Item 1.01 Entry into a Material Definitive Agreement.
On October 30, 2013, we sold our Northridge Office Building to the Fulton County
Board of Education for $5,280,000 and paid off our $2,422,533Northridge Office
Building loan. This sale also reduced our operating expenses by approximately
$210,000 per year. The Fulton County Board of Education intends to occupy 100%
of the building and as a condition of closing, required that we vacate the
building by February 28, 2014, which was later extended to April 5, 2014.
Consequently, we were required to seek new office space in another building. On
February 19, 2014, we entered into a sublease for 1,817 square feet of office
space with Roberts Capital Partners, LLC. The sublease has a commencement date
of April 7, 2014. Roberts Capital Partners, LLC is owned by Mr. Charles S.
Roberts, our Chairman of the Board, Chief Executive Officer, and President. The
rental rates and lease term are the same rental rates and lease term that
Roberts Capital Partners, LLC has with KBS SOR Northridge LLC, the unrelated
third party owner of the building. Roberts Capital Partners, LLC is liable to
the building owner for the full three-year term of its lease, however, we
negotiated a 90-day right to terminate our sublease. The sublease has a
three-year term, with a one-year option, which provides for rental rates of
$16.50 per square foot in Year 1, $17.25 per square foot in Year 2, $18.00 per
square foot in Year 3, and $18.75 per square foot for the Year 4 option. We have
the right to terminate the sublease upon 90 days notice, by paying a minimum of
12 months of rent under the sublease, and an early termination amount, which
will be the lesser of (x) the next 12 months of rent due under the sublease or
(y) the remaining amounts due under the term of the sublease, as calculated on
the early termination date. The minimum total lease payments to Roberts Capital
Partners, LLC will be $61,324 and the maximum total lease payments, assuming the
full three-year term and the exercise of the Year 4 option, would be $128,099.
We believe the favorable terms of our sublease provide us with significant
flexibility in successfully implementing our business plan.
In compliance with the applicable listing rules of the NYSE MKT stock exchange,
Roberts Realty's audit committee, which is composed of three independent
directors, approved the sublease outlined above in accordance with the
committee's charter. Additionally, in accordance with Roberts Realty's Code of
Business Conduct and Ethics, Roberts Realty's board of directors approved the
sublease, with Mr. Roberts abstaining from the vote.
Note Regarding Forward-looking Statements
This report contains a "forward-looking statement" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, as amended. The forward-looking statement relates to our
intent, belief, or expectations regarding the implementation of our business
plan. This statement involves a number of known and unknown risks,
uncertainties, and other factors, all of which are difficult or impossible to
predict and many of which are beyond the Company's control, that may cause its
actual results, performance, or achievements to be materially different from any
future results, performance, or achievements expressed or implied by this
forward-looking statement, including the occurrence, terms and timing of one or
more transactions or sales.
For this forward-looking statement, we claim the protection of the safe harbor
for forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995. You should not place undue reliance on the forward-looking
statement, which speaks only as of the date of this report. All subsequent
written and oral forward-looking statements attributable to us or any person
acting on our behalf are expressly qualified in their entirety by the cautionary
statement contained or referred to in this section. We undertake no obligation
to publicly update or revise any forward-looking statements, whether as a result
of new information, future events, or otherwise. For more information about
other risks and uncertainties we face, please see the section in our most recent
annual report on Form 10-K and quarterly report on Form 10-Q entitled "Risk
Item 9.01 Financial Statements and Exhibits.
Exhibit No. Exhibit
10.1 Office Lease by and between Roberts Capital Partners, LLC, as Landlord, and
Roberts Properties Residential, L.P., as Tenant, dated as of February 19,