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ATLANTA-Utilizing a 1031 Tax Deferred Exchange, authorized by the Internal Revenue Service, locally based Roberts Realty Investors Inc. has used the proceeds from its January $14.8 million sale of the Rosewood Plantation apartment community in suburban Norcross, GA to buy four development sites totaling 30.9 acres for $13.4 million from an undisclosed seller in north Atlanta.

The 1031 Exchange allows Roberts to defer paying federal and state corporate capital gain taxes.

Roberts plans to build a 220-unit multifamily complex; 39,000 sf of office; 47,000 sf of retail; and 80 rental townhomes. The company’s prepared statement didn’t disclose an estimated hard construction cost of the four projects. But area construction industry estimators tell GlobeSt.com that based on current market labor and material costs, the aggregate hard cost will be at least $53 million.

In January, Roberts sold the Rosewood to Rosewood Plantation Apartments Inc. for $97,368 per unit, according to its 8K form filed with the Securities and Exchange Commission.

Roberts received cash proceeds of $5.81 million after deducting prorated rent of $73,000; a mortgage note of $7.88 million, assumed by the buyer; $366,000 for closing costs and prorations; and $740,000 for a partnership profits interest to Roberts Properties Inc., a non-owned affiliate.

The company’s $13.4 million acquisition of the 30.9 acres equates to $433,657 per acre or $9.96 per sf, top-of-the-line prices for prime parcels.

“By reinvesting the proceeds from the sale of Rosewood Plantation into these (four) development sites, we have replaced a 152-unit apartment community with the land necessary to add four new assets to our portfolio, which we expect will contribute to the company’s cash flow beginning in 2002,” Charles R. Elliott, Roberts’ chief financial officer, says in a prepared statement.

Tax deferred exchanges “continue to increase in popularity as more investors discover this powerful technique to accumulate wealth in real estate,” Cherie M. Embree, division manager, Asset Preservation Inc., Gulf Breeze, FL, tells GlobeSt.com.

Section 1031 of the Internal Revenue Codes “allows an owner of investment property exchange property and defer paying federal and state capital gain taxes if the owner purchases a ‘like-kind’ replacement property,” says Embree, who teaches Realtors about 1031 Exchanges.

“The real power of a tax-deferred exchange is not just this tax savings, (but) it is the tremendous increase in purchasing power generated by this tax savings,” Embree tells GlobeSt.com. “With the advantages of leverage, every dollar saved in taxes, allows a real estate investor to purchase two to three times more real estate.”

Which is what Roberts did.

In its $13.4 million acquisition, the company bought a 10.7-acre apartment site on Northridge Parkway, adjacent to Roberts’ successful Highland Park apartment community the company developed and built in 1995. The firm plans a 220-unit, $23 million apartment complex of one-bedroom and two-bedroom units on the site. Construction is slated for December with occupancy tentatively anticipated by mid-2002.

On a 3.9-acre office site adjacent to the 10.7-acre apartment tract, Roberts has started site work on 39,000-sf office building, part of which will also be the company’s new headquarters.

“This (3.9-acre) acquisition gives the company control of 26 contiguous acres along Northridge Parkway, between Roswell Road and Dunwoody Place,” Elliott says in the statement.

Bank of North Georgia is providing a $5.3 million construction loan for the office project, expected to be completed by January. Roberts will own and manage the building as part of its portfolio.

The third development site is a 6.8 acre tract at the intersection of Jones Bridge and Abbotts Bridge Road on which the company is constructing the Addison Place Shoppes a 47,000-sf retail center to be housed by 28 tenants. The retail is at the entrance to the company’s Addison Place apartment community.

“The addition of the Shoppes to our Addison Place community is consistent with smart-growth development where residents can live, work and shop, all within a short distance of their home,” Charles Roberts, the company’s chairman/president/CEO says in the same prepared statement.

Roberts also plans an 80 rental townhouse undertaking on a 9.5-acre pad directly across Jones Bridge Road from Addison Place.

The company’s common stock was trading at $8.22 per share on the American Stock Exchange July 16, up 12 cents (1.48%) on volume of 700. The stock’s 52-week high-low is $$8.29 and $7. There are 4.86 million shares outstanding. Charles Roberts owns 27% of the company.

Roberts Realty Investors Inc. owns 1,500 apartment units in six complexes in Atlanta and one in Charlotte. The company is an umbrella partnership real estate investment trust (UPREIT).

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