##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


FORM 10-K


|   |  |                                                                                             
|-- |  | --------------------------------------------------------------------------------------------
|þ  |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|   |  | For the fiscal year ended December 31, 2005                                                 
|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


None




|                                       |  |                                          
|-------------------------------------- |  | -----------------------------------------
|Title of Each Class                    |  | Name of Each Exchange on Which Registered
|                                       |  |                                          
|Common Stock, $.01 par value per share |  | American Stock Exchange                  

None


o þ


o þ


þ o


S-K 10-K 10-K. o


12b-2


o o þ


12b-2 o þ






|                                       |  |                              
|-------------------------------------- |  | -----------------------------
|Class                                  |  | Outstanding at March 13, 2006
|                                       |  |                              
|Common Stock, $.01 par value per share |  | 5,727,429 shares             

DOCUMENTS INCORPORATED BY REFERENCE


|         |  |                              
|-------- |  | -----------------------------
|Document |  | Parts Into Which Incorporated
|         |  |                              
|None     |  |                              









---



##### 



TABLE OF CONTENTS
 PAGEPART I
    
    
    2ITEM 1. DESCRIPTION OF BUSINESS
    
    
    2ITEM 1A. RISK FACTORS
    
    
    13ITEM 1B. UNRESOLVED STAFF COMMENTS
    
    
    24ITEM 2. PROPERTIES
    
    
    24ITEM 3. LEGAL PROCEEDINGS
    
    
    31ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS
    
    
    31PART II
    
    
    32ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY,
RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    32ITEM 6. SELECTED FINANCIAL DATA
    
    
    33ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    36ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
    
    
    53ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    54ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
    
    
    54ITEM 9A CONTROLS AND PROCEDURES
    
    
    54ITEM 9B OTHER INFORMATION
    
    
    55PART III
    
    
    56ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
OF THE REGISTRANT
    
    
    56ITEM 11. EXECUTIVE COMPENSATION
    
    
    59ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
    
    
    60ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
    
    
    62ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    65PART IV
    
    
    68ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    68EX-21 SUBSIDIARIES OF THE REGISTRANTEX-23.1 INDEPENDENT AUDITORS' CONSENT - DELOITTE & TOUCHE LLPEX-23.2 INDEPENDENT AUDITORS' CONSENT - REZNICH GROUP, P.C.EX-31 SECTION 302 CERTIFICATION OF THE CEO AND CFOEX-32 SECTION 906 CERTIFICATION OF THE CEO AND CFO




---



##### Table of Contents



NOTE REGARDING FORWARD-LOOKING STATEMENTS
   
 PART I
 
 ITEM 1. DESCRIPTION OF BUSINESS.
 General
   2




---



##### Table of Contents



The Operating Partnership
    Recent Developments
 Sale of Ballantyne Place Apartment Community and Reinvestment of Net Proceeds
 Sale of Ballantyne Place
 3




---



##### Table of Contents



Purchase of 14.5 Acres of Undeveloped Land in Westside
 Purchase of Sawmill Village Undeveloped Land
 Purchase of Grand Pavilion Retail Center
 Purchase of Bassett Shopping Center
 Purchase of Spectrum Retail Center
 Purchase of Highway 20 Undeveloped Land
 4




---



##### Table of Contents



Purchase of Additional Land Adjacent to Highway 20 Land
  Sale of 362,588 Common Shares to Two Directors
  Listing of Addison Place Townhomes for Sale
  Resignation of Chief Financial Officer
   Trends
   5




---



##### Table of Contents



Growth Strategies
  
    
    maximize cash flow from operations by seeking through intensive management to
maintain high occupancy levels, obtain regular rent increases, manage tenant turnover
efficiently and control operating expenses; and
    
    develop and/or acquire new multifamily residential communities, retail shopping
centers and/or mixed-use projects in Atlanta and South Florida.
  Property
Management Strategy
 
    
    to increase average occupancy and rental rates as market conditions permit;
 6




---



##### Table of Contents




    
    to minimize resident turnover and delinquent rental payments through strict review
of each applicants creditworthiness;
    
    to provide our commercial tenants with superior facilities that enable them to
succeed in business;
    
    to control operating expenses and increase net operating income at each of our
properties; and
    
    to provide superior service to our residents and our 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;
    
    traffic volume, transportation access, proximity to commercial centers and regional
malls; and
    
    proximity to and quality of the areas schools.
  7




---



##### Table of Contents



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
    
    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
 
    
    hiring Mr. Roberts or the Roberts Companies to develop and construct real estate
under a fee arrangement;
    
    acquiring undeveloped property from Mr. Roberts or his affiliates for future
development, which we did in 2004 and 2005; or
    
    acquiring from Mr. Roberts or his affiliates partially or completely constructed
properties, whether in their lease-up phase or already leased-up.
  8




---



##### Table of Contents



Securities of or Interest in Persons Primarily Engaged in Real Estate Activities and Other
Issuers
 No Investments in Mortgages
 Financing Policies
     9




---



##### Table of Contents



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
  10




---



##### Table of Contents



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.
  Insurance
   11




---



##### Table of Contents



12




---



##### Table of Contents



ITEM 1A. RISK FACTORS
  
    
    real estate related risks;
    
    financing risks;
    
    tax risks;
    
    environmental and other legal risks; and
    
    risks for investors in our stock.This section includes forward-looking statements.
 Real Estate Related Risks
 Our business currently operates at a loss
  Construction risks inherent in the development and construction of new properties could negatively
affect our financial performance.
  
    
    increased costs for or any unavailability of materials or labor;
    
    building restrictions;
    
    environmental impact studies by the government;
    
    weather delays;
    
    increased interest costs due to rising interest rates; and
    
    any financial instability of the developer (Roberts Properties, Inc., which is owned
by Mr. Charles S. Roberts, our President, Chief Executive Officer and Chairman of our
Board of
 13




---



##### Table of Contents



Directors), general contractor (Roberts Properties Construction, Inc., also owned by Mr.
Roberts) or any subcontractor.
  We face leasing risks in our planned development and construction program.
  We are currently concentrated in metropolitan Atlanta, and adverse changes in economic or market
conditions in Atlanta could negatively affect our financial performance and condition.
  
    
    lack of employment growth;
    
    supply and demand for properties;
    
    neighborhood values in the submarkets in which our properties are located;
    
    zoning and other regulatory conditions;
    
    competition from other properties;
    
    property taxes;
    
    weather problems; and
    
    price increases for materials or labor.
  We face conflicts of interest because of our business dealings with our Chief Executive Officer and
his affiliates.
  14




---



##### Table of Contents




    
    the possibility that the Roberts Companies might incur severe financial problems or
even become bankrupt;
    
    the possibility that the Roberts Companies may at any time have economic or business
interests or goals that are or that become inconsistent with our business interests or
goals; or
    
    the possibility that the Roberts Company may be in a position to take action
contrary to our instructions or requests or contrary to our policies or objectives.
 We face substantial competition.
  
    
    cause us to pay a higher price for a new property than we otherwise would have paid;
    
    prevent us from purchasing a desired property at all;
    
    decrease the rental rates that we would be able to charge in the absence of such
direct competition; and
    
    reduce the occupancy rates that we would otherwise be able to achieve.
  Favorable conditions for purchasing residential properties could adversely affect our revenues from
our residential communities.
  Changes in market or economic conditions may affect our business negatively.
  Terrorism could impair our business.
  15




---



##### Table of Contents



Our commercial and office tenants may go bankrupt or be unable to make lease payments.
  Real estate properties are illiquid and may be difficult to sell, particularly in a poor market
environment.
  Losses from natural catastrophes may exceed our insurance coverage.
  Our business depends on key personnel.
  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.
 16




---



##### Table of Contents



Financing Risks
 We may not be able to obtain the debt and equity we need to carry out our planned development and
construction program.
  We may be unable to refinance our existing debt or we may only be able to do so on unfavorable
terms.
  
    
    the risk that our cash flow will be insufficient to meet required payments of
principal and interest; and
    
    the risk that we will not be able to renew, repay or refinance our debt when it
matures or that the terms of any renewal or refinancing will not be as favorable as the
existing terms of that debt.
   Rising interest rates could materially and adversely affect the cost of our indebtedness.
  17




---



##### Table of Contents



Increased debt and leverage could affect our financial position and impair our ability to make
distributions to our investors.
  
    
    increase our vulnerability to general adverse economic and industry conditions;
    
    limit our flexibility in planning for, or reacting to, changes in our business and
the REIT industry, which may place us at a competitive disadvantage compared to our
competitors that have less debt; and
    
    limit, along with the possible financial and other restrictive covenants in our
indebtedness, our ability to borrow additional funds.
  If we are unable to reinvest sales or refinancing proceeds as quickly as we expect, our financial
condition may be adversely affected.
  If we incur additional debt, the agreements covering those debts could contain various covenants
that limit our discretion in the operation of our business.
  18




---



##### Table of Contents




    
    incur additional debt and issue preferred stock;
    
    pay dividends and make other distributions;
    
    make investments and other payments;
    
    redeem or repurchase our capital stock;
    
    consolidate or merge;
    
    create liens;
    
    sell assets; or
    
    enter into certain transactions with our affiliates.
  Our interest rate hedging activities may not effectively protect us from fluctuations in interest
rates.
  Tax Risks
 Our company may fail to qualify for REIT status under federal income tax laws.
   19




---



##### Table of Contents



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.
 These costs could be substantial and in extreme cases could exceed the value of the contaminated
property. The presence of hazardous or toxic substances or petroleum products and the failure to
remediate that contamination properly may materially and adversely affect our ability to borrow
against, sell or rent an affected property. In addition, applicable environmental laws create
liens on contaminated sites in favor of the government for damages and costs it incurs in
connection with a contamination.
 We face risks related to mold and asbestos.
  20




---



##### Table of Contents




    
    properly manage and maintain the asbestos;
    
    notify and train those who may come into contact with asbestos; and
    
    undertake special precautions, including removal or other abatement, if asbestos
would be disturbed during renovation or demolition of a building.
  We may acquire properties that are subject to liabilities for which we have no recourse, or only
limited recourse, against the seller.
  
    
    claims by tenants, vendors or other persons dealing with the former owners of the
properties;
    
    liabilities incurred in the ordinary course of business; and
    
    claims for indemnification by directors, officers and others indemnified by the
former owners of the properties.
  We face risks in complying with Section 404 of the Sarbanes-Oxley Act of 2002.
   21




---



##### Table of Contents



Failure to comply with the Americans with Disabilities Act or other similar laws could result in
substantial costs.
  Risks for Investors in Our Stock
 We do not pay regular quarterly dividends, and we do not anticipate making any distributions to
investors for the indefinite future, other than possibly to preserve our REIT status if so
required.
  The market price of our stock is subject to fluctuation as a result of our operating results, the
operating results of other REITs and changes in the stock market in general.
  Additional issuances of equity securities may dilute the investment of our current shareholders.
  22




---



##### Table of Contents



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.
  23




---



##### Table of Contents



ITEM 1B. UNRESOLVED STAFF COMMENTS.
  
 ITEM 2. PROPERTIES.
 General
  Residential
 
    
    Addison Place, a 403-unit, multifamily community consisting of the 118-unit Addison
Place Townhomes and the 285-unit Addison Place Apartments in Alpharetta, Georgia.
Addison Place has a physical occupancy rate of 92.5%.
 Retail
 
    
    Grand Pavilion, a 62,323-square-foot retail center located in Alpharetta, Georgia
that is 88.4% leased.
 
    
    Bassett Shopping Center, a 19,949-square-foot retail center located across from the
Mall of Georgia in Gwinnett County that is 100% leased.
 
    
    Spectrum at the Mall of Georgia, a 30,050-square-foot retail center located across
from the Mall of Georgia in Gwinnett County that is 100% leased.
    
    Addison Place Shops, a 39,205-square-foot retail center located at the entrance to
our Addison Place apartment community in Alpharetta, Georgia that is in
lease-up . We have completed construction of this retail center except for the
interior tenant finish. The Addison Place Shops are 18.0% leased.
 Office
 
    
    Northridge office building, a 37,864-square-foot building in lease-up in Atlanta,
Georgia. We occupy a portion of one floor of the building as our corporate
headquarters, and we have entered into leases for the remaining space on that floor
with Roberts Properties and Roberts Construction. The building is 44.1% leased.
 Properties under Development
 
    
    Northridge community, a 10.9-acre site adjacent to our Northridge office building,
currently in the planning and design phase, on which we intend to build a 220-unit
apartment community.
 24




---



##### Table of Contents




    
    Peachtree Parkway, an 82% undivided interest in 23.6 acres of undeveloped land,
currently in the planning and design phase, that is zoned for 292 residential units
located on Peachtree Parkway in Gwinnett County, Georgia.
    
    North Springs, a 9.8-acre tract of undeveloped land currently in the planning and
design phase, that is zoned for 356 residential units, 210,000 square feet of office
space and 56,000 square feet of retail space located on Peachtree Dunwoody Road in
Atlanta, Georgia.
    
    Sawmill Village, a 22.1-acre tract of undeveloped land currently in the planning and
design phase, in Cumming, Georgia, north of metropolitan Atlanta, zoned for 154
residential units.
    
    Highway 20, a 38.2-acre tract of undeveloped land currently in the planning and
design phase, in Cumming, Georgia, zoned for 210 residential units.
 Investment Properties
 
    
    Westside, a 44.0-acre tract of undeveloped land zoned for 326 residential units and
a density of 500,000 square feet for a university education center located on Westside
Parkway in Alpharetta, Georgia. We also own a right of first refusal to acquire an
adjacent seven-acre parcel zoned for 105 residential units.
 
    
    A 1.0-acre undeveloped commercial site adjacent to the Addison Place Shops that we
intend either to sell or to develop.
     25




---



##### Table of Contents



Year
    
    
    Number
    
    
    Approximate
    
    
    Average
    
    
    December 2005
    
    
    OccupancyResidential
    
    
    
    
    
    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.
    
    
    12/31/05ResidentialAddison Place
Townhomes
(1)
    
    Alpharetta
    
    
    1999
    
    
    
    118
    
    
    
    200,194
    
    
    
    1,697
    
    
    
    1,167
    
    
    
    0.69
    
    
    
    89.4
    %Addison Place
Apartments
(1)
    
    Alpharetta
    
    
    2001
    
    
    
    285
    
    
    
    403,312
    
    
    
    1,415
    
    
    
    1,044
    
    
    
    0.74
    
    
    
    93.4
    %Total
Residential
(1)
    
    
    
    
    
    
    
    
    
    
    403
    
    
    
    603,506
    
    
    
    1,498
    
    
    
    1,079
    
    
    
    0.72
    
    
    
    92.3
    %
 
 (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.  Average Effective Annual Rental RatesMonth
    
    
    Physical Occupancy Rate
    
    
    
    
    
    
    2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005CompletedInitial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Per
    
    
    Per
    
    
    Per
    
    
    Per
    
    
    Per
    
    
    Per
    
    
    Per
    
    
    Per
    
    
    Per
    
    
    PerCommunity
    
    Lease up
    
    
    2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005
    
    
    Unit
    
    
    Sq. Ft.
    
    
    Unit
    
    
    Sq. Ft.
    
    
    Unit
    
    
    Sq. Ft.
    
    
    Unit
    
    
    Sq. Ft.
    
    
    Unit
    
    
    Sq. Ft.Addison Place
Townhomes
    
    
    5/00
    
    
    
    90.3
    %
    
    
    74.7
    %
    
    
    88.5
    %
    
    
    94.0
    %
    
    
    93.4
    %
    
    $
    1,335
    
    
    $
    0.79
    
    
    $
    1,275
    
    
    $
    0.75
    
    
    $
    1,195
    
    
    $
    0.70
    
    
    $
    1,157
    
    
    $
    0.68
    
    
    $
    1,207
    
    
    $
    0.71Addison Place
Apartments
    
    
    9/02
    
    
    
    63.6
    %*
    
    
    65.8
    %*
    
    
    90.3
    %
    
    
    94.2
    %
    
    
    94.2
    %
    
    $
    1,148
    
    
    $
    0.81
    
    
    $
    1.044
    *
    
    $
    0.74
    *
    
    $
    1,007
    
    
    $
    0.71
    
    
    $
    994
    
    
    $
    0.70
    
    
    $
    1,032
    
    
    $
    0.73Total Addison
Place
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    89.8
    %
    
    
    94.2
    %
    
    
    94.0
    %
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    $
    1,061
    
    
    $
    0.71
    
    
    $
    1,041
    
    
    $
    0.69
    
    
    $
    1,083
    
    
    $
    0.72
 46




---



##### Table of Contents



Retail or
    
    
    
    
    
    
    
    
    
    
    
    
    
    Approximate
    
    
    Average Annualized Base
    
    
    OccupancyOffice
    
    
    
    
    
    Year
    
    
    Year
    
    
    Rentable Area
    
    
    Rent per
    
    
    as ofProperty
    
    Location
    
    
    Completed
    
    
    Acquired
    
    
    (Square Feet)
    
    
    Square Foot(1)
    
    
    12/31/05RetailGrand Pavilion
    
    Alpharetta
    
    
    1999
    
    
    
    2005
    
    
    
    62,323
    
    
    $
    16.92
    
    
    
    88.4
    %Bassett Center
    
    Gwinnett County
    
    
    1999
    
    
    
    2005
    
    
    
    19,949
    
    
    
    20.34
    
    
    
    100.0
    %Spectrum Center
    
    Gwinnett County
    
    
    2002
    
    
    
    2005
    
    
    
    30,050
    
    
    
    25.19
    
    
    
    83.4
    %Addison Place Shops (2)
    
    Alpharetta
    
    
    2005
    
    
    
    2001
    
    
    
    39,205
    
    
    
    22.00
    
    
    
    3.1
    %Total Retail
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    151,527
    
    
    $
    19.96
    
    
    
    66.9
    %Northridge Office Building
(3)
    
    Atlanta
    
    
    2004
    
    
    
    2001
    
    
    
    37,864
    
    
    $
    20.00
    
    
    
    35.5
    %
 
 (1)
    
    Average Annualized Base Rent per Square Foot is equal to December 2005 base rental revenue
multiplied by 12.(2)
    
    The Addison Place Shops retail center was completed in May 2005 and is in its lease-up phase.
Occupancy at December 31, 2005 does not include leases for three other spaces totaling 5,810
square feet for tenants who had signed leases with terms beginning in 2006.(3)
    
    The Northridge office building is still in its lease-up phase. Occupancy at December 31,
2005 does not include a lease for 3,147 square feet for one tenant who had a signed lease with
terms beginning in 2006.  Expiring
    
    
    % of TotalNumber of
    
    
    Approximate
    
    
    Approximate
    
    
    Expiring
    
    
    % of TotalExpiring
    
    
    Rentable Area
    
    
    Rentable Area
    
    
    Annualized
    
    
    AnnualizedYear
    
    Leases(1)
    
    
    (Square Feet)
    
    
    (Square Feet)
    
    
    Base Rent
    
    
    Base Rent2006
    
    
    5
    
    
    
    11,450
    
    
    
    9.6
    %
    
    $
    192,564
    
    
    
    7.4
    %2007
    
    
    8
    
    
    
    16,915
    
    
    
    14.1
    %
    
    
    459,268
    
    
    
    17.6
    %2008
    
    
    5
    
    
    
    9,300
    
    
    
    7.8
    %
    
    
    181,674
    
    
    
    7.0
    %2009
    
    
    9
    
    
    
    18,390
    
    
    
    15.4
    %
    
    
    408,283
    
    
    
    15.7
    %2010
    
    
    6
    
    
    
    16,527
    
    
    
    13.8
    %
    
    
    289,571
    
    
    
    11.1
    %2011 and later
    
    
    7
    
    
    
    47,015
    
    
    
    39.3
    %
    
    
    1,072,520
    
    
    
    41.2
    %Total
    
    
    40
    
    
    
    119,597
    
    
    
    100.0
    %
    
    $
    2,603,880
    
    
    
    100.0
    %
 
 (1)
    
    Lease expiration table does not include option periods. 27




---



##### Table of Contents



Fulton County
  Alpharetta
  Addison Place Apartments and Townhomes.
   Addison Place Shops.
 28




---



##### Table of Contents



Grand Pavilion.
 Westside
 Perimeter Center/North Springs Area
   North Springs.
 Northridge Office Building
 29




---



##### Table of Contents



Northridge Apartment Community.
 Gwinnett County
  Peachtree Corners Area
  Peachtree Parkway.
 Mall of Georgia Area
  Bassett Shopping Center.
 Spectrum Shopping Center.
 Forsyth County/Cumming
  Sawmill
 30




---



##### Table of Contents



Highway 20
 Summary of Debt Secured by Our Properties
  Possible Additional Communities to Be Developed
  
 ITEM 3. LEGAL PROCEEDINGS.
  
 ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  31




---



##### 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
    
    
    Declared2005
    
    First Quarter
    
    $
    8.55
    
    
    $
    7.60
    
    
    NoneSecond Quarter
    
    
    8.43
    
    
    
    7.25
    
    
    NoneThird Quarter
    
    
    8.90
    
    
    
    7.62
    
    
    NoneFourth Quarter
    
    
    7.92
    
    
    
    7.52
    
    
    None2004
    
    First Quarter
    
    $
    8.10
    
    
    $
    6.81
    
    
    NoneSecond Quarter
    
    
    11.10
    
    
    
    5.50
    
    
    $
    4.50Third Quarter
    
    
    8.34
    
    
    
    5.66
    
    
    NoneFourth Quarter
    
    
    8.20
    
    
    
    6.80
    
    
    None
       32




---



##### Table of Contents



ITEM 6. SELECTED FINANCIAL DATA.
  33




---



##### Table of Contents



OPERATING DATA:
(Dollars in Thousands, Except Per Share Amounts)
 YEARS ENDED DECEMBER 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001OPERATING DATA:REVENUES:Rental operations
    
    $
    5,485
    
    
    $
    4,774
    
    
    $
    4,607
    
    
    $
    3,733
    
    
    $
    3,305Other operating income
    
    
    394
    
    
    
    288
    
    
    
    282
    
    
    
    208
    
    
    
    200Total revenues
    
    
    5,879
    
    
    
    5,062
    
    
    
    4,889
    
    
    
    3,941
    
    
    
    3,505EXPENSES:Property operating and maintenance expense (exclusive of
depreciation and amortization) (1)
    
    
    2,442
    
    
    
    1,933
    
    
    
    1,703
    
    
    
    1,616
    
    
    
    1,248Depreciation and amortization
    
    
    2,116
    
    
    
    1,695
    
    
    
    1,795
    
    
    
    2,029
    
    
    
    1,733Interest expense
    
    
    3,118
    
    
    
    2,479
    
    
    
    2,003
    
    
    
    1,775
    
    
    
    1,115Interest income
    
    
    (265
    )
    
    
    (294
    )
    
    
    (77
    )
    
    
    (39
    )
    
    
    (263
    )Amortization of deferred financing costs
    
    
    160
    
    
    
    101
    
    
    
    149
    
    
    
    163
    
    
    
    90Legal settlement
    
    
    150
    
    
    
    (340
    )
    
    
    0
    
    
    
    0
    
    
    
    0General and administrative expense
    
    
    1,561
    
    
    
    1,708
    
    
    
    2,072
    
    
    
    2,155
    
    
    
    1,732Total expenses
    
    
    9,282
    
    
    
    7,282
    
    
    
    7,645
    
    
    
    7,699
    
    
    
    5,655LOSS FROM CONTINUING OPERATIONS BEFORE MINORITY
INTEREST AND GAINS ON SALE OF REAL ESTATE ASSETS
    
    
    (3,403
    )
    
    
    (2,220
    )
    
    
    (2,756
    )
    
    
    (3,758
    )
    
    
    (2,150
    )MINORITY INTEREST OF UNITHOLDERS
IN THE OPERATING PARTNERSHIP
    
    
    865
    
    
    
    596
    
    
    
    783
    
    
    
    1,184
    
    
    
    701LOSS FROM CONTINUING OPERATIONS BEFORE GAINS ON
SALE OF REAL ESTATE ASSETS
    
    
    (2,538
    )
    
    
    (1,624
    )
    
    
    (1,973
    )
    
    
    (2,574
    )
    
    
    (1,449
    )GAINS ON SALE OF REAL ESTATE ASSETS, net of minority interest
of unitholders in the operating partnership
    
    
    
    
    
    
    102
    
    
    
    77
    
    
    
    941
    
    
    
    LOSS FROM CONTINUING OPERATIONS
    
    
    (2,538
    )
    
    
    (1,522
    )
    
    
    (1,896
    )
    
    
    (1,633
    )
    
    
    (1,449
    )INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of
minority interest of unitholders in the operating partnership
    
    
    3,794
    
    
    
    38,508
    
    
    
    4,586
    
    
    
    (883
    )
    
    
    8,889Net income (loss)
    
    $
    1,256
    
    
    $
    36,986
    
    
    $
    2,690
    
    
    $
    (2,516
    )
    
    $
    7,440INCOME (LOSS) PER COMMON SHARE  DILUTED:Loss from continuing operations
    
    $
    (0.46
    )
    
    $
    (0.29
    )
    
    $
    (0.37
    )
    
    $
    (0.33
    )
    
    $
    (0.30
    )Income (loss) from discontinued operations
    
    
    0.69
    
    
    
    7.30
    
    
    
    0.89
    
    
    
    (0.18
    )
    
    
    1.83Net income (loss)
    
    $
    0.23
    
    
    $
    7.01
    
    
    $
    0.52
    
    
    $
    (0.51
    )
    
    $
    1.53Dividends declared (2)
    
    $
    0.00
    
    
    $
    4.50
    
    
    $
    0.55
    
    
    $
    0.00
    
    
    $
    0.33
 December 31,BALANCE SHEET DATAReal estate assets, before accumulated depreciation
    
    $
    80,365
    
    
    $
    80,649
    
    
    $
    42,175
    
    
    $
    42,495
    
    
    $
    41,937Real estate assets, net of accumulated depreciation
    
    
    70,107
    
    
    
    71,492
    
    
    
    35,600
    
    
    
    37,658
    
    
    
    39,109Total assets
    
    
    127,149
    
    
    
    129,229
    
    
    
    177,739
    
    
    
    179,007
    
    
    
    165,503Total debt
    
    
    66,925
    
    
    
    72,942
    
    
    
    57,917
    
    
    
    53,363
    
    
    
    45,364Minority interest of unitholders in the operating partnership
    
    
    14,459
    
    
    
    14,368
    
    
    
    9,214
    
    
    
    9,361
    
    
    
    11,996Shareholders equity
    
    
    44,794
    
    
    
    39,849
    
    
    
    24,049
    
    
    
    22,479
    
    
    
    25,374
 Footnotes are on the following page.
 34




---



##### Table of Contents



December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001OTHER DATA:Cash flow provided by (used in):Operating activities of continuing operations
    
    $
    (661
    )
    
    $
    (1,493
    )
    
    $
    (1,263
    )
    
    $
    (1,712
    )
    
    $
    (253
    )Operating activities of discontinued operations
    
    
    355
    
    
    
    (537
    )
    
    
    3,234
    
    
    
    4,481
    
    
    
    6,239Investing activities
    
    
    (21,042
    )
    
    
    117,666
    
    
    
    5,191
    
    
    
    (16,221
    )
    
    
    (49,684
    )Financing activities
    
    
    (4,200
    )
    
    
    (97,167
    )
    
    
    (4,121
    )
    
    
    16,377
    
    
    
    44,820Net increase (decrease) in cash and cash equivalents
    
    
    (25,548
    )
    
    
    18,469
    
    
    
    3,041
    
    
    
    2,925
    
    
    
    1,122Cash and cash equivalents, beginning of year
    
    
    27,052
    
    
    
    8,583
    
    
    
    5,542
    
    
    
    2,617
    
    
    
    1,495Cash and cash equivalents, end of year
    
    
    1,504
    
    
    
    27,052
    
    
    
    8,583
    
    
    
    5,542
    
    
    
    2,617Funds from operations (3)
    
    $
    (1,485
    )
    
    $
    (706
    )
    
    $
    2,082
    
    
    $
    1,987
    
    
    $
    4,722Weighted average common shares outstanding  basic
    
    
    5,522,630
    
    
    
    5,280,064
    
    
    
    5,171,748
    
    
    
    4,943,280
    
    
    
    4,870,117Weighted average common shares outstanding  diluted (effect of operating
partnership units)
    
    
    7,406,066
    
    
    
    7,220,658
    
    
    
    7,223,727
    
    
    
    7,220,593
    
    
    
    7,226,123Total stabilized communities (at end of year)
    
    
    2
    
    
    
    2
    
    
    
    7
    
    
    
    5
    
    
    
    8Total stabilized apartments (at end of year)
    
    
    403
    
    
    
    403
    
    
    
    1,632
    
    
    
    1,029
    
    
    
    1,633Average physical occupancy (stabilized communities) (4)
    
    
    94.0
    %
    
    
    94.2
    %
    
    
    86.2
    %
    
    
    93.3
    %
    
    
    95.9
    %Total stabilized retail properties (at end of year)
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total stabilized retail square footage (at end of year)
    
    
    112,322
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Average physical occupancy (stabilized retail properties)
    
    
    89.1
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Property operating expenses include personnel, utilities, repairs, maintenance,
landscaping, real estate taxes, marketing, insurance and property administration
expenses.(2)
    
    We began paying dividends and distributions on our common stock and units beginning
on April 15, 1996.(3)
    
    Funds from Operations, or FFO, is defined by the National Association of Real Estate
Investment Trusts as net income, computed in accordance with accounting principles
generally accepted in the United States (GAAP), excluding gains (or losses) from sales
of depreciable property and non-recurring items, plus real estate related depreciation
and amortization. We use the current NAREIT definition of FFO. Effective January 1,
2000, NAREIT amended its definition of FFO to include all non-recurring items, except
those defined as extraordinary items under GAAP and gains and losses from sales of
depreciable operating property. We consider FFO to be an important measure of our
operating performance; however, FFO does not represent amounts available for
managements discretionary use for payment of capital replacement or expansion, debt
service obligations, property acquisitions, development and distributions or other
commitments and uncertainties. FFO should not be considered as an alternative to net
income (determined in accordance with GAAP) as an indication of our financial
performance or cash flows from operating activities (determined in accordance with GAAP)
as a measure of our liquidity, nor is it indicative of funds available to fund our cash
needs, including our ability to make distributions. We consider FFO to be an important
measure of our operating performance. While FFO does not represent cash flows from
operating, investing or financing activities as defined by GAAP, FFO does provide
investors with additional information with which to evaluate the ability of a REIT to
pay dividends, meet required debt service payments and fund capital expenditures. We
believe that to gain a clear understanding of our operating results, FFO should be
evaluated in conjunction with net income (determined in accordance with GAAP). FFO
represents funds from operations available for shareholders and unitholders. See Item
7, Managements Discussion and Analysis of Financial Condition and Results of Operations
 Supplemental Disclosure of Funds From Operations, for a reconciliation of net income
to FFO.(4)
    
    Represents the average physical occupancy of the stabilized communities calculated
by dividing the total number of vacant days by the total possible number of vacant days
for each period and subtracting the resulting number from 100%.  35




---



##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
 Overview
  Recent Developments
 Selection of Independent Registered Public Accounting Firm.
 Sale of Ballantyne Place and Reinvestment of Net Proceeds
    36




---



##### Table of Contents



Other Recent Purchases of New Properties for Development
 
    
    an 82% undivided interest in 23.55 acres of undeveloped land zoned for 292
residential units in Gwinnett County, Georgia for $7,770,000;
    
    a 29.48-acre site of undeveloped land zoned for 109 residential units, 15,000 square
feet of retail space and a density of 500,000 square feet for a university education
center in Alpharetta, Georgia for $5,880,000; and
    
    a 9.84-acre site of undeveloped land zoned for 356 residential units, 210,000 square
feet of office space and 56,000 square feet of retail space in Atlanta, Georgia for
$15,700,000.
 Sale of St. Andrews at the Polo Club.
 Sale of Five Apartment Communities to Colonial Properties Trust
 
    
    $58,802,000 for the mortgage notes payable assumed by the buyer;
    
    closing costs and prorations totaling $150,000; and
    
    a partnership profits interest distribution of $3,182,000 paid to Roberts Properties
under the amended partnership agreement of the operating partnership.
 37




---



##### Table of Contents



Refinancing of Addison Place Apartments
 Substantial Effects of Apartment Sales on Future Operating Results.
 Listing of Addison Place Townhomes for Sale
  Resignation of Chief Financial Officer
  Trends
  38




---



##### Table of Contents



Results of Operations
  Comparison of the Year Ended December 31, 2005 to the Year Ended December 31, 2004
     39




---



##### Table of Contents




    
    interest on the debt we assumed in the acquisition of the retail centers,
    
    interest on the debt secured by the Northridge office building and the Addison Place
Shops retail center, for which we began expensing interest in September 2004 and June
2005, respectively, rather than capitalizing interest as we completed construction of
these properties, and
    
    interest on the debt we incurred to finance our land purchases in 2004 and 2005.
    Comparison of the Year Ended December 31, 2004 to the Year Ended December 31, 2003
   
    
    an increase in revenues at our Addison Place community arising from an increase in
economic occupancy, and
    
    rental revenues from our Northridge office building, which became operational in the
third quarter of 2004.
  40




---



##### Table of Contents



Anticipated Effects of Sale of Seven Apartment Communities on our Future Results of Operations
  Revenues
 Income from Operations
 41




---



##### Table of Contents



Reduction in Number of Employees and Associated Costs
 Liquidity and Capital Resources
  Comparison of the Year Ended December 31, 2005 to the Year Ended December 31, 2004
     
    
    property sales in 2004 and 2005, which resulted in net reductions of debt of
$73,521,000 in 2004 and $22,217,000 in 2005;
    
    $36,036,000 in proceeds from mortgage notes payable, $15,002 of which was used to
finance our retail acquisitions in September and October 2005 and $21,034 of which was
used to payoff our Addison Place Apartments loan in April 2005;
    
    a net increase in land loan proceeds of $11,303,000 used to fund five land
acquisitions in 2004 and 2005;
    
    $2,901,000 in proceeds from the sale of stock in June 2005; and
 42




---



##### Table of Contents




    
    a payment of $32,509,000 in a special distribution during June 2004 with no
corresponding distributions in 2005; partially offset by
    
    a net increase in repayment of land loans of $17,413,000; and
    
    a $21,034,000 repayment of our Addison Place Apartment loan.
 Comparison of the Year Ended December 31, 2004 to the Year Ended December 31, 2003
     
    
    property sales in 2004 and 2003, which resulted in a net reduction of debt of
$9,930,000 in 2003 and $73,521,000 in 2004; and
    
    $9,462,000 in proceeds from a land loan used to finance two land acquisitions in
2004; partially offset by:
    
    $10,750,000 in proceeds from a mortgage note payable used to refinance the River
Oaks property in 2003, partially offset by the repayment of that same mortgage;
    
    a net decrease in proceeds from construction notes payable of $9,804,000; and
    
    a net increase in dividend payments of $28,547,000, including a special distribution
of $32,509,000 in June 2004.
   43




---



##### Table of Contents



44




---



##### Table of Contents



ROBERTS REALTY INVESTORS, INC.
DEBT SUMMARY SCHEDULE
(Listed in order of maturity)
December 31, 2005
 Interest
    
    Maturity
    
    Balance at
    
    Monthly
    
    Balance atLender
    
    Interest Terms
    
    Rate(1)
    
    Date
    
    Maturity
    
    Payment
    
    12/31/05Addison Place Shops (2) (3)
    
    Compass Bank
    
    LIBOR plus 185 b.p.
    
    
    6.24
    
    
    04/30/06
    
    $
    6,500,000
    
    
    Interest only
    
    $
    6,364,000Northridge Office Building (4)(5)
    
    Bank of North
Georgia
    
    LIBOR plus 200 b.p.
    
    
    6.39
    
    
    05/28/06
    
    
    4,000,000
    
    
    Interest only
    
    
    4,000,000Revolving $2 million
credit line (4)
    
    Compass Bank
    
    LIBOR plus 175 b.p.
    
    
    6.04
    
    
    08/01/06
    
    
    2,000,000
    
    
    Interest only
    
    
    2,000,000Westside (4)
    
    Compass Bank
    
    LIBOR plus 175 b.p.
    
    
    6.12
    
    
    08/31/08
    
    
    6,480,000
    
    
    Interest only
    
    
    6,480,000Sawmill Village (4)
    
    Bank of North Georgia
    
    LIBOR plus 175 b.p.
    
    
    6.14
    
    
    08/31/08
    
    
    3,335,000
    
    
    Interest only
    
    
    3,335,000Addison Place Townhomes (6)
    
    Prudential Life
    
    Fixed-rate permanent
    
    
    6.95
    
    
    11/15/09
    
    
    8,339,000
    
    
    $
    62,885
    
    
    
    8,927,000Grand Pavilion (7)
    
    LaSalle Bank
    
    Fixed-rate permanent
    
    
    5.43
    
    
    07/11/13
    
    
    6,016,000
    
    
    $
    40,565
    
    
    
    6,962,000Spectrum (7)
    
    LaSalle Bank
    
    Fixed-rate permanent
    
    
    5.68
    
    
    05/01/14
    
    
    4,546,000
    
    
    $
    31,273
    
    
    
    5,289,000Addison Place Apartments
    
    Freddie Mac
    
    Fixed-rate permanent
    
    
    6.35
    
    
    05/01/15
    
    
    18,027,000
    
    
    $
    130,669
    
    
    
    20,860,000Bassett (7)
    
    LaSalle Bank
    
    Fixed-rate permanent
    
    
    8.47
    
    
    10/01/19
    
    
    1,943,000
    
    
    $
    21,853
    
    
    
    2,708,000Totals
    
    
    
    
    
    
    
    
    
    
    
    $
    61,186,000
    
    
    
    
    
    
    $
    66,925,000
 45




---



##### Table of Contents



(1)
    
    The interest rate shown for variable-rate debt is as of December 31, 2005.(2)
    
    This loan has an interest rate floor of 3.50%.(3)
    
    On March 9, 2006, the maturity date of this loan was extended from April 30, 2006 to
October 30, 2007.(4)
    
    Each of these loans has an interest rate floor of 3.75%.(5)
    
    On March 10, 2006, the maturity date was extended from May 28, 2006 to September 10,
2007, and monthly payments will consist of a fixed principal amount of $13,333 plus
interest at the 30-day LIBOR rate plus 200 basis points.(6)
    
    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.(7)
    
    The lender acts as trustee for the actual lender. Additional monthly payments are
required to sustain escrow reserves. 46




---



##### Table of Contents



Debt
Maturity Scheduleas of December 31, 2005
 PrincipalYear
    
    Payments
    
    
    Applicable Communities or Properties2006 (1) (2) (3)
    
    $
    12,942,000
    
    
    Addison Place Shops, Northridge Office Building, Line of Credit2007
    
    
    616,0002008
    
    
    10,466,000
    
    
    Westside, Sawmill Village2009
    
    
    9,010,000
    
    
    Addison Place Townhomes2010
    
    
    564,000Thereafter
    
    
    33,327,000
    
    
    Grand Pavilion, Addison Place Apartments, Spectrum and BassettTotal
    
    $
    66,925,000
 
 (1)
    
    We extended the maturity date of the $6,364,000 Addison Place Shops loan from April 30,
2006 to October 30, 2007.(2)
    
    We extended the maturity date of the $4,000,000 Northridge Office Building loan from May 28,
2006 to September 10, 2007. Under the extended term, monthly payments will consist of a fixed
principal amount of $13,333 per month plus interest at the 30-day LIBOR rate plus 200 basis points,
with a balloon payment at maturity of $3,760,000 plus interest(3)
    
    We paid off the $2,000,000 line of credit in February 2006 with proceeds from the Highway 20
land loan. Short-Term Debt
  Addison Place Shops
 Northridge Office Building
 Unsecured Line of Credit
 47




---



##### Table of Contents



Highway 20 Land Loan
 Long-Term Debt
  Land Loans
  
    
    by extending the maturity date if the property has not been developed,
    
    by obtaining a construction loan if we are ready to begin construction, or
    
    if the land has been developed and constructed and is generating income, by
obtaining a permanent mortgage on the property.
 Floating Rate Debt
  Anticipated Effects of Sale of Seven Apartment Communities on our Liquidity and Capital
Resources
  Net Cash Provided by Operating Activities from Continuing Operations.
 48




---



##### Table of Contents



Debt
 Annual Principal Payments
 Interest Expense
  Contractual Obligations
  Payments due by periodLess than
    
    
    
    
    
    
    
    
    
    
    More thanContractual obligations
    
    Total
    
    
    1 year
    
    
    1-3 years
    
    
    4-5 years
    
    
    5 yearsLong-Term Debt Obligations
    
    $
    54,561
    
    
    $
    605
    
    
    $
    11,146
    
    
    $
    9,643
    
    
    $
    33,167Capital Lease Obligations
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Operating Lease Obligations
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Due to affiliates (1)
    
    
    2,093
    
    
    
    2,093
    
    
    
    0
    
    
    
    0
    
    
    
    0Other construction obligations
    
    
    1,532
    
    
    
    1,532
    
    
    
    0
    
    
    
    0
    
    
    
    0Total
    
    $
    58,186
    
    
    $
    4,230
    
    
    $
    11,146
    
    
    $
    9,643
    
    
    $
    33,167
 
 (1)
    
    We enter into design and development agreements with Roberts Properties and construction
contracts with Roberts Construction in the normal course of business. The amounts listed in
the table are obligations related to the design and development agreements. These agreements
are fixed at $5,000 per residential unit and are payable over the planned development period.
Obligations related to the construction contracts have not been determined because the design
of the projects is still in process. Terms of the construction contracts are cost plus 10%
for overhead and profit. We estimate, however, the total amount of construction obligations
to be approximately $165.0 million based on current zoning and an estimated cost per unit,
although we cannot predict with any certainty the timing of the construction obligations. See
Item 13, Certain Relationships and Related Transactions  Transactions with the Roberts
Companies, for a 49




---



##### Table of Contents



description of our design and development agreements and construction contracts with Roberts
Properties and Roberts Construction.  Critical Accounting Policies
  Cost Capitalization
    Asset Impairment Evaluation
  50




---



##### Table of Contents



Derivatives and Hedging Activities
    Stock Repurchase Plan
   51




---



##### Table of Contents



Supplemental Disclosure of Funds From Operations
    Twelve Months Ended December 31,2005
    
    
    2004
    
    
    2003Net income (loss)
    
    $
    1,256
    
    
    $
    36,986
    
    
    $
    2,690Minority interest of unitholders  continuing operations
    
    
    (865
    )
    
    
    (596
    )
    
    
    (783
    )Minority interest of unitholders  discontinued operations
    
    
    (238
    )
    
    
    (844
    )
    
    
    (630
    )Gain on sale properties, net of minority interest
    
    
    (4,495
    )
    
    
    (40,792
    )
    
    
    (6,174
    )Depreciation expense  continuing operations
    
    
    2,116
    
    
    
    1,695
    
    
    
    1,795Depreciation expense  discontinued operations
    
    
    741
    
    
    
    2,845
    
    
    
    5,184Funds From Operations
    
    $
    (1,485
    )
    
    $
    (706
    )
    
    $
    2,082Weighted average shares and units
outstanding during the period
    
    
    7,406,066
    
    
    
    7,220,658
    
    
    
    7,223,727
 Inflation
  52




---



##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
   53




---



##### 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, 2005 and
2004 and for the Years Ended December 31, 2005, 2004 and 2003: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
 
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
  
 ITEM 9A. CONTROLS AND PROCEDURES.
   54




---



##### Table of Contents



ITEM 9B. OTHER INFORMATION.
  55




---



##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
 Directors and Executive Officers
 Charles S. Roberts
  Wm. Jarell Jones
 Dennis H. James
 Charles R. Elliott
 56




---



##### Table of Contents



Ben A. Spalding
 James M. Goodrich,
 Michael A. Quinlan
 57




---



##### Table of Contents



Audit Committee
  Section 16(a) Beneficial Ownership Reporting Compliance
  Code of Ethics and Business Conduct
  (1)
    
    honest and ethical conduct, including the ethical handling of corporate
opportunities and actual or apparent conflicts of interest between personal and
professional relationships;(2)
    
    full, fair, accurate, timely and understandable disclosure in reports and
documents that we file with, or submit to, the SEC and in other public
communications we make;(3)
    
    compliance with applicable governmental laws, rules and regulations;(4)
    
    confidentiality; protection and proper use of company assets;(5)
    
    equal employment opportunities and prohibition of discrimination or
harassment;(6)
    
    the prompt internal reporting of violations of the code to an appropriate
person or persons identified in the code; and(7)
    
    accountability for adherence to the code.
  58




---



##### Table of Contents



ITEM 11. EXECUTIVE COMPENSATION.
 Compensation of Executive Officers
  Summary Compensation Table
 Annual CompensationName and Principal Position
    
    Year
    
    
    Salary ($)
    
    
    Bonus ($)(1)Charles S. Roberts
    
    
    2005
    
    
    
    150,000
    
    
    
    275,000Chairman of the Board, Chief Executive
    
    
    2004
    
    
    
    150,000
    
    
    
    600,000Officer and President
    
    
    2003
    
    
    
    150,000
    
    
    
    0
 
 (1)
    
    Mr. Roberts earned a bonus in 2005 for the sale of our Ballantyne Place community in Charlotte,
North Carolina and two bonuses in 2004: (a) $300,000 for the sale of five apartment communities to
Colonial Properties Trust and (b) $300,000 for the sale our St. Andrews at the Polo Club apartment
community.   Compensation of Directors
   59




---



##### Table of Contents



Compensation Committee Interlocks and Insider Participation
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS.
  
    
    each person or entity known by us to be the beneficial owner of more than 5% of the
outstanding shares of common stock;
    
    each director and our named executive officer; and
    
    our directors and executive officers as a group.
   60




---



##### Table of Contents



Number of UnitsName of
    
    Number of Shares
    
    
    Beneficially
    
    
    
    
    
    
    Percent ofBeneficial Owner
    
    Owned
    
    
    Owned
    
    
    Total
    
    
    Class(1)Charles S. Roberts (2)
    
    
    1,335,123
    
    
    
    873,986
    
    
    
    2,209,109
    
    
    
    33.5
    %James M. Goodrich (3)
    
    
    281,847
    
    
    
    0
    
    
    
    281,847
    
    
    
    4.9
    %Dennis H. James
    
    
    102,052
    
    
    
    2,405
    
    
    
    104,457
    
    
    
    1.8
    %Ben A. Spalding (4)
    
    
    23,252
    
    
    
    27,318
    
    
    
    50,570
    
    
    
    
    *Wm. Jarell Jones(5)
    
    
    32,012
    
    
    
    0
    
    
    
    32,012
    
    
    
    
    *Charles R. Elliott
    
    
    12,200
    
    
    
    0
    
    
    
    12,200
    
    
    
    
    *All directors and executive
officers as a group: (6
persons) (6)
    
    
    1,786,486
    
    
    
    903,709
    
    
    
    2,690,195
    
    
    
    40.6
    %
 
 *
    
    Less than 1%.(1)
    
    The total number of shares outstanding used in calculating this percentage is 5,727,429, the
number of shares outstanding as of March 13, 2006.(2)
    
    Includes 2,744 shares and 29,500 units owned by a family limited liability company of which
Mr. Roberts is the manager. Mr. Roberts disclaims beneficial ownership of those shares and
units.(3)
    
    Includes 158,582 shares owned jointly by Dr. Goodrich and his wife, Penelope; and 108,478
shares owned by Goodrich Enterprises, Inc., all of the outstanding shares of which are owned
by Dr. and Mrs. Goodrich and their sons. Each of Dr. and Mrs. Goodrich disclaims beneficial
ownership of the shares held by the corporation except to the extent of their respective
pecuniary interests in those shares. Dr. Goodrichs total also includes 14,787 shares he owns
through an IRA.(4)
    
    Includes 7,564 shares owned by partnerships of which Mr. Spaldings wife is the managing
partner. Mr. Spaldings beneficial ownership of units includes 2,917 units owned by Mrs.
Spalding and 24,401 units owned by partnerships of which Mrs. Spalding is the managing
partner. Mr. Spalding disclaims beneficial ownership of all units and shares owned by his
wife or partnerships of which she is the managing partner.(5)
    
    Includes 1,745 shares owned by Mr. Jones wife, to which Mr. Jones disclaims beneficial
ownership.(6)
    
    Includes 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. 61




---



##### Table of Contents



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
 General
   
    
    any of our directors or executive officers;
    
    any holder we believe owns of record or beneficially more than 5% of our outstanding
common stock or units; and
    
    any member of the immediate family of any of those persons.
  Transactions with the Roberts Companies
 Overview
 Addison Place Shops Retail Center
 Northridge Community
 Northridge Office Building
 62




---



##### 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.
  North Springs Land
 63




---



##### Table of Contents



Westside Land
 Development Fees
 TotalAmountTotal
    
    
    Incurred
    
    
    RemainingContract
    
    
    through
    
    
    ContractualAmount
    
    
    2/28/06
    
    
    CommitmentNorth Springs
    
    $
    1,780,000
    
    
    $
    989,000
    
    
    $
    791,000Peachtree Parkway
    
    
    1,197,000
    
    
    
    665,000
    
    
    
    532,000Sawmill Village
    
    
    770,000
    
    
    
    
    
    
    
    770,000Highway 20
    
    
    1,050,000
    
    
    
    
    
    
    
    1,050,000$
    4,797,000
    
    
    $
    1,654,000
    
    
    $
    3,143,000
 Construction Contracts
 Other Fees and Reimbursements
 64




---



##### Table of Contents



ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
  Audit Fees
 For 2004
  For 2005
   Audit Related Fees
  65




---



##### Table of Contents



Tax Fees
 For 2004
  For 2005
   All Other Fees
  Pre-Approval Policy
  General.
 Audit Services.
 Audit-related Services.
 Tax Services.
 All Other Services
 66




---



##### Table of Contents



Pre-Approval Fee Levels
 67




---



##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
 (a)
    
    1. and 2. Financial Statements and Schedules.The financial statements and schedules listed below are filed as part of this annual report
on the pages indicated.
 INDEX TO FINANCIAL STATEMENTS
 PageREPORTS
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS
    
    
    F-1CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE AS OF DECEMBER 31,
2005 AND 2004 AND FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003:Consolidated Balance Sheets
    
    
    F-3Consolidated Statements of Operations
    
    
    F-4Consolidated Statements of Shareholders Equity
    
    
    F-5Consolidated Statements of Cash Flows
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7Schedule III  Real Estate and Accumulated Depreciation
    
    
    S-1
 68




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      
 F-1




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




---



##### Table of Contents



ROBERTS REALTY INVESTORS, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (Dollars in Thousands, Except Per Share Data)
 December 31,
    
    
    December 31,2005
    
    
    2004ASSETSREAL ESTATE ASSETS  At cost:Land
    
    $
    15,705
    
    
    $
    9,109Buildings and improvements
    
    
    60,890
    
    
    
    65,527Furniture, fixtures and equipment
    
    
    3,770
    
    
    
    6,01380,365
    
    
    
    80,649Less accumulated depreciation
    
    
    (10,258
    )
    
    
    (9,157
    )Operating real estate assets
    
    
    70,107
    
    
    
    71,492Construction in progress and real estate under development
    
    
    42,860
    
    
    
    14,559Land held for development
    
    
    9,267
    
    
    
    13,713Net real estate assets
    
    
    122,234
    
    
    
    99,764CASH AND CASH EQUIVALENTS
    
    
    1,504
    
    
    
    27,052RESTRICTED CASH
    
    
    117
    
    
    
    150DEFERRED FINANCING COSTS  Net of accumulated amortization of
$185 and $445 at December 31, 2005 and 2004, respectively
    
    
    551
    
    
    
    341FAIR VALUE OF LEASES (net of accumulated amortization of $66)
    
    
    1,584
    
    
    
    OTHER ASSETS  Net
    
    
    1,159
    
    
    
    1,922$
    127,149
    
    
    $
    129,229LIABILITIES AND SHAREHOLDERS EQUITYLIABILITIES:Mortgage notes payable
    
    $
    44,746
    
    
    $
    31,186Construction loans payable
    
    
    10,364
    
    
    
    32,294Land notes payable
    
    
    9,815
    
    
    
    9,462Line of credit payable
    
    
    2,000
    
    
    
    Interest rate swap contract payable
    
    
    
    
    
    
    436Accounts payable and accrued expenses
    
    
    577
    
    
    
    731Due to affiliates (including retainage payable of $298 at December 31, 2004)
    
    
    97
    
    
    
    653Security deposits and prepaid rents
    
    
    297
    
    
    
    250Total liabilities
    
    
    67,896
    
    
    
    75,012COMMITMENTS AND CONTINGENCIES (Note 10)MINORITY INTEREST OF UNITHOLDERS IN THE OPERATING PARTNERSHIP
    
    
    14,459
    
    
    
    14,368SHAREHOLDERS 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, 5,727,429 and
5,668,622 shares issued at December 31, 2005 and 2004, respectively
    
    
    57
    
    
    
    57Additional paid-in capital
    
    
    27,067
    
    
    
    26,476Treasury shares, at cost (362,588 shares)
    
    
    
    
    
    
    (2,764
    )Unamortized deferred compensation
    
    
    (4
    )
    
    
    (18
    )Retained earnings
    
    
    17,674
    
    
    
    16,418Accumulated other comprehensive loss
    
    
    
    
    
    
    (320
    )Total shareholders equity
    
    
    44,794
    
    
    
    39,849$
    127,149
    
    
    $
    129,229
  F-3




---



##### Table of Contents



ROBERTS REALTY INVESTORS, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Dollars in Thousands, Except Per Share Data)
 Years Ended December 31,2005
    
    
    2004
    
    
    2003OPERATING REVENUES:Rental operations
    
    $
    5,485
    
    
    $
    4,774
    
    
    $
    4,607Other operating income
    
    
    394
    
    
    
    288
    
    
    
    282Total operating revenues
    
    
    5,879
    
    
    
    5,062
    
    
    
    4,889OPERATING EXPENSES:Personnel
    
    
    586
    
    
    
    508
    
    
    
    470Utilities
    
    
    394
    
    
    
    324
    
    
    
    257Repairs, maintenance and landscaping
    
    
    442
    
    
    
    370
    
    
    
    312Real estate taxes
    
    
    656
    
    
    
    445
    
    
    
    403Marketing, insurance and other
    
    
    364
    
    
    
    286
    
    
    
    261General and administrative expenses
    
    
    1,561
    
    
    
    1,708
    
    
    
    2,072Depreciation expense
    
    
    2,116
    
    
    
    1,695
    
    
    
    1,795Total operating expenses
    
    
    6,119
    
    
    
    5,336
    
    
    
    5,570LOSS FROM OPERATIONS
    
    
    (240
    )
    
    
    (274
    )
    
    
    (681
    )OTHER INCOME (EXPENSE):Interest income
    
    
    265
    
    
    
    294
    
    
    
    77Interest expense
    
    
    (3,118
    )
    
    
    (2,479
    )
    
    
    (2,003
    )Legal settlement
    
    
    (150
    )
    
    
    340
    
    
    
    Amortization of deferred financing costs
    
    
    (160
    )
    
    
    (101
    )
    
    
    (149
    )Total other expense
    
    
    (3,163
    )
    
    
    (1,946
    )
    
    
    (2,075
    )LOSS FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST AND
GAIN ON SALE OF REAL ESTATE ASSETS
    
    
    (3,403
    )
    
    
    (2,220
    )
    
    
    (2,756
    )MINORITY INTEREST OF UNITHOLDERS IN THE OPERATING PARTNERSHIP
    
    
    865
    
    
    
    596
    
    
    
    783LOSS FROM CONTINUING OPERATIONS BEFORE GAIN ON SALE OF REAL
ESTATE ASSETS
    
    
    (2,538
    )
    
    
    (1,624
    )
    
    
    (1,973
    )GAINS ON SALE OF REAL ESTATE ASSETS, net of minority interest
of unitholders in the operating partnership
    
    
    
    
    
    
    102
    
    
    
    77LOSS FROM CONTINUING OPERATIONS
    
    
    (2,538
    )
    
    
    (1,522
    )
    
    
    (1,896
    )INCOME FROM DISCONTINUED OPERATIONS, net of
minority interest of unitholders in the operating partnership
    
    
    3,794
    
    
    
    38,508
    
    
    
    4,586NET INCOME
    
    $
    1,256
    
    
    $
    36,986
    
    
    $
    2,690INCOME (LOSS) PER COMMON SHARE  BASIC AND DILUTED (Note 7):Loss from continuing operations
    
    $
    (0.46
    )
    
    $
    (0.29
    )
    
    $
    (0.37
    )Income from discontinued operations
    
    
    0.69
    
    
    
    7.30
    
    
    
    0.89Net income
    
    $
    0.23
    
    
    $
    7.01
    
    
    $
    0.52Weighted average common shares  basic
    
    
    5,522,630
    
    
    
    5,280,064
    
    
    
    5,171,748Weighted average common shares  diluted (effect of
operating partnership units)
    
    
    7,406,066
    
    
    
    7,220,658
    
    
    
    7,223,727Cash dividends per share
    
    $
    0.00
    
    
    $
    4.50
    
    
    $
    0.55
  F-4




---



##### 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, 2002
    
    
    5,459,391
    
    
    $
    55
    
    
    $
    25,408
    
    
    $
    (2,764
    )
    
    $
    (139
    )
    
    $
    (3,398
    )
    
    $
    3,317
    
    
    $
    22,479Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,690
    
    
    
    2,690Unrealized gain on interest rate swaps
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,045
    
    
    
    
    
    
    
    1,045Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,735Conversion of units to shares
    
    
    124,303
    
    
    
    1
    
    
    
    623
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    624Dividends declared ($0.55 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,854
    )
    
    
    (2,854
    )Restricted shares issued to
employees, net of forfeitures
    
    
    1,512
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    (8
    )Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54
    
    
    
    
    
    
    
    
    
    
    
    54Adjustment for minority interest in
the operating partnership
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11BALANCE AS OF DECEMBER 31, 2003
    
    
    5,585,206
    
    
    
    56
    
    
    
    26,050
    
    
    
    (2,764
    )
    
    
    (93
    )
    
    
    (2,353
    )
    
    
    3,153
    
    
    
    24,049Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,986
    
    
    
    36,986Unrealized gain on interest rate swaps
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,033
    
    
    
    
    
    
    
    2,033Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,019Conversion of units to shares
    
    
    93,896
    
    
    
    1
    
    
    
    473
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    474Dividends declared ($4.50 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,721
    )
    
    
    (23,721
    )Restricted shares issued to
employees, net of forfeitures
    
    
    (10,480
    )
    
    
    
    
    
    
    (75
    )
    
    
    
    
    
    
    75Adjustment for minority interest in
the operating partnership
    
    
    
    
    
    
    
    
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28BALANCE AS OF DECEMBER 31, 2004
    
    
    5,668,622
    
    
    
    57
    
    
    
    26,476
    
    
    
    (2,764
    )
    
    
    (18
    )
    
    
    (320
    )
    
    
    16,418
    
    
    
    39,849Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,256
    
    
    
    1,256Unrealized gain on interest rate swaps
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    320
    
    
    
    
    
    
    
    320Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,576Sale of treasury shares
    
    
    
    
    
    
    
    
    
    
    137
    
    
    
    2,764
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,901Conversion of units to shares
    
    
    59,085
    
    
    
    
    
    
    
    285
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    285Restricted shares issued to
employees, net of forfeitures
    
    
    (278
    )
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    12Adjustment for minority interest in
the operating partnership
    
    
    
    
    
    
    
    
    
    
    171
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    171BALANCE AS OF DECEMBER 31, 2005
    
    
    5,727,429
    
    
    $
    57
    
    
    $
    27,067
    
    
    $
    
    
    
    $
    (4
    )
    
    $
    
    
    
    $
    17,674
    
    
    $
    44,794
  F-5




---



##### Table of Contents



ROBERTS REALTY INVESTORS, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Dollars in Thousands)
 Years Ended December 31,2005
    
    
    2004
    
    
    2003(Revised 
    
    
    (Revised See Note 2)
    
    
    See Note 2)OPERATING ACTIVITIES:Net income
    
    $
    1,256
    
    
    $
    36,986
    
    
    $
    2,690Adjustments to reconcile net income to net cash provided by operating activities:(Income) from discontinued operations, net of minority interest
    
    
    (3,778
    )
    
    
    (38,508
    )
    
    
    (4,586
    )Minority interest of unitholders in the operating partnership
    
    
    (879
    )
    
    
    (596
    )
    
    
    (783
    )Depreciation and amortization
    
    
    2,276
    
    
    
    1,795
    
    
    
    1,944Amortization of above and below market leases
    
    
    10
    
    
    
    
    
    
    
    Amortization of deferred compensation
    
    
    14
    
    
    
    
    
    
    
    54Gain on sale of real estate assets, net of minority interest
    
    
    
    
    
    
    (102
    )
    
    
    (74
    )Changes in assets and liabilities:Decrease (increase) in other assets
    
    
    359
    
    
    
    (895
    )
    
    
    300(Increase) in restricted cash
    
    
    (17
    )
    
    
    (30
    )
    
    
    (7
    )Increase (decrease) in accounts payable and accrued expenses relating to operations
    
    
    98
    
    
    
    (143
    )
    
    
    (801
    )Net cash (used in) operating activities from continuing operations
    
    
    (661
    )
    
    
    (1,493
    )
    
    
    (1,263
    )Net cash provided by (used in) operating activities from discontinued operations
    
    
    355
    
    
    
    (537
    )
    
    
    3,234Net cash (used in) provided by operating activities
    
    
    (306
    )
    
    
    (2,030
    )
    
    
    1,971INVESTING ACTIVITIES:Proceeds from sale of real estate assets
    
    
    
    
    
    
    890
    
    
    
    381Acquisition and construction of real estate assets
    
    
    (57,735
    )
    
    
    (24,592
    )
    
    
    (12,052
    )Net cash (used in) investing activities from continuing operations
    
    
    (57,735
    )
    
    
    (23,702
    )
    
    
    (11,671
    )Net cash provided by investing activities from discontinued operations
    
    
    36,693
    
    
    
    141,368
    
    
    
    16,862Net cash (used in) provided by investing activities
    
    
    (21,042
    )
    
    
    117,666
    
    
    
    5,191FINANCING ACTIVITIES:Principal repayments on mortgage notes payable
    
    
    (1,442
    )
    
    
    (297
    )
    
    
    (1,107
    )Proceeds from mortgage notes payable
    
    
    36,036
    
    
    
    
    
    
    
    10,750Repayment of mortgage notes, including prepayment penalty
    
    
    (21,034
    )
    
    
    
    
    
    
    (8,487
    )Proceeds from line of credit
    
    
    2,000
    
    
    
    
    
    
    
    Payment of loan costs
    
    
    (1,042
    )
    
    
    (121
    )
    
    
    (252
    )Proceeds from construction loans
    
    
    1,084
    
    
    
    2,763
    
    
    
    12,567Repayment of construction note payable
    
    
    (530
    )
    
    
    
    
    
    
    Proceeds from land notes payable
    
    
    20,765
    
    
    
    9,462
    
    
    
    Repayment of land notes payable
    
    
    (20,413
    )
    
    
    (3,000
    )
    
    
    (3,700
    )Re-issuance of treasury shares
    
    
    2,901
    
    
    
    
    
    
    
    (Decrease) increase in amounts due affiliates
    
    
    (308
    )
    
    
    56
    
    
    
    Payment of dividends and distributions
    
    
    
    
    
    
    (32,509
    )
    
    
    (3,962
    )Net cash provided by (used in) financing activities from continuing operations
    
    
    18,017
    
    
    
    (23,646
    )
    
    
    5,809Net cash (used in) financing activities from discontinued operations
    
    
    (22,217
    )
    
    
    (73,521
    )
    
    
    (9,930
    )Net cash (used in) investing activities
    
    
    (4,200
    )
    
    
    (97,167
    )
    
    
    (4,121
    )NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    (25,548
    )
    
    
    18,469
    
    
    
    3,041CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
    
    
    27,052
    
    
    
    8,583
    
    
    
    5,542CASH AND CASH EQUIVALENTS, END OF YEAR
    
    $
    1,504
    
    
    $
    27,052
    
    
    $
    8,583SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for interest
    
    $
    3,924
    
    
    $
    6,167
    
    
    $
    9,395
  F-6




---



##### Table of Contents



ROBERTS REALTY INVESTORS, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1.
    
    BUSINESS AND ORGANIZATION
    
    
    two multifamily apartment communities totaling 403 residential units in the
Atlanta metropolitan area;
    
    four retail centers totaling 151,527 square feet, including a 39,205 square
foot retail center that is in its lease-up phase;
    
    a 37,864 square foot commercial office building that is also in its lease-up
phase;
    
    six 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 POLICIES
 Basis of Presentation.
   F - 7




---



##### Table of Contents



Real Estate Assets and Depreciation.
    Cash and Cash Equivalents.
 F - 8




---



##### Table of Contents



Restricted Cash.
 Deferred Financing Costs.
 Revenue Recognition.
  Year
    
    Amount2006
    
    $
    2,127,0002007
    
    
    1,918,0002008
    
    
    1,549,0002009
    
    
    1,340,0002010
    
    
    1,042,000Thereafter
    
    
    1,900,000Total
    
    $
    9,874,000
 Income Taxes.
 (Estimate)2005
    
    
    2004
    
    
    2003Net income
    
    $
    1,256
    
    
    $
    36,986
    
    
    $
    2,690Adjustments to net income:Gains from real estate sales
    
    
    (1,170
    )
    
    
    (11,014
    )
    
    
    (1,091
    )Depreciation
    
    
    (166
    )
    
    
    (939
    )
    
    
    586Amortization of intangibles
    
    
    70
    
    
    
    29
    
    
    
    60Prepaid rents
    
    
    26
    
    
    
    (48
    )
    
    
    (7
    )Unearned compensation
    
    
    (49
    )
    
    
    (58
    )
    
    
    (9
    )Capitalized costs
    
    
    
    
    
    
    58
    
    
    
    105Dividends paid deduction
    
    
    
    
    
    
    (23,654
    )
    
    
    (2,689
    )Operating loss
    
    
    (481
    )
    
    
    (1,858
    )
    
    
    (1,858
    )Other
    
    
    17
    
    
    
    16
    
    
    
    17Taxable income
    
    $
    (497
    )
    
    $
    (481
    )
    
    $
    (2,196
    )
 F - 9




---



##### Table of Contents



Tax Status of Dividends.
 2004
    
    
    2003Pre-May 6 capital gains
    
    
    0
    %
    
    
    1
    %Long-term capital gains
    
    
    60
    %
    
    
    52
    %Unrecaptured section 1250 gains
    
    
    34
    %
    
    
    41
    %Non-taxable return of capital
    
    
    6
    %
    
    
    6
    %
 Earnings Per Share.
 Use of Estimates.
 Recent Accounting Pronouncements.
 3.
    
    ACQUISITIONS AND DISPOSITIONS
     F - 10




---



##### Table of Contents



(a)
    
    $58,802,000 for the mortgage notes payable assumed by the buyer,(b)
    
    closing costs and prorations totaling $150,000, and(c)
    
    a partnership profits interest distribution of $3,182,000 paid to
Roberts Properties under the amended partnership agreement of the operating
partnership.
       F - 11




---



##### Table of Contents



For the year ended December 31, 2005Pro formaAs reported
    
    
    Adjustments
    
    
    Pro formaTotal operating revenues
    
    
    5,879
    
    
    
    1,918
    
    
    
    7,797Loss (income) from continuing operations
    
    
    (2,538
    )
    
    
    472
    
    
    
    (2,066
    )Net income
    
    
    1,256
    
    
    
    472
    
    
    
    1,728Weighted average common shares  basic
    
    
    5,522,630
    
    
    
    5,522,630
    
    
    
    5,522,630Weighted average common shares  diluted
    
    
    7,406,066
    
    
    
    7,406,066
    
    
    
    7,406,066Per Share Data  Basic and DilutedNet income
    
    $
    0.23
    
    
    $
    0.08
    
    
    $
    0.31
  F - 12




---



##### Table of Contents



Years Ended December 31,2005
    
    
    2004
    
    
    2003Total operating revenues
    
    $
    5,879
    
    
    $
    5,062
    
    
    $
    4,889Net loss
    
    
    (2,538
    )
    
    
    (1,522
    )
    
    
    (1,896
    )Weighted average common shares  basic
    
    
    5,522,630
    
    
    
    5,280,064
    
    
    
    5,171,748Weighted average common shares  diluted
    
    
    7,406,066
    
    
    
    7,220,658
    
    
    
    7,223,727Per Share
Data  Basic and DilutedNet loss
    
    
    (0.46
    )
    
    
    (0.29
    )
    
    
    (0.37
    )
 4.
    
    DISCONTINUED OPERATIONS
  
    
    Bradford Creek, a 180-unit community sold on June 2, 2004;
    
    Plantation Trace, a 232-unit community sold on June 2, 2004;
    
    Preston Oaks, a 213-unit community sold on June 2, 2004;
    
    River Oaks, a 216-unit community sold on June 2, 2004;
    
    Veranda Chase, a 250-unit community sold on June 2, 2004; and
    
    St. Andrews at the Polo Club, a 200-unit community sold on July 29, 2004;
    
    Highland Park, a 188-unit community sold on August 6, 2003.
  F - 13




---



##### Table of Contents



Year EndedDecember 31,2005
    
    
    2004
    
    
    2003OPERATING REVENUES:Rental operations
    
    $
    887
    
    
    $
    6,560
    
    
    $
    14,626Other operating income
    
    
    41
    
    
    
    420
    
    
    
    919Total operating revenues
    
    
    928
    
    
    
    6,981
    
    
    
    15,545OPERATING EXPENSES:Personnel
    
    
    211
    
    
    
    943
    
    
    
    1,673Utilities
    
    
    83
    
    
    
    509
    
    
    
    968Repairs, maintenance and landscaping
    
    
    67
    
    
    
    514
    
    
    
    1,050Real estate taxes
    
    
    151
    
    
    
    944
    
    
    
    1,646Marketing, insurance and other
    
    
    146
    
    
    
    606
    
    
    
    961Depreciation of real estate assets
    
    
    741
    
    
    
    2,845
    
    
    
    5,184Total operating expenses
    
    
    1,399
    
    
    
    6,361
    
    
    
    11,482INCOME FROM OPERATIONS
    
    
    (471
    )
    
    
    620
    
    
    
    4,063OTHER EXPENSE:Interest expense
    
    
    (450
    )
    
    
    (2,923
    )
    
    
    (5,977
    )Expenses related to retirement of debt
    
    
    
    
    
    
    (719
    )
    
    
    (148
    )Amortization of deferred financing costs
    
    
    (18
    )
    
    
    (106
    )
    
    
    (156
    )Total other expense
    
    
    (468
    )
    
    
    (3,748
    )
    
    
    (6,281
    )Loss before minority interest
    
    
    (939
    )
    
    
    (3,128
    )
    
    
    (2,218
    )MINORITY INTEREST OF UNITHOLDERS IN THE
OPERATING PARTNERSHIP
    
    
    238
    
    
    
    844
    
    
    
    630LOSS BEFORE GAIN ON SALE OF REAL ESTATE
ASSETS
    
    
    (701
    )
    
    
    (2,284
    )
    
    
    (1,588
    )GAIN ON SALE OF REAL ESTATE ASSETS, net
of minority interest of unitholders
    
    
    4,495
    
    
    
    40,792
    
    
    
    6,174INCOME FROM DISCONTINUED OPERATIONS
    
    $
    3,794
    
    
    $
    38,508
    
    
    $
    4,586
 5.
    
    NOTES PAYABLE
  Line of Credit.
 F - 14




---



##### Table of Contents



Mortgage Notes .
 FixedInterestRate as of
    
    
    Principal OutstandingProperty Securing Mortgage
    
    Maturity
    
    
    12/31/05
    
    
    12/31/05
    
    
    12/31/04Addison Place Townhomes
    
    
    11/15/09
    
    
    
    6.95
    %
    
    $
    8,927,000
    
    
    $
    9,056,000Addison Place Apartments
    
    
    05/01/15
    
    
    
    6.35
    %
    
    
    20,860,000
    
    
    
    22,130,000Grand Pavilion Shopping Center
    
    
    07/11/13
    
    
    
    5.43
    %
    
    
    6,962,000
    
    
    
    Bassett Shopping Center
    
    
    10/01/19
    
    
    
    8.47
    %
    
    
    2,708,000
    
    
    
    Spectrum Shopping Center
    
    
    5/01/14
    
    
    
    5.68
    %
    
    
    5,289,000
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    $
    44,746,000
    
    
    $
    31,186,000
   Construction Loans.
  F - 15




---



##### Table of Contents



Land Loans.
     2006 (1) (2) (3)
    
    $

12,942,0002007
    
    
616,0002008
    
    
10,466,0002009
    
    
9,010,0002010
    
    
564,000Thereafter
    
    
33,327,000$
    66,925,000
      F - 16




---



##### Table of Contents



6.
    
    DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES.
   7.
    
    SHAREHOLDERS EQUITY
 Exchanges of Units for Shares.
 Restricted Stock.
  Dividends and Distributions.
 F - 17




---



##### Table of Contents



Treasury Stock.
 Earnings Per Share.
 2005
    
    
    2004
    
    
    2003Loss from continuing operations  basic
    
    $
    (2,538
    )
    
    $
    (1,522
    )
    
    $
    (1,896
    )Minority interest of unitholders in the operating
partnership in income attributable to continuing
operations
    
    
    (865
    )
    
    
    (556
    )
    
    
    (751
    )Loss from continuing operations  diluted
    
    $
    (3,374
    )
    
    $
    (2,078
    )
    
    $
    (2,647
    )Income from discontinued operations  basic
    
    $
    3,794
    
    
    $
    38,508
    
    
    $
    4,586Minority interest of unitholders in the operating
partnership in income attributable to discontinued
operations
    
    
    1,292
    
    
    
    14,167
    
    
    
    1,844Income from discontinued operations  diluted
    
    $
    5,086
    
    
    $
    52,675
    
    
    $
    6,430Net income  diluted
    
    $
    1,712
    
    
    $
    50,597
    
    
    $
    3,783Weighted average shares  basic
    
    
    5,522,630
    
    
    
    5,280,064
    
    
    
    5,171,748Dilutive securities  weighted average units
    
    
    1,883,436
    
    
    
    1,940,594
    
    
    
    2,051,979Weighted average shares  diluted
    
    
    7,406,066
    
    
    
    7,220,658
    
    
    
    7,223,727
 8.
    
    SEGMENT REPORTING
   F - 18




---



##### Table of Contents



9.
    
    RELATED PARTY TRANSACTIONSTransactions with Mr. Charles S. Roberts and His AffiliatesRoberts Realty enters into contractual commitments in the normal course of business with
Roberts Properties, Inc. (Roberts Properties) and Roberts Properties Construction, Inc.
(Roberts Construction), together referred to as the Roberts Companies. Mr. Charles S.
Roberts, the President, Chief Executive Officer and Chairman of the Board of Roberts Realty,
owns all of the outstanding stock of the Roberts Companies. The contracts between Roberts
Realty and the Roberts Companies relate to the development and construction of real estate
assets, and, from time to time, the acquisition of real estate. The board of directors has
adopted a policy that all conflicting interest transactions must be authorized by a majority
of the disinterested directors, but only if there are at least two directors who are
disinterested with respect to the matter at issue. In addition, Roberts Realty adopted a
new charter for the audit committee of its board of directors on May 19, 2004 under the
applicable rules of the American Stock Exchange. Under the new charter, related party
transactions are subject to appropriate review and oversight by the audit committee. In
entering into the transactions described below, Roberts Realty complied with those policies.Design and Development Agreements with Roberts Properties. Roberts Realty pays Roberts
Properties fees for various development services that include market studies, business
plans, design, finish selection, interior design and construction administration. On April
14, 2005, Roberts Realty entered into design and development agreements with Roberts
Properties relating to the Peachtree Parkway property and the North Springs property
(formerly referred to as the Peachtree Dunwoody property). On August 4, 2005, Roberts
Realty entered into a design and development agreement with Roberts Properties relating to
the Sawmill Village property. (In February 2006, Roberts Realty entered into a design and
development agreement with Roberts Properties relating to the Highway 20 property. See Note
12  Subsequent Events.) The financial terms of the agreements are generally $5,000 per
residential unit payable over the development period. The following table provides
information about these design and development agreements.
 TotalAmountTotal
    
    
    Incurred
    
    
    RemainingContract
    
    
    through
    
    
    ContractualAmount
    
    
    12/31/05
    
    
    CommitmentNorth Springs
    
    $
    1,780,000
    
    
    $
    989,000
    
    
    $
    791,000Peachtree Parkway
    
    
    1,197,000
    
    
    
    665,000
    
    
    
    532,000Sawmill Village
    
    
    770,000
    
    
    
    
    
    
    
    770,000$
    3,747,000
    
    
    $
    1,654,000
    
    
    $
    2,093,000
 Construction Contracts with Roberts Construction
  F-19




---



##### Table of Contents



Land Acquisitions.
   Partnership Profits Interests.
 §
    
    the debt assumed, or taken subject to, by the operating partnership in connection
with its acquisition of the property;§
    
    the equity issued by the operating partnership in acquiring the property; and§
    
    all subsequent capital improvements to the property made by the operating partnership.
  Other Fees.
 Office Leases.
 F-20




---



##### Table of Contents



Transactions with Other Directors
 Other Fees.
 10.
    
    COMMITMENTS AND CONTINGENCIESRoberts Realty has several projects in various phases of development, and has entered into
various contracts for the development and construction of these projects. The contracts
with Roberts Properties and Roberts Construction are described in Note 9  Related Party
Transactions. The construction contracts with Roberts Construction require Roberts Realty
to pay Roberts Construction its cost plus 10%. The cost of these construction projects has
not yet been determined as the design of the projects and the number of units and square
footage to be constructed is still being finalized. Roberts Realty has also entered into
other cost plus contracts with architectural and engineering firms related to the design
and construction of the projects. Roberts Realty estimates the total cost of the projects,
including contractor fees payable to Roberts Construction, to be approximately $165.0
million, although the exact amount could be materially different.In addition to the construction contracts with Roberts Construction, Roberts Realty entered
into architectural and engineering contracts with third parties for the North Springs and
Peachtree Parkway projects. As of December 31, 2005, outstanding commitments on these
contracts totaled $1,532,000. As of December 31, 2005, Roberts Realty had one $500,000
letter of credit outstanding.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.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 1,849,486
units outstanding at December 31, 2005 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 the officer or directors serving in
such capacity. The maximum potential amount of future payments Roberts Realty could be
required to make under this indemnification arrangement is unlimited. Roberts Realty
currently has a directors and officers liability insurance policy that may limit its
exposure and enable it to recover a portion of any future amounts paid. Because of the
insurance policy coverage, Roberts Realty believes the
estimated fair value of this indemnification arrangement is minimal, and Roberts Realty has
recorded no liabilities for this indemnification arrangement as of December 31, 2005.
 F-21




---



##### Table of Contents



11.
    
    SUMMARIZED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
 (In thousands, except per share data)Quarter EndedMarch 31
    
    June 30
    
    September 30
    
    December 31Year Ended December 31, 2005Total operating revenues
    
    $
    1,325
    
    
    $
    1,330
    
    
    $
    1,332
    
    
    $
    1,892(Loss) income from operations
    
    
    (39
    )
    
    
    (127
    )
    
    
    (128
    )
    
    
    54(Loss) from continuing operations
    
    
    (589
    )
    
    
    (642
    )
    
    
    (710
    )
    
    
    (597
    )Income (loss) from discontinued operations
    
    
    (410
    )
    
    
    4,175
    
    
    
    29
    
    
    
    Net income (loss)
    
    
    (999
    )
    
    
    3,533
    
    
    
    (681
    )
    
    
    (597
    )Per share (diluted):Loss from continuing operations
    
    $
    (0.11
    )
    
    $
    (0.12
    )
    
    $
    (0.13
    )
    
    $
    (0.10
    )Income (loss) from discontinued operations
    
    
    (0.08
    )
    
    
    0.77
    
    
    
    0.00
    
    
    
    0.00Net income (loss)
    
    
    (0.19
    )
    
    
    0.65
    
    
    
    (0.13
    )
    
    
    (0.10
    )Year Ended December 31, 2004Total operating revenues
    
    $
    1,229
    
    
    $
    1,570
    
    
    $
    1,280
    
    
    $
    983Income (loss) from operations
    
    
    9
    
    
    
    284
    
    
    
    (162
    )
    
    
    (405
    )Loss from continuing operations
    
    
    (440
    )
    
    
    (172
    )
    
    
    (544
    )
    
    
    (366
    )Income (loss) from discontinued operations
    
    
    (153
    )
    
    
    31,702
    
    
    
    7,435
    
    
    
    (476
    )Net income (loss)
    
    
    (593
    )
    
    
    31,532
    
    
    
    6,891
    
    
    
    (844
    )Per share (diluted):(Loss) from continuing operations
    
    $
    (0.08
    )
    
    $
    (0.03
    )
    
    $
    (0.10
    )
    
    $
    (0.08
    )Income (loss) from discontinued operations
    
    
    (0.09
    )
    
    
    6.00
    
    
    
    1.42
    
    
    
    (0.03
    )Net income (loss)
    
    
    (0.17
    )
    
    
    5.97
    
    
    
    1.32
    
    
    
    (0.11
    )
  12.
    
    SUBSEQUENT EVENTSOn January 31, 2006, Roberts Realty purchased a 1.29-acre parcel of land for $387,000
adjacent to its Highway 20 land in Cumming, Georgia. Simultaneously, Roberts Realty closed
a $4,077,000 loan with Wachovia Bank, N.A. The loan is secured by the Highway 20 land,
including the newly acquired outparcel, bears interest at the 30-day LIBOR rate plus 175
basis points and matures on January 30, 2007.On February 3, 2006, Roberts Realty entered into a listing agreement with CB Richard Ellis
to sell its Addison Place Townhome community. Because the listing agreement was
entered into after December 31, 2005, and there is no assurance that a contract will be
received at a price acceptable to Roberts Realty, it is not classified as held for sale as
of December 31, 2005.On February 21, 2006, Roberts Realty entered into a design and development agreement with
Roberts Properties and a cost plus 10% construction contract with Roberts Construction
relating to the Highway 20 property.
 F-22




---



##### Table of Contents



F-23




---



##### Table of Contents



SCHEDULE III  REAL ESTATE AND ACCUMULATED DEPRECIATION
 ROBERTS REALTY INVESTORS, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 2005
(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
    
    $
    20,860
    
    
    $
    3,152
    
    
    $
    25,917
    
    
    $
    417
    
    
    $
    3,152
    
    
    $
    26,334
    
    
    $
    29,486Addison Place Townhomes
    
    
    8,927
    
    
    
    2,053
    
    
    
    10,440
    
    
    
    339
    
    
    
    2,053
    
    
    
    10,779
    
    
    
    12,832Grand Pavilion Shopping Center (a)
    
    
    6,962
    
    
    
    3,120
    
    
    
    7,008
    
    
    
    
    
    
    
    3,120
    
    
    
    7,008
    
    
    
    10,128Addison Place Shops
    
    
    6,364
    
    
    
    2,107
    
    
    
    6,569
    
    
    
    25
    
    
    
    2,107
    
    
    
    6,594
    
    
    
    8,701Spectrum Shopping Center (a)
    
    
    5,289
    
    
    
    3,190
    
    
    
    4,565
    
    
    
    51
    
    
    
    3,190
    
    
    
    4,616
    
    
    
    7,806Northridge Office Building
    
    
    4,000
    
    
    
    357
    
    
    
    6,511
    
    
    
    55
    
    
    
    357
    
    
    
    6,566
    
    
    
    6,923Bassett Shopping Center (a)
    
    
    2,708
    
    
    
    1,726
    
    
    
    2,763
    
    
    
    
    
    
    
    1,726
    
    
    
    2,763
    
    
    
    4,489Total Operating Properties
    
    $
    55,110
    
    
    $
    15,705
    
    
    $
    63,773
    
    
    $
    887
    
    
    $
    15,705
    
    
    $
    64,660
    
    
    $
    80,365CONSTRUCTION IN PROGRESS AND REAL
ESTATE UNDER DEVELOPMENTNorth Springs
    
    $
    
    
    
    $
    15,739
    
    
    $
    
    
    
    $
    1,671
    
    
    $
    15,739
    
    
    $
    1,671
    
    
    $
    17,410Peachtree Parkway
    
    
    
    
    
    
    7,813
    
    
    
    
    
    
    
    1,070
    
    
    
    7,813
    
    
    
    1,070
    
    
    
    8,883Northridge Community
    
    
    
    
    
    
    5,300
    
    
    
    
    
    
    
    1,387
    
    
    
    5,300
    
    
    
    1,387
    
    
    
    6,687Highway 20 Cumming
    
    
    
    
    
    
    5,051
    
    
    
    
    
    
    
    
    
    
    
    5,051
    
    
    
    
    
    
    
    5,051Sawmill Village
    
    
    3,335
    
    
    
    4,829
    
    
    
    
    
    
    
    
    
    
    
    4,829
    
    
    
    
    
    
    
    4,829Total Properties Under Construction
    
    $
    3,335
    
    
    $
    38,732
    
    
    $
    
    
    
    $
    4,128
    
    
    $
    38,732
    
    
    $
    4,128
    
    
    $
    42,860LAND HELD FOR INVESTMENTWestside Parkway
    
    $
    6,480
    
    
    $
    9,267
    
    
    $
    
    
    
    $
    
    
    
    $
    9,267
    
    
    $
    
    
    
    $
    9,267Total
    
    $
    64,925
    
    
    $
    63,704
    
    
    $
    63,773
    
    
    $
    5,015
    
    
    $
    63,704
    
    
    $
    68,788
    
    
    $
    132,492
 S-1




---



##### Table of Contents



SCHEDULE III  REAL ESTATE AND ACCUMULATED DEPRECIATION
 ROBERTS REALTY INVESTORS, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 2005
(Dollars in Thousands)
 Life on whichAccumulated
    
    
    Date of Original
    
    
    Date
    
    
    DepreciationDescription
    
    Depreciation
    
    
    Construction
    
    
    Acquired
    
    
    is ComputedAddison Place Townhomes
    
    $
    3,306
    
    
    
    1999
    
    
    Sept  99
    
    3  27.5 YearsAddison Place Apartments
    
    
    6,394
    
    
    
    1999
    
    
    June  98
    
    3  27.5 YearsAddison Place Shops
    
    
    132
    
    
    
    2005
    
    
    May - 05
    
    3  27.5 YearsNorthridge Office Building
    
    
    328
    
    
    
    2004
    
    
    June  01
    
    3  27.5 YearsGrand Pavilion Shopping Center
    
    
    53
    
    
    
    1999
    
    
    Sept  05
    
    3  27.5 YearsSpectrum Shopping Center
    
    
    24
    
    
    
    2002
    
    
    Oct  05
    
    3  27.5 YearsBassett Shopping Center
    
    
    21
    
    
    
    1999
    
    
    Sept - 05
    
    3  27.5 YearsTotal
    
    $
    10,258
  S-2




---



##### 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:
 2005
    
    
    2004
    
    
    2003BALANCE AT BEGINNING OF PERIOD
    
    $
    80,649
    
    
    $
    152,553
    
    
    $
    164,217Additions during period:Other additions
    
    
    31,104
    
    
    
    38,893
    
    
    
    Improvements
    
    
    823
    
    
    
    217
    
    
    
    1,271Total Additions
    
    
    31,927
    
    
    
    39,110
    
    
    
    1,271Deductions during period:Sales
    
    
    (32,211
    )
    
    
    (110,646
    )
    
    
    (12,632
    )Other disposals
    
    
    
    
    
    
    (368
    )
    
    
    (303
    )Total disposals
    
    
    (32,211
    )
    
    
    (111,014
    )
    
    
    (12,935
    )Balance at close of period
    
    $
    80,365
    
    
    $
    80,649
    
    
    $
    152,553
 (c)
    
    Accumulated depreciation on operating real estate assets is as follows:
 2005
    
    
    2004
    
    
    2003BALANCE AT BEGINNING OF PERIOD
    
    $
    9,157
    
    
    $
    30,871
    
    
    $
    28,229Additions during period:Depreciation expense
    
    
    2,786
    
    
    
    4,540
    
    
    
    6,980Deductions during period:Sales
    
    
    (1,685
    )
    
    
    (26,101
    )
    
    
    (4,065
    )Other disposals
    
    
    
    
    
    
    (153
    )
    
    
    (273
    )Total disposals
    
    
    (1,685
    )
    
    
    (26,254
    )
    
    
    (4,338
    )Balance at close of period
    
    $
    10,258
    
    
    $
    9,157
    
    
    $
    30,871
      Table of Contents     
    
    exhibits designated with a footnote (1) are associated with
five Atlanta apartment communities  Bradford Creek, Plantation Trace, Preston Oaks,
River Oaks, and Veranda Chase, totaling 1,091 units  that we sold on June 2, 2004;
    
    exhibits designated with a footnote (2) are associated with
our 200-unit St. Andrews at the Polo Club community in Palm Beach County, Florida,
which we sold on July 29, 2004; and
    
    exhibits designated with a footnote (3) are associated with
our Ballantyne Place apartment community in Charlotte, North Carolina, which we sold
on May 31, 2005.
 We will provide a copy of any or all of the following exhibits to any shareholder who requests
them, for a cost of ten cents per page.
 ExhibitNo.
    
    DescriptionArticles of Incorporation, Bylaws and Certificates and Articles of Merger:3.1
    
    
    Amended and Restated Articles of Incorporation of Roberts Realty
Investors, Inc. filed with the Georgia Secretary of State on July 22,
2004. [Incorporated by reference to Exhibit 3.1 in our quarterly report
on Form 10-Q for the quarter ended September 30, 2004.]3.2
    
    
    Bylaws of Roberts Realty Investors, Inc. [* 2.2]4.1
    
    
    Agreement of Limited Partnership of Roberts Properties Residential, L.P.,
dated as of July 22, 1994. [* 3.1]4.1.1
    
    
    First Amended and Restated Agreement of Limited Partnership of Roberts
Properties Residential, L.P., dated as of October 1, 1994, as amended.
[* 3.1.1]4.1.2
    
    
    Amendment #1 to First Amended and Restated Agreement of Limited
Partnership of Roberts Properties Residential, L.P., dated as of October
13, 1994. [* 3.1.2]4.1.3
    
    
    Amendment #2 to First Amended and Restated Agreement of Limited
Partnership of Roberts Properties Residential, L.P. [Incorporated by
reference to Exhibit 10.1 in our Registration Statement on Form S-3 filed
July 8, 1999, registration number 333-82453.]4.2
    
    
    Certificate of Limited Partnership of Roberts Properties Residential,
L.P. filed with the Georgia Secretary of State on July 22, 1994. [* 3.2]
 70    Table of Contents  ExhibitNo.
    
    Description4.2.1
    
    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]4.2.4
    
    Certificate of Merger filed with the Georgia Secretary of State on
September 27, 1995, merging Roberts Properties-St. Simons, L.P. with and
into Roberts Properties Residential, L.P. (Windsong Merger). [* 3.2.4]4.2.5
    
    Certificate of Merger filed with the Georgia Secretary of State on March
21, 1996, merging Roberts Properties Bentley Place, L.P. with and into
Roberts Properties Residential, L.P. (Bentley Place Merger).
[Incorporated by reference to Exhibit 4.2.5 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:10.1.1
    
    Construction Administration Agreement between Roberts Residential, L.P.
and Roberts Properties, Inc. (Charlotte). [Incorporated by reference to
Exhibit 10.17.02 in our quarterly report on Form 10-Q for the quarter
ended June 30, 2000.]10.1.2
    
    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.]10.1.3
    
    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.]
 71    Table of Contents  ExhibitNo.
    
    Description10.1.4
    
    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.]10.1.5
    
    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.]10.1.6
    
    Office Lease between Roberts Properties Residential, L.P. and Roberts
Properties, Inc. dated November 23, 2004. [Incorporated by reference to
Exhibit 10.1.6 in our annual report on Form 10-K for the year ended
December 31, 2004.]10.1.7
    
    Office Lease between Roberts Properties Residential, L.P. and Roberts
Properties Construction, Inc. dated November 23, 2004. [Incorporated by
reference to Exhibit 10.1.7 in our annual report on Form 10-K for the
year ended December 31, 2004.]10.1.8
    
    Sales Contract dated December 29, 2004 between Roberts Properties
Residential, L.P. and Roberts Properties Peachtree Parkway, L.P.
[Incorporated by reference to Exhibit 10.1 in our current report on Form
8-K dated January 5, 2005.]10.1.9
    
    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.]10.1.10
    
    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.]10.1.11
    
    Sales Contract dated January 19, 2005 between Roberts Properties
Residential, L.P. and Roberts Properties Peachtree Dunwoody, LLC.
[Incorporated by reference to Exhibit 10.1 in our current report on Form
8-K dated January 21, 2005.]10.1.12
    
    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.]10.1.13
    
    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.]10.1.14
    
    Determination of annual base salaries for 2005, effective January 1,
2005, for the registrants executive officers, and determination that
there will be no further bonus paid to Mr. Roberts related to his 2004
performance. [Incorporated by reference to Item 1.01 in our current
report on Form 8-K dated March 9, 2005.]
 72    Table of Contents  ExhibitNo.
    
    Description10.1.15
    
    Determination of Executive Officer Salaries for 2005 and Bonuses for
2004. [Incorporated by reference to our current report on Form 8-K dated
March 9, 2005.]10.1.16
    
    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.]10.1.17
    
    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.]10.1.18
    
    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.]10.1.19
    
    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.]10.1.20
    
    Determination of bonuses for the executive officers of Roberts Realty,
Inc. [Incorporated by reference to our current report on Form 8-K dated
June 21, 2005.]10.1.21
    
    Agreements between Roberts Realty Investors, Inc. and each of Charles S.
Roberts and Wm. Jarell Jones to acquire shares of treasury stock.
[Incorporated by reference to our current report on Form 8-K dated June
22, 2005.]10.1.22
    
    Purchase contract dated June 28, 2005 between Roberts Properties
Residential, L.P. and Roberts Properties Peachtree Dunwoody, LLC.
[Incorporated by reference to Exhibit 10.11 in our quarterly report on
Form 10-Q for the quarter ended June 30, 2005.]10.1.23
    
    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.]10.1.24
    
    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.]10.1.25
    
    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.]
 73
    Table of Contents  ExhibitNo.
    
    Description10.1.26
    
    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.]10.1.27
    
    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.]Addison Place Financing Documents:10.2.1
    
    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.]10.2.2
    
    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.]10.2.3
    
    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.]10.2.4
    
    Promissory Note executed by Roberts Properties Residential, L.P. in favor
of First Union National Bank, dated May 3, 2000, in the original
principal amount of $22,500,000 (Addison Place Apartments).
[Incorporated by reference to Exhibit 10.14.09 in our quarterly report on
Form 10-Q for the quarter ended June 30, 2000.]10.2.5
    
    Deed to Secure Debt, Security Agreement and Assignment of Leases and
Rents Agreement executed by Roberts Properties Residential, L.P. in favor
of First Union National Bank, dated May 3, 2000 (Addison Place
Apartments). [Incorporated by reference to Exhibit 10.14.10 in our
quarterly report on Form 10-Q for the quarter ended June 30, 2000.]10.2.6
    
    Multifamily Note in the principal amount of $21,000,000, dated April 19,
2005, executed by Roberts Properties Residential, L.P. in favor of
Primary Capital Advisors LC (Addison Place Apartments). [Incorporated by
reference to Exhibit 10.1 in our current report on Form 8-K dated April
19, 2005.]10.2.7
    
    Multifamily Deed to Secure Debt, Assignment of Rents, and Security
Agreement dated April 19, 2005 made by Roberts Properties Residential,
L.P. in favor of Primary Capital Advisors LC (Addison Place Apartments).
[Incorporated by reference to Exhibit 10.2 in our current report on Form
8-K dated April 19, 2005.]
 74
    Table of Contents  ExhibitNo.
    
    Description10.2.8
    
    Guaranty dated April 19, 2005 made by Roberts Realty Investors, Inc. in
favor of Primary Capital Advisors LC (Addison Place Apartments).
[Incorporated by reference to Exhibit 10.3 in our current report on Form
8-K dated April 19, 2005.]Peachtree Parkway / North Springs (formerly Peachtree Dunwoody)Financing Documents10.3.1
    
    Promissory Note in the principal amount of $20,411,550, dated December
29, 2004, executed by Roberts Properties Residential, L.P. in favor of
Wachovia Bank, National Association. [Incorporated by reference to
Exhibit 10.4 in our current report on Form 8-K dated January 5, 2005.]10.3.2
    
    Deed to Secure Debt, Security Agreement and Assignment of Leases and
Rents dated December 29, 2004 made by Roberts Properties Residential,
L.P. in favor of Wachovia Bank, National Association. [Incorporated by
reference to Exhibit 10.5 in our current report on Form 8-K dated January
5, 2005.]10.3.3
    
    Unconditional Guaranty of Payment and Performance dated December 29, 2004
made by Roberts Realty Investors, Inc. in favor of Wachovia Bank,
National Association. [Incorporated by reference to Exhibit 10.6 in our
current report on Form 8-K dated January 5, 2005.]10.3.4
    
    First Consolidated Amendatory Agreement dated January 19, 2005 among
Roberts Properties Residential, L.P., Roberts Realty Investors, Inc., and
Wachovia Bank, National Association. [Incorporated by reference to
Exhibit 10.3 in our current report on Form 8-K dated January 21, 2005.]Community Sales10.4.1
    
    Sales Contract dated April 26, 2004 between Roberts Properties
Residential, L.P. and Colonial Realty Limited Partnership for the sale of
the Preston Oaks community, with First Amendment thereto dated May 21,
2004. (1) [Incorporated by reference to Exhibit 2.1 in our
quarterly report on Form 10-Q for the quarter ended June 30, 2004.]10.4.2
    
    Schedule of material differences between Sales Contract and Amendment to
Sales Contract for Preston Oaks apartment community and Sales Contracts
and Amendment to Sales Contracts for Bradford Creek, River Oaks,
Plantation Trace and Veranda Chase apartment communities. (1)
[Incorporated by reference to Exhibit 2.2 in our quarterly report on
Form 10-Q for the quarter ended June 30, 2004.]10.4.3
    
    Sales Contract dated May 24, 2004, by and between Roberts Properties
Residential, L.P. and Wellington Development, L.C., with First, Second
and Third Amendments thereto dated June 15, July 1, and July 12, 2004,
respectively. (2) [Incorporated by reference to Exhibit 2.1
in our current report on Form 8-K dated August 10, 2004.]10.4.4
    
    Sales Contract dated May 2, 2005 between Roberts Properties Residential,
L.P. and Post Apartment Homes, L.P. (3) [Incorporated by
reference to Exhibit 10.1 in our current report on Form 8-K dated May 2,
2005.]
 75
    Table of Contents  ExhibitNo.
    
    DescriptionBallantyne Place Financing Documents:(3)10.5.1
    
    Construction Loan Agreement executed by Roberts Properties Residential,
L.P. in favor of AmSouth Bank, dated February 21, 2002 (Ballantyne Place
construction loan). [Incorporated by reference to Exhibit 10.4.1 in our
quarterly report on Form 10-Q for the quarter ended March 31, 2002.]10.5.2
    
    Promissory Note executed by Roberts Properties Residential, L.P. in favor
of AmSouth Bank, dated February 21, 2002 in the original principal amount
of $24,000,000 (Ballantyne Place construction loan). [Incorporated by
reference to Exhibit 10.4.2 in our quarterly report on Form 10-Q for the
quarter ended March 31, 2002.]10.5.3
    
    Deed of Trust, Security Agreement, and Assignment of Rents and Leases
executed by Roberts Properties Residential, L.P. in favor of AmSouth
Bank, dated February 21, 2002 (Ballantyne Place construction loan).
[Incorporated by reference to Exhibit 10.4.3 in our quarterly report on
Form 10-Q for the quarter ended March 31, 2002.]10.5.4
    
    Guaranty Agreement executed by Roberts Realty Investors, Inc. in favor of
AmSouth Bank, dated February 21, 2002 (Ballantyne Place construction
loan). [Incorporated by reference to Exhibit 10.4.4 in our quarterly
report on Form 10-Q for the quarter ended March 31, 2002.]Preston Oaks Financing Documents:(1)10.6.1
    
    Multifamily Note executed by Roberts Properties Residential, L.P. in
favor of Primary Capital Advisors LC, dated February 1, 2001, in the
original principal amount of $12,700,000 (Preston Oaks). [Incorporated
by reference to Exhibit 10.1.3 in our quarterly report on Form 10-Q for
the quarter ended March 31, 2001.]10.6.2
    
    Multifamily Deed to Secure Debt, Assignment of Rents and Security
Agreement executed by Roberts Properties Residential, L.P. in favor of
Primary Capital Advisors LC, dated February 1, 2001 (Preston Oaks).
[Incorporated by reference to Exhibit 10.1.4 in our quarterly report on
Form 10-Q for the quarter ended March 31, 2001.]River Oaks Financing Documents:(1)L.J. Melody & Company immediately assigned the River Oaks loan and the
following related documents to the Federal Home Loan Mortgage Corporation
(Freddie Mac).10.7.1
    
    Multifamily Note executed by Roberts Properties Residential, L.P. in
favor of L.J. Melody & Company, dated August 21, 2003, in the original
principal amount of $10,750,000 (River Oaks). [Incorporated by reference
to Exhibit 10.4.1 in our quarterly report on Form 10-Q for the quarter
ended September 30, 2003.]10.7.2
    
    Multifamily Deed to Secure Debt, Assignment of Rents and Security
Agreement executed by Roberts Properties Residential, L.P. in favor of
L.J. Melody & Company, dated August 21, 2003 (River Oaks). [Incorporated
by reference to Exhibit 10.4.2 in our quarterly report on Form 10-Q for
the quarter ended September 30, 2003.]
 76
    Table of Contents  ExhibitNo.
    
    Description10.7.3
    
    Replacement Reserve Agreement executed by Roberts Properties Residential,
L.P. in favor of L.J. Melody & Company, dated August 21, 2003 (River
Oaks). [Incorporated by reference to Exhibit 10.4.3 in our quarterly
report on Form 10-Q for the quarter ended September 30, 2003.]10.7.4
    
    Guaranty executed by Roberts Realty Investors, Inc. in favor of L.J.
Melody & Company, dated August 21, 2003 (River Oaks). [Incorporated by
reference to Exhibit 10.4.4 in our quarterly report on Form 10-Q for the
quarter ended September 30, 2003.]Plantation Trace Financing Documents:(1)10.8.1
    
    Promissory Note executed by Roberts Properties Residential, L.P. in favor
of The Prudential Insurance Company of America, dated September 29, 1998,
in the original principal amount of $11,900,000 (Plantation Trace).
[Incorporated by reference to Exhibit 10.07.04 in our quarterly report on
Form 10-Q for the quarter ended September 30, 1998.]10.8.2
    
    Deed to Secure Debt and Security Agreement executed by Roberts Properties
Residential, L.P. in favor of The Prudential Insurance Company of
America, dated September 29, 1998, and related collateral documents
(Plantation Trace). [Incorporated by reference to Exhibit 10.07.05 in
our quarterly report on Form 10-Q for the quarter ended September 30,
1998.]10.8.3
    
    Limited Guaranty executed by Roberts Realty Investors, Inc. in favor of
The Prudential Insurance Company of America, dated September 29, 1998
(Plantation Trace). [Incorporated by reference to Exhibit 10.07.06 in
our quarterly report on Form 10-Q for the quarter ended September 30,
1998.]Bradford Creek Financing Documents:(1)10.9.1
    
    Real Estate Note executed by Roberts Properties Residential, L.P. in
favor of Nationwide Life Insurance Company, dated June 1, 1998, in the
original principal amount of $8,400,000 (Bradford Creek). [Incorporated
by reference to Exhibit 10.8.6 in our quarterly report on Form 10-Q for
the quarter ended June 30, 1998.]10.9.2
    
    Deed to Secure Debt and Security Agreement executed by Roberts Properties
Residential, L.P. in favor of Nationwide Life Insurance Company of
America, dated June 1, 1998, and related collateral documents (Bradford
Creek). [Incorporated by reference to Exhibit 10.8.7 in our quarterly
report on Form 10-Q for the quarter ended June 30, 1998.]10.9.3
    
    Guaranty between Roberts Realty Investors, Inc. and Nationwide Life
Insurance Company of America, dated June 1, 1998 (Bradford Creek).
[Incorporated by reference to Exhibit 10.8.8 in our quarterly report on
Form 10-Q for the quarter ended June 30, 1998.]Veranda Chase (formerly Old Norcross) Financing Documents:(1)10.10.1
    
    Promissory Note executed by Roberts Realty Residential, L.P. in favor of
Compass Bank, dated April 25, 2001, in the original principal amount of
$17,000,000 (Veranda Chase). [Incorporated by reference to Exhibit
10.16.4 in our quarterly report on Form 10-Q for the quarter ended June
30, 2001.]
 77
    Table of Contents  ExhibitNo.
    
    Description10.10.2
    
    Construction Loan Agreement executed by Roberts Properties Residential,
L.P. in favor of Compass Bank, dated April 25, 2001 (Veranda Chase).
[Incorporated by reference to Exhibit 10.16.5 in our quarterly report on
Form 10-Q for the quarter ended June 30, 2001.]St. Andrews at the Polo Club Financing Documents:(2)10.11.1
    
    Promissory Note executed by Roberts Properties Residential, L.P. in favor
of State Farm Life Insurance Company, dated November 6, 2001 in the
original principal amount of $21,000,000 (St. Andrews at the Polo Club).
[Incorporated by reference to Exhibit 10.13.1 in our annual report on
Form 10-K for the year ended December 31, 2001.]10.11.2
    
    Mortgage and Security Agreement executed by Roberts Realty Residential,
L.P. in favor of State Farm Life Insurance Company, dated November 6,
2001 (St. Andrews at the Polo Club). [Incorporated by reference to
Exhibit 10.13.2 in our annual report on Form 10-K for the year ended
December 31, 2001.]10.11.3
    
    Assignment of Rents and Lease executed by Roberts Realty Residential,
L.P. in favor of State Farm Life Insurance Company, dated November 6,
2001 (St. Andrews at the Polo Club). [Incorporated by reference to
Exhibit 10.13.3 in our annual report on Form 10-K for the year ended
December 31, 2001.]10.11.4
    
    Guaranty Agreement (Rental Achievement) executed by Roberts Realty
Investors, Inc. in favor of State Farm Life Insurance Company, dated
November 6, 2001 (St. Andrews at the Polo Club). [Incorporated by
reference to Exhibit 10.13.4 in our annual report on Form 10-K for the
year ended December 31, 2001.]10.11.5
    
    Guaranty Agreement (Carve out) executed by Roberts Realty Investors, Inc.
in favor of State Farm Life Insurance Company, dated November 6, 2001
(St. Andrews at the Polo Club). [Incorporated by reference to Exhibit
10.13.5 in our annual report on Form 10-K for the year ended December 31,
2001.]Other Exhibits:21
    
    Subsidiaries of the Registrant23.1
    
    Independent Auditors Consent  Deloitte & Touche LLP23.2
    
    Independent Auditors Consent  Reznick Group, P.C.24.1
    
    Power of Attorney (contained on the signature page hereof).31
    
    Certifications of Charles S. Roberts and Michael A. Quinlan pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32
    
    Certifications of Charles S. Roberts and Michael A. Quinlan 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.
 78
    Table of Contents  SIGNATURES
   By:
    
    /s/ Charles S. RobertsCharles S. Roberts, Chairman of the Board,Chief Executive Officer and PresidentDate:
    
    March 22, 2006
 POWER OF ATTORNEY
   Signature
    
    Title
    
    Date/s/ Charles S. Roberts
    
    Chairman of the Board, ChiefCharles S. Roberts
    
    Executive
Officer and President
    
    March 22, 2006/s/ Michael A. Quinlan
    
    Secretary, Treasurer, Chief
    
    March 22, 2006Michael A. Quinlan
    
    Financial
Officer (Principal FinancialOfficer and Principal Accounting Officer)/s/ Charles R. Elliott
    
    Director
    
    March 22, 2006Charles R. Elliott/s/ Dennis H. James
    
    Director
    
    March 22, 2006Dennis H. James/s/ Wm. Jarell Jones
    
    Director
    
    March 22, 2006Wm. Jarell Jones/s/ James M. Goodrich
    
    Director
    
    March 22, 2006James M. Goodrich/s/ Ben A. Spalding
    
    Director
    
    March 22, 2006Ben A. Spalding
 79