Document:

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                                                                 EXHIBIT 10.13.1

                                 PROMISSORY NOTE
                           (STATE FARM LOAN NO. 13551)

$21,000,000.00                                                  NOVEMBER 6, 2001
                                                        WEST PALM BEACH, FLORIDA

         FOR VALUE RECEIVED, the undersigned, ROBERTS PROPERTIES RESIDENTIAL,
L.P., a Georgia limited partnership, ("Maker") promises to pay to the order of
STATE FARM LIFE INSURANCE COMPANY, an Illinois corporation, its successors or
assigns ("State Farm") the principal sum of TWENTY-ONE MILLION AND 00/100
DOLLARS ($21,000,000.00) ("Principal"), together with interest ("Interest") on
the unpaid Principal balance outstanding from the date hereof until paid at the
rate of Six and Ninety-Five One Hundredths percent (6.95%) per annum ("Note
Rate"). Interest shall be computed on the basis of a three hundred sixty (360)
day year having twelve (12), thirty (30) day months. Principal and Interest
accrued thereon, together with all other sums which may be at any time due,
owing or required to be paid by the terms of the Mortgage (hereinafter defined)
and other Loan Documents (as defined in the Mortgage) are hereinafter
collectively called the "Indebtedness".

I.       PAYMENTS.

         A.       On the date of this Promissory Note, Maker shall pay interest
only from the date of disbursement to and including November 30, 2001.
Thereafter, commencing on January 1, 2002 and continuing on the first (1st) day
of each succeeding month thereafter ("Regular Payment Date") to and including
November 1, 2011, Principal and Interest thereon at the Note Rate shall be paid
in fixed monthly installments of One Hundred Thirty-Nine Thousand Nine and
00/100 DOLLARS ($139,009.00) each ("Monthly Payment"). A final payment of all
outstanding Principal and accrued and unpaid Interest thereon shall be due and
payable on December 1, 2011 ("Maturity Date").

         B.       All required payments are to be made to State Farm at One
State Farm Plaza, Bloomington, Illinois 61710, Attention: Investment Accounting,
D-3, or at any other place State Farm shall designate in writing.

         C.       All Obligations (as defined in the Mortgage) are payable in
lawful money of the United States of America which is legal tender for public
and private debts.

         D.       Capitalized terms not otherwise defined herein shall have the
meanings ascribed to such terms in the Mortgage and other Loan Documents.

II.      EVENTS OF DEFAULT.

         A.       It shall constitute an event of default ("Event of Default")
of and under this Promissory Note ("Note") if any of the following events shall
occur:

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                  1.       Maker shall fail to pay any installment of Principal
and Interest when due under this Note. However, Monthly Payments received by
State Farm within ten (10) days of the Regular Payment Date shall be considered
made as required. If payment is not received by State Farm by the tenth (10th)
day of the month when due, the Default Rate (hereinafter defined) shall apply
from the first (1st) day of the month.

                  2.       Maker shall fail to perform or observe any of the
other covenants, agreements or conditions of this Note or an Event of Default
shall occur under any of the other Loan Documents now or hereafter evidencing or
securing the Indebtedness beyond the expiration of any applicable grace or cure
periods contained in the other Loan Documents.

         B.       While any Event of Default exists, the Note Rate shall be
increased to Eleven and Ninety-Five One Hundredths percent (11.95%) per annum
("Default Rate"). Interest shall accrue at the Default Rate from the date of the
Event of Default until the date upon which the Event of Default is cured. It is
a condition precedent to the cure of any Event of Default that Maker shall pay
all Principal and accrued Interest required under this Note (i.e., that would
have been paid but for the Event of Default) to the most current Regular Payment
Date, and the difference between the Default Rate and the Note Rate from the
date of the first occurrence of the Event of Default to the date upon which the
Event of Default is cured.

         C.       Prior to an Event of Default, payments received by State Farm
shall be applied first to Interest and the remainder to Principal. After an
Event of Default, State Farm may, at its option, apply any payments or other
amounts received first to the payment of State Farm's expenses incurred in
accordance with the provisions of the Loan Documents, then to Interest and the
remainder to Principal.

         D.       In case of an Event of Default by Maker in the performance or
observance of any of the covenants, agreements or conditions of this Note or the
other Loan Documents and the expiration of any applicable grace or cure periods,
State Farm, at its option and without further notice, may declare the
Indebtedness, including the entire Principal balance, together with all Interest
accrued and unpaid thereon, to be immediately due and payable. Failure to
exercise this option for a particular Event of Default shall not constitute a
waiver of the right to exercise same in case of any subsequent Event of Default.

III.     SECURITY.

         This Note is secured by, among other Loan Documents, (i) a Mortgage and
Security Agreement executed by Maker to and in favor of State Farm of even date
with this Note ("Mortgage") which encumbers and constitutes a lien upon and
security interest in certain real property located in Palm Beach County, in the
State of Florida ("State") and certain other properties, rights and interests,
all as more fully described in the Mortgage ("Premises") and (ii) an Assignment
of Rents and Leases executed by Maker to and in favor of State Farm of even
date with this Note ("Assignment of Rents and Leases") in which the Rents (as
defined therein) and the Leases (as defined therein) are absolutely and
unconditionally assigned by Maker to State Farm. The terms and provisions of
the Mortgage and the Assignment of Rents and Leases are incorporated herein by
reference and made a part hereof.

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IV.      PREPAYMENT.

         A.       The loan evidenced by this Note ("Loan") shall be closed to
prepayment for a period of three (3) years from the commencement of the
amortization of Principal and Interest hereunder (i.e., until the later to occur
of (i) December 1, 2004 or (ii) after thirty-six (36) Monthly Payments have been
made on this Note). Only thereafter, provided Maker first gives State Farm
written notice at least thirty (30) days, but no more than sixty (60) days,
before the date selected by Maker for prepayment ("Prepayment Date"), Maker may
prepay the entire outstanding Principal on the Prepayment Date; provided that
(i) all other amounts due, including, without limitation, all accrued Interest,
under the Loan Documents as Indebtedness are also paid and (ii) the amount
prepaid is accompanied by a fee ("Prepayment Fee") equal to the greater of the
following:

                  1.       An amount equal to one percent (1%) of the entire
Principal amount to be prepaid, or

                  2.       If at the time of prepayment the Reinvestment Yield
(as defined herein) is less than the Note Rate, the Prepayment Fee shall be
calculated by:

                           A.       Using the Reinvestment Yield corresponding
                  to the payment frequency of the Note, combine the present
                  values of: (i) the scheduled payments remaining until the
                  Maturity Date of the Note, and (ii) the final Principal and
                  accrued Interest payment due on the Maturity Date of the Note;

                           B.       From the amount so obtained, subtracting the
                  par value of the outstanding Principal balance of this Note as
                  of the Prepayment Date;

                  and the remainder so obtained shall be the Prepayment Fee.

         B.       For purposes of this Note, the term "Reinvestment Yield" shall
mean the yield on United States Treasury Securities having the closest maturity
(month and year) to the Maturity Date of this Note. Should more than one United
States Treasury Security be quoted as maturing on the Maturity Date of this
Note, then the yield of the Security quoted closest to par will be used in the
calculation of the Prepayment Fee.

         C.       The Prepayment Fee shall be calculated two (2) business days
before the scheduled Prepayment Date.

         D.       Failure of Maker to prepay on the selected Prepayment Date
shall be considered a waiver by Maker of the present right to prepay.

         E.       If State Farm declares the entire Indebtedness to be
immediately due and payable, Maker agrees that the Prepayment Fee, calculated as
if the Prepayment Date were the date of acceleration, shall apply if allowed by
Applicable Law (as hereinafter defined).

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         F.       No Prepayment Fee shall be payable in the event that the Loan
is prepaid, in whole or in part, by reason of the application of insurance or
condemnation proceeds to the Indebtedness as required by the Loan Documents.

         G.       No Prepayment Fee shall be payable after one hundred seventeen
(117) Monthly Payments have been made on this Note or September 1, 2011,
whichever comes later in time.

         H.       If State Farm consents to a sale, conveyance or transfer of
the Premises described in the Mortgage, or any interest therein, but requires,
as a condition to such consent, an increase in the Note Rate, Maker shall have
the right, for ninety (90) days from State Farm's written notification of such
required rate increase, to prepay the Indebtedness secured by the Loan Documents
in full without a Prepayment Fee. It is expressly provided, however, that the
foregoing provisions of this Paragraph H shall have no application to the
one-time right to sell and transfer title to the Premises provided in Section
3.11(e) of the Mortgage.

V.       LIMITATION OF LIABILITY.

         In consideration of the security provided by Maker to State Farm for
repayment of the Indebtedness, including, without limitation, the liens on and
security interests in the Premises granted pursuant to the Mortgage and the
absolute and unconditional assignment of Rents and Leases made pursuant to the
Assignment of Rents and Leases, upon the occurrence of an Event of Default
hereunder or under any of the other Loan Documents, State Farm agrees that it
shall not, except as otherwise set forth in this Section, seek to enforce, nor
shall State Farm be entitled to enforce, any deficiency or monetary judgment
against Maker, any Partner of Maker ( if Maker is a partnership), any Member of
Maker (if Maker is a limited liability company) or any Beneficiary of Maker (if
Maker is a trust) (individually, an "Exculpated Party" and collectively, the
"Exculpated Parties"), personally, and shall not levy or execute judgment upon
any property of the Exculpated Parties, other than the Premises; it being
expressly agreed, acknowledged and understood, however, that nothing contained
herein shall in any manner or way release, affect or impair:

         A.       The existence of the Indebtedness and Obligations created in
and evidenced by the Loan Documents.

         B.       The enforceability of the liens and security interests created
in and granted by the Loan Documents against the Premises.

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         C.       The right of State Farm to recover from any of the Exculpated
Parties:

                  1.       After the occurrence of an Event of Default under any
of the Loan Documents:

                           A.       Any Rents received by any of the Exculpated
         Parties from tenants of the Premises and not applied to the
         Indebtedness or to the ordinary operating expenses of the Premises
         during Maker's current fiscal year;

                           B.       An amount equal to any Rents from the
         Premises not paid by any tenant due to Maker's failure to perform the
         landlord's obligations under any lease or leases of the Premises or any
         part thereof;

                           C.       Any amount(s) necessary to repair or replace
         any damage to or destruction of the Premises which is caused by the
         willful or wanton act or omission on the part of any of the Exculpated
         Parties; or

                           D.       Any sums expended by State Farm in
         performance of or in compliance with the obligations of the landlord
         under all covenants, agreements and provisions of any Lease or Leases
         assigned to State Farm as security for the Indebtedness and Obligations
         due to Maker's failure or refusal to so perform such obligations;

                  2.       Any insurance proceeds or condemnation awards
received by any of the Exculpated Parties and not delivered over to State Farm
or used for Restoration of the Premises;

                  3.       Any costs, expenses, damages, reasonable attorneys'
and paralegals' fees or other liabilities or obligations incurred by State Farm,
directly or indirectly arising out or on account of or attributable to the use,
generation, storage, release, threatened release, discharge, disposal, or
presence on, under, or about the Premises of any materials, substances or
wastes, defined or classified as hazardous or toxic under applicable federal,
state or local laws or regulations or arising out of or from any failure on the
part of Maker to comply with the provisions of the Environmental Indemnification
Agreement executed by Maker to and in favor of State Farm of even date with this
Note; or

                  4.       Any loss, damage, cost, expense, liability or
obligation suffered or incurred by State Farm arising out or on account of or
based upon any fraud or willful misrepresentation of a material fact by any of
the Exculpated Parties in any document executed or presented to State Farm in
connection with the loan evidenced by this Note ("Loan").

                  5.       An amount equal to the aggregate sum of any and all
tenant security deposits required to be paid by State Farm to any tenants of the
Premises (or any other party) and not reimbursed to State Farm by Maker or any
Exculpated Party and any and all damages, costs and expenses, including, without
limitation, attorneys' and paralegals' fees, suffered or incurred by State Farm
by reason or on account of the failure of Maker or any Exculpated Party

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to account for and turn over to State Farm any tenant security deposits received
by Maker or any Exculpated Party as required by the Leases or the Loan
Documents.

VI.      NON-USURIOUS LOAN.

         A.       It is the intention of Maker and State Farm that this Note and
all other Loan Documents shall comply with any Applicable Law (hereinafter
defined). To that end, the parties stipulate and agree that none of the terms
and provisions of this Note or the Loan Documents shall ever be construed to
create a contract that violates any Applicable Law or exceeds the limits imposed
or provided by law for the use or detention of money or for forbearance in
seeking its collection.

         B.       In the event that Interest paid or received under this Note or
the other Loan Documents shall result, because of any reduction of Principal or
any other reason, in an effective rate of interest which for any period is in
excess of applicable usury limits, such excess Interest for the period in
question shall, at State Farm's option, be refunded to Maker or be applied upon
the outstanding Principal of the Note without a Prepayment Fee.

         C.       The term "Applicable Law", as such term is used in this Note
shall mean any federal or state statute or other law, including, but not limited
to, the applicable usury laws of the State or the United States (whichever
allows the greater rate of interest), as such Applicable Law now exists, is
amended or is enacted during the term of this Note.

         D.       The Maker represents and agrees that the Indebtedness
evidenced by this Note constitutes a commercial business loan which comes within
the purview of Section 687.02 Florida Statutes.

VII.     STATE FARM'S ATTORNEY FEES.

         Should the Indebtedness evidenced by this Note or any part thereof be:
(i) collected at law or in equity or through any legal, bankruptcy,
receivership, probate or other court proceedings; (ii) placed in the hands of
attorneys for collection after the occurrence of an Event of Default; or (iii)
the subject of any court proceeding involving the lien of the Mortgage or its
priority, Maker and all endorsers, guarantors and sureties of such Indebtedness
jointly and severally agree to pay to State Farm, in addition to the Principal
and Interest due and payable hereunder, reasonable attorneys' and paralegals'
fees and collection costs, and all other Obligations due pursuant to the terms
of the Loan Documents including those incurred by State Farm on any appeal.

VIII.    MAKER'S WAIVERS.

         Maker and all endorsers, guarantors and sureties of the Indebtedness
         evidenced by this Note and any other persons liable or to become liable
         on or for such Indebtedness hereby severally waive presentment for
         payment, demand and notice of demand, dishonor and notice of dishonor,
         protest and notice of protest, and nonpayment and notice of nonpayment
         of this Note, and all other notices and demands, including without
         limitation, notice of intention to accelerate the maturity of this
         Note, notice of acceleration of the maturity of the Note, diligence in
         collection and the bringing of suit against any other party and hereby
         further agree to all renewals, extensions, modifications, partial
         payments, releases or substitutions of security, in whole or in part,
         with or without notice, whether before or after maturity.

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IX.      PAYMENT OF TAXES AND FEES.

         Maker agrees to pay all costs, expenses, fees and taxes on or with
respect to the execution, delivery, recordation, existence or possession of this
Note, the Mortgage and the other Loan Documents, including, without limitation,
all recording fees and any documentary stamp tax or intangible personal property
tax now or hereafter required by Applicable Law to be affixed or paid with
respect to this Note, the Mortgage or the other Loan Documents.

X.       WAIVER OF TRIAL BY JURY.

         Maker hereby waives, to the fullest extent permitted by Applicable Law,
the right to trial by jury in any action, proceeding or counterclaim filed by
any party, whether in contract, tort or otherwise relating directly or
indirectly to this Note or any acts or omissions of the Maker in connection
therewith or contemplated thereby.

XI.      RELEASES.

         State Farm may, without notice, and without regard to the
consideration, if any, given or paid therefor, release or substitute any part of
the Premises given as security for the repayment of the Indebtedness evidenced
and represented by this Note without releasing any other property given as
security for such Indebtedness, or may release any party obligated on or liable
for the payment of the Indebtedness evidenced and represented by this Note
without releasing any other party obligated on or liable for such Indebtedness,
or may agree with any party obligated or liable for the repayment of the
Indebtedness evidenced and represented by this Note to extend the time for
payment of any part or all of such Indebtedness without releasing any party
obligated on or liable for such Indebtedness. Failure on part of State Farm to
exercise any right granted herein, in the Mortgage or the other Loan Documents
shall not constitute a waiver of such right or preclude the subsequent exercise
thereof.

XII.     GOVERNING LAW.

         This Note and the rights, duties, obligations and liabilities of the
parties hereunder and/or arising from or relating in any way to the Indebtedness
evidenced by this Note or the loan transaction of which such Indebtedness and
this Note are a part shall be governed by and construed for all purposes under
the law of the State.

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         IN WITNESS WHEREOF, Maker has caused these presents to be executed by
its undersigned officer(s) or other representative(s) thereunto duly authorized,
as of the day and year first above written.

Maker's Address:                     ROBERTS PROPERTIES RESIDENTIAL,
                                     L.P., a Georgia limited partnership

c/o Roberts Realty Investors, Inc.
Attn:  Charles R. Elliott, C.F.O.    By:  ROBERTS REALTY INVESTORS,
8010 Roswell Road, Suite 120              INC., a Georgia corporation,
Atlanta, Georgia  30350                   its sole general partner

                                          By: /s/ Charles R. Elliott
                                             ----------------------------------
                                             Charles R. Elliott
                                             Its Secretary,
                                             Treasurer and Chief
                                             Financial Officer

                                                    (Corporate Seal)

Note:    Documentary stamps in the amount of $73,500.00 have been affixed to
         the original Mortgage of even date herewith which secures this Note.

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                                                                Exhibit 10.13.2

This instrument was prepared by
and following recordation should
be returned to:

William E. Doster, Esquire
Lowndes, Drosdick, Doster,
   Kantor & Reed, P.A.
215 North Eola Drive
Post Office Box 2809
Orlando, Florida  32802

                        MORTGAGE AND SECURITY AGREEMENT
                          (STATE FARM LOAN NO. 13551)

         THIS MORTGAGE AND SECURITY AGREEMENT ("Mortgage") is made and executed
the 6th day of November, 2001 by ROBERTS PROPERTIES RESIDENTIAL, L.P., a
Georgia limited partnership, ("Mortgagor") whose address for purposes of this
instrument is c/o Roberts Realty Investors, Inc., Attn: Charles R. Elliott,
Chief Financial Officer, 8010 Roswell Road, Suite 120, Atlanta, Georgia 30350
to, in favor and for the benefit of STATE FARM LIFE INSURANCE COMPANY, an
Illinois corporation, ("State Farm") whose address for purposes of this
instrument is One State Farm Plaza, E-3, Bloomington, Illinois 61710, and
pertains to the real estate ("Real Estate") described on Exhibit A attached
hereto and made a part hereof.

                                  ARTICLE ONE
                                   RECITALS

         1.1      NOTE.

         Mortgagor has executed and delivered to State Farm a Promissory Note
("Note") of even date herewith. In the Note, Mortgagor promises to pay to the
order of State Farm the principal sum of Twenty-One Million and 00/100 Dollars
($21,000,000.00) ("Loan"). This Mortgage secures the Loan. From date hereof the
Loan shall be repaid with interest thereon, in monthly installments as set
forth in the Note, and the entire unpaid principal balance and all accrued
interest thereon shall be due and payable on December 1, 2011 (the "Maturity
Date"). The terms and provisions of the Note are by this reference thereto
incorporated herein and made a part hereof.

         1.2      INDEBTEDNESS.

         The indebtedness evidenced by the Note, including principal, interest
and prepayment premium, if any, together with all other sums which may at any
time be due, owing, or required to be paid under the Note, this Mortgage, and
the other Loan Documents (as hereinafter defined) are herein called the
"Indebtedness".

         1.3      LOAN DOCUMENTS.

         In addition to this Mortgage and the Note, there have been executed
and delivered by Mortgagor to and in favor of State Farm, as security for the
payment of the Indebtedness, certain

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other loan documents more particularly described on Exhibit B attached hereto
and by this reference thereto made a part hereof (the Note, this Mortgage, and
all other documents and instruments described on said Exhibit B, whether now or
hereafter existing, and as same may be hereafter amended, modified, or
supplemented from time to time, are collectively referred to herein as the
"Loan Documents").

                                  ARTICLE TWO
                                   THE GRANT

         In order to secure the payment of the sums that are now or may
hereafter become owing from Mortgagor to State Farm: (i) as the payments
required in the Loan Documents, (ii) as a result of the non-performance of any
of the terms, provisions, covenants, agreements, and obligations contained
herein or under the Loan Documents, or (iii) as a result of a breach of the
terms, provisions, covenants, agreements, representations, warranties and
certifications made in the Loan Documents (collectively, the "Obligations")
(whether or not the Mortgagor is personally liable for such payment,
performance, and observance), and in consideration of the sum of Ten and 00/100
Dollars ($10.00), in hand paid by State Farm to the Mortgagor, the Recitals
hereinabove stated in Article One, and for other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
Mortgagor hereby grants, bargains, sells, assigns, warrants, releases, aliens,
transfers, conveys and mortgages to State Farm and its successors and assigns a
present and continuing lien upon and security interest in and to all of the
following rights, interests, claims, and property (collectively the
"Premises"):

                  (a) all the Real Estate described in Exhibit A attached
         hereto and by this reference incorporated herein and made a part
         hereof;

                  (b) all buildings, structures, and other improvements now or
         hereafter constructed, erected, installed, placed or situated upon the
         Real Estate (collectively the "Improvements");

                  (c) all estate, claim, demand, right, title, and interest of
         Mortgagor now owned or hereafter acquired, including without
         limitation, any after-acquired title, franchise, license, remainder or
         reversion, in and to (i) any land or vaults lying within the
         right-of-way of any street, avenue, way, passage, highway, or alley,
         open or proposed, vacated or otherwise, adjoining the Real Estate;
         (ii) any and all alleys, sidewalks, streets, avenues, strips and gores
         of land adjacent, belonging or appertaining to the Real Estate and
         Improvements; (iii) all rights of ingress and egress to and from the
         Real Estate and all adjoining property; (iv) storm and sanitary sewer,
         water, gas, electric, railway, telephone, and all other utility
         services relating to the Real Estate and Improvements; (v) all land
         use, zoning, developmental rights and approvals, all air rights,
         water, water rights, water stock, gas, oil, minerals, coal, and other
         substances of any kind or character underlying or relating to the Real
         Estate or any part thereof; and (vi) each and all of the tenements,
         hereditaments, easements, appurtenances, other rights, liberties,
         reservations, allowances, and privileges relating to the Real Estate
         or the Improvements or in any way now or hereafter appertaining
         thereto, including homestead and any other claim at law or in equity
         (collectively the "Appurtenances");

                  (d) all leasehold estates and the right, title, and interest
         of the Mortgagor in, to

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         and under any and all leases, subleases, management agreements,
         arrangements, concessions, or agreements, written or oral, relating to
         the use and occupancy of the Real Estate and Improvements or any
         portion thereof, now or hereafter existing or entered into, including
         the Credit Leases described in Section 3.18 (collectively the
         "Leases");

                  (e) all rents, issues, profits, proceeds, income, revenues,
         royalties, advantages, avails, claims against guarantors, security and
         other deposits (whether in cash or other form), advance rentals, and
         any and all other payments or benefits now or hereafter derived,
         directly or indirectly, from the Real Estate and Improvements, whether
         under the Leases or otherwise (collectively the "Rents"); subject,
         however, to the right, power, and authority (the "License") granted
         Mortgagor in the Assignment of Rents and Leases executed by Mortgagor
         to and in favor of State Farm of even date herewith to collect and
         apply the Rents as provided therein;

                  (f) all right, title, and interest of Mortgagor in and to any
         and all contracts, written or oral, express or implied, now existing
         or hereafter entered into or arising, in any manner related to the
         improvement, use, operation, sale, conversion or other disposition of
         any interest in the Premises, including without limitation all options
         to purchase or lease the Real Estate or Improvements or any portion
         thereof or interest therein, or any other rights, interests, or
         greater estates in the rights and properties comprising the Premises,
         now owned or hereafter acquired by the Mortgagor (collectively the
         "Contract Rights");

                  (g) all general intangibles of Mortgagor, including without
         limitation, goodwill, trademarks, trade names, option rights, permits,
         licenses, insurance policies and proceeds therefrom, rights of action,
         and books and records relating to the Real Estate or Improvements
         (collectively the "Intangible Personal Property");

                  (h) all right, title and interest of the Mortgagor in and to
         all fixtures, equipment and tangible personal property of every kind,
         nature or description attached or affixed to or situated upon or
         within the Real Estate or Improvements, or both, provided the same are
         used, usable, or intended to be used for or in connection with any
         present or future use, occupation, operation, maintenance, management
         or enjoyment of the Real Estate or Improvements (collectively the
         "Tangible Personal Property");

                  (i) all proceeds of the conversion, voluntary or involuntary,
         of any of the Premises into cash or other liquidated claims, or that
         are otherwise payable for injury to, or the taking or requisitioning
         of the Premises, including all insurance and condemnation proceeds as
         provided in this Mortgage (collectively the "Proceeds");

                  (j) all Tax and Insurance Deposits (as hereinafter defined);

                  (k) all of the Mortgagor's right, power, or privilege to
         further hypothecate or encumber all or any portion of the property,
         rights and interests described in this Article Two as security for any
         debt or obligation; it being intended by this provision to divest the
         Mortgagor of the right, power and privilege to hypothecate or
         encumber, or to grant a mortgage upon or security interest in any of
         the property hypothecated in or encumbered by this Mortgage as
         security for the payment of any debt or performance of any

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<PAGE>

         obligation without State Farm's prior written consent (the "Right to
         Encumber"); and

                  (l) all other property, rights, interests, estates, or claims
         of every name, kind, character or nature, both in law and in equity,
         which Mortgagor now has or may hereafter acquire in the Real Estate
         and Improvements and all other property, rights, interests, estates or
         claims of any name, kind, character or nature or properties now owned
         or hereafter acquired in the other properties and interests comprising
         the Premises ("Other Rights and Interests").

Mortgagor agrees that without the necessity of any further act of the Mortgagor
or State Farm, the lien of and the security interest created in and by this
Mortgage shall automatically extend to and include any and all renewals,
replacements, substitutions, accessions, products or additions to and proceeds
of the Premises and any real property acquired by the Mortgagor which may be
contiguous or attached to the Premises and may be required by law or by a
tenant of the Premises to be used in or as part of the direct operation of the
Premises.

         TO HAVE AND TO HOLD the Premises hereby mortgaged and conveyed or so
intended, unto State Farm, its successors and assigns, forever, free from all
rights and benefits under and by virtue of the Homestead Exemption Laws or
similar laws of the State or other jurisdiction in which the Premises are
located (which rights and benefits are hereby expressly released and waived),
for the uses and purposes herein set forth.

         THE MORTGAGOR hereby covenants with and warrants to State Farm and
with the purchaser at any foreclosure sale that at the execution and delivery
hereof, Mortgagor owns the Premises and has good, indefeasible estate therein,
in fee simple; that the Premises are free from all encumbrances whatsoever (and
any claim of any other person thereto) other than those approved and permitted
by State Farm ("Permitted Exceptions") which are listed, described and set
forth in Schedule B - Section 2 of Commonwealth Land Title Insurance Company
Commitment for Title Insurance No. 0107362 effectively dated September 12, 2001
at 8:00 a.m. in the face amount of $21,000,000.00 naming State Farm as the
proposed insured thereunder, including all endorsements thereto, approved by
State Farm (the "Title Commitment") and in Schedule B of the Loan Policy of
title insurance issued to State Farm pursuant to the Title Commitment insuring
the first priority lien of this Mortgage (the "Loan Policy"); that it has good
and lawful right to sell, convey, mortgage and encumber the Premises; and that
Mortgagor and its successors and assigns shall forever warrant and defend the
title to the Premises against all claims and demands whatsoever.

         PROVIDED, HOWEVER, that if and when Mortgagor has paid all of the
Indebtedness, and has strictly performed and observed all of the agreements,
terms, conditions, provisions, and warranties contained in this Mortgage and in
all of the other Loan Documents, the estate, right, title, and interest of
State Farm in and to the Premises shall cease and shall be released at the cost
of Mortgagor, but otherwise shall remain in full force and effect.

                                 ARTICLE THREE
                               GENERAL AGREEMENTS

         To protect the security of this Mortgage, the Mortgagor further
covenants and agrees as follows:

                                       4
<PAGE>

         3.1 RECITALS.

         The recitals set forth above are true and correct and are by reference
incorporated herein.

         3.2 OBLIGATIONS.

         Mortgagor shall pay promptly each and every sum due to State Farm
under the Loan Documents either as the payments due under any of the terms
thereof, as sums due as a result of the nonperformance of any of the covenants,
agreements, and obligations thereof, or as amounts due as a result of a breach
of any of the representations, warranties, and certifications contained therein
(including fees and charges), at the times and in the manner provided in the
Loan Documents. All such sums payable by Mortgagor shall be paid without
demand, counterclaim, offset, deduction, or defense. Mortgagor hereby waives
all rights now or hereafter conferred by statute or otherwise to any such
demand, counterclaim, offset, deduction, or defense.

         3.3 OTHER PAYMENTS.

                  (a) Mortgagor shall deposit, in addition to the monthly
         installments of principal and interest required by the Note, monthly
         until the Indebtedness is fully paid the following sums (collectively
         the "Tax and Insurance Deposits"):

                           (i) a sum equal to one-twelfth (1/12th) of the
                  annual Taxes (as hereinafter defined) next due on the
                  Premises, all as estimated by State Farm (the "Tax
                  Deposits"); and

                           (ii) a sum equal to one-twelfth (1/12th) of the
                  annual premium or premiums next payable for the insurance
                  hereinafter required to be maintained on or with respect to
                  the Premises (the "Insurance Deposits").

         Amounts paid as Tax and Insurance Deposits are herein called "Other
Payments."

                  (b) Should the total Tax and Insurance Deposits on hand not
         be sufficient to pay all of the Taxes and insurance premiums, together
         with all penalties and interest thereon, when the same become due and
         payable, then the Mortgagor shall pay to State Farm promptly on demand
         any amount necessary to make up the deficiency. If the total of such
         Tax and Insurance Deposits exceeds the amount required to pay the
         Taxes and insurance premiums, such excess shall be credited on
         subsequent payments to be made for such items.

                  (c) All such Tax and Insurance Deposits:

                           (i) shall be held by State Farm or a depository
                  designated by State Farm, in trust, with no obligation to
                  segregate such payments and without any obligation arising
                  for the payment of any interest thereon;

                           (ii) shall be held in trust to be applied by State
                  Farm for the purposes for which made (as hereinabove
                  provided) subject, however, to the security interest granted
                  State Farm therein pursuant to Article Two; and

                                       5
<PAGE>

                           (iii) shall not be subject to the direction or
                  control of the Mortgagor.

                  (d) Provided that no Event of Default (as hereinafter
         defined) exists and there are sufficient funds in the Tax and
         Insurance Deposits, State Farm agrees to make the payment of the Taxes
         or insurance premiums with reasonable promptness (following its
         receipt of appropriate tax and/or insurance bills therefor) prior to
         delinquency. However, if Mortgagor elects to pay such Taxes or
         insurance premiums from other resources, upon presentation by
         Mortgagor of receipted (i.e., paid) tax and/or insurance bills
         therefor, State Farm shall reimburse the Mortgagor for such Taxes and
         insurance premium payments made by the Mortgagor from the Tax and
         Insurance Deposits.

                  (e) Upon the occurrence of an Event of Default (as
         hereinafter defined), State Farm may, at its option, without being
         required to do so, apply any Tax and Insurance Deposits on hand on
         account of any of the Indebtedness, in such order and manner as State
         Farm may elect. When the Indebtedness has been fully paid, then any
         remaining Tax and Insurance Deposits shall be paid to the Mortgagor.

         3.4 MAINTENANCE, REPAIR, RESTORATION, PRIOR LIENS, PARKING.

         The Mortgagor shall and hereby agrees to:

                  (a) promptly repair, restore, replace, or rebuild any portion
         of the Improvements which may become damaged or destroyed, whether or
         not proceeds of insurance are available or sufficient for such
         purpose, with all replacements being at least equal in quality and
         condition as existed prior thereto, free from any security interest
         therein, encumbrances thereon, or reservation of title thereto;

                  (b) keep the Improvements in good condition and repair,
         without waste, and free from mechanics', materialmen's or like liens
         or claims or other liens or claims of lien;

                  (c) complete, within a reasonable time, any Improvements now
         or hereafter in the process of construction or erection upon the Real
         Estate;

                  (d) comply with all statutes, rules, regulations, orders,
         decrees, and other requirements of any governmental body, whether
         federal, state, or local, having jurisdiction over the Premises and
         the use thereof and observe and comply with any conditions and
         requirements necessary to preserve and extend any and all rights,
         licenses, permits (including without limitation zoning variances,
         special exceptions, and nonconforming uses), privileges, franchises,
         and concessions that are applicable to the Premises or its use and
         occupancy;

                  (e) make no material alterations in or to the Improvements,
         except as required in paragraph (d) hereof or otherwise with the
         written consent of State Farm and in conformity with all applicable
         laws;

                  (f) not suffer nor permit any change in the use of the
         Improvements to any use other than rental apartments without State
         Farm's prior written consent;

                                       6
<PAGE>

                  (g) pay when due all operating costs of the Improvements;

                  (h) not initiate nor acquiesce in any zoning reclassification
         with respect to the Premises without State Farm's prior written
         consent;

                  (i) provide, improve, grade, surface and thereafter maintain,
         clean, repair, and adequately light all parking areas upon the Real
         Estate of sufficient size to accommodate the greater of (a) the amount
         of standard-size vehicles required by law, ordinance, regulation, or
         (b) required by the terms of any lease which is subject to the
         Assignment of Rents and Leases made by Mortgagor to and in favor of
         State Farm of even date herewith, together with any sidewalks, aisles,
         streets, driveways and sidewalk cuts and sufficient paved areas for
         ingress, egress and rights-of-way to and from the adjacent
         thoroughfares necessary or desirable for the use thereof; and

                  (j) forever warrant and defend its title to the Premises and
         the validity, enforceability and priority of the lien and security
         interests granted in and by this Mortgage and the other Loan Documents
         against the claims and demands of all persons; subject, however, to
         the Permitted Exceptions.

         3.5 PROPERTY TAXES AND CONTEST OF LIENS.

         Notwithstanding the Other Payments required by Section 3.3, Mortgagor
shall be responsible for the payment, when first due and owing and before
delinquency and before any penalty attaches, of all real estate and personal
property taxes and assessments (general or special), water charges, sewer
charges, and any other charges, fees, taxes, claims, levies, charges, expenses,
liens, and assessments, ordinary or extraordinary, governmental or
nongovernmental, statutory or otherwise, that may be asserted against the
Premises or any part thereof or interest therein ("Taxes"). Notwithstanding
anything contained herein to the contrary, Mortgagor may, in good faith and
with reasonable diligence, contest the validity or amount of any such Taxes as
well as any mechanics', materialmen's, or other liens or claims of lien upon
the Premises (collectively "Contested Liens"), provided that:

                  (a) such contest shall have the effect of preventing the
         collection of the Contested Liens and the sale or forfeiture of
         Premises or any part thereof or interest therein to satisfy the same;
         and

                  (b) Mortgagor shall first notify State Farm in writing of the
         intention of Mortgagor to contest the same before any Contested Liens
         have been increased by any interest, penalties, or costs.

         3.6 TAX AND LIEN PAYMENTS BY STATE FARM.

                  (a) Upon the failure of Mortgagor to pay the Tax Deposits as
         required in Section 3.3 or (in the event said payments are waived by
         State Farm) to pay the Taxes required to be paid in Section 3.5 above,
         State Farm is authorized, in its sole discretion, to make any payment
         of Taxes levied, assessed or asserted against the Premises, or any
         part thereof, in accordance with any tax bill or statement from the
         appropriate public office without inquiry into the accuracy or
         validity of any Taxes, sales, forfeiture, or title or

                                       7
<PAGE>

         claim relating thereto.

                  (b) State Farm is also authorized, in the place and stead of
         Mortgagor, to make any payment relating to any apparent or threatened
         adverse title, lien, claim of lien, encumbrance, claim, charge, or
         payment otherwise relating to any other purpose but not enumerated in
         this Section, whenever, in State Farm's judgment and discretion, such
         advance seems necessary to protect the full security intended to be
         created by this Mortgage.

                  (c) All such advances authorized by this Section 3.6 shall
         constitute additional Indebtedness and shall be repaid by Mortgagor to
         State Farm upon demand with interest at the Default Rate (as defined
         in the Note) from the date of such advance.

         3.7 INSURANCE.

                  (a) The Mortgagor shall insure and keep insured the Premises
         and each and every part thereof against such perils and hazards as
         State Farm may from time to time require, and in any event including:

                           (i) Property Insurance against loss of and damage to
                  the Improvements by all risks of physical loss or damage,
                  including by fire, windstorm, flood, and other risks covered
                  by the so-called extended endorsement in an amount equal to
                  one hundred percent (100%) of the then current "full
                  replacement cost" of all Improvements, fixtures and equipment
                  from time to time on the Improvements without deduction for
                  physical depreciation and having a deductible of not more
                  than $25,000.00;

                           (ii) Comprehensive general liability insurance
                  against death, bodily injury and property damage with such
                  limits as State Farm may reasonably require;

                           (iii) Steam boiler, machinery and pressurized vessel
                  insurance (if applicable to the Improvements);

                           (iv) Rent loss insurance/business interruption
                  insurance in an amount sufficient to cover loss of
                  rents/gross earnings from the Premises for a minimum of six
                  (6) months; and

                           (v) The types and amounts of coverage as are
                  customarily maintained by owners or operators of like
                  properties.

                  (b) Insurance policies required by this Section 3.7 shall:

                           (i) be in amounts and form and issued by companies
                  satisfactory to State Farm and shall comply with all
                  provisions of this Mortgage;

                           (ii) contain endorsements naming State Farm as first
                  mortgagee/loss

                                       8
<PAGE>

                  payee under a standard mortgage loss payable clause under the
                  required property, steam boiler and rent loss/business
                  interruption insurance policies and as an additional insured
                  under the required comprehensive general liability insurance
                  policy;

                           (iii) contain an endorsement providing at least
                  thirty (30) days' written notice to State Farm prior to
                  non-renewal, cancellation or termination;

                           (iv) permit State Farm to pay any premium within
                  fifteen (15) days after its receipt of notice stating that
                  such premium has not been paid when due; and

                           (v) require that settlement of any claim under any
                  of the referenced policies shall require State Farm's prior
                  written approval.

                  (c) The policy or policies of such insurance or certificates
         of insurance evidencing the required coverage shall be delivered to
         State Farm.

                  (d) Mortgagor shall not purchase separate insurance policies
         concurrent in form or contributing in the event of loss with those
         policies required to be maintained under this Section 3.7.

         3.8 INSURANCE PREMIUM PAYMENT BY STATE FARM.

                  (a) In the event the Mortgagor fails to make the Insurance
         Deposits as required by Section 3.3 or (if those payments have been
         waived) upon State Farm's receipt (i) of notice of an unpaid insurance
         premium, (ii) of notice of a termination or cancellation of any
         required insurance policy, or (iii) of notice that a required
         insurance policy is not to be renewed and Mortgagor fails to provide
         replacement coverage at least fifteen (15) days prior to the
         termination of existing coverage, State Farm may, at its option,
         procure and substitute another policy of insurance in the amount
         required pursuant to the foregoing terms of this Mortgage with such
         companies as State Farm may select, the cost of which shall be paid by
         Mortgagor upon demand should the amount available from the Insurance
         Deposit be insufficient to pay the premium therefor. All sums paid by
         State Farm in procuring said insurance that are not promptly
         reimbursed by the Mortgagor shall be additional Indebtedness and shall
         be immediately due and payable without notice, with interest thereon
         at the Default Rate as defined in the Note.

                  (b) In the event of any insured damage to or destruction of
         the Improvements or any part thereof, Mortgagor shall promptly notify
         State Farm and take such steps as necessary to preserve the undamaged
         portion of the Improvements. In State Farm's sole discretion all
         insurance proceeds shall be applied: (i) to the installments of the
         Indebtedness in the inverse order of its maturity (provided, however,
         no premium or penalty shall be payable in connection with any
         prepayment of the Indebtedness from the insurance proceeds as
         aforesaid), or (ii) to the cost of restoring, repairing, replacing, or
         rebuilding (herein generally called "Restoration") the Improvements or
         any part thereof. Provided however, if any Credit Lease, as described
         in Section 3.18(b), requires the

                                       9
<PAGE>

         Restoration of the Improvements, then so long as (i) no Event of
         Default is in existence on the date of such damage or destruction of
         the Improvements and no event has occurred as of such date which with
         the passage of time, the giving of notice or both, would constitute an
         Event of Default, and (ii) no tenant under any Credit Lease is in
         default thereof as of such date and no event has occurred which, with
         the passage of time or the giving of notice or both, would constitute
         a default by the tenant under any Credit Lease, such insurance
         proceeds, after deducting therefrom any expenses incurred protecting
         the undamaged portion of the Improvements and in the collection of the
         insurance proceeds, shall be disbursed by State Farm to Mortgagor to
         reimburse Mortgagor for the cost of Restoration as set forth in
         Section 3.10.

         3.9 CONDEMNATION.

                  (a) The Mortgagor shall give State Farm prompt notice of any
         proceedings, instituted or threatened, seeking condemnation or taking
         by eminent domain or any like process (a "Taking") of all or any part
         of the Real Estate or Improvements including any easement thereon or
         appurtenance thereto (including severance of, consequential damage to,
         or change in grade of streets), and shall deliver to State Farm copies
         of any and all papers served in connection with any such proceeding.

                  (b) Mortgagor hereby assigns, transfers, and sets over unto
         State Farm the entire proceeds of any and all awards resulting from
         any Taking (the "Award"). State Farm is hereby authorized to collect
         and receive from the condemnation authorities the entire Award and is
         further authorized to give appropriate receipts and acquittances
         therefor.

                  (c) In the event of any such Taking, any and all such Award
         shall be applied, in State Farm's sole discretion: (i) to the
         installments of the Indebtedness in the inverse order of their
         maturity (provided, however, no premium or penalty shall be payable in
         connection with any prepayment of the Indebtedness made out of such
         Award as aforesaid); or (ii) to the cost of Restoration of the Real
         Estate and Improvements or any part thereof. Provided however, if any
         Credit Lease, as described in Section 3.18(b), requires the
         Restoration of the Improvements, then so long as (i) no Event of
         Default is in existence on the date of such Taking and no event has
         occurred as of such date which, with the passage of time, the giving
         of notice or both, would constitute an Event of Default, and (ii) no
         tenant under any Credit Lease is in default thereof as of such date
         and no event has occurred which, with the passage of time or the
         giving of notice or both, would constitute a default by the tenant
         under any Credit Lease, such Award, after deducting therefrom any
         expenses incurred in the collection of the Award, shall be used to
         reimburse Mortgagor for the cost of Restoration as set forth in
         Section 3.10.

         3.10 RESTORATION USING PROCEEDS.

                  (a) In the event State Farm elects to make any Proceeds
         available for Restoration of the Real Estate and/or Improvements,
         Mortgagor shall complete, in form and with supporting documentation
         reasonably required by State Farm, an estimate of the cost to repair
         or to restore the Real Estate and Improvements to the condition at
         least equal to the condition in which they existed prior to such
         damage, destruction or Taking,

                                      10
<PAGE>

         free from any security interest in, lien or encumbrances on, or
         reservation of title to such Real Estate and Improvements.

                  (b) The Proceeds necessary to complete Restoration shall be
         held by State Farm, or if State Farm so desires, a disbursing agent
         selected by State Farm. Said Proceeds may be invested using
         Mortgagor's taxpayer identification number in an interest bearing
         account mutually acceptable to Mortgagor and State Farm. The costs and
         expenses of administering disbursements shall be paid by Mortgagor. In
         the event the amount of the Proceeds are insufficient to cover the
         cost of Restoration, Mortgagor shall pay the cost of Restoration in
         excess of the Proceeds before being entitled to any reimbursement from
         the Proceeds.

                  (c) Subject to State Farm's right to limit the number of
         disbursements, the Proceeds shall be disbursed from time to time upon
         State Farm's being furnished with architect's certificates, waivers of
         lien, contractor's sworn statements, and such other evidences as State
         Farm or any disbursing agent may reasonably require to verify the cost
         and fact of the completion of the Improvements included in said
         disbursement. Under no circumstances shall any portion of the Proceeds
         be released until State Farm has been reasonably assured that the
         Proceeds remaining after the requested disbursement will be sufficient
         to complete Restoration. No Payment made prior to the final completion
         of Restoration shall exceed ninety percent (90%) of the value of the
         work performed from time to time. Any Proceeds remaining after
         Restoration shall be applied at State Farm's option against the
         Indebtedness in the inverse order of its maturity.

                  (d) Notwithstanding any provisions of this Mortgage to the
         contrary, including, without limitation, the foregoing provisions of
         this Section 3.10, State Farm shall make Proceeds available to
         Mortgagor for Restoration of the Premises on the following basis, to
         wit: (i) Proceeds received in amounts of $150,000.00 or less shall be
         made available directly to Mortgagor for Restoration without regard to
         the disbursement procedures provided in this Section 3.10, and (ii)
         Proceeds received in amounts in excess of $150,000.00 and up to
         $1,500,000.00 shall be made available to Mortgagor for the Restoration
         of the Premises on the basis and otherwise subject to the disbursement
         procedures hereinabove specified in this Section 3.10 without regard
         to and notwithstanding any provision of this Mortgage which otherwise
         permits State Farm to apply Proceeds in reduction of the Indebtedness
         secured by this Mortgage. However, all Proceeds received in amounts in
         excess of $1,500,000.00 shall be and remain subject to the right of
         State Farm, in its sole discretion, to apply the same in reduction of
         the Indebtedness as otherwise and elsewhere provided in this Mortgage.

         3.11 RESTRICTIONS ON TRANSFER.

                  (a) Without the prior written consent of State Farm:

                           (i) Mortgagor shall not create, effect, contract
                  for, commit or consent to, nor shall Mortgagor suffer or
                  permit any sale, conveyance, transfer, assignment, collateral
                  assignment, lien, other than Contested Liens as defined and
                  permitted in Section 3.5 of this Mortgage, pledge, mortgage,
                  security interest, or

                                      11
<PAGE>

                  other hypothecation, encumbrance or alienation (or any
                  agreement to do any of the foregoing) of the Premises, or any
                  interest therein or title thereto, (excepting, however, the
                  sale or other disposition of Collateral (as hereinafter
                  defined) no longer useful in connection with the operation of
                  the Premises ("Obsolete Collateral"), provided, however, that
                  prior to the sale or other disposition of Obsolete
                  Collateral, such Obsolete Collateral shall have been replaced
                  by Collateral of at least equal value and utility which is
                  subject to the first and prior lien of this Mortgage); or

                           (ii) Mortgagor shall not fail to pay when the same
                  shall become due all lawful claims and demands of mechanics,
                  materialmen, laborers, and others which, if unpaid, might
                  result in or permit the creation of a lien on the Real Estate
                  or Improvements, or on the Rents arising therefrom and/or
                  Mortgagor shall not fail to pay or otherwise discharge (by
                  bond or otherwise) any mechanic's, materialmen's or laborer's
                  lien filed on the Real Estate or Improvements, or on the
                  Rents arising therefrom, within fifteen (15) days from the
                  filing of the same or when Mortgagor receives actual notice
                  that such lien has been filed, whichever shall last occur; or

                           (iii) if the Mortgagor is a land trustee ("Trustee
                  Mortgagor"), any beneficiary of the Mortgagor shall not
                  create, effect, contract for, commit or consent to, or shall
                  suffer or permit, any sale, conveyance, transfer, assignment,
                  collateral assignment, lien, pledge, mortgage, security
                  interest, or other hypothecation, encumbrance or alienation
                  of such beneficiary's beneficial interest in the Mortgagor;
                  or

                           (iv) if the Mortgagor is a corporation or limited
                  liability company, or if any corporation or limited liability
                  company is a beneficiary of a Trustee Mortgagor, any
                  shareholder of such corporation or limited liability company
                  shall not create, effect, contract for, commit or consent to,
                  or shall suffer or permit any sale, conveyance, transfer,
                  assignment, collateral assignment, lien, pledge, mortgage,
                  security interest, or other hypothecation, encumbrance or
                  alienation of any such shareholder's shares of such
                  corporation or limited liability company (provided, however,
                  that if such corporation or limited liability company is a
                  corporation or limited liability company whose stock is
                  publicly traded on a national securities exchange or on the
                  "Over The Counter" market, then this subparagraph (iv) shall
                  be inapplicable); or

                           (v) if the Mortgagor is a partnership or joint
                  venture or if any beneficiary of a Trustee Mortgagor is a
                  partnership or joint venture, any general partner or joint
                  venturer in such partnership or joint venture shall not
                  create, effect, contract for, commit or consent to, suffer,
                  or permit any sale, conveyance, transfer, assignment,
                  collateral assignment, lien, pledge, mortgage, security
                  interest, or other hypothecation, encumbrance or alienation
                  of any part of the partnership interest or joint venture
                  interest, as the case may be, of such general partner or
                  joint venturer (provided, however, that if such general
                  partner or joint venturer is a corporation whose stock is
                  publicly traded on a national securities

                                      12
<PAGE>

                  exchange or on the "Over the Counter" market, then this
                  subparagraph (v) shall be inapplicable); or

                           (vi) there shall not be any change in control (by
                  way of transfers of stock ownership, partnership interests,
                  or otherwise) in any corporation, limited liability company
                  or partnership constituting or included within the Mortgagor
                  which directly or indirectly controls any corporation,
                  limited liability company or partnership constituting or
                  included within the Mortgagor that results in a material
                  change in the identity of the person(s) in control of such
                  entity; (provided, however, if such entity is a corporation
                  whose stock is publicly traded on a national securities
                  exchange or on the "Over the Counter" market, then this
                  subparagraph (vi) shall be inapplicable).

                  (b) It is expressly provided, however, that the foregoing
         provisions of this Section 3.11 shall not apply (i) to transfers of
         limited partnership interests in the Mortgagor, (ii) to liens securing
         the Indebtedness, or (iii) to the lien of current Taxes not in
         default. The provisions of this Section 3.11 shall be operative with
         respect to, and shall be binding upon, any persons who, in accordance
         with the terms hereof or otherwise, shall acquire any part of or
         interest in or encumbrance upon the Premises, or such beneficial
         interest in, share of stock of, or partnership or joint venture
         interest in the Mortgagor or any beneficiary of a Trustee Mortgagor.
         Any waiver by State Farm of the provisions of this Section 3.11 shall
         not be deemed to be a waiver of the right of State Farm in the future
         to insist upon strict compliance with the provisions of this Section
         3.11.

                  (c) Except as otherwise provided in this Section 3.11, upon
         the sale or transfer of (i) all or any part of the Premises, or (ii)
         all or any part of the beneficial interest in Mortgagor (if Mortgagor
         is not a natural person or persons but is a corporation, limited
         liability company, partnership, trust or other legal entity) (the
         person or entity to whom or which all or any part of the Premises have
         been so sold or transferred, being the "Transferee"), without the
         prior written consent of State Farm, State Farm may, at State Farm's
         option, declare all of the sums secured by this Mortgage to be
         immediately due and payable. State Farm's consent to any such
         transfer, if given at all, shall be given only if and when the
         Transferee's creditworthiness and management ability are satisfactory
         to State Farm, and the proposed Transferee has executed, prior to any
         proposed sale or transfer, a written assumption agreement containing
         such terms as State Farm may require, including, without limitation,
         an increase in the rate of interest payable under the Note.

                  (d) In the event of a sale, transfer or assignment to which
         State Farm has consented and, as a condition to such consent, has
         required an increase in the rate of interest payable under the Note,
         Mortgagor shall have the right, for a period of ninety (90) days from
         the date of State Farm's written notification to Mortgagor of such
         rate increase, to prepay the Loan at par plus accrued interest.

                  (e) Notwithstanding the foregoing provisions of this Section
         3.11, the Original Mortgagor (for purposes of this subparagraph (e)
         and subparagraph (f) below

                                      13
<PAGE>

         only, the term "Original Mortgagor" shall mean and be defined as
         Roberts Properties Residential, L.P. only, and shall not include any
         transferee of the Premises encumbered by this Mortgage from the said
         Roberts Properties Residential, L.P. who or which may have previously
         been approved by State Farm as a transferee of the Premises pursuant
         to this Section 3.11) shall have the right, subject to the provisions
         of subparagraph (g) below, one time and one time only, to sell and
         transfer title to the Premises encumbered by this Mortgage (and
         without any right on the part of State Farm to change the material
         provisions of the Loan Documents, including, without limitation, the
         interest rate, the payment terms, the maturity date and/or the
         collateral for the Loan as currently provided) to another party
         (hereinafter referred to as a "Transferee") if and when, and only if
         and when, and provided that, prior to any such proposed sale or
         transfer, each of the following conditions are satisfied and
         fulfilled, to wit:

                           (i) that thirty (30) days prior written notice of
                  such proposed transfer is provided to State Farm together
                  with (1) a description of the proposed transfer, including a
                  description of the nature of and the respective amounts of
                  the ownership interest(s) proposed to be transferred, (2) the
                  identity and composition of the proposed Transferee,
                  including, without limitation, its organizational documents,
                  certificates of existence, good standing and qualification to
                  do business in its state of domicile and the state in which
                  the Premises is located, (3) copies of the proposed transfer
                  documents pursuant to which the proposed transfer is to be
                  effected, (4) sufficient information from which State Farm is
                  able, in its sole, but reasonable, discretion, to determine
                  the acceptability to State Farm of those characteristics of
                  the proposed Transferee identified in subparagraph (ii)
                  immediately below, and (5) such additional materials and/or
                  information as may be reasonably requested by State Farm
                  regarding the proposed transfer and/or the proposed
                  Transferee;

                           (ii) that the proposed Transferee's identity and
                  composition, financial condition and creditworthiness,
                  property management experience and expertise and character
                  and business reputation are all determined by State Farm, in
                  its sole discretion, to be acceptable to State Farm and are
                  approved in writing by State Farm;

                           (iii) that the proposed Transferee shall, prior to
                  or at the time of the proposed transfer, execute and deliver
                  to State Farm an Assumption Agreement, in form and content
                  acceptable to State Farm, pursuant to which the proposed
                  Transferee (if otherwise approved by State Farm as aforesaid)
                  shall assume and agree to pay and perform all liabilities and
                  obligations of the Original Mortgagor under the Note, this
                  Mortgage and all other Loan Documents;

                           (iv) that all state and/or local taxes on or
                  applicable to such transfer and/or to such assumption of
                  liabilities and obligations and all expenses incurred by
                  State Farm relating to the preparation and/or review and
                  approval of the proposed Transferee and any proposed transfer
                  documentation, including, but not limited to the fees of
                  State Farm's outside/selected counsel in that regard, if any,
                  shall be paid by the Original Mortgagor or the proposed
                  Transferee;

                                      14
<PAGE>

                           (v) that, prior to or at the time of such proposed
                  transfer, the proposed Transferee shall execute and deliver
                  to State Farm such modifications of the Loan Documents or
                  additional instruments (e.g., new UCC financing statements)
                  in form and content acceptable to State Farm, as may be
                  reasonably required by State Farm (provided, however, that
                  such modifications of the Loan Documents and/or additional
                  instruments shall not change the material provisions of the
                  Loan Documents, including, without limitation, the interest
                  rate, the payment terms, the maturity date and/or the
                  collateral for the Loan as currently provided);

                           (vi) that State Farm shall, at the expense of the
                  Original Mortgagor or the proposed Transferee, be provided
                  such endorsements to the Loan Policy of Title Insurance
                  pursuant to which the lien of this Mortgage has previously
                  been insured as a first priority mortgage lien on the
                  Premises as State Farm deems necessary and/or appropriate in
                  order to insure the continuing first priority lien status of
                  this Mortgage following and notwithstanding the sale and
                  transfer of title to the Premises to the proposed Transferee;
                  and

                           (vii) that State Farm shall receive a Transfer and
                  Assumption Fee in an amount equal to one percent (1%) of the
                  outstanding unpaid principal balance of the Note at the time
                  of such sale and transfer of the Premises to a Transferee
                  approved by State Farm in writing.

         Upon the fulfillment of the conditions hereinabove stated in this
         subparagraph (e) and hereinafter stated in subparagraph (g) below, the
         Original Mortgagor shall, except as stated in the Assumption Agreement
         described in sub-subparagraph (iii) of this subparagraph (e), be
         relieved of and released from all liabilities and obligations arising
         under the Loan Documents from and after the effective date of said
         Assumption Agreement; provided, however, that Mortgagor and any
         Guarantor or Indemnitor shall not be released from any liability,
         whether pursuant to the terms of this Mortgage or the terms of the
         separate Environmental Indemnification Agreement executed by them of
         even date with this Mortgage, on account or in respect of any
         hazardous materials or environmental conditions present on the Real
         Estate or in the Improvements on or prior to the date on which the
         proposed transfer is actually made.

                  (f) Also notwithstanding the foregoing provisions of this
         Section 3.11, the Original Mortgagor (as defined in subparagraph (e)
         immediately above) shall, without constituting an Event of Default
         under the terms of the Note, the Mortgage or any other Loan Documents
         and/or entitling State Farm to accelerate the maturity of the
         Indebtedness secured by this Mortgage and/or entitling State Farm to
         impose or assess any transfer or assumption fee and/or require a
         change in the material terms (including, without limitation, the
         interest rate, the payment terms, the maturity date and/or the
         collateral for the Loan as currently provided) of the Loan, be
         permitted to make the following transfers, to wit:

                           (i) a transfer of title to the entire Premises to
                  its general partner, Roberts Realty Investors, Inc.; or

                                      15
<PAGE>

                           (ii) any merger or consolidation of Borrower and/or
                  its general partner, Roberts Realty Investors, Inc., with
                  another entity or entities, so long as Original Mortgagor or
                  its general partner, Roberts Realty Investors, Inc., is the
                  surviving entity and the net worth of such surviving entity,
                  whether Original Mortgagor or Roberts Realty Investors, Inc.,
                  as applicable, immediately after such merger or consolidation
                  is not less than the net worth of such surviving entity
                  immediately prior to merger or consolidation;

         provided, however, that each of the conditions to transfer hereinabove
         specified in sub-subparagraph (i), (iii), (iv), (v) and (vi) of
         subparagraph (e) of this Section 3.11 and all conditions to transfer
         hereinafter specified in subparagraph (g) of this Section 3.11 shall
         first be satisfied and fulfilled; and, provided further, that any such
         transfer permitted in this subparagraph (f), if and when consummated,
         shall not release or relieve any party otherwise liable or obligated
         for or on any liability or obligation under the Loan Documents from or
         of such liability or obligation, if any.

                  (g) Any transfer otherwise permitted pursuant to the
         provisions of Subparagraphs (e) and (f) above shall be and is hereby
         expressly made subject to the following additional conditions, to wit:

                           (i) that no Event of Default shall be in existence
                  under the Note, this Mortgage or any of the other Loan
                  Documents on the date of such proposed transfer and that on
                  such date no event shall have occurred or be in existence
                  which, with the passage of time, the giving of notice, or
                  both, would constitute an Event of Default under the Note,
                  this Mortgage or any of the other Loan Documents;

                           (ii) that such proposed transfer shall not be to a
                  transferee who or which, on the date of such proposed
                  transfer, is in bankruptcy, insolvency or any other court or
                  administrative proceedings; and

                           (iii) that, except as expressly stated in
                  subparagraph (e) above, such proposed transfer, when
                  consummated, shall not effect a release of any party who or
                  which is otherwise obligated thereon or liable thereunder
                  from any obligation under the terms of the Note, this
                  Mortgage or any of the other Loan Documents.

         3.12 STATE FARM'S DEALINGS WITH TRANSFEREE.

         In the event State Farm gives its written consent to a sale or
transfer, whether by operation of law, voluntarily, or otherwise, of all or any
part of the Premises, State Farm shall be authorized and empowered to deal with
the Transferee with regard to the Premises, the Indebtedness, and any of the
terms or conditions of this Mortgage as fully and to the same extent as it
might with the original Mortgagor, without in any way releasing or discharging
the original Mortgagor from any of its covenants under this Mortgage, and
without waiving State Farm's right of acceleration of the maturity of the
Indebtedness as provided in this Mortgage or the Note.

                                      16
<PAGE>

         3.13 CHANGE IN TAX LAWS.

         In the event of the enactment of or change in (including a change in
interpretation) any applicable law, in any manner changing or modifying the
laws governing (i) the taxation of mortgages, deeds of trust or other security
instruments or the debts secured thereby, or (ii) the manner of collecting such
taxes, so as to adversely affect State Farm, this Mortgage or any other Loan
Document or the Indebtedness, Mortgagor shall promptly pay any such tax and
otherwise compensate State Farm to the extent of such detriment; provided,
however, that if Mortgagor fails to make such payment or if any such law
prohibits Mortgagor from making such payment or would penalize State Farm in
the event of such payment, State Farm may elect, by notice in writing given to
the Mortgagor, to declare all of the Indebtedness secured hereby to be and
become due and payable, at par, within one hundred twenty (120) days from the
giving of such notice. It is expressly provided, however, that the foregoing
provisions of this Section 3.13 shall not apply in respect of any income, net
worth, franchise or other taxes imposed upon State Farm itself (as
distinguished from a tax on this Mortgage or the other Loan Documents or the
Indebtedness secured thereby).

         3.14 INSPECTION OF PREMISES.

         Mortgagor hereby grants to State Farm, its agents, employees,
consultants and contractors the right to enter upon the Premises for the
purpose of making any and all inspections, reports, tests, inquiries and
reviews as State Farm (in its sole and absolute discretion) deems necessary to
assess the then current condition of the Premises, or for the purpose of
performing any other acts which State Farm is authorized to perform under this
Mortgage or under the Environmental Indemnification Agreement. Mortgagor will
cooperate with State Farm to facilitate each such entry and the accomplishment
of such purposes.

         3.15 CERTIFIED ANNUAL OPERATING STATEMENTS.

         Within one hundred twenty (120) days after the close of each fiscal
year of Mortgagor, Mortgagor shall furnish (i) annual operating statements
showing all elements of income and expense of the Premises, and (ii) a current
rent roll, showing all items set forth in the rent roll delivered to State Farm
in connection with the closing of the Loan. Mortgagor shall promptly furnish to
State Farm such other financial information concerning the condition of the
Premises, and all other information concerning the Premises or the performance
by Mortgagor of the Obligations, that State Farm may reasonably request. All
such statements and information shall be prepared in accordance with generally
accepted accounting principles and shall otherwise be satisfactory to State
Farm and shall be certified by an authorized person, partner or officer of
Mortgagor approved by State Farm. State Farm and its representatives shall have
the right, at all reasonable times and upon reasonable notice, to examine and
make copies of Mortgagor's plans, books, records, income tax returns and all
supporting data concerning the Premises. Mortgagor will assist State Farm and
its representatives in conducting any such examination.

         3.16 DECLARATION OF SUBORDINATION.

         At the option of State Farm, this Mortgage shall become subject and
subordinate, in whole or in part (but not with respect to priority of
entitlement to insurance proceeds or any Award) to any and all Leases of all or
any part of the Premises upon the execution by State Farm

                                      17
<PAGE>

and recording thereof, at any time hereafter and in the appropriate official
records of the county wherein the Real Estate is situated, of a unilateral
declaration to that effect.

         3.17 USURY.

         State Farm intends that Mortgagor shall not be required to pay, and
State Farm shall not be entitled to receive or collect, interest in excess of
the maximum legal rate permitted under applicable usury laws. In the event
State Farm or any court determines that any charge, fee or interest paid or
agreed to be paid in connection with the Loan may, under applicable usury laws,
cause the interest rate on the Loan to exceed the maximum rate permitted by
law, then such charges, fees or interest shall be reduced to the maximum rate
permitted by law and any amounts actually paid in excess of such maximum rate
permitted by law shall, at State Farm's option, be applied by State Farm to
reduce the outstanding principal balance of the Loan or repaid by State Farm
directly to Mortgagor.

         3.18 LEASE OBLIGATIONS.

                  (a) Mortgagor covenants and agrees to keep, observe and
         perform and to require all tenants of the Premises to keep, observe
         and perform all the covenants, agreements and provisions of any
         present or future Leases, including the Credit Leases described
         herein, of the Premises on their respective part to be kept, observed
         and performed. If Mortgagor shall neglect or refuse to so perform or
         fail to require such tenants to so perform, then State Farm may, at
         its option, itself perform and comply or require performance or
         compliance by such tenants with any such lease covenants, agreements
         and provisions. Any sums expended by State Farm in performance or
         compliance with such Leases or in enforcing performance or compliance
         with such Leases by the tenants, including costs and expenses and
         reasonable attorneys' fees, shall be paid by Mortgagor upon demand
         with interest thereon at the Default Rate as defined in the Note and
         in the absence of such payment all such sums shall be deemed to be and
         become part of the Indebtedness secured by this Mortgage.

                  (b) Mortgagor, as further security for the payment of the
         Indebtedness, has, pursuant to this Mortgage and by separate
         Assignment of Rents and Leases of even date herewith, sold,
         transferred and assigned to State Farm, its successors and assigns,
         all of Mortgagor's right, title and interest, as landlord, in, to and
         under certain leases demising all or a portion of the Premises,
         together with the Rents provided therein, said lease or leases (the
         "Credit Leases") being identified as follows:

<TABLE>
<CAPTION>
Date of Lease                      Landlord                   Tenant
<S>                                <C>                        <C>
  NOTE:  THERE ARE NO CREDIT LEASES, AS DEFINED HEREIN.
</TABLE>

         Mortgagor expressly covenants and agrees that if Mortgagor, as
landlord under the Credit Leases, fails to perform and fulfill any term,
covenant, condition or provision in said Credit Leases on its part to be
performed or fulfilled, at the times and in the manner in the Credit Leases
provided, or if Mortgagor suffers or permits to occur any breach or default
under the provisions of said Credit Leases, or if Mortgagor fails to fully
protect, insure, preserve and cause continued performance or fulfillment of the
terms, covenants or provisions in said Credit Leases required to

                                      18
<PAGE>

be performed or fulfilled by any tenant therein or if Mortgagor, without State
Farm's prior written consent, permits or approves an assignment by any tenant
under the Credit Leases or a subletting of all or any part of the Premises
demised in the Credit Leases, then in any such event, at the option of State
Farm, and without notice to the Mortgagor, such breach or default shall
constitute an Event of Default hereunder and at the option of State Farm, all
unpaid Indebtedness secured by this Mortgage shall, notwithstanding anything in
the Note, this Mortgage or the other Loan Documents to the contrary, become due
and payable as in case of other Events of Default.

         3.19 ENVIRONMENTAL COMPLIANCE.

         Mortgagor hereby agrees to comply and cause all tenants of the
Premises to comply with any and all Federal, state or local laws, rules and
regulations relating to environmental protection including, but not limited to,
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980 ("CERCLA"), as amended by the Superfund Amendments and Reauthorization Act
of 1986, and such other legislation, rules and regulations as are in, or may
hereafter come into, effect and apply to Mortgagor, State Farm, the Loan or the
Premises or any occupancy users thereof, whether as lessees, tenants,
licensees, or otherwise. Mortgagor shall defend, indemnify and save and hold
State Farm harmless from and against any and all claims, costs or expenses
relating to such environmental protection provisions notwithstanding any
exculpatory or limitation on liability provisions contained in this Mortgage
and the other Loan Documents.

         3.20 FURTHER ASSURANCES.

                  (a) Mortgagor shall do all acts necessary to keep valid and
         effective the lien and security interest created by this Mortgage and
         the security intended to be afforded by the Loan Documents and to
         carry into effect their objectives.

                  (b) Mortgagor shall, upon the request of State Farm from time
         to time, and in the event all or any portion of the Premises is leased
         to a person or entity affiliated with an Exculpated Party, Mortgagor
         will cause such person or entity to execute, acknowledge and deliver
         all such additional papers and instruments and perform all such
         further acts as may be reasonably necessary to perform the Obligations
         and, as State Farm deems reasonably necessary, to evidence, perfect or
         confirm the liens and security interests, or the priority thereof,
         created by this Mortgage and the other Loan Documents.

                  (c) Without limiting the generality of the foregoing,
         Mortgagor will promptly and, insofar as not contrary to applicable
         law, at Mortgagor's expense, execute, record, rerecord, file and
         refile in such offices, at such times and as often as may be
         necessary, this Mortgage, additional mortgages, security agreements,
         and every other instrument in addition to or supplemental hereto,
         including applicable financing statements, continuation statements,
         affidavits or certificates as may be necessary to create, perfect,
         maintain, continue, extend and/or preserve the liens, encumbrances and
         security interests intended to be granted and created in and by the
         Loan Documents and the rights and remedies of State Farm and Mortgagor
         thereunder. Upon request of State Farm, Mortgagor shall promptly
         supply evidence of fulfillment of the foregoing acts and further
         assurances.

                                      19
<PAGE>

         3.21 FUTURE ADVANCES.

         This Mortgage shall secure not only existing Indebtedness, but also
such future advances, whether such advances are obligatory or to be made at the
option of State Farm, or otherwise, as are made within twenty (20) years from
the date of this Mortgage, to the same extent as if such future advances were
made on the date of execution of this Mortgage, but the total of such secured
indebtedness shall not exceed at any one time a maximum principal amount equal
to twice the aggregate face amount of the Note, plus interest on the
indebtedness represented thereby and any advances or disbursements made for the
benefit or protection of or the payment of taxes, assessments, levies and
insurance upon the Premises, with the interest on such advances or
disbursements as provided herein. To the extent that this Mortgage may secure
more than one promissory note, a default in the payment of any one such
promissory note shall constitute a default in the payment of all such
promissory notes secured hereby.

                                 ARTICLE FOUR
                               EVENTS OF DEFAULT

         4.1 DEFAULTS.

         It shall constitute an event of default ("Event of Default") of and
under this Mortgage and, at the option of State Farm under the other Loan
Documents, if any of the following events shall occur:

                  (a) Mortgagor shall fail to perform on the dates or within
         the times required any of the Obligations involving the payment of
         money, including the payment of principal and/or interest under the
         Note;

                  (b) Mortgagor shall fail to timely observe, perform or
         discharge any of the non-monetary Obligations, other than a
         non-monetary obligation described in any other clause in this Article
         Four, and any such failure shall remain unremedied for thirty (30)
         days or such lesser period as may be otherwise specified in the
         applicable Loan Document (the "Grace Period") after notice to
         Mortgagor of the occurrence of such failure; provided, however, that
         State Farm may, at its option, extend any applicable Grace Period up
         to one hundred eighty (180) days if State Farm determines in good
         faith that: (i) such default cannot reasonably be cured within such
         Grace Period but can be cured within one hundred eighty (180) days;
         (ii) no lien or security interest created by the Loan Documents shall
         be impaired prior to the anticipated completion of such cure; and
         (iii) State Farm's immediate exercise of any remedies provided in this
         Mortgage or by law is not necessary for the protection or preservation
         of the Premises or State Farm's security interest therein or lien
         thereon, and Mortgagor shall immediately commence and diligently
         pursue the cure of such default;

                  (c) Mortgagor, as landlord or sublandlord, as the case may
         be, shall assign or otherwise encumber the Rents or any interest
         therein without first obtaining the written consent of State Farm;

                  (d) Mortgagor shall, after the expiration of all applicable
         grace or cure periods, default or be in default under any agreement to
         which Mortgagor is a party, other

                                      20
<PAGE>

         than the Loan Documents, which agreement relates to the borrowing of
         money by Mortgagor from any natural person, corporation, limited
         liability company, partnership, firm, association, government,
         governmental agency or any other entity, whether acting in an
         individual, fiduciary or other capacity (each a "Person"), and such
         default shall give rise to or result in any material and adverse
         change in (i) the financial condition of Mortgagor or any Exculpated
         Party, or (ii) affecting the condition, use or operation of the
         Premises or State Farm's security for the Loan ("Material Adverse
         Change"), including a default by Mortgagor under any loan documents
         evidencing or relating to a lien on the Premises which is junior and
         subordinate to this Mortgage;

                  (e) Should any representation or warranty made by Mortgagor
         in, under or pursuant to any of the Loan Documents be false or
         misleading in any material respect as of the date on which such
         representation or warranty was made or deemed remade;

                  (f) Should any of the Loan Documents cease to be in full
         force and effect or be declared null and void, or cease to constitute
         valid and subsisting liens and/or valid and perfected security
         interests in, to, or upon the Premises, or should Mortgagor contest or
         deny in writing any of its liabilities or Obligations under any of the
         Loan Documents;

                  (g) Should any violation of Section 3.11 (a) occur or should
         any other event occur which, under the terms of the Loan Documents,
         would permit State Farm to accelerate the maturity of the
         Indebtedness.

                  (h) Should Mortgagor fail at any time to satisfy the
         requirements of Section 3.7 and such failure shall continue for
         fifteen (15) days after written notice thereof;

                  (i) Should any Exculpated Party generally not pay its debts
         as they become due or admit in writing its inability to pay its debts,
         or make a general assignment for the benefit of creditors and such
         events cause or result in a Material Adverse Change;

                  (j) Should any Exculpated Party commence any case, proceeding
         or other action seeking reorganization, arrangement, adjustment,
         liquidation, dissolution or composition of it and its debts under any
         law relating to bankruptcy, insolvency, reorganization or relief of
         debtors, or seeking to have an order for relief entered against it as
         debtor, or seeking appointment of a Receiver for it or for all or any
         substantial part of its property (collectively, a "Proceeding") and
         such events cause or result in a Material Adverse Change;

                  (k) Should any Exculpated Party take an action to authorize
         any of the actions set forth above in paragraphs (i) or (j)of this
         Section 4.1;

                  (l) Should any Proceeding be commenced against any Exculpated
         Party, and such Proceeding results in the entry of an order for relief
         against it which is not fully stayed within seven (7) business days
         after the entry thereof or remains undismissed for a period of
         forty-five (45) days;

                  (m) Should (i) final judgment, other than a final judgment in
         connection with any condemnation, and including any judgment or other
         final determination of any

                                      21
<PAGE>

         contest permitted by Section 3.5 of this Mortgage, be entered against
         Mortgagor that (a) adversely affects the value, use, or operation of
         the Premises, or (b) adversely affects, or reasonably may tend to
         adversely affect, the validity, enforceability, or priority of the
         lien or security interests created in and by this Mortgage, or the
         other Loan Documents, or both, or (ii) execution or other final
         process issue thereon with respect to the Premises, and Mortgagor
         shall fail to discharge the same, or provide for its discharge in
         accordance with its terms, or procure a stay of execution thereon, in
         any event within thirty (30) days from entry, or shall not within such
         period, or such longer period during which execution on such judgment
         shall have been stayed, appeal therefrom or from the order, decree, or
         process upon or pursuant to which such judgment shall have been
         entered and cause its execution to be stayed during such appeal, or if
         on appeal such order, decree, or process shall be affirmed and
         Mortgagor shall not discharge such judgment or provide for its
         discharge in accordance with its terms within thirty (30) days after
         the entry of such order or decree of affirmation, or if any stay of
         execution on appeal is released or otherwise discharged; or

                  (n) Should any agreement entered into and executed by
         Mortgagor for the management of the Real Estate and Improvements
         ("Management Agreement") not contain provisions entitling State Farm,
         any other holder of this Mortgage or any other person who shall become
         the owner of the Real Estate through foreclosure or a deed-in-lieu of
         foreclosure to terminate such Management Agreement upon ten (10) days
         prior written notice to the manager thereunder.

                                 ARTICLE FIVE
                                    REMEDIES

         5.1 REMEDIES.

                  (a) Upon the occurrence of an Event of Default, State Farm,
         at its option, may at any time thereafter declare the entire
         Indebtedness to be immediately due and payable and the same shall
         thereupon become immediately due and payable, without any further
         presentment, demand, protest or notice of any kind being required and
         State Farm, at its option and in its sole discretion, shall also be
         entitled to do any of the following:

                           (i) in person, by agent, or by a Receiver, without
                  regard to the adequacy of security, the solvency of Mortgagor
                  or the condition of the Premises, without obligation to do so
                  and without notice to or demand upon Mortgagor, enter upon
                  and take possession of the Premises, or any part thereof, in
                  its own name or in the name of a Trustee and do any acts
                  which State Farm deems necessary to preserve the value or
                  marketability of the Premises; sue for or otherwise collect
                  the Rents, and apply the same, less costs and expenses of
                  operation and collection, including reasonable attorneys'
                  fees, against the Indebtedness and Obligations, all in such
                  order as State Farm may determine; appear in and defend any
                  action or proceeding purporting to affect, in any manner
                  whatsoever, the Obligations, the security hereof or the
                  rights or powers of State Farm; pay, purchase or compromise
                  any encumbrance, charge or lien that in the judgment of State
                  Farm is prior or superior hereto; and in exercising any such
                  powers, pay necessary expenses, employ counsel and pay
                  reasonable attorneys'

                                      22
<PAGE>

                  fees;

                           (ii) as a matter of strict right and without notice
                  to Mortgagor or anyone claiming under Mortgagor, and without
                  regard to: (a) the solvency of Mortgagor, (b) whether there
                  has been or may be any impairment of or diminution in the
                  value of the Premises, or (c) whether the amount of the
                  Indebtedness exceeds the then value of the Premises, apply ex
                  parte to any court having jurisdiction to appoint a Receiver
                  to enter upon and take possession of the Premises, and
                  Mortgagor hereby waives notice of any application therefor,
                  provided a hearing to confirm such appointment with notice to
                  State Farm is set within the time required by law (any such
                  Receiver shall have all the powers and duties of Receivers in
                  similar cases and all the powers and duties of State Farm in
                  case of entry as provided herein, and shall continue as such
                  and exercise all such powers until the date of confirmation
                  of sale, unless such Receivership is sooner terminated);

                           (iii) commence an action to foreclose this Mortgage
                  in the manner provided in this Mortgage or by law;

                           (iv) with respect to any Collateral, proceed as to
                  both the real and personal property in accordance with State
                  Farm's rights and remedies in respect of the Real Estate and
                  Improvements, or proceed to sell said Collateral separately
                  and without regard to the Real Estate and Improvements in
                  accordance with State Farm's rights and remedies to the
                  Collateral; and

                           (v) with respect to the Rents, exercise those rights
                  and remedies provided in Section 697.07 Florida Statutes.

                  (b) In (i) any action to foreclose the lien of this Mortgage
         or enforce any other remedy of State Farm under any of the Loan
         Documents, or (ii) any other proceeding whatsoever in connection with
         any of the Loan Documents or the Premises in which State Farm is named
         as a party, there shall be allowed and included, as additional
         indebtedness in the judgment or decree for sale resulting therefrom,
         all expenses paid or incurred in connection with such proceeding by or
         on behalf of State Farm including, without limitation, attorneys' and
         paralegals' fees, appraisers' fees, outlays for documentary and expert
         evidence, stenographers' charges, publication costs, land and
         environmental survey costs, and costs (which may be estimated as to
         items to be expended after entry of such judgment or decree) of
         procuring all abstracts of title, title certificates, title searches
         and examinations, title insurance policies, Torrens certificates, and
         any similar data and assurances with respect to the title to the
         Premises as State Farm may deem reasonably necessary either to
         prosecute or defend in such proceeding or to evidence to bidders at
         any sale pursuant to such decree the true condition of the title to or
         value of the Premises. All expenses and fees of the ongoing nature,
         and such expenses and fees as may be incurred in the protection of the
         Premises and the maintenance of the lien of this Mortgage thereon in
         any litigation affecting the Loan Documents, or the Premises,
         including probate and bankruptcy proceedings, or in preparation for
         the commencement or defense of any proceeding or threatened suit or
         proceeding in connection therewith,

                                      23
<PAGE>

         shall upon demand of State Farm be immediately due and payable by
         Mortgagor with interest thereon at the Default Rate and shall become a
         part of the Indebtedness secured by this Mortgage.

                  (c) Unless otherwise provided herein, if Mortgagor shall at
         any time fail to perform or comply with any of the terms, covenants
         and conditions required on Mortgagor's part to be performed and
         complied with under any of the Loan Documents or any other agreement
         that, under the terms of this Mortgage, Mortgagor is required to
         perform, then State Farm may, at its option and in its sole
         discretion:

                           (i) make any payments hereunder or thereunder
                  payable by Mortgagor; and/or

                           (ii) after the expiration of any applicable grace
                  period and subject to Mortgagor's rights to contest certain
                  obligations specifically granted in this Mortgage, perform
                  any such other acts thereunder on part of the Mortgagor to be
                  performed and enter upon the Premises for such purpose.

                  (d) In any foreclosure sale of the Premises to satisfy the
         Indebtedness, the Premises, including the Real Estate and
         Improvements, may be sold in one parcel (i.e. as a single entity) or
         in two or more parcels and, otherwise, in such manner or order as
         State Farm, in its sole discretion, may elect or as the court having
         jurisdiction over such foreclosure sale may otherwise order or direct.

                  (e) The proceeds of any foreclosure sale of the Premises
         shall be distributed and applied in accordance with the applicable law
         of the State of Florida or as otherwise directed by order of the court
         in which this Mortgage is foreclosed.

                  (f) All remedies of State Farm provided for herein are
         cumulative and shall be in addition to any and all other rights and
         remedies provided in the other Loan Documents or by law, including any
         right of offset. The exercise of any right or remedy by State Farm
         hereunder shall not in any way constitute a cure or waiver of any
         default or Event of Default hereunder or under the Loan Documents, or
         invalidate any act done pursuant to any notice of default, or
         prejudice State Farm in the exercise of any of its rights hereunder or
         under the Loan Documents.

                  (g) To the extent permitted by law, Mortgagor hereby waives
         its right of redemption in the event of foreclosure.

                                  ARTICLE SIX
                     SECURITY AGREEMENT AND FIXTURE FILING

         6.1 SECURITY AGREEMENT.

         Mortgagor hereby assigns and grants to State Farm a first priority
present security interest in and to the Rents, Contract Rights, Intangible
Personal Property, Tangible Personal Property, Proceeds, Right to Encumber and
Other Rights and Interests described in Article Two and in and

                                      24
<PAGE>

to any other part or component of the Premises which may not be deemed real
property or which may not constitute a "fixture" (within the meaning of the
Code (as hereinafter defined)), and all replacements, substitutions, and
additions of, for and to the same, and the proceeds thereof (collectively, the
"Collateral") in order to secure payment of the Indebtedness and performance by
the Mortgagor of the other Obligations. This Mortgage shall constitute a
Security Agreement within the meaning of the Uniform Commercial Code (the
"Code") of the State in which the Real Estate is located.

         6.2 FIXTURE FILING.

         This Mortgage, upon recording or registration in the real estate
records of the proper office, shall constitute a "fixture filing" within the
meaning of the Code with respect to any and all Fixtures included within the
foregoing description and definition of the Premises and any Collateral that
may now be or hereafter become "fixtures" within the meaning of the Code. The
Mortgagor agrees that State Farm may, to the extent permitted by applicable
law, prepare and file financing statements, amendments thereof and continuation
statements without the signature of Mortgagor and file any financing statement,
amendment thereto or continuation statement electronically.

         6.3 REMEDIES.

         If any Event of Default occurs under this Mortgage, State Farm, in
addition to its other rights and remedies provided under this Mortgage, shall
have all the rights and remedies available to a secured party under the Code as
well as all other rights and remedies available at law or in equity. Mortgagor
upon request by State Farm, will assemble the Collateral and make it available
to State Farm, at a place State Farm designates to allow State Farm to take
possession or dispose of the Collateral. Mortgagor agrees that five (5) days'
prior written notice of the time and place of the sale of the Collateral, sent
to Mortgagor in the manner provided for the mailing of notices herein, is
reasonable notice to Mortgagor. The sale of the Collateral may be conducted by
an employee or agent of State Farm and any Person, including both the Mortgagor
and State Farm, shall be eligible to purchase any part or all of the Collateral
at the sale. The reasonable expenses of retaking, holding, preparing for sale,
selling and the like incurred by State Farm shall include, but not be limited
to, reasonable attorneys' and paralegals' fees and legal expenses incurred by
State Farm, and shall be paid by Mortgagor.

         6.4 WAIVERS.

         Mortgagor waives any right to require State Farm to (i) proceed
against any Person, (ii) proceed against or exhaust any Collateral or (iii)
pursue any other remedy in its power. Mortgagor further waives any defense
arising by reason of any power and any defense arising by reason of any
disability or other defense of Mortgagor or any other Person, or by reason of
the cessation from any cause whatsoever of the liability of Mortgagor or any
other Person. Until the Indebtedness shall have been paid in full, Mortgagor
shall not have any right to subrogation, and Mortgagor waives any right to
enforce any remedy which Mortgagor now has or may hereafter have against State
Farm or against any other Person and waives any benefit of and any right to
participate in any Collateral or security whatsoever now or hereafter held by
State Farm for or with respect to the Indebtedness and/or the Obligations.

                                      25
<PAGE>

                                 ARTICLE SEVEN
                                 MISCELLANEOUS

         7.1 NOTICES, CONSENTS, AND APPROVALS.

         Any notice, consent, or approval that State Farm or Mortgagor may
desire or be required to give to the other shall be in writing and shall be
mailed or delivered to the intended recipient thereof at its address set forth
below or at such other address as such intended recipient may, from time to
time, by notice in writing, designate to the sender pursuant hereto. Any such
notice, consent, or approval shall be deemed effective (a) if given by
nationally recognized overnight courier for next day delivery, one (1) business
day after delivery to such courier, or (b) if given by United States mail
(registered or certified), five (5) business days after such communication is
deposited in the mails or (c) if given in Person, when written acknowledgment
of receipt thereof is given. Except as otherwise specifically required herein,
notice of the exercise of any right or option granted to State Farm by this
Mortgage is not required to be given.

                  (a)      If to State Farm:

                           State Farm Life Insurance Company
                           Attn: Corporate Law-Investments
                           One State Farm Plaza, E-3
                           Bloomington, Illinois 61710

                           With copy to:

                           Lowndes, Drosdick, Doster, Kantor & Reed, P.A.
                           Attn:  William E. Doster, Esquire
                           215 North Eola Drive
                           Post Office Box 2809
                           Orlando, Florida  32802

                  (b)      If to Mortgagor:

                           Roberts Properties Residential, L.P.
                           c/o Roberts Realty Investors, Inc.
                           Attn:  Charles R. Elliott, C.F.O.
                           8010 Roswell Road
                           Atlanta, Georgia  30350

                           With copy to:

                           Holt, Ney, Zatcoff & Wasserman, LLP
                           Attn:  Sanford H. Zatcoff, Esquire
                           100 Galleria Parkway, Suite 600
                           Atlanta, Georgia  30339-5911

         7.2 TIME OF ESSENCE.

         It is specifically agreed that time is of the essence for all of the
terms and provisions continued in this Mortgage.

                                      26
<PAGE>

         7.3 COVENANTS OF MORTGAGE RUN WITH TITLE TO THE REAL ESTATE.

         The covenants and obligations set forth in this Mortgage are intended
as, shall be deemed and are hereby declared to be covenants running with the
title to the land which constitutes the Real Estate and any and all portion(s)
thereof, and such covenants and obligations shall be binding upon, and
enforceable by the owner and holder of this Mortgage personally against, the
Mortgagor and any successor in title to the Mortgagor who or which shall
acquire and/or hold title to the Real Estate while the same is subject to and
encumbered by this Mortgage. Every person or entity who or which shall have,
claim, own, hold, accept or otherwise acquire title to the Real Estate, whether
or not such title is reflected in the Public Records of the State and County in
which the Real Estate is located, shall be conclusively presumed and deemed to
have consented and agreed to personally perform each and every covenant and
obligation of the Mortgagor contained in this Mortgage to the same extent as
the original Mortgagor, whether or not any reference to this Mortgage is
contained in the document or instrument pursuant to which such person or entity
shall have acquired title to the Real Estate and whether or not such person or
entity shall have expressly agreed in writing to assume or perform the
covenants and obligations of the Mortgagor contained in this Mortgage.

         7.4 GOVERNING LAW.

         This Mortgage shall be governed by and construed in accordance with
the laws of the state in which the Real Estate is located. To the extent that
this Mortgage may operate as a security agreement under the Code, State Farm
shall have all rights and remedies conferred therein for the benefit of a
Secured Party.

         7.5 SEVERABILITY.

         If any provision of this Mortgage, or any paragraph, sentence, clause,
phrase, or word, or the validity or the application thereof, in any
circumstance, is held invalid, the remainder of this Mortgage shall be
construed as if such invalid part were never included herein.

         7.6 HEADINGS.

         The headings of articles, sections, paragraphs, and subparagraphs in
this Mortgage are for convenience of reference only and shall not be construed
in any way to limit or define the content, scope, or intent of the provisions
hereof.

         7.7 GRAMMAR.

         As used in this Mortgage, the singular shall include the plural, and
masculine, feminine, and neuter pronouns shall be fully interchangeable, where
the context so requires.

         7.8 DEED IN TRUST.

         If title to the Premises or any part thereof is now or hereafter
becomes vested in a trustee, any prohibition or restriction contained herein
against the creation of any lien on the Premises shall be construed as a
similar prohibition or restriction against the creation of any lien on or
security interest in the beneficial interest of such trust.

                                      27
<PAGE>

         7.9 SUCCESSORS AND ASSIGNS.

         This Mortgage and all provisions hereof shall be binding upon and
enforceable against Mortgagor, its successors, assigns, legal representatives,
and all other persons or entities claiming under or through Mortgagor, and the
word "Mortgagor" when used herein, shall include all such persons and entities
and any others liable for the payment of the Indebtedness or any part thereof,
whether or not they have executed the Note or this Mortgage. The word "State
Farm" when used herein, shall include State Farm's successors, assigns, and
legal representatives, including all other holders, from time to time, of the
Note.

         7.10 NO ORAL CHANGE.

         This Mortgage may only be modified, amended or changed by an
instrument in writing signed by the Mortgagor and State Farm, and may only be
released, discharged or satisfied of record by an instrument in writing signed
by State Farm. No waiver of any term, covenant, condition, or provision of this
Mortgage shall be effective unless given in writing by State Farm and if so
given by State Farm shall only be effective in the specific instance in which
given.

         7.11 ENTIRE AGREEMENT.

         This Mortgage and the other Loan Documents supersede, in all respects,
all prior written or oral agreements between the Mortgagor and State Farm
relating to the Loan, this Mortgage and the other Loan Documents and there are
no agreements, understandings, warranties or representations between the
parties except as set forth in this Mortgage and the other Loan Documents.

         7.12 CONSTRUCTION.

         Mortgagor acknowledges that Mortgagor and Mortgagor's counsel have
reviewed this Mortgage and the other Loan Documents and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party will not be employed in the construction or interpretation of
this Mortgage or the other Loan Documents or any amendments or schedules to any
of the foregoing.

         7.13 LIMITATION OF LIABILITY.

         In consideration of the security provided by Mortgagor to State Farm
for the repayment of the Indebtedness, including, without limitation, the liens
on and security interests in the Premises granted pursuant to this Mortgage and
the absolute and unconditional assignment of the Rents and the Leases pursuant
to the Assignment of Rents and Leases, upon the occurrence of an Event of
Default hereunder or under any of the Loan Documents, State Farm agrees that it
shall not, except as otherwise set forth in this Section, seek to enforce, nor
shall State Farm be entitled to enforce, any deficiency or monetary judgment
against Mortgagor, any Partner of Mortgagor (if Mortgagor is a partnership),
any Member of Mortgagor (if Mortgagor is a limited liability company) or any
Beneficiary of Mortgagor (if Mortgagor is a trust) (individually, an
"Exculpated Party," and collectively, the "Exculpated Parties"), personally,
and shall not levy or execute judgment upon any property of the Exculpated
Parties, other than the Premises; it being expressly agreed, acknowledged and
understood, however, that nothing contained herein shall in

                                      28
<PAGE>

any manner or way release, affect or impair:

                  (a) The existence of the Indebtedness and Obligations created
         in and evidenced by the Loan Documents.

                  (b) The enforceability of the liens and security interests
         created in and granted by the Loan Documents against the Premises.

                  (c) The right of State Farm to recover from the Exculpated
         Parties:

                           (i) after the occurrence of an Event of Default
                  under any of the Loan Documents:

                                    (A) any Rents received by any of the
                           Exculpated Parties from tenants of the Premises and
                           not applied to the Indebtedness or to the ordinary
                           operating expenses of the Premises during
                           Mortgagor's current fiscal year;

                                    (B) an amount equal to any Rents from the
                           Premises not paid due to Mortgagor's failure to
                           perform the Landlord's obligations under any Lease
                           or Leases of the Premises or any part thereof;

                                    (C) any amount(s) necessary to repair or
                           replace any damage to or destruction of the
                           Premises, which is caused by the willful or wanton
                           act or omission of any of the Exculpated Parties;

                                    (D) any sums expended by the State Farm in
                           performance of or in compliance with the obligations
                           of the landlord under all covenants, agreements and
                           provisions of any Lease assigned to State Farm as
                           security for the Indebtedness and Obligations due to
                           Mortgagor's failure or refusal to so perform such
                           obligations;

                           (ii) any insurance proceeds or condemnation awards
                  received by the Exculpated Parties and not delivered over to
                  State Farm or used for Restoration of the Premises;

                           (iii) any costs, expenses, damages, attorneys' and
                  paralegals' fees or other liabilities or obligations incurred
                  by State Farm, directly or indirectly arising out or on
                  account of or attributable to the use, generation, storage,
                  release, threatened release, discharge, disposal, or presence
                  on, under, or about the Premises, of any materials,
                  substances or wastes, defined or classified as hazardous or
                  toxic under applicable Federal, State or local laws or
                  regulations or arising out of or from any failure on the part
                  of Mortgagor to comply with the provisions of the
                  Environmental Indemnification Agreement; or (i)

                           (iv) any loss, damage, cost, expense, liability or
                  obligation suffered or incurred by State Farm arising out or
                  on account of or based upon any fraud or

                                      29
<PAGE>

                  willful misrepresentation of a material fact by the
                  Exculpated Parties in any document executed or presented to
                  State Farm in connection with the Loan.

                           (v) an amount equal to the aggregate sum of any and
                  all tenant security deposits required to be paid by State
                  Farm to any tenants of the Premises (or any other party) and
                  not reimbursed to State Farm by Mortgagor or any Exculpated
                  Party and any and all damages, costs and expenses suffered or
                  incurred by State Farm by reason or on account of the failure
                  of Mortgagor or any Exculpated Party to account for and turn
                  over to State Farm any tenant security deposits received by
                  Mortgagor or any Exculpated Party as required by the Leases
                  or the Loan Documents.

         7.14 WAIVER OF TRIAL BY JURY.

         Mortgagor hereby waives, to the fullest extent permitted by Applicable
Law, the right to trial by jury in any action, proceeding or counterclaim filed
by any party, whether in contract, tort or otherwise, relating directly or
indirectly to this Mortgage or any acts or omissions of the Mortgagor in
connection therewith or contemplated thereby.

         IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be executed
by its undersigned officer(s) or other representative(s) thereunto duly
authorized as of the date hereinabove first written.

Signed, sealed and delivered in the
presence of the undersigned witnesses:       ROBERTS PROPERTIES RESIDENTIAL,
                                             L.P., a Georgia limited partnership

   /s/ Sherevone D. Wade                     By:  ROBERTS REALTY INVESTORS,
-----------------------------                INC., a Georgia corporation,
Signature of Witness                         its sole general partner

  Sherevone D. Wade                          By:  /s/ Charles R. Elliott
-----------------------------                   -------------------------------
Print/Type Name of Witness                      Charles R. Elliott
  /s/ Mal Sport                                 Its Secretary, Treasurer and
-----------------------------                    Chief Financial Officer
Signature of Witness

  Mal Sport                                                    (Corporate Seal)
-----------------------------
Print/Type Name of Witness

                                      30
<PAGE>

STATE OF GEORGIA
COUNTY OF FULTON

         The foregoing instrument was acknowledged before me this 6th day of
November, 2001 by Charles R. Elliott, as Secretary, Treasurer and Chief
Financial Officer of Roberts Realty Investors, Inc., a Georgia corporation, on
behalf of said corporation in its capacity as sole general partner of Roberts
Properties Residential, L.P., a Georgia limited partnership. He [X] is
personally known to me or [__] has produced (insert type of identification) as
identification.

                                       /s/ Joanne M. Roberts
                                     ------------------------------------------
                                     Name:  Joanne M. Roberts
                                          -------------------------------------
                                     Notary Public
                                     Commission No.
                                                    ---------------------------
                                     My Commission Expires:  August 16, 2002
                                                           --------------------

                                                  (NOTARIAL SEAL)

                                      31
<PAGE>

                                   EXHIBIT A
                        LEGAL DESCRIPTION OF REAL ESTATE

TRACT ONE: All of TRG POLO OF PALM BEACH POLO AND COUNTRY CLUB - WELLINGTON
P.U.D., according to the map or plat thereof, recorded in Plat Book 87, Pages
160-163 of the Public Records of Palm Beach County, Florida.

TRACT TWO: TOGETHER WITH those non-exclusive rights and easements appurtenant
to and benefiting the above described Tract One created and/or granted in and
pursuant to the following instruments:

         (i) Declaration of Restrictive Covenants (North Berm Buffer) between
         Palm Beach Polo and Country Club Property Owners' Association, Inc.
         and TRG-PC, Ltd., recorded July 9, 1999 in O.R. Book 11222, Page 392,
         Public Records of Palm Beach County, Florida, re-recorded February 3,
         2000 in O. R. Book 11592, Page 520, aforesaid records, re-recorded on
         October 25, 2001 in O.R. Book 13022, Page 1686, aforesaid records.

         (ii) Declaration of Restrictive Covenants (South Berm Buffer) among
         Palm Beach Polo, Inc., Acme Improvement District, Palm Beach Polo and
         Country Club Property Owners' Association, Inc. and TRG-PC, Ltd.,
         recorded July 9, 1999 in O.R. Book 11222, Page 397, aforesaid records,
         re-recorded on October 25, 2001 in O.R. Book 13022, Page 1672,
         aforesaid records.

         (iii) Declaration of Restrictive Covenants (East Buffer) between Palm
         Beach Polo, Inc. and TRG-PC, Ltd., recorded July 9, 1999 in O.R. Book
         11222, Page 405, aforesaid records, re-recorded on October 25, 2001 in
         O.R. Book 13022, Page 1680, aforesaid records.

         (iv) Those easements (and only those easements) created in and granted
         pursuant to Article XIII, Section 13.2 and Article XIII, Section 13.5
         of that certain Declaration of Master Covenants, Conditions and
         Restrictions of Palm Beach Polo and Country Club between Palm Beach
         Polo and Country Club Property Owners' Association, Inc. and Landmark
         Land Company of Florida, Inc., dated June 22, 1987, recorded June 26,
         1987 in O.R. Book 5331, Page 1589, aforesaid records; as amended by
         First Amendment to the Declaration of Master Covenants, Conditions and
         Restrictions of Palm Beach Polo and Country Club by Landmark Land
         Company of Florida, Inc., dated October 16, 1987, recorded October 20,
         1987 in O.R. Book 5455, Page 523, aforesaid records; as further
         amended by Amendment to Declaration of Master Covenants, Conditions
         and Restrictions to Palm Beach Polo and Country Club by Palm Beach
         Polo and Country Club Property Owners' Association, Inc. and Landmark
         Land Company of Florida, Inc., dated November 6, 1987, recorded
         November 12, 1987 in O.R. Book 5480, Page 1632, aforesaid records; as
         further amended by Second Amendment to the Declaration of Master
         Covenants, Conditions and Restrictions of Palm Beach Polo and Country
         Club by Landmark Land Company of Florida, Inc., dated July 26, 1988,
         recorded in O.R. Book 5755, Page 1305, aforesaid records; as further
         amended by Third Amendment to the

<PAGE>

         Declaration of Master Covenants, Conditions and Restrictions of Palm
         Beach Polo and Country Club by Landmark Land Company of Florida, Inc.,
         dated October 31, 1990, recorded in O.R. Book 6663, Page 782,
         aforesaid records; as further amended by Fourth Amendment to
         Declaration of Master Covenants, Conditions and Restrictions of Palm
         Beach Polo and Country Club by Landmark Land Company of Florida, Inc.,
         dated April 29, 1991, recorded May 17, 1991 in O.R. Book 6826, Page
         1150, aforesaid records; as affected by Assignment and Agreement
         between Landmark Land Company of Florida, Inc. and Palm Beach Polo
         Development, L.P., dated as of November 21, 1988, recorded November
         23, 1988 in O.R. Book 5882, Page 657, aforesaid records; and as
         further affected by Partial Deannexation from Covenants, Conditions
         and Restrictions of Palm Beach Polo and Country Club by Palm Beach
         Polo Holdings, Inc., dated February 1, 2000, recorded February 3, 2000
         in O.R. Book 11592, Page 513, aforesaid records, subject to the terms
         and provisions of Article XIII, Section 13.2 and Article XIII, Section
         13.5 of said Declaration of Master Covenants, Conditions and
         Restrictions of Palm Beach Polo and Country Club, as so amended.

<PAGE>

                                   EXHIBIT B
                              OTHER LOAN DOCUMENTS

1.       Assignment of Rents and Leases executed by Mortgagor, as Mortgagor, to
         and in favor of State Farm, as Mortgagee, of even date with this
         Mortgage

2.       UCC-1 Financing Statements executed by Mortgagor, as Debtor, and State
         Farm, as Secured Party (undated).

3.       Environmental Indemnification Agreement executed by Mortgagor, and
         Roberts Realty Investors, Inc., Mortgagor's sole general partner, as
         Indemnitors, to and in favor of State Farm, as Indemnitee, of even
         date with this Mortgage.

4.       Borrower's Certificate executed by Mortgagor, as Borrower, to and in
         favor of State Farm, as Lender, of even date with this Mortgage.

5.       Loan Funding Authorization executed by Mortgagor, as Borrower, to and
         in favor of State Farm, as Lender, of even date with this Mortgage.

6.       Loan Funding Statement (Receipt for Loan Proceeds) executed by
         Mortgagor, as Borrower, to and in favor of State Farm, as Lender, of
         even date with this Mortgage.

7.       Guaranty Agreement (carve-outs) executed by Roberts Realty Investors,
         Inc., Mortgagor's sole general partner, as Guarantor, to and in favor
         of State Farm, as Lender, of even date with this Mortgage.

8.       Guaranty Agreement (rental achievement) executed by Roberts Realty
         Investors, Inc., Mortgagor's sole general partner, as Guarantor, to
         and in favor of State Farm, as Lender, of even date with this
         Mortgage.

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