Document:

<PAGE>

                                                                 Exhibit 10.12.1

                                 PROMISSORY NOTE

$6,500,000

                                                                    May 30, 2003

                                                                Atlanta, Georgia

         FOR VALUE RECEIVED, the undersigned ROBERTS PROPERTIES RESIDENTIAL,
L.P., a Georgia limited partnership (the "BORROWER"), hereby promises to pay to
the order of COMPASS BANK (the "LENDER"), at P.O. Box 10566, Birmingham, Alabama
35296, or at such other place as Lender may direct, in lawful money of the
United States of America constituting legal tender in payment of all debts and
dues, public and private, together with interest thereon calculated at the rate
and in the manner set forth herein, the principal amount of SIX MILLION FIVE
HUNDRED THOUSAND AND N0/100 DOLLARS ($6,500,000.00), or so much thereof as may
be advanced and outstanding hereunder. Payment of principal and interest shall
be in accordance with the following provisions:

         1.       INTEREST.

                  (a) The applicable interest rate (the "APPLICABLE RATE") under
         this Note shall be an adjustable rate per annum equal to 185 basis
         points (1.85%) in excess of the 30 day "LIBOR" rate (as defined herein)
         from time to time in effect. "LIBOR" refers to the London Interbank
         Offered Rate for the stated period as published on the date of
         determination of the interest rate (or in the event no such quotation
         is available on such date, as quoted on the day most immediately
         preceding the date of determination on which such a quotation was
         available). The Applicable Rate payable under this Section 1(a) will be
         set on the date hereof, and shall be subject to change on the same day
         of each month hereafter (the "INTEREST ADJUSTMENT DATES") while any
         amount of principal is unpaid. On each Interest Adjustment Date, the
         interest rate will be raised or lowered to reflect changes in the LIBOR
         rate. In the event that at any time during the term of this Note, the
         LIBOR ceases to be published and is no longer ascertainable, the term
         "LIBOR rate" shall mean a substitute and comparable rate selected by
         Lender in its sole discretion. Notwithstanding anything to the contrary
         in the foregoing, at no time during the term of this Note shall the
         Applicable Rate be less than three and 50/100ths percent (3.50%) per
         annum.

                  (b) Interest on all principal amounts outstanding from time to
         time hereunder shall be calculated on the basis of a 360-day year
         applied to the actual number of days upon which principal is
         outstanding, by multiplying the product of the principal amount
         outstanding and the respective Applicable Rate set forth herein by the
         actual number of days elapsed, and dividing by 360. In no event shall
         the rate of interest calculated hereunder exceed the maximum rate
         allowed by law. Any principal amounts outstanding hereunder after
         maturity or earlier acceleration of this Note shall bear interest at a
         floating rate equal to two percentage points (2%) in excess of Compass
         Bank Prime until paid. Each change in the interest rate resulting from
         a change in "COMPASS BANK PRIME" shall become effective on the day on
         which such change in "Compass Bank Prime" occurs. "Compass Bank Prime",
         as used herein, is a reference rate established by the Lender for

<PAGE>

                                                                 Exhibit 10.12.1

         use in computing and adjusting interest, is subject to increase,
         decrease, or change at the Lender's discretion, and is only one of the
         reference rates or indices that Lender uses. Borrower acknowledges that
         the Lender may lend to others at rates of interest at, or greater or
         less than, "Compass Bank Prime" or the rate provided herein.

         2.       PAYMENT.

         (a)      Borrower promises to pay interest monthly on or before the
                  fifth (5th) day of each month, on the principal amount owing
                  hereunder from time to time, computed daily in the manner and
                  at the Applicable Rate set forth in Section 1 above; the first
                  such interest payment shall be due and payable on June 5,
                  2003.

         (b)      All unpaid principal, interest and other charges shall be due
                  and payable in full on April 30, 2006 (the "MATURITY DATE").

         3.       PREPAYMENT. This Note may be prepaid in whole or in part
without penalty, provided that any partial prepayment shall be in integral
multiples of $10,000, and shall be accompanied by an amount equal to all accrued
interest and other charges on the amount so prepaid.

         4.       LOAN DOCUMENTS. The indebtedness evidenced hereby is secured
by, inter alia the Construction Loan Agreement executed by Borrower in favor of
Lender as of the date hereof (the "LOAN AGREEMENT"), the Future Advance Deed to
Secure Debt, Assignment of Rents and Leases and Security Agreement on real
property (the "PROPERTY") located in Fulton County, Georgia, from Borrower to
Lender dated as of the date hereof, and the other documents or instruments
evidencing or securing the Loan (collectively, the "LOAN DOCUMENTS").

         This Note is included in the indebtedness referred to in the Loan
Documents and is entitled to the benefits of those documents, but neither this
reference to those documents nor any provisions thereof shall affect or impair
the absolute and unconditional obligations of the Borrower to pay the principal
of and interest on this Note when due.

         5.       EVENTS OF DEFAULT. Upon the occurrence of any one or more of
the following events ("EVENTS OF DEFAULT"):

                  (a) Failure to make any payment of the principal of or
         interest on this Note when and as the same becomes due and payable and
         such default is not cured within three (3) days after receipt of
         written notice thereof; and

                  (b) The occurrence of any default or event of default
         specified in the Loan Documents, or in any other instrument executed in
         connection with or securing this Note which is not cured within any
         cure period provided with respect thereto (if any),

then, or at any time thereafter during the continuance of any such event, the
holder may, with or without notice to the Borrower, declare this Note and
indebtedness evidenced hereby to be forthwith due and payable, whereupon this
Note and the indebtedness evidenced hereby shall become forthwith due and
payable, both as to principal and interest, without presentment,

                                      -2-

<PAGE>

                                                                 Exhibit 10.12.1

demand, protest, or other notice of any kind, all of which are hereby expressly
waived, anything contained herein or in any of the Loan Documents or in any
other instrument executed in connection with or securing this Note to the
contrary notwithstanding.

         6.      WAIVERS. Borrower hereby waives demand, presentment for
payment, notice of dishonor, protest, and notice of protest and diligence in
collection or bringing suit and agrees that the holder hereof may accept partial
payment, or release or exchange security or collateral, without discharging or
releasing any unreleased collateral or the obligations evidenced hereby.
Borrower further waives any and all rights of exemption, both as to personal and
real property, under the constitution or laws of the United States, the State of
Georgia, or any other state.

         7.      LATE FEE. Any scheduled payment of principal and or interest
which is not paid within ten (10) days from the date due will be subject to a
late charge of five percent (5%) of such scheduled payment.

         8.      ATTORNEYS' FEES. Borrower agrees to pay reasonable attorneys'
fees and costs actually incurred by the holder hereof in collecting to collect
this Note, whether by suit or otherwise. Whenever reference is made to the
payment of "reasonable attorney's fees" or words of similar import in this Note
the same shall mean and refer to the payment of actual attorney's fees incurred
based upon the attorney's normal hourly rate and the number of hours worked, and
not the statutory attorney's fees defined in O.C.G.A. Section 13-1-11.

         9.      MISCELLANEOUS. As used herein, the terms "Borrower", "Lender"
and "holder" shall be deemed to include their respective successors, legal
representatives and assigns, whether by voluntary action of the parties or by
operation of law. This Note is given under the seal of all parties hereto, and
it is intended that this Note is and shall constitute and have the effect of a
sealed instrument according to law. This Note has been negotiated, and is being
executed and delivered in the State of Georgia, or if executed elsewhere, shall
become effective upon the Lender's receipt and acceptance of the executed
original of this Note in the State of Georgia; provided, however, that the
Lender shall have no obligation to give, nor shall Borrower be entitled to
receive, any notice of such acceptance for this Note to become a binding
obligation of Borrower. Borrower hereby submits to jurisdiction in the State of
Georgia. This Note shall be governed by and be construed in accordance with the
laws of the State of Georgia. It is intended, and the Borrower and the holder
hereof specifically agree, that the laws of the State of Georgia governing
interest shall apply to this Note and to this transaction. This Note may not be
modified except by written agreement signed by the Borrower and the holder
hereof, or by their respective successors or assigns. Time is of the essence of
this Note.

         10.     AVOIDANCE OF USURY. If from any circumstances whatsoever,
fulfillment of any provision of this Note or of any other instrument evidencing
or securing the indebtedness evidenced hereby, at the time performance of such
provision shall be due, shall involve transcending the limit of validity
presently prescribed by any applicable usury statute or any other applicable
law, with regard to obligations of like character and amount, then ipso facto,
the obligation to be fulfilled shall be reduced to the limit of such validity,
so that in no event shall any exaction be possible under this Note or under any
other instrument evidencing or securing the indebtedness evidenced hereby, that
is in excess of the current limit of such validity, but such obligations shall
be fulfilled to the limit of such validity. In determining whether or not the
rate

                                      -3-

<PAGE>

                                                                 Exhibit 10.12.1

of interest hereunder exceeds the highest lawful rate, Maker and Holder agree
and intend that all sums paid hereunder which are deemed interest for the
purposes of determining usury, shall be prorated, allocated or spread in equal
parts over the longest period of time permitted under the applicable laws of the
State of Georgia.

         IN WITNESS WHEREOF, Borrower has caused this Note to be executed,
sealed and delivered as of the date first set forth above.

                                ROBERTS PROPERTIES RESIDENTIAL, L.P., a
                                Georgia limited partnership

                                BY: ROBERTS REALTY INVESTORS, INC., a
                                    Georgia corporation, its general partner

                                    By: /s/ Charles R. Elliott
                                        ------------------------------------
                                    Name:  Charles R. Elliott
                                    Title: Chief Operating Officer and Secretary

                                           [CORPORATE SEAL]

                                      -4-<PAGE>

                                                                 Exhibit 10.12.2

[COMPASS BANK LOGO]

                           CONSTRUCTION LOAN AGREEMENT

DATE:             May 30, 2003

LENDER:           Compass Bank
                  P.O. Box 10566
                  Birmingham, Alabama 35296
                  Attention: Commercial Real Estate Department

BORROWER:         Roberts Properties Residential, L.P.

                  Type of entity: Georgia limited partnership

                  Address:        8010 Roswell Road
                                  Suite 120
                                  Atlanta, Georgia 30350

GUARANTORS:       Those Guarantors as may be specified in the Commitment Letter.

PROJECT:          Addison Place Shoppes, located in Fulton County, Georgia on
                  the real property described on EXHIBIT A hereto

LOAN AMOUNT:      $6,500,000

COMMITMENT
LETTER:           Commitment Letter from Lender to Borrower dated May 21, 2003.
                  A copy of the Commitment Letter is attached as EXHIBIT C
                  hereto and made a part hereof.

CONSTRUCTION LOAN AGREEMENT

                                                                          PAGE 1

<PAGE>

                                                                 Exhibit 10.12.2

WHEREAS, Lender has agreed to make the Loan to Borrower in accordance with the
terms and conditions set forth in the Commitment Letter.

NOW THEREFOR, in consideration of premises, the mutual promises hereinafter
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties, intending to be legally bound
hereby, agree as follows:

1. COMMITMENT LETTER. The Loan shall be made, secured, guaranteed and disbursed
in accordance with the terms and conditions of the Commitment Letter, which
shall survive the closing of the Loan except to the extent modified in the Loan
Documents. Defined terms shall have the meanings given to them in the Commitment
Letter unless otherwise expressly set forth herein. The term "Deed to Secure
Debt" used herein and the term "mortgage" as used in the Commitment Letter shall
both mean and refer to that certain Future Advance Deed to Secure Debt,
Assignment of Rents and Leases and Security Agreement of even date herewith by
Borrower in favor of Lender.

2. CONSTRUCTION. Borrower shall construct and complete the Project as set forth
in the Commitment Letter.

3. CONDITIONS FOR FINAL DISBURSEMENT. In addition to the conditions contained in
the Commitment Letter, prior to and as a condition precedent to Lender's
obligation to make the final disbursement under the Loan, each of the following
conditions shall have been and continue to be fully satisfied:

         (a)      FINAL CERTIFICATES. Borrower shall have exhibited or caused to
                  be exhibited to Lender the final certificate of approval of
                  the various governmental authorities having jurisdiction,
                  including without limitation, a building shell certificate of
                  occupancy, any necessary construction certificates, and
                  certificates of the full payment and discharge of all costs,
                  expenses, contract payments and charges relating to
                  construction; and

         (b)      SUBSTANTIAL COMPLETION. Lender shall have received
                  certification from Lender's inspector of the substantial
                  completion of the Project.

4. ADDITIONAL REQUIREMENTS REGARDING DISBURSEMENTS. Lender may require five (5)
business days' notice in writing from Borrower prior to a disbursement under the
Loan. Unless otherwise agreed by Borrower and Lender, all disbursements are to
be made at the office of Lender or at such other place as Lender shall designate
and are to be credited to a construction account with Lender and disbursements
made therefrom upon written request of Borrower and satisfaction of all other
conditions precedent thereto.

5. CERTAIN DISBURSEMENTS. Prior to the satisfaction of the conditions set forth
herein and in the Commitment Letter, Lender may at its sole option, but shall
have no obligation to, disburse such sums as Lender may elect, including without
limitation amounts owed for expenses to Lender by Borrower.

6. REPRESENTATIONS AND WARRANTIES OF BORROWER. In order to induce Lender to
enter into this Agreement and to make the Loan for which provision is made
herein, the Borrower represents and warrants to Lender that:

         (a)      BORROWER'S ORGANIZATION AND AUTHORITY. The Borrower, if not an
                  individual, is a legal entity of the type set forth at the top
                  of page 1 hereof, duly organized, validly existing and in good
                  standing in its state of organization and is qualified or
                  registered, as required by law, and in good standing in all
                  jurisdictions where qualification or registration is
                  necessary. The Borrower and any Guarantor have all requisite
                  corporate, partnership, association, trust, or other power and
                  authority, and have taken or caused to be taken all necessary
                  corporate, partnership, association, trust, or other action
                  (including any necessary shareholder, partner, member or
                  beneficiary action) necessary to execute, deliver, enter into
                  and perform in accordance with the Loan Documents. Upon
                  execution and delivery hereof and thereof, the Loan Documents
                  will constitute valid and binding obligations of the Borrower,
                  any Guarantor, and the other parties thereto, enforceable in
                  accordance with their respective terms, and the Note will be
                  entitled to the benefits of this Agreement, the Commitment and
                  the other Loan Documents.

         (b)      ADVERSE CHANGE. There has been no material adverse change in
                  the business, properties, or condition (financial or
                  otherwise) of Borrower, any Guarantor or any of the Collateral
                  since the date of the last financial statements furnished to
                  Lender.

         (c)      LITIGATION. Except for any litigation or claims specifically
                  described on EXHIBIT B hereto, there is no action, suit or
                  proceeding at law or in equity or by or before any
                  governmental instrumentality or other agency now pending, or,
                  to the knowledge of the Borrower threatened or in prospect
                  against or affecting the Borrower, any Guarantor, or any
                  properties or rights of the Borrower or any Guarantor which,
                  if adversely determined, would materially or adversely affect
                  the business, properties, or financial condition of the
                  Borrower, any Guarantor or any of the Collateral. Borrower is
                  not currently affected by any strike or other labor
                  disturbance, nor is the Borrower or any Guarantor in default
                  in any respect under any judgment, order, injunction, rule,
                  ruling or regulation of any court or governmental commission,
                  agency or instrumentality.

CONSTRUCTION LOAN AGREEMENT

                                                                          PAGE 2

<PAGE>

                                                                 Exhibit 10.12.2

         (d)      NO VIOLATIONS. Neither the execution nor delivery of this
                  Agreement, nor any of the other Loan Documents, nor the
                  consummation of the transactions contemplated hereby and
                  thereby, nor compliance with the terms and provisions hereof
                  and thereof, will conflict with, violate or result in a breach
                  of or default under, or result in the creation or imposition
                  of any lien, charge or encumbrance of any nature whatsoever on
                  any of the assets of the Borrower or any Guarantor, pursuant
                  to the terms of any provision of any contract or agreement,
                  charter, bylaw, partnership agreement, trust indenture, or
                  other corporate, partnership or trust restriction, any law,
                  ordinance, rule, order, certificate, license, regulation or
                  decree of the United States or any state, territory or
                  political subdivision thereof, or any court, agency or other
                  tribunal under which the Borrower, any Guarantor or any of
                  Borrower's or Guarantor's assets are subject. Neither Borrower
                  nor any Guarantor is in default with respect to the
                  performance, observance or fulfillment of any of the
                  obligations, covenants or conditions contained in any of the
                  foregoing which are material to its financial condition.

         (e)      PAYMENT OF TAXES. The Borrower and, if Borrower is a
                  partnership, each of Borrower's general partners, have filed
                  or caused to be filed all federal, state and local tax
                  returns, which are required to be filed, and have paid or
                  caused to be paid all taxes as shown on said returns or on any
                  assessment received by them, to the extent that such taxes
                  have become due, except as otherwise permitted by the
                  provisions hereof. The Borrower has no reason to believe that
                  any additional taxes are due for prior calendar tax years that
                  have not been audited by the respective tax authorities beyond
                  the amounts provided in the financial statements heretofore
                  furnished to Lender.

         (f)      LOCATION OF RECORDS. Upon request by Lender, the Borrower
                  shall give to Lender written notice of each office of the
                  Borrower at which records of the Borrower pertaining to the
                  Collateral are kept. Except as such notice is given, all
                  records of the Borrower pertaining to the Collateral are and
                  shall be kept at the Borrower's address set forth in this
                  Agreement.

         (g)      PERMITS; GOVERNMENTAL AND OTHER APPROVALS. Borrower possesses
                  such licenses and permits as are required for the conduct of
                  its business. No approval, consent or authorization of any
                  governmental authority which has not heretofore been obtained
                  is necessary for the execution or delivery by Borrower of this
                  Agreement or the other Loan Documents or for the performance
                  by Borrower of any of the terms or conditions hereof or
                  thereof.

         (h)      PROPERTIES. The Borrower has good and marketable title to all
                  the Borrower's properties and assets; and all such properties
                  and assets are free and clear of Liens, except as disclosed in
                  the financial statements referred to in Section 6(b) and as
                  otherwise permitted or required by the provisions of this
                  Agreement and the other Loan Documents.

         (i)      CONSENTS, REGISTRATIONS, APPROVALS, ETC. No registration with
                  or consent or approval of, or other action by any Governmental
                  Authority is required for the execution, delivery and
                  performance of any Loan Document to which it is a party.

         (j)      SOLVENCY. The Borrower is and will remain Solvent, taking into
                  account the consummation of the transactions provided in the
                  Loan Documents.

         (k)      PROJECT. (a) The construction of the Project in accordance
                  with the Plans, and the use of the Property for the purposes
                  referenced herein will not violate any restrictive covenant,
                  any applicable governmental building law (herein "Building
                  Law"), or other governmental law, ordinance or regulation
                  applicable thereto; (b) the Property has convenient and
                  adequate access to all electric, gas, water, storm sewer,
                  sanitary sewer, telephone, cable television and other utility
                  services necessary for the construction of the Project and the
                  intended use of the Property, such utilities are available to
                  the Borrower in sufficient quantities to accommodate the
                  construction and intended use of the Property and to comply
                  with all Building Laws, and with all other applicable
                  governmental laws, rules, ordinances and codes (herein
                  "Governmental Requirements"), and the Borrower has all
                  easements, grants, permits, approvals and other rights
                  necessary to tie into and use such utilities; (c) the Property
                  has access to existing public roads and highways (including
                  all necessary rights and governmental approvals for related
                  ingress and egress) that is adequate for the intended use of
                  the Property; (d) when the Project is completed in accordance
                  with the Plans, the Property will have paved, off-street
                  parking adequate to comply with all building laws and other
                  governmental requirements applicable thereto; (e) when the
                  Project is completed in accordance with the Plans, the
                  Property will comply with all applicable Building Laws and
                  Governmental Requirements and will qualify for a certificate
                  of occupancy (or local equivalent) for all space in each
                  building on the Property); (f) the Plans are satisfactory to
                  the Borrower, comply with all applicable Governmental
                  Requirements, and have been approved by any required
                  Governmental Authorities and by all other persons whose
                  approval is required; (g) the Borrower has obtained all
                  material certificates, licenses, authorizations,
                  registrations, permits and other approvals of Governmental
                  Authorities and other persons necessary for the operation of
                  the Property, the conduct of the Borrower's business at the
                  Project, and the construction of the Project, including all
                  such certificates, licenses, authorizations, registrations,
                  permits and approvals required under applicable Building Laws;
                  (h) the present and contemplated use and occupancy of the
                  Property do not conflict with or violate any of the same; (i)
                  no portion of the Property is located within a special flood
                  hazard area; and (j) none of the improvements included in the
                  Project will create an encroachment over, across or onto any
                  boundary lines, rights-of-way, or easements, and no building
                  or improvement on any adjoining property encroaches onto the
                  Property.

<PAGE>

                                                                 Exhibit 10.12.2

         (l)      INFORMATION REGARDING LOANS; PURPOSE. All of the information
                  contained in the request for the Loans is true and correct in
                  all material respects and all statements, representations and
                  warranties contained therein and in any other Loan Document
                  signed in connection herewith are true and correct in all
                  material respects. The proceeds of the Loan will be used
                  solely for business or commercial purposes, and none of such
                  proceeds will be used for personal, family, household or
                  agricultural purposes.

         (m)      CHANGES IN MANAGEMENT. The Borrower shall not permit any
                  change in the management of the Property without the prior
                  written consent of the Lender.

         (n)      CHANGES IN CONSTRUCTION DOCUMENTS. The Borrower shall not make
                  any changes in any of the construction contracts for the
                  Project, except as expressly permitted by the Loan Documents.

         (o)      PARTICIPATION. The Borrower understands that the Lender may
                  from time to time enter into a participation agreement or
                  agreements with one or more participants pursuant to which
                  each such participant shall be given a participation in the
                  Loan and that any such participant may from time to time
                  similarly grant to one or more sub-participants
                  sub-participations in the Loan. The Borrower agrees that, to
                  the extent provided under the participation agreements, any
                  participant or sub-participant may exercise any and all rights
                  of banker's lien or set-off with respect to Borrower, as fully
                  as if such participant or sub-participant had made a Loan
                  directly to the Borrower in the amount of the participation or
                  sub-participation given to such participant or sub-participant
                  in the Loan. For the purposes of this Section 6(o) only, the
                  Borrower shall be deemed to be directly obligated to each
                  participant or sub-participant in the amount of its
                  participating interest in the amount of the Loan and any other
                  indebtedness arising under the Loan and the Loan documents.
                  Nothing contained in this Section 6(o) shall affect the
                  Lender's right of set-off (under Section 10 or applicable law)
                  with respect to the entire amount of the indebtedness
                  evidenced and/or secured by the Loan Documents,
                  notwithstanding any such participation or sub-participation.
                  The Lender may divulge to any participant or sub-participant
                  all information, reports, financial statements, certificates
                  and documents obtained by it from the Borrower or any other
                  person under any provision of this Agreement or otherwise.

7. OPERATING ACCOUNT. Borrower shall establish and maintain a depository account
at Lender during the life of the Loan.

8. EVENTS OF DEFAULT. The occurrence of any of the following events, and, except
with respect to (i) payment defaults, (ii) defaults under Sections 8(a), (b),
(c), (h), (i) and (x), or (iii) where a different time is specifieD, the
continuance of such event for thirty (30) days or more after written notice
thereof from Lender to Borrower (or in the event said default cannot be cured
within 30 days, said period may be extended for up to an additional 60 days
provided Borrower is diligently attempting to cure same), shall constitute an
Event of Default hereunder ("Event of Default")

         (a)      If Borrower fails to make any payment of the principal of or
                  interest (together with premium thereon, if any) on the Note
                  when the same becomes due and payable and such failure is not
                  cured within (3) days after receipt of written notice thereof;

         (b)      If the Deed to Secure Debt and the other Loan Documents shall
                  not provide Lender with a first priority security title to and
                  security interest in and to the Project and other real and
                  personal property covered thereby, satisfactory to Lender and
                  its counsel;

         (c)      If without the prior written consent of Lender, the Project or
                  the other collateral or any part thereof or any interest of
                  the Borrower therein, is sold, transferred, conveyed or
                  encumbered in any way, except for leases approved by Lender;
                  provided, Borrower shall have the right, without Lender's
                  prior consent but with written notice to Lender, to transfer
                  the Project to Roberts Realty Investors, Inc.

         (d)      If the improvements on the Project shall encroach upon any
                  street or upon adjoining property;

         (e)      If in Lender's sole reasonable judgment, the Project cannot be
                  completed by the date for completion set forth in the
                  Commitment Letter;

         (f)      If the improvements on the Project are damaged or destroyed by
                  fire or otherwise to an extent such that the Project cannot be
                  completed on or before the date for completion set forth in
                  the Commitment Letter, or that there are insufficient funds
                  remaining in the construction budget to complete the Project,
                  taking into account any insurance proceeds received because of
                  the damage and any additional funds provided by Borrower;

         (g)      If Borrower shall fail to comply with any of the covenants,
                  terms or conditions contained herein, in the Commitment
                  Letter, in the Note, or in any of the other Loan Documents,
                  giving consideration to any grace or cure period specifically
                  provided therefor;

         (h)      The filing by the Borrower or any Guarantor of a voluntary
                  petition in bankruptcy or the Borrower's adjudication as a
                  bankrupt or insolvent, or the filing by the Borrower or any
                  Guarantor of any petition or answer seeking or acquiescing in
                  any reorganization, arrangement, composition, readjustment,
                  liquidation, dissolution or similar relief for itself under
                  any

<PAGE>

                                                                 Exhibit 10.12.2

                  present or future federal, state or other statute, law or
                  regulation relating to bankruptcy, insolvency or other relief
                  for debtors, or the Borrower's or any Guarantor's seeking or
                  consenting to or acquiescence in the appointment of any
                  trustee, receiver or liquidator of the Borrower or any
                  Guarantor or of all or any substantial part of the Project or
                  of any or all of the rents, revenues, issues, earnings,
                  profits or income thereof, or the making of any general
                  assignment for the benefit of creditors or the admission in
                  writing of its inability to pay its debts generally as they
                  become due; or

         (i)      The entry by a court of competent jurisdiction of any order,
                  judgment, or decree approving a petition filed against the
                  Borrower or any Guarantor seeking any reorganization,
                  arrangement, composition, readjustment, liquidation,
                  dissolution or similar relief under any present or future
                  federal, state or other statute, law or regulation relating to
                  bankruptcy, insolvency, or other relief for debtors, which
                  order, judgment or decree remains unvacated and unstayed for
                  an aggregate of sixty (60) days (whether or not consecutive)
                  from the date of entry thereof, or the appointment of any
                  trustee, receiver or liquidator of the Borrower or any
                  Guarantor or of all or any substantial part of the Project or
                  of any or all of the rents, revenues, issues, earnings,
                  profits or income thereof without the consent or acquiescence
                  of the Borrower or any Guarantor which appointment shall
                  remain unvacated and unstayed for an aggregate of sixty (60)
                  days (whether or not consecutive); or

         (j)      To the full extent not prohibited by applicable law, if a
                  final non-appealable judgment by a court of competent
                  jurisdiction is entered against Borrower or any Guarantor,
                  which judgment is material to Borrower's financial condition
                  or ability to pay the Loan;

         (k)      If Borrower does not construct the Project in material
                  accordance with the plans and specifications approved by
                  Lender (the "Plans"), except as the Plans may be changed by
                  mutual written consent of Borrower and Lender, or by change
                  orders not requiring the Lender's consent hereunder. For
                  purposes of the foregoing, Lender's consent shall not be
                  required for change orders in the individual amount of $50,000
                  or less, and provided that the aggregate amount of all change
                  orders does not exceed $250,000.

         (l)      If Borrower does not permit Lender, or representatives of
                  Lender, to enter upon the Project to inspect the Project at
                  all reasonable times and examine all detailed plans, shop
                  drawings, and specifications which are kept at the Project, or
                  if Borrower fails to furnish to Lender, when requested, copies
                  of such plans, drawings and specifications;

         (m)      If the construction of the Project is not commenced within
                  sixty (60) days from closing of the Loan, or is not carried on
                  with reasonable dispatch and completed (except for tenant
                  improvements) within fifteen (15) months of the date of
                  closing of the Loan;

         (n)      If Borrower executes any security agreement, except to Lender,
                  covering any materials, fixtures or articles used in the
                  construction of the Project or covering articles of personal
                  property placed in the Project as a fixture;

         (o)      If Borrower fails to comply with any requirement of any
                  governmental authority having jurisdiction within thirty (30)
                  days after receipt of notice in writing of such requirement
                  shall have been given to Borrower or within the time specified
                  in such notice, whichever is greater;

         (p)      If Borrower fails to notify Lender of the filing of any lien
                  against the Project within ten (10) business days after
                  Borrower receives notice of such lien;

         (q)      If any representation or warranty made herein or in any of the
                  other Loan Documents shall prove to be false or misleading in
                  any material respect;

         (r)      If any report, certificate, financial statement or other
                  instrument furnished in connection with the Loan Documents or
                  the borrowing hereunder shall prove to be false or misleading
                  in any material respect;

         (s)      If Borrower or any other Person fails to observe or perform
                  any other covenant, condition or agreement under the Loan
                  Documents within any applicable cure period, or if there shall
                  occur a default or an Event of Default under the Loan
                  Documents;

         (t)      If Borrower is a partnership, if any of the general partners
                  of Borrower shall cease to be such partners, or any action
                  shall be taken or if there shall be any occurrence which could
                  or does have the effect of terminating, dissolving,
                  liquidating, or winding-up the business of any such general
                  partner;

         (u)      If any action whatsoever shall be taken, or if there shall be
                  any occurrence which could or does have the effect of,
                  terminating, dissolving, liquidating or winding-up the
                  business of the Borrower or any Guarantor;

         (v)      If any lease relating to the Project is modified, amended, or
                  terminated without Lender's prior written consent, and as
                  otherwise permitted herein or in the Loan Documents, or if
                  there shall occur any default under any such lease which is
                  not cured within the time specifically provided therefor;

<PAGE>

                                                                 Exhibit 10.12.2

         (w)      At the option of Lender, on the dissolution or liquidation of
                  any corporate Guarantor, or upon the death or legal incapacity
                  of any individual Borrower or Guarantor, or if the Borrower or
                  any Guarantor is a partnership, the death or legal incapacity
                  of any general partner of the Borrower or such Guarantor.

         (x)      Any default by Borrower under any agreement between Borrower
                  and Lender or any affiliate of Lender, now existing or
                  hereafter entered into with respect to the Loan, which
                  provides for an interest rate or commodity swap, cap, floor,
                  collar, forward foreign exchange transaction, currency swap,
                  cross-currency rate swap, currency option, or any combination
                  of, or option with respect to, these or similar transactions,
                  for the purpose of hedging Borrower's exposure to fluctuations
                  in interest rates, currency calculations or commodity prices
                  (collectively the "Swap Agreement"), which default is not
                  cured within the cure period, if any, set forth in such
                  agreement.

9. REMEDIES. Upon the occurrence of any one or more of the above-listed Events
of Default, then, or at any time thereafter, Lender may, without notice to the
Borrower or any other Person, declare the unpaid principal of and interest and
other charges on the Loan immediately due and payable, together with any other
Liabilities (hereinafter defined) of the Borrower to Lender, and such amounts
thereupon shall become immediately due and payable, without presentment, demand,
protest, notice of protest or notice of any kind, all of which are hereby
expressly waived by Borrower, and if all such amounts are not immediately paid
in full, Lender may exercise all rights given to it under the laws of the State
of Georgia and any other state and under this Agreement and the other Loan
Documents, including without limitation, foreclosure of the Deed to Secure Debt
and/or the filing of actions in law or in equity. Upon the occurrence of any one
or more of the above-listed Events of Default, all obligations on the part of
Lender to make loans and advances hereunder shall, if Lender so elects, cease
and terminate; provided, however, that Lender may, in its sole discretion, make
additional advances without becoming liable to make any other advances,
notwithstanding anything to the contrary contained or implied herein, in the
Commitment Letter or in any other Loan Document.

10. SETOFF. Lender is hereby given a continuing lien as additional security for
the Note and all other Liabilities and indebtedness of Borrower to Lender (as
defined herein and in the Deed to Secure Debt or in any other Loan Document)
upon any and all moneys, securities, and other property of Borrower, and the
proceeds thereof, now or hereafter held or received by or in transit to the
Lender from or for Borrower, whether for safekeeping, custody, pledge,
transmission, collection, or otherwise, and also upon any and all deposit
balances (general or special) and credits of Borrower with, and any and all
claims of Borrower against the Lender at any time existing, and upon the
occurrence of any Event of Default hereunder, the Lender may apply or set off
the same against the Indebtedness and Liabilities (as defined herein or in the
Deed to Secure Debt or other Loan Documents) secured by the Deed to Secure Debt
and other Loan Documents.

11. BORROWER DEFINED; SUCCESSORS AND ASSIGNS. The term "Borrower", wherever used
herein, shall mean the Borrower described on the first page of this Agreement,
whether one or more, and its or their respective successors, assigns, executors
and administrators, and all of the covenants, conditions, and agreements hereof
shall bind the successors, assigns, executors and administrators of Borrower and
shall inure to the benefit of and be available to the successors and assigns of
Lender.

12. PERSON AND LIABILITIES DEFINED. The term "Person" shall include natural
persons, corporations (which shall be deemed to include business trusts),
associations, partnerships and all such similar entities. Except as otherwise
may be defined with respect to a particular Loan Document, the term
"Liabilities" shall mean all indebtedness, liabilities and obligations of
Borrower to Lender, whether joint or several, matured or unmatured, liquidated
or unliquidated, direct or indirect, primary or secondary, absolute or
contingent, now existing or hereafter arising and whether arising by contract,
operation of law or otherwise, and all extensions, modifications, amendments,
consolidations, renewals and replacements thereof, and whether incurred or given
as maker, endorser, guarantor, surety or otherwise, including without
limitation, the Loan and the indebtedness evidenced by the Note or any
extension, modification, amendment, consolidation, renewal or replacement
thereof or therefor.

13. DELAY; NO WAIVER. No delay or failure of Lender to exercise any option or
right herein given or reserved shall constitute a waiver of such option or right
or estop Lender thereafter to exercise the same or any other option or right at
any time, and Lender's payment or contracting to pay anything Borrower has
herein agreed to pay shall not constitute a waiver of the default of Borrower in
failing to make any such payment. A waiver by Lender of any option or right
herein given or reserved on any one occasion shall not be deemed a waiver of
said option or right on any future occasion. Lender may in its discretion extend
the time of payment of the principal evidenced and secured by the Note and other
Loan Documents and any extension so granted shall be deemed to be made in
pursuance of this Agreement and not in modification thereof.

14. NO PARTNERSHIP OR JOINT VENTURE. Notwithstanding anything to the contrary
herein contained or implied, Lender, by this Agreement, or by any action
pursuant thereto or hereto, shall not be deemed a partner, joint venturer or
participant in the venture with Borrower, and Borrower hereby indemnifies and
agrees to defend and hold Lender harmless (including the payment of reasonable
attorneys' fees) from any and all damages resulting from such a construction of
the parties' relationship. The requirements herein, and the restrictions imposed
in this Agreement and the other Loan Documents, are for the sole protection and
benefit of Lender.

15. ASSIGNMENTS. Lender may assign this Loan or any parts hereof, including the
participation of all or any part of this Loan to one or more financial
institutions of its choice. Borrower shall not assign or delegate this Agreement
or any of its rights or duties hereunder without the prior written consent of
Lender. In the event of such assignment by Borrower with Lender's consent,
Borrower shall execute, or cause the execution of, all documents necessary or
appropriate to continue the full force and effect of the Note and other Loan
Documents.

<PAGE>

                                                                 Exhibit 10.12.2

16. MODIFICATIONS; WAIVER. Neither this Agreement nor any provision hereof may
be changed, modified, amended, waived, discharged, abandoned or terminated
except by an instrument in writing signed by the party against whom enforcement
of the change, modification, amendment, waiver, discharge, abandonment or
termination is sought. In the event that Lender shall waive in writing any
provision or requirement hereunder, such waiver shall be effective only for the
specific purposes, circumstances and duration stated in said waiver.

17. REMEDIES CUMULATIVE. No right or remedy conferred upon Lender in this
Agreement is intended to be exclusive of any other right or remedy contained in
the Note, this Agreement, or any other Loan Document, and every such right or
remedy shall be cumulative and in addition to every other right or remedy
contained herein or therein or now or hereafter available to the Lender at law,
in equity, by statute or otherwise.

18. INVALID PROVISIONS; NO CONFLICT. If any of the provisions of this Agreement
or the other Loan Documents or the application thereof to any Person or
circumstances, shall, to any extent, be invalid or unenforceable, the remainder
of said documents and instruments, or the application of such provision or
provisions to Persons or circumstances other than those as to whom or which it
is held invalid or unenforceable, shall not be affected thereby, and every
provision of this Agreement and the other Loan Documents shall be valid and
enforceable to the fullest extent permitted by law. No provision of this
Agreement or the other Loan Documents shall be deemed in conflict with any other
provision hereof or thereof, and the Borrower acknowledges that no such
provision or any interpretation thereof shall be deemed to diminish the rights
of the Lender, any assignee, or the holder of the Note under the terms and
conditions or any other provisions hereof or thereof. Lender may at its option
exhaust its remedies hereunder, under the Note, and under the other Loan
Documents, either concurrently or independently, and in such order as it may
determine.

19. INDEMNIFICATION. Borrower shall and does hereby indemnify and hold harmless
Lender from and against any and all claims, charges, losses, expenses and costs,
including without limitation reasonable attorneys' fees, resulting from any
claims, actions or proceedings in connection with the execution, delivery and
performance of this Agreement or the other Loan Documents, except for claims,
charges, losses, expenses and costs resulting directly from the Lender's willful
misconduct or gross negligence. The indemnification provided in this section
shall survive the payment in full of the Loan.

20. HEADINGS; UNDER SEAL; ENTIRE AGREEMENT. Article and section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement or be used to construe any provision hereof
or for any other purpose. This Agreement is intended to be under the seal of all
parties hereto and to have the effect of a sealed instrument in accordance with
the law. This Agreement, together with Commitment Letter and the other Loan
Documents, embodies the entire agreement and understanding between the parties,
supersedes all prior agreements and understandings related to the subject matter
hereof and thereof, and may not be amended except by written agreement between
Borrower and Lender.

21. NO THIRD PARTY BENEFICIARIES. There are no third party beneficiaries to this
Agreement or to any of the other Loan Documents. All conditions to Lender's
obligations to make disbursements under this Agreement and the other Loan
Documents are imposed solely and exclusively for the benefit of Lender. Neither
Borrower nor any other Person shall have standing to require satisfaction of any
such condition or be entitled to assume that Lender will refuse to make
disbursements in the absence of strict compliance with any or all such
conditions, and neither Borrower nor any other Person shall, under any
circumstances, be deemed to be a beneficiary of any conditions hereof, any or
all of which conditions may be waived freely, in whole or in part by Lender at
any time if, in its sole discretion, Lender deems it advisable so to do. Lender
makes no representations or warranties and assumes no obligation or
responsibility with respect to the quality of the construction of the
improvements or any part of the Project. This Agreement and the other Loan
Documents shall not benefit, and may not be relied upon by, any Person other
than the Borrower and the Lender.

22. NOTICES. Any notice shall be deemed conclusively to have been received by a
party hereto and be effective on the earlier of the day on which delivered to
such party at the address set forth on page 1 hereof (or at any other address as
such party shall specify to the other party in writing) or on the third business
day after the date deposited in the U.S. mails, addressed to such party at said
address.

23. GOVERNING LAW; PLACE OF EXECUTION. This Agreement and the other Loan
Documents, and the rights and obligations of the parties hereunder and
thereunder shall be governed by and be construed in accordance with the laws of
the State of Georgia. Borrower acknowledges that the negotiation of the
provisions of this Agreement and the other Loan Documents took place in the
State of Georgia, that all such documents are being executed in the State of
Georgia, or if executed elsewhere, will become effective only upon Lender's
receipt and acceptance thereof in said State; provided, however, that Lender
shall have no obligation to give, nor shall Borrower or any other Person be
entitled to receive, any notice of such receipt and acceptance in order for said
Loan Documents to become effective and valid and binding obligations of the
Borrower. Borrower acknowledges further that all of such documents were or will
be executed and delivered to Lender to induce Lender to make the Loan to
Borrower. Borrower hereby submits itself to jurisdiction in the State of Georgia
for any action or cause of action arising out of or in connection with the Loan
or the Loan Documents, agrees that venue for any such action shall be in Fulton
County, Georgia, and waives any and all rights under the laws of any state to
object to jurisdiction or venue within Fulton County, Georgia. Notwithstanding
the foregoing, nothing contained in this section shall prevent Lender from
bringing any action or exercising any rights against Borrower, any Guarantor,
any security for the Loan, or any of Borrower's properties in any other county,
state or jurisdiction. Initiating such action or proceeding or taking any such
action in any other state shall in no event constitute a waiver by Lender of any
of the foregoing.

24. INSPECTIONS; LENDER'S BENEFIT ONLY. Lender shall have the right, and
Borrower shall allow Lender and any of its authorized representatives and
construction consultants, if any shall be employed, at all times after 24 hours
prior notice to inspect the Project and all Collateral, and the status of
construction, and to review all architectural and construction drawings and
other documents. The Borrower also

<PAGE>

                                                                 Exhibit 10.12.2

shall permit Lender and any of its authorized representatives to examine,
inspect and make extracts from books and records of the Borrower, and Borrower
will discuss with Lender or its representatives the affairs, finances and
accounts of the Borrower, all at such reasonable times and as often as may be
reasonably requested by Lender. Any inspections and reports made by, for or on
behalf of Lender, including without limitation, any inspections made by Lender
or by its Construction Consultant, or any approvals of inspection reports made
by Lender or its Construction Consultant pursuant to (i) the provisions hereof,
(ii) Section 9 and 10 of Addendum A to the Commitment Letter, or (iii) any other
provisions of the Loan Documents giving Lender a right of inspection of the
Project, shall be solely for the benefit of Lender, and neither Borrower nor any
third party shall be beneficiaries of the same, or shall be entitled to claim
any loss or damage as a result of such inspections, approvals, disapprovals or
the failure of Lender to make the same. BORROWER ACKNOWLEDGES THAT LENDER IS NOT
ACTING IN A FIDUCIARY CAPACITY FOR BORROWER IN ANY RESPECT RELATIVE TO THE LOAN,
INCLUDING WITHOUT LIMITATION, IN THE MAKING OF ANY SUCH INSPECTIONS OR IN
REVIEWING OR APPROVING ANY SUCH INSPECTION REPORTS.

25. FINANCIAL STATEMENTS, REPORTS, ETC. The Borrower shall furnish to the
Lender:

         (a)      Not later than 90 days after the end of each semi-annual
                  fiscal period, financial statements (including a balance sheet
                  and the related statements of income, cash flows and retained
                  earnings) of the Borrower prepared in accordance with
                  generally accepted accounting principles (or other
                  comprehensive basis of accounting acceptable to the Lender)
                  for such period and for the period beginning on the first day
                  of the fiscal year and ending on the last day of such period,
                  together with statements in comparative form for the
                  corresponding periods in the preceding fiscal year, and
                  certified by an authorized representative of the Borrower.

         (b)      Not later than 120 days after the end of each fiscal year,
                  financial statements (including a balance sheet and the
                  related statements of income, cash flows and retained
                  earnings) of the Borrower prepared in accordance with
                  generally accepted accounting principles (or other
                  comprehensive basis of accounting acceptable to the Lender)
                  for such fiscal year, together with statements in comparative
                  form for the preceding fiscal year, and accompanied by an
                  opinion of certified public accountants acceptable to the
                  Lender, which opinion shall state in effect that (1) such
                  financial statements (A) were audited using generally accepted
                  auditing standards, (B) were prepared in accordance with
                  generally accepted accounting principles (or other
                  comprehensive basis of accounting acceptable to the Lender,
                  applied on a consistent basis, and (C) present fairly the
                  financial condition and results of operations of the Borrower
                  for the periods covered and (2) except as disclosed in such
                  opinion, in making the examination necessary for such opinion,
                  such accountants have obtained no knowledge of (A) the
                  existence of any event of default under any Loan Document or
                  under any instrument evidencing or securing any other
                  indebtedness or liability, contingent or noncontingent, of the
                  Borrower and (B) the occurrence of any event which, with
                  notice or lapse of time or both, would constitute an Event of
                  Default under any of the Loan Documents or under any
                  instrument evidencing or securing any other indebtedness or
                  contingent liability of the Borrower.

         (c)      Together with the financial statements required by subsections
                  (a) and (b) above, a certificate of an authorized
                  representative of the Borrower stating that, except as
                  disclosed in such certificate, (1) no event of default exists
                  under any of the Loan Documents or under any instrument
                  evidencing or securing any other indebtedness or contingent
                  liability of the Borrower, and (2) no event has occurred and
                  is continuing which, with notice or lapse of time or both,
                  would constitute an event of default under any of the Loan
                  Documents or under any instrument evidencing or securing any
                  other indebtedness or contingent liability of the Borrower. If
                  any such event of default exists or any such event has
                  occurred and is continuing, such certificate shall contain a
                  description of the nature and extent thereof.

         (d)      Within ten (10) days after request therefor from Lender, a
                  rent schedule of the Project, certified by the Borrower,
                  showing the name of each tenant, and for each tenant, the
                  space occupied, the lease expiration date and the rent paid.

         (e)      Not later than 120 days after the end of each fiscal year,
                  financial statements (including a balance sheet and the
                  related statements of income, cash flows and retained
                  earnings) of each Guarantor prepared in accordance with
                  generally accepted accounting principles (or other
                  comprehensive basis of accounting acceptable to Lender) for
                  such fiscal year, together with statements in comparative form
                  for the preceding fiscal year, and certified by the respective
                  Guarantor.

         (f)      Such other information regarding the property or the financial
                  condition or operations of the Borrower, the Guarantors, or
                  the Project as the Lender shall reasonably request, including,
                  without limitation, copies of Federal income tax statements of
                  the Borrower and/or the Guarantors. The guaranties of the
                  Guarantors may contain an acknowledgment of their obligations
                  to furnish the financial reports, records and statements
                  described therein.

26. LEASES. The Borrower shall obtain Lender's approval of leases for space in
the Project. Minimum criteria for such approval shall include the following:

         (a)      Tenant's ability the proposed business;

         (b)      Lease is written on a Borrower's standard form as approved by
                  Lender;

         (c)      Minimum rent of $19.50 per square foot;

         (d)      Minimum lease term of three (3) years; and

<PAGE>

                                                                 Exhibit 10.12.2

         (e)      "Triple net" as to expenses.

If requested by Lender, Borrower shall obtain from each tenant an estoppel and a
subordination, non-disturbance and attornment agreement, each in form approved
by Lender.

27. ADDITIONAL PROVISIONS. The additional provisions attached hereto as EXHIBIT
D ("Additional Provisions") are incorporated herein by this reference and made a
part of this Agreement. In the event of any conflict between the Additional
Provisions and any other provision of this Agreement, the Additional Provisions
shall control.

<PAGE>

                                                                 Exhibit 10.12.2

IN WITNESS WHEREOF, Lender and Borrower have caused this Agreement to be duly
and properly executed as of the date first set forth above.

                                LENDER:

WITNESS:                        COMPASS BANK

_____________________________   By: /s/ John L.Davis
                                    -----------------------------------
                                      John L. Davis, Senior Vice President

                                BORROWER (MORTGAGOR, DEBTOR):

WITNESS:                        ROBERTS PROPERTIES RESIDENTIAL, L.P.,
                                a Georgia limited partnership

/s/ Joanne M. Roberts           By: ROBERTS REALTY INVESTORS, INC.,
-----------------------------       a Georgia corporation, its general partner

                                    By: /s/ Charles R. Elliott
                                        -----------------------------------
                                    Name: Charles R. Elliott
                                    Title: Chief Operating Officer and Secretary

                                    [CORPORATE SEAL]

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