ROBERTS REALTY INVESTORS INC - 10-Q Quarterly Report

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q


[ü]		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended June 30, 2002

OR

[ ]		TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the transition period from _____________ to _____________

Commission File No. 001-13183

Roberts Realty Investors, Inc.

(Exact Name of Registrant as Specified in Its Charter)


Georgia		58-2122873

(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)


8010 Roswell Road, Suite 120, Atlanta, Georgia		30350

(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, Including Area Code: (770) 394-6000

Indicate by check ü whether the registrant: (1) has filed all reports to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [ü] No [ ]

The number of outstanding shares of the registrant’s Common Stock on July 31, 2002 was 4,925,646 (net of shares held in treasury).

TABLE OF CONTENTS


PART I
	ITEM 1. FINANCIAL STATEMENTS.
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
PART II
	ITEM 1. LEGAL PROCEEDINGS.
	ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
SIGNATURES
EXHIBIT INDEX
First Amendment to Security Instrument

TABLE OF CONTENTS


		PAGE

PART I FINANCIAL INFORMATION			1

	ITEM 1. FINANCIAL STATEMENTS		1

	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		13

	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		30

PART II OTHER INFORMATION			31

	ITEM 1. LEGAL PROCEEDINGS		31

	ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS		31

	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS		31

	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K		31

PART I

ITEM 1. FINANCIAL STATEMENTS.
ROBERTS REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)


					June 30,			December 31,
					2002			2001

					(Unaudited)
ASSETS
REAL ESTATE ASSETS – At cost:
	Land				$	20,640		$	19,729
	Buildings and improvements					116,060			109,166
	Furniture, fixtures and equipment					13,583			12,891

						150,283			141,786
	Less accumulated depreciation					(24,686	)		(21,463	)

		Operating real estate assets				125,597			120,323
	Land held for future development					1,972			1,741
	Construction in progress and real estate under development					39,894			38,809

				Net real estate assets		167,463			160,873
CASH AND CASH EQUIVALENTS						1,964			2,617
RESTRICTED CASH						339			336
DEFERRED FINANCING COSTS – Net of accumulated amortization of $640 and $464 at June 30, 2002 and December 31, 2001, respectively						1,316			1,225
OTHER ASSETS – Net						569			452

					$	171,651		$	165,503

LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
	Mortgage notes payable				$	100,898		$	78,877
	Construction notes payable					19,935			31,704
	Land notes payable					6,700			8,000
	Lines of credit					400			2,000
	Swap contract liability					3,477			2,880
	Accounts payable and accrued expenses					3,076			1,859
	Due to affiliates (including retainage payable of $1,133 and $1,143 at June 30, 2002 and December 31, 2001, respectively)					2,186			2,397
	Security deposits and prepaid rents					401			416

			Total liabilities			137,073			128,133

COMMITMENTS AND CONTINGENCIES (Note 6)
MINORITY INTEREST OF UNITHOLDERS IN THE OPERATING PARTNERSHIP						10,996			11,996

SHAREHOLDERS’ EQUITY:
	Preferred shares, $.01 par value, 20,000,000 shares authorized, no shares issued and outstanding					—			—
	Common shares, $.01 par value, 100,000,000 shares authorized, 5,285,704 and 5,266,567 shares issued at June 30, 2002 and December 31, 2001, respectively					53			53
	Additional paid-in capital					24,507			24,410
	Less treasury shares, at cost (362,588 shares at June 30, 2002 and December 31, 2001)					(2,764	)		(2,764	)
	Unamortized restricted stock compensation					(158	)		(202	)
	Retained earnings					4,315			5,833
	Accumulated other comprehensive income					(2,371	)		(1,956	)

				Total shareholders’ equity		23,582			25,374

					$	171,651		$	165,503

The accompanying notes are an integral part of these consolidated financial statements.

ROBERTS REALTY INVESTORS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Amounts)


			Three Months						Six Months
			Ended June 30,						Ended June 30,

			2002			2001			2002			2001

			(Unaudited)						(Unaudited)
OPERATING REVENUES:
	Rental operations		$	4,359		$	4,588		$	8,770		$	9,098
	Other operating income			271			345			529			640

		Total operating revenues		4,630			4,933			9,299			9,738

OPERATING EXPENSES:
	Personnel			493			470			924			928
	Utilities			274			278			567			553
	Repairs, maintenance and landscaping			310			312			596			565
	Real estate taxes			488			392			983			770
	Marketing, insurance and other			270			208			534			412
	General and administrative expenses			489			393			1,014			858
	Depreciation of real estate assets			1,689			1,389			3,329			2,666

		Total operating expenses		4,013			3,442			7,947			6,752

INCOME FROM OPERATIONS				617			1,491			1,352			2,986

OTHER INCOME (EXPENSE):
Interest income				13			157			22			268
Interest expense				(1,681	)		(1,427	)		(3,264	)		(2,601	)
Loss on disposal of assets				(17	)		(14	)		(13	)		(30	)
Amortization of deferred financing costs				(83	)		(45	)		(176	)		(86	)

		Total other expense		(1,768	)		(1,329	)		(3,431	)		(2,449	)

INCOME (LOSS) BEFORE MINORITY INTEREST, GAIN ON SALE OF REAL ESTATE ASSET AND EXTRAORDINARY ITEM				(1,151	)		162			(2,079	)		537
MINORITY INTEREST OF UNITHOLDERS IN THE OPERATING PARTNERSHIP				367			(53	)		663			(177	)

INCOME (LOSS) BEFORE GAIN ON SALE OF REAL ESTATE ASSET AND EXTRAORDINARY ITEM				(784	)		109			(1,416	)		360
GAIN (LOSS) ON SALE OF REAL ESTATE ASSET, net of minority interest of unitholders in the operating partnership				0			0			(102	)		5,188

INCOME (LOSS) BEFORE EXTRAORDINARY ITEM				(784	)		109			(1,518	)		5,548
EXTRAORDINARY ITEM – Loss on early extinguishment of debt, net of minority interest of unitholders in the operating partnership				0			0			0			(291	)

NET INCOME (LOSS)			$	(784	)	$	109		$	(1,518	)	$	5,257

INCOME PER COMMON SHARE – BASIC AND DILUTED:
	Income (loss) before extraordinary item		$	(0.16	)	$	0.02		$	(0.31	)	$	1.14
	Extraordinary item			0.00			0.00			0.00			(0.06	)

	Net income (loss)		$	(0.16	)	$	0.02		$	(0.31	)	$	1.08

	Weighted average common shares – basic			4,920,708			4,845,249			4,916,151			4,856,287
	Weighted average common shares – diluted			7,220,419			7,211,537			7,220,298			7,238,122

The accompanying notes are an integral part of these consolidated financial statements.

ROBERTS REALTY INVESTORS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)


				Six Months Ended June 30,

				2002			2001

				(Unaudited)			(Unaudited)
OPERATING ACTIVITIES:
	Net income (loss)			$	(1,518	)	$	5,257
	Adjustments to reconcile net income to net cash provided by operating activities:
		Minority interest of unitholders in the operating partnership			(663	)		177
		(Gain) loss on sale of real estate asset			102			(5,188	)
		Loss on disposal of assets			13			30
		Depreciation and amortization			3,505			2,757
		Extraordinary item, loss on early extinguishment of debt			0			291
		Amortization of deferred compensation			36			41
	Change in assets and liabilities:
		Increase in restricted cash			(3	)		(33	)
		(Increase) decrease in other assets			(117	)		420
		Increase in accounts payable and accrued expenses relating to operations			1,239			699
		(Decrease) increase in security deposits and prepaid rent			(15	)		7

			Net cash provided by operating activities		2,579			4,458

INVESTING ACTIVITIES:
	Proceeds from sale of real estate assets				0			6,368
	Acquisition and construction of real estate assets				(10,316	)		(23,295	)

			Net cash used in investing activities		(10,316	)		(16,927	)

FINANCING ACTIVITIES:
	Proceeds from mortgage notes payable				22,500			12,700
	Principal repayments on mortgage notes payable				(480	)		(440	)
	Proceeds from land notes payable				0			3,000
	Payoff of land notes payable				(1,300	)		(2,000	)
	Payment of loan costs				(266	)		(374	)
	Proceeds from construction loans				10,730			9,011
	Payoff of construction loan				(22,500	)		0
	Proceeds from lines of credit				402			1,200
	Payoff of lines of credit				(2,002	)		0
	Payoff of mortgage notes, including prepayment penalty				0			(8,970	)
	Repurchase of treasury stock				0			(554	)
	Payment of dividends and distributions				0			(1,601	)

			Net cash provided by financing activities		7,084			11,972

NET DECREASE IN CASH AND CASH EQUIVALENTS					(653	)		(497	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD					2,617			1,495

CASH AND CASH EQUIVALENTS, END OF PERIOD				$	1,964		$	998

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
	Cash paid for interest			$	4,365		$	3,480

The accompanying notes are an integral part of these consolidated financial statements.

ROBERTS REALTY INVESTORS, INC.

NOTES TO FINANCIAL STATEMENTS

1. BUSINESS AND ORGANIZATION OF THE COMPANY

Roberts Realty Investors, Inc., a Georgia corporation, was formed July 22, 1994 to serve as a vehicle for investments in, and ownership of, a professionally managed real estate portfolio consisting primarily of multifamily apartment communities. Roberts Realty owns and operates multifamily residential properties as a self-administered, self-managed equity real estate investment trust (a “REIT”). Six of Roberts Realty’s completed apartment communities are located in the Atlanta metropolitan area with the seventh located in Palm Beach County, Florida.

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