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U.S. Securities and Exchange Commission
Washington, D.C. 20549
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Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): JANUARY 9, 1998
Roberts Realty Investors, Inc.
(Exact name of Registrant as specified in charter)
Georgia 0-28048 56-2122873
(State or other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification Number)
8010 Roswell Road, Suite 120, Atlanta, Georgia 30350
(Address of principal executive offices) (Zip Code)
(770) 394-6000
(Registrant's Telephone Number, including Area Code)
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FORM 8-K
ITEM 2. - ACQUISITION OR DISPOSITION OF ASSETS
On January 9, 1998, Roberts Realty Investors, Inc. (the "Company") completed
the sale of the Windsong community for $9,750,000 in cash. Windsong is a
232-unit apartment community located on St. Simons Island on the southeastern
coast of Georgia. Net sales proceeds were $5,193,667 after deduction for loan
repayment of $3,959,042 and closing costs and prorations totaling $597,291. The
Company intends to reinvest the net sales proceeds in a replacement property in
connection with a Section 1031 tax-deferred exchange. The purchaser, Windsong
Apartments, L.P., is unaffiliated with the Company and the transaction was
negotiated at arm's length. In negotiating the sales price, the Company
considered, among other factors, the Windsong community's historical and
anticipated cash flows, the condition of the community, the extensive
renovations completed by the Company, and current market conditions.
ITEM 7. - FINANCIAL STATEMENTS AND EXHIBITS
(a) Pro Forma Financial Statements
(I) Pro forma condensed consolidated balance sheet as of September 30,
1997 (unaudited).
(ii) Pro forma consolidated statements of operations for the year ended
December 31, 1996 (unaudited) and for the nine months ended
September 30, 1997 (unaudited).
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ROBERTS REALTY INVESTORS, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
(UNAUDITED)
- -------------------------------------------------------------------------------
This unaudited pro forma condensed consolidated balance sheet is presented as
if Roberts Realty Investors, Inc. (the "Company") had completed the sale of the
Windsong community on September 30, 1997. In management's opinion, all
adjustments necessary to reflect the effect of this transaction have been made.
This unaudited pro forma condensed consolidated balance sheet is not
necessarily indicative of what the actual financial position would have been at
September 30, 1997, nor does it purport to represent the future financial
position of the Company.
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
(B) THE
ADJUSTMENTS COMPANY
(A) FOR SALE OF PRO FORMA PRO FORMA
HISTORICAL AUTUMN RIDGE ADJUSTMENTS CONSOLIDATED
---------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
NET REAL ESTATE ASSETS $106,513 $ (7,749)(F) $ 98,764
CASH AND CASH EQUIVALENTS 11,041 5 (C) 5,340 (G) 16,386
RESTRICTED CASH 667 (46)(H) 621
OTHER ASSETS-NET 1,067 (8)(D) 1,059
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$119,288 $(3) $ (2,455) $ 116,830
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LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Mortgage notes payable $ 68,179 $ (4,069)(I) $ 64,110
Other liabilities 4,655 (3)(E) (40)(J) 4,612
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72,834 (3) (4,109) 68,722
MINORITY INTEREST 20,672 736 (K) 21,408
SHAREHOLDERS' EQUITY
Common stock 42 42
Additional paid-in capital 29,396 (736)(K) 28,660
Accumulated deficit (3,656) 1,654 (L) (2,002)
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25,782 918 26,700
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$119,288 $(3) $ (2,455) $ 116,830
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</TABLE>
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Notes to pro forma condensed consolidated balance sheet (unaudited):
(A) Reflects the unaudited historical consolidated balance sheet of Roberts
Realty Investors, Inc. as of September 30, 1997.
(B) Represents the adjustments necessary to reflect the effects of the
Company's sale of the Autumn Ridge community.
(C) Reflects the increase in cash from the collection of $8,000 of receivables
less the payment of $3,000 of accounts payable which relate to the sale of
the Autumn Ridge community.
(D) Reflects the collection of certain receivables related to the sale of the
Autumn Ridge community.
(E) Reflects the payment of accounts payable related to the sale of the Autumn
Ridge community.
(F) Reflects a decrease for the net book value of the Windsong community that
was sold on January 9, 1998.
(G) Reflects net sales proceeds of $5,294,000 (before revenue and expense
prorations of $100,000) from the sale of the Windsong community on January
9, 1998 and $46,000 from the release of restrictions on restricted cash
balances as a result of the sale.
(H) Reflects the decrease due to the release of restrictions on certain cash
balances as a result of the sale of the Windsong community.
(I) Reflects a decrease for the $3,959,000 mortgage note payable that was
assumed by the buyer of the Windsong community and the write-off of the
$110,000 mortgage note premium as a result of the sale.
(J) Reflects the elimination of resident security deposits as a result of the
sale of the Windsong community.
(K) Represents the adjustment necessary to reflect the 44.5% pro forma
minority interest in the aggregate gain of $1,654,000 realized on the sale
of the Windsong community.
(L) Represents a gain of $1,544,000 on the sale of the Windsong community and
a $110,000 extraordinary gain on the early extinguishment of indebtedness.
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ROBERTS REALTY INVESTORS, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
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The accompanying pro forma consolidated statement of operations is presented as
if the Company's sale of the Autumn Ridge and Windsong communities and the
purchase of Roberts Properties Management L.L.C. had occurred as of January 1,
1997. In management's opinion, all adjustments necessary to reflect the effects
of these transactions have been made. This unaudited pro forma consolidated
statement of operations is not necessarily indicative of what the actual
results of operations would have been had these transactions occurred on
January 1, 1997, nor does it purport to represent the results of operations for
future periods.
<TABLE>
<CAPTION>
(B)
ROBERTS
PROPERTIES (C)
MANAGEMENT AUTUMN (D)
(A) L.L.C. RIDGE WINDSONG PRO
HISTORICAL HISTORICAL HISTORICAL HISTORICAL ADJUSTMENTS FORMA
---------- ---------- ---------- ---------- ----------- -----
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES $ 13,171 $211 $(1,088) $(1,315) $ (211) (E) $ 10,768
OPERATING EXPENSES:
Personnel 1,281 (143) (132) 1,006
Utilities 872 (124) (61) 687
Repairs, maintenance and landscaping 799 (112) (139) 548
Real estate taxes 1,093 (62) (61) 970
Management fees to related party 211 (20) (21) (170) (F) 0
Marketing, insurance and other 605 (50) (55) 500
General and administrative expenses 1,149 183 1,332
Depreciation of real estate assets 4,344 (363) (369) 3,612
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Total operating expenses 10,354 183 (874) (838) (170) 8,655
INCOME FROM OPERATIONS 2,817 28 (214) (477) (41) 2,113
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OTHER INCOME (EXPENSES):
Interest income 263 (32) (2) 229
Interest expense (3,570) 230 230 (3,110)
Gain on sale of asset 1,792 (1,792) 0
Loss on disposal of assets (124) 17 23 (84)
Amortization of deferred financing costs (90) 6 (84)
Other amortization expense (26) (7) 7 (G) (26)
Acquisition Roberts Properties Mgmt, LLC (5,900) 5,900 (H) 0
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Total other income (expenses) (7,655) (7) (1,571) 251 5,907 (3,075)
INCOME (LOSS) BEFORE MINORITY
INTEREST & EXTRAORDINARY ITEM (4,838) 21 (1,785) (226) 5,866 (962)
MINORITY INTEREST 2,085 (1,656) (I) 429
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INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM $ (2,753) $ 21 $(1,785) $ (226) $ 4,210 $ (533)
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PER SHARE DATA:
Income (loss) before extraordinary item $ (0.66) $ (0.13)
========= =========
Weighted average common shares
outstanding 4,186,330 4,186,330
========= =========
</TABLE>
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Notes to pro forma consolidated statement of operations (unaudited):
(A) Reflects the Company's unaudited historical consolidated statement of
operations for the nine months ended September 30, 1997.
(B) Reflects the historical statement of operations for the three months
ended March 31, 1997, the period prior to the acquisition of Roberts
Properties Management, L.L.C. ("Roberts Management").
(C) Reflects the historical statement of operations for the Autumn Ridge
community for the period January 1, 1997 to August 26, 1997. On August
26, 1997, the Autumn Ridge community was sold and all of its operating
revenues and expenses have been eliminated from the pro forma for the
period presented.
(D) Reflects the historical statement of operations for the Windsong
community for the nine months ended September 30, 1997. On January 9,
1998, the Windsong community was sold and all operating revenues and
expenses have been eliminated from the pro forma for the period
presented.
(E) Reflects the elimination of management fee income as a result of the
merger of Roberts Management into Roberts Properties Residential, L.P.
(F) Reflects the elimination of management fees paid to Roberts Management
by Roberts Properties Residential, L.P. The fees related to the Autumn
Ridge community are eliminated in adjustment (C) and the fees related to
the Windsong community are eliminated in adjustment (D).
(G) Reflects the elimination of amortization expense resulting from the
write-off of Roberts Management's unamortized management contracts.
(H) Reflects the elimination of the nonrecurring expense associated with the
purchase of Roberts Management.
(I) Represents the adjustment necessary to reflect the 44.6% pro forma
minority interest in the Company's pro forma loss before extraordinary
item assuming the purchase of Roberts Management occurred on January 1,
1997.
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ROBERTS REALTY INVESTORS, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
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The accompanying pro forma consolidated statement of operations is presented as
if the Company's acquisitions of (1) Roberts Properties Bentley Place, L.P.
effective March 1, 1996 for $7,235,000, (2) The Crestmark Club, L.P. effective
June 1, 1996 for $19,025,500, (3) Roberts Properties Management, L.L.C.
effective April 1, 1997 for $5,900,000, (4) the sale of the Autumn Ridge
community on August 26, 1997 for $10,601,000, and (5) the sale of the Windsong
community for $9,750,000 had occurred as of January 1, 1996. The acquisitions
of Roberts Properties Bentley Place, L.P. and The Crestmark Club, L.P. have
been accounted for using the purchase method of accounting. The Company
acquired Roberts Properties Management, L.L.C. through a merger. In
management's opinion, all adjustments necessary to reflect the effects of these
transactions have been made. This unaudited pro forma consolidated statement of
operations is not necessarily indicative of what the actual results of
operations would have been had this transaction occurred on January 1, 1996,
nor does it purport to represent the results of operations for future periods.
<TABLE>
<CAPTION>
(B)
ROBERTS
PROPERTIES (D)
MANAGEMENT AUTUMN (E)
(A) L.L.C. (C) RIDGE WINDSONG PRO FORMA PRO
HISTORICAL HISTORICAL ACQUISITIONS HISTORICAL HISTORICAL ADJUSTMENTS FORMA
---------- ---------- ------------ ---------- ---------- ----------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES $ 15,197 $874 $1,118 $(1,470) $(1,674) $(874)(F) $ 13,171
OPERATING EXPENSES:
Personnel 1,365 106 (168) (178) 1,125
Utilities 932 75 (186) (75) 746
Repairs, maintenance and landscaping 956 65 (86) (262) 673
Real estate taxes 1,149 106 (77) (53) 1,125
Management fees to related party 760 (760)(F) 0
Marketing, insurance and other 689 64 (110) (88) 555
General and administrative expenses 926 491 1,417
Depreciation of real estate assets 4,974 2 286 (579) (529) 165 (G) 4,319
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Total operating expenses 11,751 493 702 (1,206) (1,185) (595) 9,960
INCOME FROM OPERATIONS 3,446 381 416 (264) (489) (279) 3,211
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OTHER INCOME (EXPENSES):
Interest income 353 3 5 (8) (5) 348
Interest expense (3,724) (365) 269 314 (17)(H) (3,523)
Amortization of deferred financing costs (141) (16) 6 14 (I) (137)
Other amortization expense (67) (19) 19 (J) (67)
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Total other income (expenses) (3,579) (16) (376) 267 309 16 (3,379)
INCOME (LOSS) BEFORE MINORITY
INTEREST & EXTRAORDINARY ITEM (133) 365 40 3 (180) (263) (168)
MINORITY INTEREST 52 24 (K) 76
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INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM $ (81) $365 $ 40 $ 3 $ (180) $(239) $ (92)
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PER SHARE DATA:
Income (loss) before extraordinary item $ (0.02) $ (0.02)
========= =========
Weighted average common shares
assumed to be outstanding (L) 3,799,567 4,154,659
========= ---------
</TABLE>
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Notes to pro forma consolidated statement of operations (unaudited):
(A) Reflects the Company's historical consolidated statement of operations
for the year ended December 31, 1996.
(B) Reflects the unaudited historical statement of operations for the year
ended December 31, 1996 of Roberts Properties Management, L.L.C.
("Roberts Management").
(C) Reflects the Roberts Properties Bentley Place, L.P. unaudited historical
statement of operations for the two months ended February 29, 1996, and
The Crestmark Club, L.P. unaudited historical statement of operations
for the five months ended May 31, 1996, prior to their acquisition by
the Company excluding management fees paid to Roberts Management.
(D) On August 26, 1997, the Autumn Ridge community was sold and all of its
operating revenues and expenses have been eliminated from the pro forma
for the period presented. The sale resulted in a gain of $1,792,000 and
extraordinary charges of $326,000 related to debt prepayment for a net
gain of $1,466,000 which is not reflected in the pro forma statement of
operations.
(E) On January 9, 1998, the Windsong community was sold and all of its
operating revenues and expenses have been eliminated from the pro forma
for the period presented. The sale resulted in a gain of $1,544,000 on
the sale of property and an extraordinary gain of $110,000 on the early
extinguishment of indebtedness for a total gain of $1,654,000 which is
not reflected in the pro forma statement of operations.
(F) Reflects the elimination of $760,000 of management fees paid to Roberts
Management by Roberts Properties Residential, L.P. (the "Operating
Partnership") and the elimination of $114,000 of management fees paid to
Roberts Management on certain properties prior to their inclusion in the
Operating Partnership.
(G) Reflects an increase in depreciation as a result of the purchase of the
Bentley Place community ($12,000) and the Crestmark community ($155,000)
offset by the elimination of depreciation expense on certain assets held
by Roberts Management deemed to have no future value ($2,000).
(H) Reflects (a) the $1,000 reduction in interest expense associated with
the payoff of the note payable at the closing of the Bentley Place
acquisition, (b) a $73,000 increase in interest expense on the
$4,100,000 loan that was placed on the Bentley Place community having a
fixed interest rate of 7.10% for a 10-year term with monthly payments of
principal and interest based on a 30-year amortization schedule, and (c)
a $55,000 decrease in interest expense due to the payment of the
Crestmark land loans at the closing of the acquisition of the Crestmark
community.
(I) Reflects (a) a $1,000 reduction in amortization expense for the
write-off of intangible assets as a result of the Bentley Place
acquisition, (b) a $2,000 increase in amortization expense for the
estimated loan costs of $73,000 associated with the loan to be secured
by the Bentley Place community, and (c) a $15,000 reduction in
amortization expense resulting from the write-off of The Crestmark Club,
L.P.'s unamortized loan costs.
(J) Reflects the elimination of amortization expense resulting from the
cancellation and write-off of Roberts Management's unamortized
management contracts.
(K) Represents the adjustment to reflect the 45.0% pro forma minority
interest in the Company's pro forma loss before extraordinary item
assuming the acquisition of Roberts Management, the Bentley Place
community and the Crestmark community had occurred as of January 1,
1996.
(L) Pro forma weighted average shares outstanding reflects historical
weighted average shares outstanding for the year ended December 31, 1996
adjusted to give effect to (a) 744,940 shares of common stock issued in
connection with the acquisition of Bentley Place, and (b) 699,175 shares
issued in the offering of common stock in March and May as if such
shares had been issued on January 1, 1996. Earnings per share is
unaffected by partners who receive
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units in the Operating Partnership instead of shares of common stock of the
Company because unitholders and shareholders effectively share equally in the
income or loss of the Operating Partnership.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be filed on its behalf by the
undersigned hereunto duly authorized.
ROBERTS REALTY INVESTORS, INC.
Date: JANUARY 26, 1998 By: /s/ CHARLES R. ELLIOTT
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CHARLES R. ELLIOTT
CHIEF FINANCIAL OFFICER
