire those units in
exchange for shares, on a one-for-one basis, or (b) to pay cash for those units at their
fair market value, based upon the then current trading price of the shares. Roberts Realty
has adopted a policy that it will issue shares in exchange for all future units submitted
for redemption.In January 2003, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46), which was
subsequently revised in December 2003. Roberts Realty adopted FIN 46 in January 2004, at
which time it determined that it had no variable interest entities, nor does Roberts Realty
have any variable interest entities at December 31, 2007.Certain reclassifications of prior years balances have been made to conform to the current
format.Real Estate Assets and Depreciation.Real estate assets are recorded at depreciated cost
less reductions for impairment, if any. Roberts Realty evaluates the carrying value of its
real estate assets in accordance with Statement of Financial Accounting Standard (SFAS)
No. 144, Accounting for the Impairment of Long-Lived Assets. In identifying potential
impairment, management considers such factors as declines in a propertys operating
performance or market value, a change in use, and adverse changes in general market
conditions. In determining whether an asset is impaired, management estimates the future
cash flows expected to be generated from both the assets use and its eventual disposition.
If the sum of these estimated future cash flows on an undiscounted basis is less than the
assets carrying cost, the asset is written down to its fair value. None of Roberts
Realtys real estate assets required a write-down during the twelve months ended December
31, 2007.The purchase price of acquired real estate assets is allocated to land, building, and
intangible assets, in accordance with SFAS No. 141, Accounting for Business Combinations.
During September and October 2005, Roberts Realty acquired three retail centers in separate
transactions totaling $24,071,000. Roberts Realty allocates the purchase price of an
acquired asset based on the relative fair values of the land, building, and intangible
assets. For tangible assets, classified as real estate assets, the values are determined as
though the land was undeveloped and the buildings were vacant. Intangible assets typically
consist of above or below market leases, customer relationships and the value of in-place
leases. The fair value of any above or below market leases is amortized into operating
revenues over the terms of the respective leases. The combined net value of above and below
market leases acquired, net of accumulated amortization, was ($5,000) and $81,000, and the
unamortized remaining values are included in other assets on the consolidated balance sheets
at December 31, 2007 and 2006, respectively. The value of in-place leases is amortized over
the term of the respective lease. Intangible assets that are subject to amortization are
reviewed for potential impairment whenever events or circumstances indicate that carrying
amounts may not be recoverable and are tested at least annually. During 2007, Roberts
Realty determined that, based on estimated future cash flows, the carrying amount of the
fair value of the leases relating to the Retail/Office segment exceeds its fair value by
approximately $46,000. Accordingly, an impairment loss of that amount was recognized and is
included in write off of fair value / market value of leases (net) in the statement of
operations.Expenditures directly related to the development, acquisition, and improvement of real
estate assets are capitalized at cost as land, buildings, and improvements. During the
construction period, interest expense, real estate taxes, and insurance are capitalized.
Interest expense is capitalized on qualifying assets during construction using a weighted
average interest rate for all indebtedness. Interest capitalized for the years ended
December 31, 2007 and 2006 was $691,461
 F-7




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##### Table of Contents



and $0, respectively. Leasing costs, including
commissions and legal costs, are capitalized and amortized over the term of the lease. Ordinary repairs and maintenance are expensed as
incurred. Major replacements and betterments are capitalized and depreciated over their
estimated useful lives; buildings are generally depreciated over 27.5 years; land
improvements are depreciated over 15 years; and furniture, fixtures, and equipment are
depreciated over 5 to 7 years. The amortization of the value of the in-place leases,
leasing costs, and any tenant improvement allowance is included in the depreciation and
amortization expense on the operating statement with the operating real estate depreciable
assets.Roberts Realty recognizes gains on sales of assets in accordance with SFAS No. 66,
Accounting for Sales of Real Estate. If any significant continuing obligation exists at
the date of the sale, Roberts Realty defers a portion of the gain attributable to the
continuing obligation until the continuing obligation has expired or is removed. There were
no such continuing obligations on the sales of Roberts Realtys assets as of December 31,
2007 and 2006.Cash and Cash Equivalents.Roberts Realty considers all highly liquid investments with a
maturity of three months or less at the time of purchase to be cash equivalents. Roberts
Realty maintains cash and cash equivalent balances with financial institutions that exceed
federally insured limits. Roberts Realty has not experienced any losses related to these
balances, and management believes its credit risk is minimal.Restricted Cash.Restricted cash consists of multifamily, retail, and office security
deposits, and lender escrows held by third parties.Deferred Financing Costs.Deferred financing costs include fees and costs incurred to
obtain financings and are amortized on the straight-line method over the terms of the
related debt. Accounting principles generally accepted in the United States of America
require that the effective-yield method be used to amortize financing costs; however, the
effect of using the straight-line method is not materially different from the results that
would have been obtained using the effective-yield method. Amortization of deferred
financing costs was $170,000 and $161,000 for the years ending December 31, 2007 and 2006,
respectively.Revenue Recognition.Roberts Realty leases its multifamily properties under operating
leases with terms generally one year or less. Commercial leases for Roberts Realtys retail
and office properties generally have terms of three to five years, with options to renew for
an additional three to five years. Roberts Realty recognizes revenue for reimbursements
from retail tenants of operating expenses consisting primarily of real estate taxes,
property insurance, and various common area expenses such as electricity, water and sewer,
and trash removal. Rental income from multifamily properties is recognized when collected,
and rental income from retail and office properties is recognized when earned, which
materially approximates revenue recognition on a straight-line basis. At December 31, 2007,
future minimum rentals to be received by Roberts Realty under its retail and office leases,
excluding reimbursements for operating expenses, are as follows:
 Year
    
    Amount2008
    
    $
    2,079,0002009
    
    
    1,537,0002010
    
    
    1,268,0002011
    
    
    1,013,0002012
    
    
    724,000Thereafter
    
    
    669,000Total
    
    $
    7,290,000
 F-8




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##### Table of Contents



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 each year at least 90% of its
taxable income, as defined in the Code, to its shareholders and satisfies certain other
requirements. As long as Roberts Realty continues to maintain its qualification as a REIT,
it generally will not be subject to federal income tax on distributed net income in the
future. Accordingly, no provision has been made for federal and state income taxes in the
accompanying consolidated financial statements. A reconciliation of Roberts Realtys net
loss to its taxable loss for the years ending December 31, 2007 and 2006 is shown below,
with dollars in thousands.
 2007
    
    
    2006Net (loss) income
    
    $
    (3,412
    )
    
    $
    (3,858
    )Adjustments to net income:Political campaign contributions
    
    
    
    
    
    
    9Gains from real estate sales
    
    
    
    
    
    
    Gains from sale of fixed assets
    
    
    
    
    
    
    (15
    )Depreciation
    
    
    292
    
    
    
    302Amortization of intangibles
    
    
    224
    
    
    
    592Prepaid rents
    
    
    72
    
    
    
    (34
    )Unearned compensation
    
    
    56
    
    
    
    (36
    )Straight line rent
    
    
    
    
    
    
    (90
    )Section 754 deduction
    
    
    
    
    
    
    (34
    )Disallowed charities
    
    
    
    
    
    
    1Capitalized costs
    
    
    
    
    
    
    Dividends paid deduction
    
    
    
    
    
    
    Operating loss
    
    
    
    
    
    
    (497
    )Other
    
    
    (9
    )
    
    
    20Taxable (loss)
    
    $
    (2,777
    )
    
    $
    (3,640
    )
 Tax Status of Dividends.Roberts Realty did not pay a dividend or special distribution
during 2007 or 2006.Earnings Per Share.Basic earnings per share is calculated using the weighted average
number of common shares outstanding during the periods presented. Diluted earnings per
share is calculated to reflect the potential dilution of all instruments or securities that
are convertible into shares of common stock. For Roberts Realty, this includes the units
that are outstanding during the periods presented.Use of Estimates.The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ
from those estimates.Recent Accounting Pronouncements.In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Income Tax
Uncertainties (FIN 48). FIN 48 defines the threshold for recognizing tax return
positions in the financial statements as those that are more-likely-than-not to be
sustained upon examination
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by the taxing authority. FIN 48 also provides guidance on
de-recognition, measurement, and classification of income tax uncertainties, along with any related interest and penalties,
accounting for income tax uncertainties in interim periods and the level of disclosures
associated with any recorded income tax uncertainties. FIN 48 was effective January 1,
2007. Roberts Realty concluded that adopting the provisions of FIN 48 had no material
effect on its financial position or results of operations.In September 2006, the FASB issued SFAS No. 157, Fair Value Measurement (SFAS 157).
SFAS 157 defines fair value, establishes a framework for measuring fair value in generally
accepted accounting principles, and expands disclosures about fair value measurements. SFAS
157 is effective for the Companys financial assets and liabilities on January 1, 2008. In
February 2008, the FASB reached a conclusion to defer the implementation of the SFAS 157
provisions relating to non-financial assets and liabilities until January 1, 2009. The FASB
also reached a conclusion to amend SFAS 157 to exclude SFAS No. 13, Accounting for Leases,
and its related interpretive accounting pronouncements. SFAS 157 is not expected to
materially affect how the Company determines fair value, but it may result in certain
additional disclosures.In December 2007, the FASB issued SFAS No. 160, Non-controlling Interests in Consolidated
Financial Statements  an amendment of FASB Statement No. 115 (SFAS 160). SFAS 160
amends Accounting Research Bulletin 51 to establish accounting and reporting standards for
the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary.
It clarifies that a non-controlling interest in a subsidiary is an ownership interest in the
consolidated entity that should be reported as equity in the consolidated financial
statements. SFAS 160 requires consolidated net income to be reported at amounts that
include the amounts attributable to the parent and to the non-controlling interest. The
provisions of SFAS 160 are effective for fiscal years beginning after November 15, 2008.3.
    
    ACQUISITIONS AND DISPOSITIONSOn January 31, 2006, Roberts Realty purchased a 1.29-acre parcel of land located adjacent to
the Highway 20 land. The purchase price, including closing costs, was $378,000.On October 3, 2006, Roberts Realty purchased a 1.34-acre parcel of land located adjacent to
its Grand Pavilion retail center in Alpharetta. The purchase price, including closing
costs, was $876,006. Roberts Realty funded this acquisition by drawing on its line of
credit, which was subsequently repaid in full prior to December 31, 2006.On December 6, 2006, Roberts Realty acquired the remaining 18% undivided interest in the
Peachtree Parkway property from an unaffiliated third party for $2,284,043, plus closing
costs of $22,108. In addition, Roberts Realty paid the $146,000 balance owed by the seller
to Roberts Properties for the sellers portion of the total $811,111 amount incurred under
the Design and Development Agreement through the date of closing. The property remains as
collateral on the $8,175,000 note taken to fund this acquisition.4.
    
    DISCONTINUED OPERATIONSRoberts Realty reports the results of operations and gains or losses for sold properties in
accordance with SFAS No. 144. Gains and losses and results of operations from sold
properties are listed separately on the Consolidated Statements of Operations. Interest
expense on any property that Roberts Realty has sold along with all expenses related to the
retirement of debt are included in discontinued operations in the year incurred.
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On February 3, 2006, Roberts Realty entered into a listing agreement for the sale of its
118-unit Addison Place townhome community. On June 5, 2006, Roberts Realty terminated its
listing
agreement. As a result, the community no longer met the criteria outlined in SFAS 144 to be
classified as held for sale, and its net real estate assets and liabilities are classified
as operating real estate assets and liabilities at December 31, 2007 and 2006.On September 29, 2006, Roberts Realty entered into a listing agreement for the sale of its
19,949 square foot Bassett retail center, which Roberts Realty acquired on September 30,
2005. On December 27, 2006, Roberts Realty terminated its listing agreement effective
December 31, 2006. At June 30, 2007, Roberts Realty had a signed letter of intent to sell
the Bassett retail center and, therefore, its net real estate assets and liabilities were
classified as held for sale at June 30, 2007. Although the transaction was not consummated,
Roberts Realty intends to market its Bassett retail center for sale at some point in the
future, Roberts Realty determined that the property does not meet the criteria outlined in
SFAS 144 to be classified as held for sale and, therefore, its net real estate assets and
liabilities are classified as operating real estate assets and liabilities at December 31,
2007 and 2006.5.
    
    NOTES PAYABLERoberts Realty has five types of debt:
 1.
    
    mortgage notes secured by some of its operating properties;2.
    
    construction/permanent loans secured by other real estate
assets;3.
    
    land loans used to purchase undeveloped land;4.
    
    an unsecured, revolving line of credit; and5.
    
    an insurance premium note payable.
 The details of each of the five types of debt are summarized below. For each loan other
than the insurance premium note payable, the operating partnership or its wholly owned
subsidiary is the borrower, and Roberts Realty is the guarantor.Mortgage Notes.The permanent mortgage notes payable secured by Roberts Realtys operating
properties at December 31, 2007 and 2006 were as follows (in order of maturity date):
 Fixed InterestRate as of
    
    
    Principal OutstandingProperty Securing Mortgage
    
    Maturity
    
    
    12/31/07
    
    
    12/31/07
    
    
    12/31/06Addison Place Townhomes
    
    
    11/15/09
    
    
    
    6.95
    %
    
    $
    8,639,000
    
    
    $
    8,788,000Grand Pavilion Retail Center
    
    
    07/11/13
    
    
    
    5.43
    %
    
    
    6,743,000
    
    
    
    6,855,000Spectrum at the Mall of Georgia
    
    
    05/01/14
    
    
    
    5.68
    %
    
    
    5,140,000
    
    
    
    5,217,000Addison Place Apartments
    
    
    05/01/15
    
    
    
    6.35
    %
    
    
    20,380,000
    
    
    
    20,628,000Bassett Retail Center
    
    
    10/01/19
    
    
    
    8.47
    %
    
    
    2,644,000
    
    
    
    2,677,000Total
    
    
    
    
    
    
    
    
    
    $
    43,546,000
    
    
    $
    44,165,000
 On October 25, 1999, the operating partnership closed a $9,500,000 loan from Prudential
Insurance Company secured by the Addison Place townhome community. This loan is scheduled
to mature on November 15, 2009. The interest rate is fixed at 6.95% per year for the full
10-year term and the loan is being amortized over 30 years.On May 1, 2000, the operating partnership closed a $22,500,000 loan from Wachovia Bank
secured by the Addison Place apartment community. This loan was scheduled to mature on May
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10, 2005. On April 19, 2005, the operating partnership closed a $21,000,000 loan from
Primary Capital Advisors LC and, using proceeds from the new loan along with cash on hand,
repaid the
balance of the Addison Place apartment loan to Wachovia Bank. Roberts Realty is the
guarantor of the operating partnerships obligations under the loan documents. There were
no early termination fees due on the repayment of either the Wachovia Bank loan or the
related swap agreement. Primary Capital Advisors LC assigned the loan and related loan
documents to the Federal Home Loan Mortgage Corporation (Freddie Mac) in June 2005. The
loan has a 10-year term and matures on May 1, 2015. The interest rate is fixed at 6.35% per
year for the full 10-year term and the loan is amortized over 30 years. In addition,
Roberts Realty has the option, at its election, to extend the loan for an additional
one-year period at an interest rate that will float at 250 basis points over a Freddie Mac
index.On September 29, 2005, Roberts Realty purchased Grand Pavilion, a 62,323 square foot retail
center, and assumed the existing mortgage from LaSalle Bank with a balance of $6,995,000, a
fixed interest rate of 5.43%, and a maturity date of July 11, 2013. The loan is secured by
the property and is being amortized over 30 years.On September 30, 2005, Roberts Realty purchased Bassett Retail Center, a 19,949 square foot
retail center, and assumed the existing mortgage from LaSalle Bank with a balance of
$2,715,000, a fixed interest rate of 8.47%, and a maturity date of October 1, 2019. The
loan is secured by the property and is being amortized over 30 years.October 27, 2005, Roberts Realty purchased Spectrum at the Mall of Georgia, a 30,050 square
foot retail center, and assumed the existing mortgage from LaSalle Bank with a balance of
$5,306,000, a fixed interest rate of 5.68%, and a maturity date of May 1, 2014. The loan is
secured by the property and is being amortized over 30 years.Construction Loans.On June 28, 2001, Roberts Realty closed a $5,280,000 loan from Bank of
North Georgia to fund the construction of the Northridge office building. The loan is
secured by the land and improvements and bears interest at the 30-day LIBOR rate plus 200
basis points. On May 28, 2004, Roberts Realty extended the maturity date of the loan to May
28, 2005 and simultaneously reduced the maximum principal amount available to be borrowed
under the loan to $4,530,000. On May 28, 2005, Roberts Realty reduced the principal amount
of the loan to $4,000,000 and extended the maturity date to May 28, 2006. On March 10,
2006, Roberts Realty extended the maturity date from May 28, 2006 to September 10, 2007. On
September 10, 2007, Roberts Realty extended the maturity date from September 10, 2007 to
September 10, 2008. Under the extended term, monthly payments consist of a fixed principal
amount of $13,333 per month and interest at the 30-day LIBOR rate plus 200 basis points,
with a balloon payment at maturity of $3,605,000 plus interest. At December 31, 2007, the
outstanding balance on the loan was $3,712,000 and the interest rate was 6.60%.On May 30, 2003, Roberts Realty closed a $6,500,000 construction loan from Compass Bank to
fund the construction of the Addison Place Shops retail center. The loan is secured by the
land and improvements, bears interest at the 30-day LIBOR rate plus 185 basis points, and
was scheduled to mature on April 30, 2006. On March 9, 2006, Roberts Realty extended the
maturity date from April 30, 2006 to October 30, 2007. On October 9, 2007, Roberts Realty
extended the maturity date from October 30, 2007 to October 31, 2008, with all other terms
and conditions of the loan remaining the same. At December 31, 2007, the outstanding
balance on the loan was $6,364,000 and the interest rate was 6.45%.Land Loans.On December 29, 2004, Roberts Realty closed a $20,412,000 loan with Wachovia
Bank (as amended on January 19, 2005) to help fund a portion of the land acquisitions
described in the following table. See Note 3, Acquisitions and Dispositions, for more
information.
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##### Table of Contents



1.
    
    An 82% undivided interest in 23.5 acres of undeveloped land located on
Peachtree Parkway in Gwinnett County; the land was acquired on December 29, 2004
for $7,786,000, which includes closing costs.2.
    
    29.5 acres of undeveloped land located on Westside Parkway in
Alpharetta; the land was acquired on December 29, 2004 for $5,919,000, which
includes closing costs.3.
    
    9.8 acres of undeveloped land located on Peachtree Dunwoody Road in
Sandy Springs; the land was acquired on January 19, 2005 for $15,724,000, which
includes closing costs.
 Roberts Realty repaid $5,800,000 on January 31, 2005 and $7,769,500 on February 17, 2005,
leaving a balance of $6,842,500 on the original $20,412,000 loan, at which time Wachovia
Bank released the 23.5-acre Peachtree Parkway land as collateral as provided in the loan
documents. The loan was secured by the land, and the interest rate was the 30-day LIBOR
rate plus 185 basis points. Although the loan was not scheduled to mature until December
29, 2005, Roberts Realty prepaid the loan on September 27, 2005 without penalty as explained
in the following paragraph.On June 30, 2005, Roberts Realty acquired 14.5 acres of undeveloped land on Westside
Parkway, next to its Westside land purchased in December 2004. This acquisition increased
Roberts Realtys total investment in Westside to 44.0 acres. On September 27, 2005, Roberts
Realty closed a $6,480,000, interest-only loan from Compass Bank secured by its investment
in Westside. The interest rate on the loan is the 30-day LIBOR rate plus 175 basis points,
and the maturity date is August 27, 2008. Roberts Realty used proceeds from the loan, along
with working capital, to pay off the Wachovia land loan described above. At December 31,
2007, the outstanding balance on the loan was $6,480,000, and the interest rate was 6.35%.On September 29, 2005, Roberts Realty closed a $3,335,000, interest-only loan from Bank of
North Georgia secured by Sawmill Village, a 22.0-acre tract of undeveloped land located in
Cumming. The interest rate on the loan is the 30-day LIBOR rate plus 175 basis points, and
the maturity date is August 29, 2008. Roberts Realty used the proceeds from the loan to
fund the acquisition of the Spectrum at the Mall of Georgia retail center, as more fully
described in Note 3, Acquisitions and Dispositions. At December 31, 2007, the outstanding
balance on the loan was $3,335,000, and the interest rate was 6.35%.On January 31, 2006, Roberts Realty closed a $4,077,000, interest-only loan from Wachovia
Bank, secured by the Highway 20 land, a 38.2-acre tract of undeveloped land located in
Cumming. The interest rate on the loan is the 30-day LIBOR rate plus 175 basis points. On
January 26, 2007, the maturity date of the loan was extended from January 31, 2007 to
January 31, 2008. On December 6, 2007, the maturity date of the loan was extended from
January 31, 2008 to April 30, 2008. The interest rate on the loan extension is the 30-day
LIBOR rate plus 250 basis points. At December 31, 2007, the outstanding balance on the loan
was $4,077,000, and the interest rate was 7.10%.On December 6, 2006, the operating partnership closed an $8,175,000 land loan
with Wachovia Bank, secured by the Peachtree Parkway land, a 23.5-acre tract of undeveloped land located
in Gwinnett County. Interest is payable in consecutive monthly payments of accrued interest
only, until maturity. On December 6, 2007, the maturity date of the loan was extended from
December 6, 2007 to March 31, 2008. The interest rate on the loan extension is the 30-day
LIBOR rate plus 250 basis points, and the loan may be prepaid at any time, in whole or in
part, without penalty or premium. At December 31, 2007, the outstanding balance on the loan
was $8,175,000, and the interest rate was 7.10%. The proceeds of the loan were used as
follows:
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##### Table of Contents




    
    $2,284,043, plus closing costs of $22,108, was used to acquire the remaining 18%
undivided interest in Peachtree Parkway (see Note 3, Acquisitions and Dispositions,
for more information);
    
    $1,350,858 was used to pay off the balance on Roberts Realtys line of credit;
and
    
    the remainder will be used for working capital and general corporate purposes,
including funding part of Roberts Realtys development and construction program.
 Line of Credit.
 Insurance Premium Note Payable.
  2008
    
    $
    33,286,0002009
    
    
    9,013,0002010
    
    
    567,0002011
    
    
    603,0002012
    
    
    637,000Thereafter
    
    
    32,073,000Total
    
    $
    76,179,000
  6.
    
    SHAREHOLDERS EQUITYExchanges of Units for Shares.During the years ended December 31, 2007 and 2006, a total
of 10,005 and 49,876 units, respectively, were exchanged for an equal number of shares.
Each redemption was reflected in the accompanying consolidated financial statements at book
value.Restricted Stock.Shareholders of Roberts Realty approved and adopted the 2006 Roberts
Realty Investors, Inc. Restricted Stock Plan (the Plan) in August 2006. The plan provides
for the grant of stock awards to employees, directors, consultants, and advisors, including
employees of Roberts Properties, Inc. and Roberts Properties Construction, Inc., which are
non-owned affiliates of Roberts Realty. Per the Plan, Roberts Realty may grant up to
400,000 shares of restricted stock, subject to anti-dilution provisions of the Plan. The
maximum number of shares
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##### Table of Contents



of restricted stock that may be granted to any one individual during the term of the Plan
may not exceed 20% of the aggregate number of shares of restricted stock that may be issued
under the Plan. The Plan is administered by the compensation committee of Roberts Realtys
board of directors.
   Year
    
    
    Beginning Balance
    
    Grants
    
    Forfeited/Vested
    
    Ending Balance2007
    
    
    1,350
    
    
    
    25,000
    
    
    
    6,964
    
    
    
    19,3862006
    
    
    3,989
    
    
    
    
    
    
    
    2,639
    
    
    
    1,350
 Dividends and Distributions.
 Treasury Stock.
 Earnings Per Share.
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##### Table of Contents



2007
    
    
    2006Loss from continuing operations  basic
    
    $
    (3,412
    )
    
    $
    (3,858
    )Minority interest of unitholders in the operating
partnership in income
 attributable to continuing operations
    
    
    (1,054
    )
    
    
    (1,241
    )Loss from continuing operations  diluted
    
    $
    (4,466
    )
    
    $
    (5,099
    )Income from discontinued operations  basic
    
    
    
    
    
    
    Minority interest of unitholders in the operating
partnership in income
 attributable to discontinued
operations
    
    
    
    
    
    
    Income from discontinued operations  diluted
    
    $
    
    
    
    $
    Net (loss) income  diluted
    
    $
    (4,466
    )
    
    $
    (5,099
    )Weighted average shares  basic
    
    
    5,804,438
    
    
    
    5,732,274Dilutive securities  weighted average units
    
    
    1,793,657
    
    
    
    1,844,344Weighted average shares  diluted
    
    
    7,598,095
    
    
    
    7,576,618
 7.
    
    SEGMENT REPORTINGSFAS No. 131, Disclosures about Segments of an Enterprise and Related Information,
established standards for reporting financial and descriptive information about operating
segments in annual financial statements. Operating segments are defined as components of an
enterprise about which separate financial information is available that is evaluated
regularly by the chief operating decision maker in deciding how to allocate resources and in
assessing performance. Roberts Realtys chief operating decision maker is Mr. Roberts, its
chief executive officer.Roberts Realty develops, constructs, owns, and manages multifamily apartment communities,
neighborhood retail centers, and one office building, all of which are currently located in
Georgia. As a result, Roberts Realty has four reportable operating segments:
 1.
    
    the multifamily segment, which consists of operating apartment
communities;2.
    
    the retail/office segment, which consists of operating retail centers
and an office building;3.
    
    the land segment, which consists of various tracts of land that are
either under development and construction or held for investment; and4.
    
    the corporate segment, which consists primarily of operating cash and
cash equivalents plus miscellaneous other assets.
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##### Table of Contents



Twelve
Months Ended December 31, 2007
 (Dollars in Thousands)
 Retail/Multifamily
    
    
    Office
    
    
    Land
    
    
    Corporate
    
    
    TotalOperating revenues  continuing
    
    $
    5,128
    
    
    $
    2,075
    
    
    $
    13
    
    
    $
    
    
    
    $
    7,216Other operating income
    
    
    270
    
    
    
    342
    
    
    
    
    
    
    
    24
    
    
    
    636Total operating revenues from
consolidated entities
    
    
    5,398
    
    
    
    2,417
    
    
    
    13
    
    
    
    24
    
    
    
    7,852Operating expenses  continuing
    
    
    (2,233
    )
    
    
    (1,108
    )
    
    
    (261
    )
    
    
    (1,563
    )
    
    
    (5,165
    )Depreciation and amortization expense
    
    
    (1,368
    )
    
    
    (1,323
    )
    
    
    
    
    
    
    (20
    )
    
    
    (2,711
    )Total operating expenses from
consolidated entities
    
    
    (3,601
    )
    
    
    (2,431
    )
    
    
    (261
    )
    
    
    (1,583
    )
    
    
    (7,876
    )Other (expense) income
    
    
    (1,989
    )
    
    
    (1,615
    )
    
    
    (963
    )
    
    
    125
    
    
    
    (4,442
    )Loss from continuing operations
before minority interest
    
    
    (192
    )
    
    
    (1,629
    )
    
    
    (1,211
    )
    
    
    (1,434
    )
    
    
    (4,466
    )Minority interest of unitholders
in the operating partnership
    
    
    46
    
    
    
    384
    
    
    
    285
    
    
    
    339
    
    
    
    1,054(Loss) from continuing operations
    
    
    (146
    )
    
    
    (1,245
    )
    
    
    (926
    )
    
    
    (1,095
    )
    
    
    (3,412
    )(Loss) income from discontinued
operations, net of minority interest
of unitholders in the operating
partnership (Note 4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net (loss) income
    
    $
    (146
    )
    
    $
    (1,245
    )
    
    $
    (926
    )
    
    $
    (1,095
    )
    
    $
    (3,412
    )Total assets at December 31, 2007
    
    $
    30,483
    
    
    $
    37,636
    
    
    $
    58,557
    
    
    $
    775
    
    
    $
    127,451
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##### Table of Contents



Twelve Months Ended December 31, 2006
 (Dollars in Thousands)
 Retail/Multifamily
    
    
    Office
    
    
    Land
    
    
    Corporate
    
    
    TotalOperating revenues  continuing
    
    $
    4,959
    
    
    $
    2,308
    
    
    $
    9
    
    
    $
    
    
    
    $
    7,276Other operating income
    
    
    264
    
    
    
    509
    
    
    
    
    
    
    
    8
    
    
    
    781Total operating revenues from
consolidated entities
    
    
    5,223
    
    
    
    2,817
    
    
    
    9
    
    
    
    8
    
    
    
    8,057Operating expenses  continuing
    
    
    (2,011
    )
    
    
    (1,495
    )
    
    
    (306
    )
    
    
    (1,672
    )
    
    
    (5,484
    )Depreciation and amortization expense
    
    
    (1,453
    )
    
    
    (1,470
    )
    
    
    
    
    
    
    (39
    )
    
    
    (2,962
    )Total operating expenses from
consolidated entities
    
    
    (3,464
    )
    
    
    (2,965
    )
    
    
    (306
    )
    
    
    (1,711
    )
    
    
    (8,446
    )Other (expense) income
    
    
    (1,995
    )
    
    
    (1,703
    )
    
    
    (1,033
    )
    
    
    21
    
    
    
    (4,710
    )Loss from continuing operations
before minority interest
    
    
    (236
    )
    
    
    (1,851
    )
    
    
    (1,330
    )
    
    
    (1,682
    )
    
    
    (5,099
    )Minority interest of unitholders
in the operating partnership
    
    
    58
    
    
    
    451
    
    
    
    323
    
    
    
    409
    
    
    
    1,241(Loss) from continuing operations
    
    
    (178
    )
    
    
    (1,400
    )
    
    
    (1,007
    )
    
    
    (1,273
    )
    
    
    (3,858
    )(Loss) income from discontinued
operations, net of minority interest
of unitholders in the operating
partnership (Note 4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net (loss) income
    
    $
    (178
    )
    
    $
    (1,400
    )
    
    $
    (1,007
    )
    
    $
    (1,273
    )
    
    $
    (3,858
    )Total assets at December 31, 2006
    
    $
    31,754
    
    
    $
    38,775
    
    
    $
    56,583
    
    
    $
    4,655
    
    
    $
    131,767
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##### Table of Contents



8.
    
    RELATED PARTY TRANSACTIONSTransactions with Mr. Charles S. Roberts and His
AffiliatesRoberts Realty enters into contractual commitments in the normal course of business with
Roberts Properties, Inc. (Roberts Properties) and Roberts Properties Construction, Inc.
(Roberts Construction), together referred to as the Roberts Companies. Mr. Charles S.
Roberts, the President, Chief Executive Officer and Chairman of the Board of Roberts Realty,
owns all of the outstanding stock of the Roberts Companies. The contracts between Roberts
Realty and the Roberts Companies relate to the development and construction of real estate
assets, and from time to time, the acquisition of real estate. The board of directors has
adopted a policy that all conflicting interest transactions must be authorized by a majority
of the disinterested directors, but only if there are at least two directors who are
disinterested with respect to the matter at issue. Under the charter for the audit
committee of Roberts Realtys board of directors, related party transactions are also
subject to appropriate review and oversight by the audit committee. In entering into the
transactions described below, Roberts Realty complied with those policies. On July 24,
2007, the board of directors adopted revised charters for the audit committee, the
compensation committee, and the nominating and governance committee.Design and Development Agreements with Roberts Properties. Roberts Realty pays Roberts
Properties fees for various development services that include market studies, business
plans, exterior design, finish selection, interior design, and construction administration.
During 2005 and 2006, Roberts Realty entered into the following design and development
agreements with Roberts Properties:
 1.
    
    on April 14, 2005 for the Peachtree Parkway property;2.
    
    on April 14, 2005 for the North Springs property
(formerly referred to as the Peachtree Dunwoody property);3.
    
    on August 4, 2005 for the Sawmill Village property;
and4.
    
    on February 21, 2006 for the Highway 20 property.
  TotalAmountTotal
    
    
    Incurred
    
    
    RemainingContract
    
    
    through
    
    
    ContractualAmount
    
    
    12/31/07
    
    
    CommitmentNorth Springs
    
    $
    1,780,000
    
    
    $
    989,000
    
    
    $
    791,000Peachtree Parkway (note 1)
    
    
    1,460,000
    
    
    
    1,160,000
    
    
    
    300,000Sawmill Village
    
    
    770,000
    
    
    
    100,000
    
    
    
    670,000Highway 20
    
    
    1,050,000
    
    
    
    100,000
    
    
    
    950,000$
    5,060,000
    
    
    $
    2,349,000
    
    
    $
    2,711,000
 Note 1:
    
    On December 6, 2006, Roberts Realty acquired the remaining 18%
undivided interest in the Peachtree Parkway land from an unaffiliated third
party for $2,284,043, plus closing costs of $22,108. In addition, Roberts
Realty paid the $146,000 balance owed by the seller to Roberts Properties for
the sellers portion of the total $811,111 amount incurred under the Design and
Development Agreement through the date of closing. The Design and Development
Agreement was amended December 6, 2006 to reflect this transaction.
 F-19




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##### Table of Contents



Construction Contracts with Roberts Construction
  1.
    
    on March 28, 2003 for the Northridge property;2.
    
    on April 14, 2005 for the Peachtree Parkway property, as amended
December 6, 2006;3.
    
    on April 14, 2005 for the North Springs property (formerly referred to
as the Peachtree Dunwoody property);4.
    
    on August 4, 2005 for the Sawmill Village property;5.
    
    on February 21, 2006 for the Highway 20 property; and6.
    
    on May 11, 2007 for a 5,088 square foot addition to the Addison Place
Shops.
 Land Acquisitions.
 Other Fees.
 Office Leases.
   F-20




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##### Table of Contents



9.
    
    COMMITMENTS AND CONTINGENCIESRoberts Realty has five projects in various phases of development and has entered into
various contracts for the development and construction of these projects. The contracts
with Roberts Properties and Roberts Construction are described in Note 8  Related Party
Transactions. The construction contracts with Roberts Construction require Roberts Realty
to pay Roberts Construction a general contractor fee equal to cost plus 10% (5% overhead and
5% profit). The cost of these five new projects has not been determined because the
architectural design, land planning, floor plans, and other details have not been finalized.
In addition to its contracts with Roberts Properties and Roberts Construction, Roberts
Realty has entered into other cost plus contracts with architectural and engineering firms
related to the design and construction of its projects.In addition to the construction contracts with Roberts Construction, Roberts Realty entered
into architectural and engineering contracts with third parties for the North Springs,
Sawmill Village, Peachtree Parkway, and Highway 20 projects. At December 31, 2007,
outstanding commitments on these contracts totaled $169,000.At December 31, 2007, Roberts Realty had one $500,000 letter of credit outstanding. The
letter of credit is a requirement of the lender for Roberts Realtys Spectrum retail center
and is held in a reserve fund by the lender for the payment of leasing costs. Roberts
Realty assumed this obligation under the loan documents when it acquired the Spectrum retail
center in October 2005. The letter of credit expires on October 26, 2008.Roberts Realty and the operating partnership are subject to various legal proceedings and
claims that arise in the ordinary course of business. While the resolution of these matters
cannot be predicted with certainty, management believes that the final outcome of these
matters will not have a material adverse effect on Roberts Realtys financial position or
results of operations. In 2006, a lien for approximately $1,191,000 was filed against the
North Springs property for a dispute over architectural fees. Roberts Realty believes that
it has made an adequate provision in the financial statements for any liability that may
result upon settlement of the lien matter.As a result of the mergers of various limited partnerships into the operating partnership,
the former partners of these limited partnerships received units. Holders of units have the
right to require the operating partnership to redeem their units for shares, subject to
certain conditions. Upon submittal of units for redemption, the operating partnership will
have the option either (a) to pay cash for those units at their fair market value, which
will be based upon the then current trading price of the shares, or (b) to acquire those
units in exchange for shares (on a one-for-one basis). Roberts Realty has adopted a policy
that it will issue shares in exchange for all future units submitted. There were 1,789,605
units outstanding at December 31, 2007 that could be exchanged for shares, subject to the
conditions described above.Under Roberts Realtys bylaws, it is obligated to indemnify its officers and directors for
certain events or occurrences arising as a result of its officers and directors serving in
these capacities. The maximum potential amount of future payments Roberts Realty could be
required to make under this indemnification arrangement is unlimited. Roberts Realty
currently has a directors and officers liability insurance policy that may limit its
exposure and enable it to recover a portion of any future amounts paid. Because of the
insurance policy coverage, Roberts Realty believes the estimated fair value of this
indemnification arrangement is minimal, and Roberts Realty has recorded no liabilities for
this indemnification arrangement as of December 31, 2007.Under various federal, state, and local environmental laws and regulations, Roberts Realty
may be required to investigate and clean up the effects of hazardous or toxic substances at
its
 F-21




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##### Table of Contents



properties, including properties that have previously been sold. The preliminary
environmental assessments of Roberts Realtys operating properties, development projects,
and land held for investment have not revealed any environmental liability that Roberts
Realty believes would have a material adverse effect on its business, assets, or results of
operations, nor is Roberts Realty aware of any liability of that type.
 10.
    
    SUMMARIZED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)(In thousands, except per share data)
 Quarter EndedMarch 31
    
    June 30
    
    Sept 30
    
    Dec 31Year Ended December 31, 2007Total operating revenues
    
    $
    1,875
    
    
    $
    1,761
    
    
    $
    2,028
    
    
    $
    2,188(Loss) income from operations
    
    
    (2
    )
    
    
    (146
    )
    
    
    9
    
    
    
    115(Loss) from continuing operations
    
    
    (959
    )
    
    
    (1,064
    )
    
    
    (677
    )
    
    
    (717
    )Income (loss) from discontinued operations
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    Net income (loss)
    
    
    (959
    )
    
    
    (1,059
    )
    
    
    (677
    )
    
    
    (717
    )Per share (diluted):Loss from continuing operations
    
    $
    (0.17
    )
    
    $
    (0.18
    )
    
    $
    (0.12
    )
    
    $
    (0.12
    )Income from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net (loss)
    
    $
    (0.17
    )
    
    $
    (0.18
    )
    
    $
    (0.12
    )
    
    $
    (0.12
    )Year Ended December 31, 2006Total operating revenues
    
    $
    1,586
    
    
    $
    2,182
    
    
    $
    1,878
    
    
    $
    2,411Income (loss) from operations
    
    
    30
    
    
    
    (66
    )
    
    
    (170
    )
    
    
    (183
    )Loss from continuing operations
    
    
    (695
    )
    
    
    (900
    )
    
    
    (994
    )
    
    
    (1,325
    )Income (loss) from discontinued operations
    
    
    58
    
    
    
    
    
    
    
    (2
    )
    
    
    Net income (loss)
    
    
    (637
    )
    
    
    (900
    )
    
    
    (996
    )
    
    
    (1,325
    )Per share (diluted):(Loss) from continuing operations
    
    $
    (0.12
    )
    
    $
    (0.16
    )
    
    $
    (0.17
    )
    
    $
    (0.23
    )Income (loss) from discontinued operations
    
    $
    0.01
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    (0.11
    )
    
    $
    (0.16
    )
    
    $
    (0.17
    )
    
    $
    (0.23
    )
  11.
    
    SUBSEQUENT EVENTSListing of Addison Place for Sale. On January 2, 2008, Roberts Realty entered into a
listing agreement with an independent real estate brokerage firm for the sale of its
403-unit Addison Place apartment community. Because Roberts Realty signed the listing
agreement on January 2, 2008, the property does not meet the criteria outlined in Statement
of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, to be classified as held for sale at December 31, 2007.
Therefore, the net real estate assets and liabilities of the Addison Place apartment
community are classified as operating real estate assets and liabilities at December 31,
2007.Term Sheet for Extension of Loans from Wachovia Bank. Roberts Realty has two loans from
Wachovia Bank totaling $12,252,000: an $8,175,000 loan that will mature on March 31, 2008;
 F-22




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F-23




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##### Table of Contents



SCHEDULE III  REAL ESTATE AND ACCUMULATED DEPRECIATION
 ROBERTS REALTY INVESTORS, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 2007
(Dollars in Thousands)
 Initial Cost to Company
    
    
    
    
    
    
    Carried at Close of PeriodImprovementsCapitalizedAfterBuildings and
    
    
    Acquisition/
    
    
    
    
    
    
    Buildings andDescription
    
    Encumbrance
    
    
    Land
    
    
    Improvements
    
    
    Construction
    
    
    Land
    
    
    Improvements
    
    
    TotalOPERATING PROPERTIESAddison Place Apartments
    
    $
    20,380
    
    
    $
    3,152
    
    
    $
    25,917
    
    
    $
    611
    
    
    $
    3,152
    
    
    $
    26,528
    
    
    $
    29,680Addison Place Townhomes
    
    
    8,639
    
    
    
    2,053
    
    
    
    10,440
    
    
    
    402
    
    
    
    2,053
    
    
    
    10,842
    
    
    
    12,895Grand Pavilion Retail Center (a)
    
    
    6,743
    
    
    
    3,996
    
    
    
    7,008
    
    
    
    29
    
    
    
    3,996
    
    
    
    7,037
    
    
    
    11,033Addison Place Shops
    
    
    6,364
    
    
    
    1,848
    
    
    
    6,569
    
    
    
    189
    
    
    
    1,848
    
    
    
    6,758
    
    
    
    8,606Spectrum Retail Center (a)
    
    
    5,140
    
    
    
    3,190
    
    
    
    4,565
    
    
    
    108
    
    
    
    3,190
    
    
    
    4,673
    
    
    
    7,863Northridge Office Building
    
    
    3,712
    
    
    
    357
    
    
    
    6,511
    
    
    
    183
    
    
    
    357
    
    
    
    6,694
    
    
    
    7,051Bassett Retail Center (a)
    
    
    2,644
    
    
    
    1,726
    
    
    
    2,763
    
    
    
    12
    
    
    
    1,726
    
    
    
    2,775
    
    
    
    4,501Total Operating Properties
    
    $
    53,622
    
    
    $
    16,322
    
    
    $
    63,773
    
    
    $
    1,534
    
    
    $
    16,322
    
    
    $
    65,307
    
    
    $
    81,629CONSTRUCTION IN PROGRESS AND
REAL ESTATE UNDER DEVELOPMENTAddison Place Shops, Building D
    
    $
    
    
    
    $
    259
    
    
    $
    
    
    
    $
    434
    
    
    $
    259
    
    
    $
    434
    
    
    $
    693North Springs
    
    
    
    
    
    
    15,739
    
    
    
    
    
    
    
    3,119
    
    
    
    15,739
    
    
    
    3,119
    
    
    
    18,858Peachtree Parkway
    
    
    8,175
    
    
    
    10,490
    
    
    
    
    
    
    
    1,862
    
    
    
    10,490
    
    
    
    1,862
    
    
    
    12,352Northridge Community
    
    
    
    
    
    
    5,300
    
    
    
    
    
    
    
    1,709
    
    
    
    5,300
    
    
    
    1,709
    
    
    
    7,009Highway 20 Cumming
    
    
    4,077
    
    
    
    5,478
    
    
    
    
    
    
    
    108
    
    
    
    5,478
    
    
    
    108
    
    
    
    5,586Sawmill Village
    
    
    3,335
    
    
    
    4,829
    
    
    
    
    
    
    
    161
    
    
    
    4,829
    
    
    
    161
    
    
    
    4,990Total Properties Under Construction
    
    $
    15,587
    
    
    $
    42,095
    
    
    $
    
    
    
    $
    7,393
    
    
    $
    42,095
    
    
    $
    7,393
    
    
    $
    49,488LAND HELD FOR INVESTMENTWestside Parkway
    
    $
    6,480
    
    
    $
    9,009
    
    
    $
    
    
    
    $
    
    
    
    $
    9,009
    
    
    $
    
    
    
    $
    9,009Total
    
    $
    75,689
    
    
    $
    67,426
    
    
    $
    63,773
    
    
    $
    8,927
    
    
    $
    67,426
    
    
    $
    72,700
    
    
    $
    140,126
 S-1




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##### Table of Contents



SCHEDULE III  REAL ESTATE AND ACCUMULATED DEPRECIATION
 ROBERTS REALTY INVESTORS, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 2007
(Dollars in Thousands)
 Life on whichAccumulated
    
    
    Date of Original
    
    Date
    
    DepreciationDescription
    
    Depreciation
    
    
    Construction
    
    Acquired
    
    is ComputedAddison Place Townhomes
    
    $
    4,074
    
    
    
    1999
    
    
    Sept  99
    
    3  27.5 YearsAddison Place Apartments
    
    
    8,394
    
    
    
    1999
    
    
    June  98
    
    3  27.5 YearsAddison Place Shops
    
    
    712
    
    
    
    2005
    
    
    May  05
    
    3  27.5 YearsNorthridge Office Building
    
    
    875
    
    
    
    2004
    
    
    June  01
    
    3  27.5 YearsGrand Pavilion Shopping Center
    
    
    565
    
    
    
    1999
    
    
    Sept  05
    
    3  27.5 YearsSpectrum Shopping Center
    
    
    365
    
    
    
    2002
    
    
    Oct  05
    
    3  27.5 YearsBassett Shopping Center
    
    
    223
    
    
    
    1999
    
    
    Sept  05
    
    3  27.5 YearsTotal
    
    $
    15,208
  S-2




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##### Table of Contents



(a)
    
    A portion of Building and Improvements is acquisition cost allocated to the fair value
of in-place leases. This cost is being amortized over the life of the respective leases.(b)
    
    Gross capitalized costs of operating real estate assets are summarized as follows:
 (Dollars in thousands)
    
    2007
    
    
    2006BALANCE AT BEGINNING OF PERIOD
    
    $
    81,390
    
    
    $
    80,341Additions during period:Other additions
    
    
    269
    
    
    
    1,223Improvements
    
    
    48
    
    
    
    89Total additions
    
    
    317
    
    
    
    1,312Deductions during period:Sales
    
    
    
    
    
    
    Other disposals
    
    
    (78
    )
    
    
    (263
    )Total disposals
    
    
    (78
    )
    
    
    (263
    )Balance at close of period
    
    $
    81,629
    
    
    $
    81,390
 (c)
    
    Accumulated depreciation on operating real estate assets is as follows:
 (Dollars in thousands)
    
    2007
    
    
    2006BALANCE AT BEGINNING OF PERIOD
    
    $
    12,814
    
    
    $
    10,260Additions during period:Depreciation expense
    
    
    2,447
    
    
    
    2,565Deductions during period:Sales
    
    
    
    
    
    
    Other disposals
    
    
    (53
    )
    
    
    (11
    )Total disposals
    
    
    (53
    )
    
    
    (11
    )Balance at close of period
    
    $
    15,208
    
    
    $
    12,814
 S-3




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##### Table of Contents



(a)(3). Exhibits required by Item 601 of Regulation S-K.
  We will provide a copy of any or all of the following exhibits to any shareholder who requests
them, for a cost of ten cents per page.
 Exhibit No.
    
    DescriptionArticles of Incorporation, Bylaws and Certificates and Articles of Merger:3.1
    
    
    Amended and Restated Articles of Incorporation of Roberts Realty
Investors, Inc. filed with the Georgia Secretary of State on July 22,
2004. [Incorporated by reference to Exhibit 3.1 in our quarterly report
on Form 10-Q for the quarter ended September 30, 2004.]3.2
    
    
    Bylaws of Roberts Realty Investors, Inc. [* 2.2]3.3
    
    
    Amended and Restated Bylaws of Roberts Realty Investors, Inc.
[Incorporated by reference to Exhibit 3.1 in our current report on Form
8-K dated February 4, 2008.]4.1
    
    
    Agreement of Limited Partnership of Roberts Properties Residential, L.P.,
dated as of July 22, 1994. [* 3.1]4.1.1
    
    
    First Amended and Restated Agreement of Limited Partnership of Roberts
Properties Residential, L.P., dated as of October 1, 1994, as amended.
[* 3.1.1]4.1.2
    
    
    Amendment #1 to First Amended and Restated Agreement of Limited
Partnership of Roberts Properties Residential, L.P., dated as of October
13, 1994. [* 3.1.2]4.1.3
    
    
    Amendment #2 to First Amended and Restated Agreement of Limited
Partnership of Roberts Properties Residential, L.P. [Incorporated by
reference to Exhibit 10.1 in our Registration Statement on Form S-3 filed
July 8, 1999, registration number 333-82453.]4.2
    
    
    Certificate of Limited Partnership of Roberts Properties Residential,
L.P. filed with the Georgia Secretary of State on July 22, 1994. [* 3.2]4.2.1
    
    
    Certificate of Merger filed with the Georgia Secretary of State on
October 13, 1994, merging Roberts Properties River Oaks, L.P.; Roberts
Properties Rosewood Plantation, L.P.; Roberts Properties Preston Oaks,
L.P.; and Roberts Properties Highland Park, L.P. with and into Roberts
Properties Residential, L.P. (1994 Consolidation). [* 3.2.1]4.2.2
    
    
    Certificate of Merger filed with the Georgia Secretary of State on March
24, 1995, merging Roberts Properties Holcomb Bridge, L.P. with and into
Roberts Properties Residential, L.P. (Holcomb Bridge Merger). [* 3.2.2]4.2.3
    
    
    Certificate of Merger filed with the Georgia Secretary of State on May
16, 1995, merging Roberts Properties Plantation Trace, L.P. with and into
Roberts Properties Residential, L.P. (Plantation Trace Merger). [*
3.2.3]
 70




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##### Table of Contents



Exhibit No.
    
    Description4.2.4
    
    
    Certificate of Merger filed with the Georgia Secretary of State on
September 27, 1995, merging Roberts Properties-St. Simons, L.P. with and
into Roberts Properties Residential, L.P. (Windsong Merger). [* 3.2.4]4.2.5
    
    
    Certificate of Merger filed with the Georgia Secretary of State on March
21, 1996, merging Roberts Properties Bentley Place, L.P. with and into
Roberts Properties Residential, L.P. (Bentley Place Merger).
[Incorporated by reference to Exhibit 4.2.5 in our quarterly report on
Form 10-QSB for the quarter ended June 30, 1996.]4.2.6
    
    
    Certificate of Merger filed with the Georgia Secretary of State on June
26, 1996, merging The Crestmark Club, L.P. with and into Roberts
Properties Residential, L.P. (Crestmark Merger). [Incorporated by
reference to Exhibit 4.2.6 in our quarterly report on Form 10-QSB for the
quarter ended June 30, 1996.]4.2.7
    
    
    Certificate and Articles of Merger filed with the Georgia Secretary of
State on April 1, 1997 merging Roberts Properties Management, L.L.C. with
and into Roberts Properties Residential, L.P. [Incorporated by reference
to Exhibit 4.2.7 in our current report on Form 8-K dated April 1, 1997.]Material Agreements with Affiliates:Corporate Office Building10.1.1
    
    
    Construction Administration Agreement between Roberts Residential, L.P.
and Roberts Properties, Inc. (Corporate Office Building). [Incorporated
by reference to Exhibit 10.20.5 in our quarterly report on Form 10-Q for
the quarter ended September 30, 2001.]10.1.2
    
    
    Office Lease between Roberts Properties Residential, L.P. and Roberts
Properties, Inc. dated March 27, 2006. [Incorporated by reference to
Exhibit 10.4 in our quarterly report on Form 10-Q for the quarter ended
March 31, 2006.]10.1.3
    
    
    Office Lease between Roberts Properties Residential, L.P. and Roberts
Properties Construction, Inc. dated March 27, 2006. [Incorporated by
reference to Exhibit 10.3 in our quarterly report on Form 10-Q for the
quarter ended March 31, 2006.]10.1.4
    
    
    Lease renewal agreement by and between Roberts Properties Residential,
L.P. and Roberts Properties Construction, Inc. dated March 21, 2007.
[Incorporated by reference to Exhibit 10.1 in our quarterly report on
Form 10-Q for the quarter ended March 31, 2007.]10.1.5
    
    
    Lease renewal agreement by and between Roberts Properties Residential,
L.P. and Roberts Properties, Inc. dated March 21, 2007. [Incorporated by
reference to Exhibit 10.2 in our quarterly report on Form 10-Q for the
quarter ended March 31, 2007.]10.1.6
    
    
    Lease renewal agreement by and between Roberts Properties Residential,
L.P. and Roberts Properties Construction, Inc. dated January 18, 2008.10.1.7
    
    
    Lease renewal agreement by and between Roberts Properties Residential,
L.P. and Roberts Properties, Inc. dated January 18, 2008.
 71




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##### Table of Contents



Exhibit No.
    
    DescriptionAddison Place Shops10.2.1
    
    
    Construction Administration Agreement between Roberts Residential, L.P.
and Roberts Properties, Inc. (Addison Place Shops). [Incorporated by
reference to Exhibit 10.21.3 in our quarterly report on Form 10-Q for the
quarter ended September 30, 2001.]10.2.2
    
    
    Construction Agreement by and between Roberts Properties Residential,
L.P. and Roberts Properties Construction, Inc. dated May 11, 2007
(Addison Place Shops). [Incorporated by reference to Exhibit 10.1 in our
current report on Form 8-K dated May 11, 2007.]Northridge10.3.1
    
    
    Design and Development Agreement between Roberts Properties Residential,
L.P. and Roberts Properties, Inc. dated June 15, 2001 (Northridge).
[Incorporated by reference to Exhibit 10.1.17 in our annual report on
Form 10-K for the year ended December 31, 2001.]10.3.2
    
    
    Construction Agreement between Roberts Properties Residential, L.P. and
Roberts Properties Construction, Inc. (Northridge). [Incorporated by
reference to Exhibit 10.1.18 in our quarterly report on Form 10-Q for the
quarter ended March 31, 2003.]Peachtree Parkway10.4.1
    
    
    Tenants-In-Common Agreement between Georgianna Jean Valentino and Roberts
Properties Peachtree Parkway, L.P., assumed by Roberts Properties
Residential, L.P. on December 29, 2004. [Incorporated by reference to
Exhibit 10.2 in our current report on Form 8-K dated January 5, 2005.]10.4.2
    
    
    Restrictive Covenant by Roberts Properties Peachtree Parkway, L.P.,
assumed by Roberts Properties Residential, L.P. on December 29, 2004.
[Incorporated by reference to Exhibit 10.3 in our current report on Form
8-K dated January 5, 2005.]10.4.3
    
    
    Design and Development Agreement among Roberts Properties Residential,
L.P., Georgianna Jean K. Valentino and Roberts Properties, Inc. for the
Peachtree Parkway property, dated as of April 14, 2005. [Incorporated by
reference to Exhibit 10.1 in our current report on Form 8-K dated April
12, 2005.]10.4.4
    
    
    Amendment Number 1 to Design and Development Agreement between Roberts
Properties Residential, L.P. and Roberts Properties, Inc. dated as of
December 6, 2006 (Peachtree Parkway). [Incorporated by reference to
Exhibit 10.1 in our current report on Form 8-K dated December 6, 2006.]10.4.5
    
    
    Construction Contract among Roberts Properties Residential, L.P.,
Georgianna Jean K. Valentino and Roberts Properties Construction, Inc.
for the Peachtree Parkway property, dated as of April 14, 2005.
[Incorporated by reference to Exhibit 10.3 in our current report on Form
8-K dated April 12, 2005.]10.4.6
    
    
    Amendment Number 1 to Construction Contract between Roberts Properties
Residential, L.P. and Roberts Properties Construction, Inc. dated as of
December 6, 2006 (Peachtree Parkway). [Incorporated by reference to
Exhibit 10.2 in our current report on Form 8-K dated December 6, 2006.]
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Exhibit No.
    
    DescriptionNorth Springs (formerly Peachtree Dunwoody)10.5.1
    
    
    Restrictive Covenant by Roberts Properties Peachtree Dunwoody, LLC,
assumed by Roberts Properties Residential, L.P. on January 20, 2005.
[Incorporated by reference to Exhibit 10.2 in our current report on Form
8-K dated January 21, 2005.]10.5.2
    
    
    Design and Development Agreement between Roberts Properties Residential,
L.P. and Roberts Properties, Inc. for the North Springs (formerly
Peachtree Dunwoody) property, dated as of April 14, 2005. [Incorporated
by reference to Exhibit 10.2 in our current report on Form 8-K dated
April 12, 2005.]10.5.3
    
    
    Construction Contract between Roberts Properties Residential, L.P. and
Roberts Properties Construction, Inc. for the North Springs (formerly
Peachtree Dunwoody) property, dated as of April 14, 2005. [Incorporated
by reference to Exhibit 10.4 in our current report on Form 8-K dated
April 12, 2005.]Sawmill Village10.6.1
    
    
    Design and Development Agreement between Roberts Properties Residential,
L.P. and Roberts Properties, Inc. for the Sawmill property in Cumming,
Georgia, dated as of August 4, 2005. [Incorporated by reference to
Exhibit 10.1 in our current report on Form 8-K dated August 9, 2005.]10.6.2
    
    
    Construction Contract between Roberts Properties Residential, L.P. and
Roberts Properties Construction, Inc. for the Sawmill property in
Cumming, Georgia, dated as of August 4, 2005. [Incorporated by reference
to Exhibit 10.2 in our current report on Form 8-K dated August 9, 2005.]Highway 2010.7.1
    
    
    Design and Development Agreement between Roberts Properties Residential,
L.P. and Roberts Properties, Inc. for the Highway 20 property in Cumming,
Georgia, dated as of February 21, 2006. [Incorporated by reference to
Exhibit 10.1 in our current report on Form 8-K dated February 21, 2006.]10.7.2
    
    
    Construction Contract between Roberts Properties Residential, L.P. and
Roberts Properties Construction, Inc. for the Highway 20 property in
Cumming, Georgia, dated as of February 21, 2006. [Incorporated by
reference to Exhibit 10.2 in our current report on Form 8-K dated
February 21, 2006.]Compensation Agreements and Arrangements, and Restricted Stock Plan10.8.1
    
    
    Determination of annual base salary for 2006, effective January 1, 2006,
for Charles S. Roberts, the registrants President and Chief Executive
Officer. [Incorporated by reference to Item 1.01 in our current report
on Form 8-K dated May 16, 2006.]10.8.2
    
    
    Determination of compensation arrangements for the interim Chief
Financial Officer of Roberts Realty Investors, Inc. [Incorporated by
reference to Item 5.02 in our current report on Form 8-K dated May 31,
2006.]10.8.3
    
    

2006 Roberts Realty Investors, Inc. Restricted Stock Plan. [Incorporated
by reference to Annex A to the registrants definitive proxy statement
filed July 20, 2006.]
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Exhibit No.
    
    Description10.8.4
    
    
    Revised Form of Restricted Stock Award Agreement (supersedes the form of
restricted stock award agreement attached as Exhibit A to Annex A to our
proxy statement for our 2006 annual meeting filed with the SEC on July
20, 2006). [Incorporated by reference to Exhibit 10.3 in our quarterly
report on Form 10-Q for the quarter ended March 31, 2007.]10.8.5
    
    
    Restricted Stock Award Agreement between Roberts Realty Investors, Inc.
and Charles R. Elliott dated February 28, 2007. [Incorporated by
reference to Exhibit 10.4 in our quarterly report on Form 10-Q for the
quarter ended March 31, 2007.]10.8.6
    
    
    Compensation arrangement for Wm. Jarell Jones effective February 4, 2008.
[Incorporated by reference to Exhibit 10.2 in our current report on Form
8-K dated February 4, 2008.]Other Agreements with Affiliates10.9.1
    
    
    Reimbursement arrangement approved and ratified on February 15, 2005
between the registrant and Roberts Properties, Inc., a wholly owned
affiliate of Charles S. Roberts, the registrants Chief Executive
Officer, President, and Chairman of the Board of Directors, for the use
of an aircraft owned by Roberts Properties, Inc. [Incorporated by
reference to Item 1.01 in our current report on Form 8-K dated February
15, 2005.]10.9.2
    
    
    Agreement between Roberts Realty and Charles R. Elliott for him to assist
Roberts Realty in offering its Addison Place townhome community in
Alpharetta, Georgia for sale. [Incorporated by reference to our current
report on Form 8-K dated November 15, 2005.]10.9.3
    
    
    Reimbursement arrangement between Roberts Realty Investors, Inc. and
Roberts Properties, Inc. effective February 8, 2008. [Incorporated by
reference to Exhibit 10.1 in our current report on Form 8-K dated
February 4, 2008.]Addison Place Financing Documents:10.10.1
    
    
    Promissory Note executed by Roberts Properties Residential, L.P. in favor
of The Prudential Insurance Company of America, dated October 25, 1999,
in the original principal amount of $9,500,000 (Addison Place Townhomes).
[Incorporated by reference to Exhibit 10.14.04 in our annual report on
Form 10-K for the year ended December 31, 1999.]10.10.2
    
    
    Deed to Secure Debt and Security Agreement executed by Roberts Properties
Residential, L.P. in favor of The Prudential Insurance Company of
America, dated October 25, 1999, and related collateral documents
(Addison Place Townhomes). [Incorporated by reference to Exhibit
10.14.05 in our annual report on Form 10-K for the year ended December
31, 1999.]10.10.3
    
    
    Guaranty executed by Roberts Realty Investors, Inc. in favor of The
Prudential Insurance Company of America, dated October 25, 1999 (Addison
Place Townhomes). [Incorporated by reference to Exhibit 10.14.06 in our
annual report on Form 10-K for the year ended December 31, 1999.]10.10.4
    
    
    Multifamily Note in the principal amount of $21,000,000, dated April 19,
2005, executed by Roberts Properties Residential, L.P. in favor of
Primary Capital Advisors LC (Addison Place Apartments). [Incorporated by
reference to Exhibit 10.1 in our current report on Form 8-K dated April
19, 2005.]
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Exhibit No.
    
    Description10.10.5
    
    
    Multifamily Deed to Secure Debt, Assignment of Rents, and Security
Agreement dated April 19, 2005 made by Roberts Properties Residential,
L.P. in favor of Primary Capital Advisors LC (Addison Place Apartments).
[Incorporated by reference to Exhibit 10.2 in our current report on Form
8-K dated April 19, 2005.]10.10.6
    
    
    Guaranty dated April 19, 2005 made by Roberts Realty Investors, Inc. in
favor of Primary Capital Advisors LC (Addison Place Apartments).
[Incorporated by reference to Exhibit 10.3 in our current report on Form
8-K dated April 19, 2005.]Peachtree Parkway / North Springs (formerly Peachtree Dunwoody) 
Financing Documents10.11.1
    
    
    Promissory Note in the principal amount of $8,175,000, dated December 6,
2006, executed by Roberts Properties Residential, L.P. in favor of
Wachovia Bank, National Association (Peachtree Parkway). [Incorporated
by reference to Exhibit 10.3 in our current report on Form 8-K dated
December 6, 2006.]10.11.2
    
    
    Deed to Secure Debt and Assignment of Rents dated December 6, 2006,
executed by Roberts Properties Residential, L.P. in favor of Wachovia
Bank, National Association (Peachtree Parkway). [Incorporated by
reference to Exhibit 10.4 in our current report on Form 8-K dated
December 6, 2006.]10.11.3
    
    
    Unconditional Guaranty dated December 6, 2006, executed by Roberts Realty
Investors, Inc. in favor of Wachovia Bank, National Association
(Peachtree Parkway). [Incorporated by reference to Exhibit 10.5 in our
current report on Form 8-K dated December 6, 2006.]Other Exhibits:21
    
    
    Subsidiaries of Roberts Realty Investors, Inc.23
    
    
    Independent Auditors Consent  Reznick Group, P.C.24
    
    
    Power of Attorney (contained on the signature page hereof).31
    
    
    Certifications of Charles S. Roberts and Charles R. Elliott pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32
    
    
    Certifications of Charles S. Roberts and Charles R. Elliott pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002. This exhibit is not
filed for purposes of Section 18 of the Securities Exchange Act of 1934
but is instead furnished as provided by applicable rules of the
Securities and Exchange Commission.
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SIGNATURES
  ROBERTS REALTY INVESTORS, INC.By:
    /s/  Charles S. RobertsCharles S. Roberts, Chairman of the Board,Chief Executive Officer and President  POWER OF ATTORNEY
   Signature
    
    Title
    
    Date/s/  Charles S. Roberts

Charles S. Roberts
    
    Chairman of the Board, Chief
Executive Officer and President
    
    March 31, 2008/s/  Charles R. Elliott

Charles R. Elliott
    
    Secretary, Treasurer, Chief
Financial Officer (Principal Financial
Officer and Principal Accounting
Officer) and Director
    
    March 31, 2008/s/  Dennis H. James

Dennis H. James
    
    Director
    
    March 31, 2008/s/  Wm. Jarell Jones

Wm. Jarell Jones
    
    Director
    
    March 31, 2008/s/  James M. Goodrich

James M. Goodrich
    
    Director
    
    March 31, 2008/s/  Ben A. Spalding

Ben A. Spalding
    
    Director
    
    March 31, 2008
 76