<PAGE> 1
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
=======================
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
=======================
Date of Report (Date of earliest event reported): August 3, 1999
ROBERTS REALTY INVESTORS, INC.
(Exact name of Registrant as specified in charter)
GEORGIA 001-13183 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)
================================================================================
<PAGE> 2
ITEM 5. OTHER EVENTS
The Registrant is filing this Current Report on Form 8-K so as to file
with the Commission its second quarter 1999 letter to shareholders.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
Exhibit No. Description
99.1 Second quarter 1999 letter to shareholders
<PAGE> 3
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.
Dated: August 3, 1999 By: /s/ Charles R. Elliott
--------------------------------------------
Charles R. Elliott, Chief Financial Officer
(The Registrant's Principal Financial and
Chief Accounting Officer, who is duly
authorized to sign this report)
<PAGE> 4
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
99.1 Second quarter 1999 letter to shareholders
</TABLE>
<PAGE> 1
EXHIBIT 99.1
TO OUR SHAREHOLDERS
On July 14, 1999, we held our annual shareholders meeting, which included the
reelection of two of your directors, Wm. Jarell Jones and Dennis H. James.
Immediately following the formal part of the meeting, we had an in-depth
discussion of the company's financial results through June 30, 1999 and our net
asset value compared to our current stock price. We discussed numerous other
topics and we were asked many excellent questions from our shareholders, some of
which we want to share with you in the following report.
SECOND QUARTER FINANCIAL HIGHLIGHTS
First, we would like to discuss our second quarter financial results, which were
highlighted by a 13.4% increase in FFO per share due to strong growth in
operating revenue, net operating income, and improved operating margins. Funds
from Operations for the quarter ended June 30, 1999 totaled $1,384,000 or $0.19
per share compared to $1,240,000 or $0.16 per share for the quarter ended June
30, 1998. For the six months ended June 30, 1999, FFO per share increased 11.3%
to $2,728,000 or $0.37 per share compared to $2,481,000 or $0.33 per share
during the same period a year ago.
When we compare our financial results to the same period last year, you will see
second quarter operating revenues increase 16.9% while property operating
expenses increase only 10.4% resulting in a 20.7% increase in net operating
income ("NOI") and a 2.0% improvement in our NOI margin from 63.4% to 65.4%. For
the six months ended June 30, 1999 compared to the same period a year earlier,
operating revenues increased 18.8%, operating expenses increased 13.7%, and net
operating income increased 21.6%. Our strong growth in operating revenue and net
operating income during the first half of 1999 is due to the 254 new apartments
we constructed and leased during 1998. The graph below shows the growth in our
operating revenue during the past year and we expect this upward trend to
continue during the second half of 1999 as we complete the construction and
leasing of our 118 townhomes at Addison Place, our recently opened community in
north Atlanta.
GROWTH IN OPERATING REVENUE
(in dollars)
[The following data is included as a chart in the printed document.]
[
<TABLE>
<S> <C>
3 Qtr 98 4,465,000
4 Qtr 98 4,719,000
1 Qtr 99 4,756,000
2 Qtr 99 4,856,000
</TABLE>
]
<PAGE> 2
The following table compares our financial highlights for the quarter ended June
30, 1999 to the same period a year ago.
<TABLE>
<CAPTION>
For The Three Months Ended
June 30, 1999 June 30, 1998 % Increase
------------- ------------- ----------
<S> <C> <C> <C>
Operating Revenues $4,856,000 $4,154,000 16.9%
Operating Expenses $1,679,000 $1,521,000 10.4%
Net Operating Income $3,177,000 $2,633,000 20.7%
Funds From Operations $1,384,000 $1,240,000 11.6%
FFO Per Share 0.19 0.16 13.4%
NOI Margin $ 65.4% $ 63.4% 2.0%
</TABLE>
Our same-property comparisons (the eight communities that were stabilized during
both 1999 and 1998) are an important measure of our operating performance
because they show we are increasing cash flow from our existing communities by
raising rents, controlling expenses, and achieving high occupancies.
Same-property operating revenue increased 4.9% from $3,919,000 for the quarter
ended June 30, 1998 to $4,112,000 for the quarter ended June 30, 1999, while
same-property operating expenses increased only 0.7% resulting in a 7.2%
increase in net operating income. Average physical occupancy at our eight
stabilized communities increased from 95.2% to 95.5% and the average monthly
rent increased 2.5% from $879 to $901 per month. For the six months ended June
30, 1999 compared to the same period a year earlier, same-property operating
revenue increased 4.7%, operating expenses increased 3.8%, and net operating
income increased 5.3%. These eight stabilized communities represent 1,524
apartment homes or 80% of our total portfolio.
EXCELLENT NEW FINANCING
I am happy to report that in March 1999 we signed a loan commitment for $9.5
million with Prudential Insurance to provide permanent financing for our 118
townhomes located at Addison Place. The loan commitment includes a fixed
interest rate of 6.95% and a ten-year term. We expect to close the loan upon
completing construction in October 1999. Based on projected first year rental
income for the townhomes, we estimate an initial cap rate of 9.2%, which will
produce a 14% return on our invested equity.
When we close the loan on the townhomes at Addison Place, our mortgage loans
will total $89 million or 51% of the estimated market value of our 1,896
apartment homes and three land parcels. During the last three years, we have
taken advantage of low interest rates to finance each of our communities with
fixed-rate, long-term mortgage
<PAGE> 3
loans. As a result, the average interest rate on our ten mortgage loans is
6.99%, with 7.30% being the highest interest rate and 6.57% the lowest. More
important, the additional cash flow we receive from raising rents accrues to us
and not the mortgage lender, because all our mortgage loans have a fixed
interest rate.
ACHIEVING OUR INVESTMENT OBJECTIVES
As discussed during the annual meeting, obtaining the highest possible return on
your invested equity is our top priority. We are accomplishing this by focusing
on three areas ... building apartment homes of the highest quality for the
lowest possible cost, obtaining excellent long-term financing, and managing each
community for maximum cash flow and value. As we stated in our 1998 annual
report, "Our focus remains the same ... to create cash flow and capital
appreciation by developing, constructing and managing new apartment homes of the
highest quality and value". Based on our financial results for the six months
ended June 30, 1999, our apartment portfolio is currently producing a 13% return
on invested equity. However, we believe additional rent increases are achievable
and, during the next twelve months, our goal is to increase the return on
invested equity to 15%.
<TABLE>
<CAPTION>
RETURN ON
INVESTED EQUITY INVESTED EQUITY
-----------------------------------------------------------------
<S> <C> <C>
Plantation Trace $ 7,343,000 10%
Bentley Place 3,638,000 11%
Crestmark 9,311,000 11%
Ivey Brook 5,938,000 13%
Bradford Creek 5,657,000 13%
River Oaks 6,042,000 14%
Highland Park 5,623,000 15%
Preston Oaks 7,707,000 15%
Rosewood Plantation 2,395,000 27%
---------------------------------
Total/Average $53,654,000 13%
===============================
</TABLE>
Our investment objective can be summed up in the following quote from our 1998
annual report ... "We have always achieved our success the old-fashioned way. We
create real estate value by building new, high-quality apartment homes. When we
invest our dollars in new construction, it is with the clear understanding that
upon completion we will have created an investment-grade asset worth
significantly more than the original dollars invested". We are proving this to
be true at Addison Place. The townhomes cost $12.9 million to build and have a
market value of $14.8 million, resulting in $1.9 million of value being created
through the development and
<PAGE> 4
construction process. Equally important, the townhomes will add approximately
$550,000 per year to our cash flow.
The townhomes, as shown on the cover of our quarterly report, feature many
upscale amenities not found in most apartment homes, such as a side-by-side
refrigerator, built-in microwave, and crown molding throughout the entire first
floor, including the kitchen. The townhomes are spacious, averaging 1,697 square
feet, and include a formal dining room and a large living room with extensive
wall space that can easily accommodate large pieces of furniture. In addition,
each townhome has a private ground-level entry and backyard. We started our
leasing activity in the second quarter and the first residents took occupancy
beginning in June. We currently have 32 or 27% of the townhomes leased and we
expect to complete the leasing in the fourth quarter of 1999.
In addition to the 118 townhomes, we started construction during the second
quarter on 287 garden apartments at Addison Place that include a new
leading-edge design with one, two, three, and four bedroom floorplans, and some
apartments with direct-entry garages. Because we started construction in the
summer, construction of these 287 apartments should move quickly. An aerial
photo of Addison Place is enclosed.
ESTIMATED NET ASSET VALUE
At our annual meeting, we discussed our net asset value, which is the price we
believe our properties are worth if sold individually in the open market. With
our stock currently trading at 32% below our estimated net asset value of $11.46
per share, we believe it is important to discuss what we estimate our net asset
value to be and how we arrived at $11.46 per share. We have included with this
report a detailed analysis of our estimated net asset value along with a summary
of our assumptions.
Because our stock is listed for trading on an exchange, many of our shareholders
might believe the current low share price reflects the market value of our
apartment portfolio. This is not true. To prove a point and to review with you
some of our values, we issued a press release (copy enclosed) announcing we had
entered into a contract to sell Bentley Place for $8,375,000 or $356,000 higher
than the value shown on our estimated net asset value schedule. We also received
written offers for Preston Oaks and Ivey Brook. (press releases enclosed) The
offer for Preston Oaks is $24,250,000, which is $4.8 million higher than our
estimated net asset value of $19,438,000. Similarly, the offer for Ivey Brook is
$14,600,000 or $1.2 million higher than our estimated net asset value of
$13,398,000. These third party offers clearly indicate we have been conservative
with our estimate of net asset value and, more important, confirm our belief
that our stock is undervalued.
<PAGE> 5
The value we create through new construction adds significantly to net asset
value. By way of example, the $1.9 million in value created by constructing and
leasing the townhomes at Addison Place added $0.26 per share to our estimated
net asset value. We believe the estimated net asset value will increase from
$11.46 to approximately $13 per share after we complete the construction and
leasing of Addison Place, Charlotte and Old Norcross.
MAXIMIZING SHAREHOLDER VALUE
Like you, we are very frustrated with our low stock price and we have been
exploring various options to maximize shareholder value, including selling some
of our communities, especially given the recent offers we have received. In
addition to the sale of Bentley Place, we announced (press release enclosed) the
listing of our Crestmark, Ivey Brook, and Preston Oaks apartment communities for
possible sale. If we have an opportunity to sell a property at a price
significantly higher than the value shown on our estimated net asset value
schedule, then we may sell one or two properties. It would be our intention to
return the net cash proceeds to you, our shareholders, in the form of a special
distribution that would be in addition to our regular quarterly dividend.
Our goal and commitment remain the same as always ... to continue to manufacture
cash flow and capital appreciation by building great apartment homes while, at
the same time, always looking for ways to maximize shareholder value. Our stock
price does not reflect the fact that we own a very high quality portfolio of
apartment homes in great locations that are very well financed; and are
producing excellent cash flow, which continues to grow. I am confident that over
time the real value of our portfolio will be realized.
Sincerely,
/S/ Charles S. Roberts
Charles S. Roberts
President and CEO
<PAGE> 6
ROBERTS REALTY INVESTORS, INC.
ESTIMATED NET ASSET VALUE
<TABLE>
<CAPTION>
ADDISON ADDISON
PLACE PLACE OLD BENTLEY
TOWNHOMES FLATS CHARLOTTE NORCROSS PLACE
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gross Potential Income $ 1,838,520 $ 1,097,580
Add: Water Sub-metering Income $ 28,320 $ 28,080
Add: Cable Income $ 6,000 $ 6,000
Add: Garage and Storage Income $ 0 $ 0
Add: Other Income $ 23,600 $ 35,382
Less: 5% Vacancy Loss $ (94,822) $ (58,352)
-----------------------------------------------------------------------------------------
Effective Gross Income $ 1,801,618 $ 1,108,690
Salaries and benefits $ 144,000 $ 118,282
Utilities $ 62,000 $ 38,078
Maintenance and repairs $ 34,000 $ 53,102
Landscaping $ 21,000 $ 23,486
Advertising and promotion $ 18,000 $ 30,604
Administrative $ 15,000 $ 16,080
Property insurance $ 8,300 $ 6,212
Property tax expense $ 158,000 $ 84,538
Management fee $ 54,049 $ 33,261
Reserves $ 23,600 $ 23,400
-----------------------------------------------------------------------------------------
Total Operating Expenses $ 537,949 $ 427,043
Net Operating Income $ 1,263,669 $ 681,647
=========================================================================================
Capitalization Rate 8.50% 8.50%
ASSET VALUE $ 14,867,000 $ 8,019,000
Less: Mortgage Loans $ (9,500,000) $ (3,976,311)
Add: Market Value of Undeveloped Land $ 4,018,000 $ 4,150,000 $ 2,739,000
Add: Development & Construction Costs $ 965,685 $ 883,370 $ 3,881
-----------------------------------------------------------------------------------------
Equity $ 5,367,000 $ 4,983,685 $ 5,033,370 $ 2,742,881 $ 4,042,689
<CAPTION>
BRADFORD HIGHLAND IVEY PLANTATION
CREEK CRESTMARK PARK BROOK TRACE
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gross Potential Income $ 2,039,308 $ 3,269,148 $ 2,133,740 $ 1,774,020 $ 2,656,538
Add: Water Sub-metering Income $ 43,200 $ 80,160 $ 45,120 $ 35,040 $ 55,680
Add: Cable Income $ 61,692 $ 118,624 $ 8,000 $ 51,530 $ 0
Add: Garage and Storage Income $ 0 $ 19,412 $ 0 $ 0 $ 19,198
Add: Other Income $ 40,830 $ 154,348 $ 35,254 $ 53,254 $ 57,202
Less: 5% Vacancy Loss $ (109,252) $ (182,085) $ (111,106) $ (95,692) $ (139,431)
-----------------------------------------------------------------------------------------
Effective Gross Income $ 2,075,779 $ 3,459,607 $ 2,111,008 $ 1,818,152 $ 2,649,187
Salaries and benefits $ 170,624 $ 364,540 $ 174,300 $ 159,818 $ 202,898
Utilities $ 155,036 $ 272,282 $ 120,524 $ 133,530 $ 176,048
Maintenance and repairs $ 47,500 $ 174,674 $ 73,426 $ 69,592 $ 150,740
Landscaping $ 41,570 $ 70,150 $ 41,114 $ 42,074 $ 51,170
Advertising and promotion $ 52,300 $ 70,442 $ 39,206 $ 32,672 $ 48,226
Administrative $ 28,656 $ 19,020 $ 33,428 $ 21,202 $ 26,174
Property insurance $ 7,606 $ 16,926 $ 8,242 $ 8,964 $ 11,888
Property tax expense $ 179,928 $ 222,000 $ 180,062 $ 127,710 $ 228,312
Management fee $ 62,273 $ 103,788 $ 63,330 $ 54,545 $ 79,476
Reserves $ 36,000 $ 66,800 $ 37,600 $ 29,200 $ 46,400
--------------------------------------------------------------------------------------------
Total Operating Expenses $ 781,493 $ 1,380,622 $ 771,232 $ 79,307 $ 1,021,332
Net Operating Income $ 1,294,285 $ 2,078,985 $ 1,339,776 $ 1,138,845 $ 1,627,855
============================================================================================
Capitalization Rate 8.50% 8.50% 8.50% 8.50% 8.50%
ASSET VALUE $ 15,227,000 $ 24,459,000 $ 15,762,000 $ 13,398,000 $ 19,151,000
Less: Mortgage Loans $ (8,317,151) $(15,868,815) $ (7,892,922) $ (6,264,546) $(11,821,737)
Add: Market Value of Undeveloped Land
Add: Development & Construction Costs
--------------------------------------------------------------------------------------------
Equity $ 6,909,849 $ 8,590,185 $ 7,869,078 $ 7,133,454 $ 7,329,263
<CAPTION>
PRESTON RIVER ROSEWOOD
OAKS OAKS PLANTATION TOTAL
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross Potential Income $ 2,523,600 $ 2,406,626 $ 1,720,596 $ 21,459,676
Add: Water Sub-metering Income $ 51,120 $ 51,840 $ 36,480 $ 455,040
Add: Cable Income $ 8,000 $ 0 $ 6,000 $ 265,846
Add: Garage and Storage Income $ 0 $ 0 $ 0 $ 38,610
Add: Other Income $ 46,630 $ 61,380 $ 39,952 $ 547,832
Less: 5% Vacancy Loss $ (131,468) $ (125,992) $ (90,151) $ (1,138,350)
----------------------------------------------------------------------------
Effective Gross Income $ 2,497,883 $ 2,393,854 $ 1,712,877 $ 21,628,654
Salaries and benefits $ 204,008 $ 212,484 $ 132,862 $ 1,883,816
Utilities $ 107,608 $ 130,406 $ 79,098 $ 1,274,610
Maintenance and repairs $ 61,218 $ 91,952 $ 58,952 $ 815,156
Landscaping $ 43,520 $ 46,208 $ 39,050 $ 419,342
Advertising and promotion $ 38,372 $ 39,688 $ 34,334 $ 403,844
Administrative $ 32,712 $ 21,262 $ 17,788 $ 231,322
Property insurance $ 10,402 $ 12,634 $ 9,024 $ 100,198
Property tax expense $ 230,274 $ 204,882 $ 127,710 $ 1,743,416
Management fee $ 74,936 $ 71,816 $ 51,386 $ 648,860
Reserves $ 42,600 $ 43,200 $ 30,400 $ 379,200
----------------------------------------------------------------------------
Total Operating Expenses $ 845,650 $ 874,532 $ 580,604 $ 7,899,764
Net Operating Income $ 1,652,232 $ 1,519,322 $ 1,132,272 $ 13,728,890
============================================================================
Capitalization Rate 8.50% 8.50% 8.50% 8.50%
ASSET VALUE $ 19,438,000 $ 17,874,000 $ 13,321,000 $ 161,516,000
Less: Mortgage Loans $ (8,367,197) $ (9,000,205) $ (8,019,106) $ (89,027,990)
Add: Market Value of Undeveloped Land $ 10,907,000
Add: Development & Construction Costs $ 1,852,936
----------------------------------------------------------------------------
Equity $ 11,070,803 $ 8,873,795 $ 5,301,894 $ 85,247,946
Shares and Units Outstanding 7,439,466
NET ASSET VALUE PER SHARE AND UNIT $11.46
The accompanying assumptions are an integral part of our Estimated Net Asset Value schedule
</TABLE>
<PAGE> 7
ASSUMPTIONS FOR NET ASSET VALUE TABLE
The following assumptions explain in detail our belief that the net asset value
of our real estate assets is $11.46 per share. The real estate industry is
dynamic and dependent on economic and financial cycles, and events and
circumstances frequently do not occur as expected. Consequently, there will
usually be differences between our key assumptions and the actual results, and
those differences may be material. The net asset value of $11.46 per share
assumes the 118 townhomes at Addison Place (the "townhomes") have been built and
leased as planned. We expect to complete the construction and leasing of the
townhomes in the fourth quarter of 1999. The net asset value is based on our
best estimates at this time and has not been reviewed by an independent third
party or by our independent auditors.
GROSS POTENTIAL INCOME For Bentley Place, Bradford Creek, Crestmark, Highland
Park, Ivey Brook, Plantation Trace, Preston Oaks, River Oaks, and Rosewood
Plantation, (the "existing communities"), this figure is derived using the
existing contractual rents as of June 30, 1999. For the townhomes, this figure
is derived using the current lease-up rents as of June 30, 1999.
WATER SUB-METERING INCOME During the fourth quarter of 1998, we implemented a
program to bill our residents for their individual water consumption, which is
being phased in during 1999 as leases are renewed. For the existing communities
and the townhomes, this figure is derived assuming individual resident water
consumption averages $20 per month or $240 per year.
CABLE INCOME For Bradford Creek, Crestmark, and Ivey Brook, this figure is based
on actual cable income for the six months ended June 30, 1999 and then
annualizing for twelve months. For Bentley Place, Highland Park, Preston Oaks,
and Rosewood Plantation, this figure is based on our best estimate of annual
cable income. For Plantation Trace and River Oaks, there is no cable income.
GARAGE AND STORAGE INCOME For Crestmark and Plantation Trace, this figure is
based on actual garage and storage income for the six months ended June 30, 1999
and then annualizing for twelve months. For Bentley Place, Bradford Creek,
Highland Park, Ivey Brook, Preston Oaks, River Oaks, and Rosewood Plantation,
there is no garage or storage income.
OTHER INCOME For the existing communities, this figure is based on actual other
income for the six months ended June 30, 1999 and then annualizing for twelve
months. For the townhomes, this figure assumes other income of $200 per unit,
which we believe is appropriate for this purpose.
<PAGE> 8
5% VACANCY LOSS For the existing communities and the townhomes, this figure is
derived by multiplying the sum of gross potential income, water sub-metering
income, cable income, garage and storage income, and other income by 5%, a
standard vacancy factor used in the real estate industry which we believe is
appropriate for this purpose.
EFFECTIVE GROSS INCOME This figure is derived by adding gross potential income,
water sub-metering income, cable income, garage and storage income, and other
income and then subtracting the vacancy loss.
OPERATING EXPENSES For the existing communities, these figures (except for
property taxes, management fees and reserves) are based on actual operating
expenses for the six months ended June 30, 1999 and then annualizing for twelve
months. For the townhomes, these figures are based on our best estimate of
annual operating expenses. For Bradford Creek, Highland Park, Ivey Brook,
Plantation Trace, Preston Oaks, River Oaks, and Rosewood Plantation, property
taxes are based on final assessed values for 1999. For Bentley Place and
Crestmark, property taxes are based on our best estimate.
MANAGEMENT FEES For the existing communities and the townhomes, this figure is
derived by multiplying effective gross income by 3%, a standard management fee
factor which we believe is appropriate for this purpose.
RESERVES For the existing communities and the townhomes, this figure is derived
by multiplying the total number of apartment homes by $200, which is our best
estimate of replacement costs.
NET OPERATING INCOME This figure is derived by subtracting operating expenses,
management fees and reserves from effective gross income.
CAPITALIZATION RATE Capitalization is the process by which net operating income
is converted to a value. Capitalization rates reflect the relationship between
net annual operating income and the value of receiving that current and probable
future income stream during a certain projection period or remaining economic
life. The capitalization rate of 8.5% used for the existing communities and the
townhomes is supported by the sales of comparable properties.
ASSET VALUE This figure is derived by dividing the net operating income by the
capitalization rate. This value does not include the higher offers we received
for Preston Oaks and Ivey Brook nor the costs of disposition, which we estimate
to be between $1.10 and $1.15 per share.
MORTGAGE LOANS For the existing communities, this figure represents the actual
indebtedness as of June 30, 1999. For the townhomes, this figure is based on the
permanent loan that will be closed upon completing construction and leasing
activity.
<PAGE> 9
MARKET VALUE OF UNDEVELOPED LAND This figure represents our best estimate of the
market value of the undeveloped land on which we intend to construct an
additional 868 new apartment homes.
DEVELOPMENT AND CONSTRUCTION COSTS This figure represents the amount of
development and construction costs that have been incurred, net of construction
loans outstanding, as of June 30, 1999.
EQUITY This figure is derived by subtracting the mortgage loans outstanding from
the asset value and then adding the market value of undeveloped land and
development and construction costs.
NET ASSET VALUE PER SHARE This figure is derived by dividing equity by the
7,439,466 aggregate shares and units outstanding as of June 30, 1999.
<PAGE> 10
CONSOLIDATED BALANCE SHEETS
ROBERTS REALTY INVESTORS, INC.
<TABLE>
<CAPTION>
(unaudited)
June 30, 1999 December 31, 1998
------------------------------------------
<S> <C> <C>
ASSETS
Operating real estate assets, net $ 106,984,000 $ 105,916,000
Land held for future development 6,065,000 6,065,000
Construction in progress 11,599,000 7,035,000
Cash and cash equivalents 2,706,000 4,106,000
Restricted cash 396,000 470,000
Other assets, net 1,357,000 1,498,000
------------------------------------------
Total assets $ 129,107,000 $ 125,090,000
==========================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage notes payable $ 79,528,000 $ 79,973,000
Construction loan payable 5,432,000
Other liabilities 4,865,000 3,012,000
------------------------------------------
Total liabilities 89,825,000 82,985,000
Minority interest of unitholders
in the operating partnership 14,534,000 15,579,000
Shareholders' Equity
Common stock 47,000 47,000
Additional paid-in-capital 28,122,000 29,335,000
Unamortized restricted stock compensation (63,000) (92,000)
Treasury stock (771,000) (145,000)
Accumulated deficit (2,587,000) (2,619,000)
------------------------------------------
Total shareholders' equity 24,748,000 26,526,000
Total liabilities and shareholders' equity $ 129,107,000 $ 125,090,000
==========================================
</TABLE>
The balance sheet is shown at depreciated book value, not market value.
<PAGE> 11
CONSOLIDATED STATEMENTS OF OPERATIONS
ROBERTS REALTY INVESTORS, INC.
<TABLE>
<CAPTION>
(unaudited) (unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
--------------------- -----------------------
<S> <C> <C> <C> <C>
Operating revenues $4,856,000 $4,154,000 $9,612,000 $8,094,000
Less: operating expenses (1,679,000) (1,521,000) (3,329,000) (2,929,000)
---------------------------- ---------------------------
Net operating income 3,177,000 2,633,000 6,283,000 5,165,000
Other income (expenses)
Interest income 35,000 118,000 80,000 250,000
Interest expense (1,252,000) (1,071,000) (2,513,000) (2,057,000)
General and administrative (512,000) (407,000) (1,020,000) (811,000)
Gain on sale of assets 1,544,000
Loss on disposal of assets (19,000) (27,000) (28,000) (51,000)
Depreciation and amortization (1,393,000) (1,149,000) (2,751,000) (2,315,000)
---------------------------- ---------------------------
Total other income (expenses) (3,141,000) (2,536,000) (6,232,000) (3,440,000)
Income before minority interest
of unitholders 36,000 97,000 51,000 1,725,000
Minority interest of unitholders (13,000) (37,000) (19,000) (707,000)
---------------------------- ---------------------------
Income 23,000 60,000 32,000 1,018,000
Early extinguishment of debt
(net of minority interest) (158,000) (93,000)
---------------------------- ---------------------------
Net Income $ 23,000 $ (98,000) $ 32,000 $ 925,000
============================= ===========================
PER SHARE DATA:
Net income per common share $0.00 $(0.02) $0.01 $0.20
======================= ======================
FFO per share $0.19 $0.16 $0.37 $0.33
======================= ======================
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<PAGE> 12
SHAREHOLDER INFORMATION
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CORPORATE HEADQUARTERS PRIMARY BANKING RELATIONSHIPS
Roberts Realty Investors, Inc. First Union National Bank
8010 Roswell Road 999 Peachtree Street
Suite 120 Atlanta, Georgia 30374
Atlanta, Georgia 30350
Telephone: (770) 394-6000 Bank of America
600 Peachtree Street, N.E.
OFFICERS Atlanta, Georgia 30308-3318
Charles S. Roberts
Chairman and Chief Executive Officer TRANSFER AGENT
First Union National Bank
Charles R. Elliott Shareholder Services
Secretary and Chief Financial Officer 1525 West W.T. Harris Blvd.
Charlotte, North Carolina 28288-1153
BOARD OF DIRECTORS Telephone: (800) 829-8432
Charles S. Roberts
Chairman and Chief Executive Officer GENERAL COUNSEL
Holt Ney Zatcoff & Wasserman, L.L.P.
James M. Goodrich 100 Galleria Parkway, Suite 600
Consulting Engineer Atlanta, Georgia 30339
Weldon R. Humphries SECURITIES COUNSEL
Private Investor Nelson Mullins Riley & Scarborough, L.L.P.
999 Peachtree Street
Dennis H. James Suite 1400
Executive Vice-President Atlanta, Georgia 30309
L.J. Melody & Company
INDEPENDENT AUDITORS
Wm. Jarell Jones Arthur Andersen LLP
Attorney and Certified Public Accountant 133 Peachtree Street
Suite 2500
Ben A. Spalding Atlanta, Georgia 30303
Private Investor
STOCK TRADING INFORMATION
George W. Wray The common shares of Roberts Realty
Private Investor Investors, Inc. trade on the
American Stock Exchange (AMEX)
MEMBER under the symbol "RPI".
National Association of Real
Estate Investment Trusts, Inc.
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This second quarter report to shareholders contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. Although we believe the expectations
reflected in the forward-looking statements are based on reasonable assumptions,
our actual results could differ materially from those described in the
forward-looking statements. Certain factors that might cause such a difference
include, but are not limited to, the following: occupancy rates and rents may be
adversely affected by local economic and market conditions; overbuilding in our
markets; construction costs of a new community may exceed original estimates;
construction and lease-up of new communities in Atlanta and Charlotte may not be
completed on schedule; and, financing may not be available or, if available, not
on favorable terms.
