<PAGE>
==============================================
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): September 26, 1997
__________________________
JDN REALTY CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
MARYLAND 1-12844 58-1468053
(State or Other (Commission File (I.R.S. Employer)
Jurisdiction of Number) Identification
Incorporation) Number)
3340 PEACHTREE ROAD, NE
SUITE 1530
ATLANTA, GEORGIA 30326
(Address of Principal Executive Offices) (Zip Code)
(404) 262-3252
(Registrant's Telephone Number, including Area Code)
==============================================
<PAGE>
ITEM 5. OTHER EVENTS
- ----------------------
On February 14, 1997, JDN Realty Corporation (the "Company") acquired The
Junction Shopping Center, a 108,043 square foot shopping center in Jackson,
Mississippi for $9,100,000 from an unrelated third party. The Company financed
this acquisition with $1,900,000 in cash and the assumption of $7,200,000 in
indebtedness from the seller.
On May 28,1997, the Company purchased the 50% ownership interest of its
joint venture partner in River Hills LLC (the "Asheville Partnership") for
$283,000. The Asheville Partnership owned and operated River Hills Shopping
Center, a 161,970 square foot shopping center in Asheville, North Carolina. The
Company assumed $11,926,000 of indebtedness in conjunction with the transaction.
On June 26, 1997, the Company purchased the 50% ownership interest of its
joint venture partner in JEBCO/JDN Loganville Center LLC (the "Loganville
Partnership") for $440,000. The Loganville Partnership owned and operated Midway
Plaza Shopping Center, a 90,496 square foot shopping center in Loganville,
Georgia. The Company assumed $5,836,000 of indebtedness in conjunction with the
transaction.
On September 16, 1997, the Company acquired Bermuda Square Shopping Center,
a 116,310 square foot shopping center in Richmond, Virginia for $8,683,000 from
an unrelated third party. The Company financed this acquisition with borrowings
under its $150 million unsecured line of credit.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
- ----------------------------------------------------------------------------
The following financial statements, pro forma financial information and
exhibits are filed as part of this report:
A. Financial Statements of real estate acquired, pursuant to Rule 3-14
of Regulation S-X:
The Junction Shopping Center
----------------------------
Report of Independent Auditors
Statements of Revenue and Certain Expenses
- Period from March 25, 1996 (date of commencement of operations)
to December 31, 1996
- Period from January 1, 1997 to February 14, 1997 (date of sale)
Notes to statements of revenue and certain expenses
River Hills Shopping Center
---------------------------
Report of Independent Auditors
Statements of Revenue and Certain Expenses
- Period from September 13, 1996 (date of commencement of
operations) to December 31, 1996
- Period from January 1, 1997 to May 28, 1997 (date of sale)
Notes to statements of revenue and certain expenses
Midway Plaza Shopping Center
---------------------------
Report of Independent Auditors
Statements of Revenue and Certain Expenses
- Period from November 2, 1995 (date of commencement of
operations) to December 31, 1995
- Year ended December 31, 1996
- Period from January 1, 1997 to June 26, 1997 (date of sale)
Notes to statements of revenue and certain expenses
Bermuda Square Shopping Center
------------------------------
Report of Independent Auditors
Statements of Revenue and Certain Expenses
- Year ended December 31, 1996
- Six months ended June 30, 1997
Notes to statements of revenue and certain expenses
<PAGE>
B. Pro forma financial information required pursuant to Article 11 of
Regulation S-X:
Pro Forma Consolidated Balance Sheet of the Company
- June 30, 1997
Pro forma consolidated statements of operations of the Company
- Year ended December 31, 1996
- Six months ended June 30, 1997
The unaudited pro forma balance sheet is based on the historical
consolidated balance sheet of the Company as of June 30, 1997 as if the Company
had acquired Bermuda Square Shopping Center on June 30, 1997.
The unaudited pro forma consolidated statements of operations are based
upon the historical consolidated statements of operations of the Company and The
Junction Shopping Center, River Hills Shopping Center, Midway Plaza Shopping
Center, and Bermuda Square Shopping Center (collectively, the "Acquisition
Properties") for the year ended December 31, 1996 and the six months ended June
30, 1997 and are presented as if the Company had acquired the Acquisition
Properties on January 1, 1996 and 1997, respectively.
These unaudited pro forma financial statements should be read in
conjunction with the audited statements of revenue and certain expenses and
notes thereto of the Acquisition Properties included in this report, the
financial statements of the Company included in its annual report on Form 10-K
for the year ended December 31, 1996 and the unaudited interim financial
statements of the Company on Form 10-Q for the six months ended June 30, 1997.
These unaudited pro forma financial statements are not necessarily indicative of
what the actual results of the Company would have been assuming the transactions
had been completed as set forth above nor are they indicative of the future
results of the Company.
C. Exhibits
Exhibit 23. Consent of Independent Auditors
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
JDN REALTY CORPORATION
By: /s/ William J. Kerley
--------------------------
William J. Kerley
Chief Financial Officer
Date: September 26, 1997
<PAGE>
Report of Independent Auditors
Shareholders and Board of Directors
JDN Realty Corporation
We have audited the statement of revenue and certain expenses of The Junction
Shopping Center as described in Note 1 for the period from March 25, 1996 (date
of commencement of operations) to December 31, 1996. This statement of revenue
and certain expenses is the responsibility of The Junction Shopping Center's
management. Our responsibility is to express an opinion on this statement of
revenue and certain expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statements of revenue and certain expenses is free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of revenue and certain
expenses. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the statement of revenue and certain expenses. We believe that
our audit of the statement of revenue and certain expenses provides a reasonable
basis for our opinion.
The accompanying statement of revenue and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in a Form 8-K of JDN Realty Corporation as
described in Note 1 and is not intended to be a complete presentation of The
Junction Shopping Center's revenue and expenses.
In our opinion, the statement of revenue and certain expenses referred to above
presents fairly, in all material respects, the revenue and certain expenses of
The Junction Shopping Center for the period from March 25, 1996 (date of
commencement of operations) to December 31, 1996 in conformity with generally
accepted accounting principles.
Ernst & Young LLP
Atlanta, Georgia
September 24, 1997
<PAGE>
The Junction Shopping Center
Statements of Revenue and Certain Expenses
<TABLE>
<CAPTION>
PERIOD FROM MARCH 25,
25 1996 (DATE OF
COMMENCEMENT OF PERIOD FROM
OPERATIONS) TO JANUARY 1, 1997 TO
DECEMBER 31, FEBRUARY 14, 1997
1996 (DATE OF SALE)
-----------------------------------------------
(UNAUDITED)
<S> <C> <C>
Revenue:
Minimum rents $490,808 $114,934
Recoveries from tenants 127,536 21,222
-----------------------------------------------
Total revenue 618,344 136,156
Certain Expenses:
Operating and maintenance 115,601 24,232
Real estate taxes, net of amounts capitalized 38,521 8,964
-----------------------------------------------
Total expenses 154,122 33,196
-----------------------------------------------
Revenue in excess of certain expenses $464,222 $102,960
===============================================
</TABLE>
See accompanying notes.
<PAGE>
The Junction Shopping Center
Notes to Statements of Revenue and Certain Expenses
Period from March 25, 1996 (date of commencement of operations) to
December 31, 1996 and the period from January 1, 1997 to February 14, 1997
(date of sale)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying statements of revenue and certain expenses relate to the
operations of the The Junction Shopping Center (the "Property") located in
Jackson, Mississippi. The Property has a total of 108,043 gross leasable square
feet. On February 14, 1997, JDN Realty Corporation (the "Company") acquired the
Property for $9,100,000 from an unrelated third party.
The accompanying statements of revenue and certain expenses were prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in a Form 8-K of JDN Realty Corporation. The
statements are not representative of the actual operations of the Property for
the periods presented nor indicative of future operations as certain expenses,
primarily consisting of mortgage interest expense, depreciation, amortization,
management fees, and corporate expenses have been excluded.
REVENUE RECOGNITION
Minimum base rentals are recognized as revenue on a straight-line basis over the
terms of the operating leases. Tenants are required to pay contingent rentals
based on common area maintenance expenses, and such contingent rentals are
recognized as revenue when earned. Additionally, certain tenants pay
incremental rental amounts based on sales volumes and these percentage rentals
are recognized when billed.
CAPITALIZATION OF CONSTRUCTION COSTS
Costs of construction, property taxes, insurance, interest and other
miscellaneous expenses incurred during the development period were capitalized
until such time as the Property or portions thereof became operational.
<PAGE>
The Junction Shopping Center
Notes to Statements of Revenue and Certain Expenses (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of the statements of revenue and certain expenses in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
2. LEASES AND SIGNIFICANT TENANTS
The tenant base includes primarily national or regional retail chains and local
retailers, and consequently the Property's credit risk is concentrated in the
retail industry.
Three national retailers are the anchor tenants of the Property. Minimum rents
from these tenants, as a percentage of total minimum rents for the periods
indicated, was as follows:
<TABLE>
<CAPTION>
PERIOD FROM MARCH
25,1996 (DATE OF PERIOD FROM
COMMENCEMENT OF JANUARY 1, 1997
OPERATIONS) TO THROUGH
DECEMBER 31, 1996 FEBRUARY 14, 1997
(DATE OF SALE)
ANCHOR TENANT
- -----------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
Office Depot 46% 32%
Petsmart 23% 22%
Big B Drugs 14% 15%
</TABLE>
<PAGE>
Report of Independent Auditors
Shareholders and Board of Directors
JDN Realty Corporation
We have audited the statement of revenue and certain expenses of River Hills
Shopping Center as described in Note 1 for the period from September 13, 1996
(date of commencement of operations) to December 31, 1996. This statement of
revenue and certain expenses is the responsibility of River Hills Shopping
Center's management. Our responsibility is to express an opinion on this
statement of revenue and certain expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenue and certain expenses is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of revenue and certain
expenses. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the statement of revenue and certain expenses. We believe that
our audit of the statement of revenue and certain expenses provides a reasonable
basis for our opinion.
The accompanying statement of revenue and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in a Form 8-K of JDN Realty Corporation as
described in Note 1 and is not intended to be a complete presentation of River
Hills Shopping Center's revenue and expenses.
In our opinion, the statement of revenue and certain expenses referred to above
presents fairly, in all material respects, the revenue and certain expenses of
River Hills Shopping Center for the period from September 13, 1996 (date of
commencement of operations) to December 31, 1996 in conformity with generally
accepted accounting principles.
Ernst & Young LLP
Atlanta, Georgia
September 16, 1997
<PAGE>
River Hills Shopping Center
Statements of Revenue and Certain Expenses
<TABLE>
<CAPTION>
PERIOD FROM
SEPTEMBER 13, 1996
(DATE OF
COMMENCEMENT OF PERIOD FROM JANUARY 1,
OPERATIONS) TO 1997 TO
DECEMBER 31, MAY 28, 1997
1996 (DATE OF SALE)
--------------------------------------------------
(UNAUDITED)
<S> <C> <C>
Revenue:
Minimum rents $228,728 $623,573
Recoveries from tenants 10,135 86,781
Interest income 2,892 5,096
Other revenue 850,000
--------------------------------------------------
Total revenue 1,091,755 715,450
Certain Expenses:
Operating and maintenance 9,352 29,975
Real estate taxes 2,738 57,547
--------------------------------------------------
Total expenses 12,090 87,522
--------------------------------------------------
Revenue in excess of certain expenses $1,079,665 $627,928
==================================================
</TABLE>
See accompanying notes.
<PAGE>
River Hills Shopping Center
Notes to Statements of Revenue and Certain Expenses
Period from September 13, 1996 (date of commencement of operations) to
December 31, 1996 and the period from January 1, 1997 to May 28, 1997
(date of sale)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying statements of revenue and certain expenses relate to the
operations of the River Hills Shopping Center (the "Property") located in
Asheville, North Carolina. The Property has a total of 186,970 gross leasable
square feet. From commencement of operations to May 28, 1997, the Property was
held in a limited liability company, which was 50% owned by JDN Realty
Corporation ("JDN Realty") and 50% owned by an unrelated third party. On May
28, 1997, JDN Realty acquired the 50% interest held by the unrelated party and
thereby became the sole owner of the Property.
The accompanying statements of revenue and certain expenses were prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in a Form 8-K of JDN Realty Corporation. The
statements are not representative of the actual operations of the Property for
the periods presented nor indicative of future operations as certain expenses,
primarily consisting of mortgage interest expense, depreciation, amortization,
management fees, and corporate expenses have been excluded.
REVENUE RECOGNITION
Minimum base rentals are recognized as revenue on a straight-line basis over the
terms of the operating leases. Tenants are required to pay contingent rentals
based on common area maintenance expenses, and such contingent rentals are
recognized as revenue when earned. Additionally, certain tenants pay
incremental rental amounts based on sales volumes and these percentage rentals
are recognized when billed.
CAPITALIZATION OF CONSTRUCTION COSTS
Costs of construction, property taxes, insurance, interest and other
miscellaneous expenses incurred during the development period were capitalized
until such time as the Property or portions thereof became operational.
<PAGE>
River Hills Shopping Center
Notes to Statements of Revenue and Certain Expenses (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of the statements of revenue and certain expenses in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
2. LEASES AND SIGNIFICANT TENANTS
The tenant base includes primarily national or regional retail chains and local
retailers, and consequently the Property's credit risk is concentrated in the
retail industry.
Three national retailers are the anchor tenants of the Property. Minimum rents
from these tenants, as a percentage of total minimum rents for the periods
indicated, were as follows:
<TABLE>
<CAPTION>
PERIOD FROM
SEPTEMBER 13, 1996
(DATE OF PERIOD FROM
COMMENCEMENT OF JANUARY 1, 1997
OPERATIONS) TO THROUGH
DECEMBER 31, 1996 MAY 28, 1997
ANCHOR TENANT (DATE OF SALE)
- --------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
Carmike Cinemas 16% 22%
Circuit City 42% 22%
Food Lion 5% 25%
</TABLE>
<PAGE>
Report of Independent Auditors
Shareholders and Board of Directors
JDN Realty Corporation
We have audited the statements of revenue and certain expenses of Midway Plaza
Shopping Center as described in Note 1 for the period from November 2, 1995
(date of commencement of operations) to December 31, 1995 and the year ended
December 31, 1996. These statements of revenue and certain expenses are the
responsibility of Midway Plaza Shopping Center's management. Our responsibility
is to express an opinion on these statements of revenue and certain expenses
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statements of revenue and certain
expenses are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the statements of
revenue and certain expenses. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the statements of revenue and certain
expenses. We believe that our audits of these statements of revenue and certain
expenses provide a reasonable basis for our opinion.
The accompanying statements of revenue and certain expenses were prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in a Form 8-K of JDN Realty Corporation as
described in Note 1 and are not intended to be a complete presentation of Midway
Plaza Shopping Center's revenue and expenses.
In our opinion, the statements of revenue and certain expenses referred to above
present fairly, in all material respects, the revenue and certain expenses of
Midway Plaza Shopping Center for the period from November 2, 1995 (date of
commencement of operations) to December 31, 1995 and year ended December 31,
1996 in conformity with generally accepted accounting principles.
Ernst & Young LLP
Atlanta, Georgia
September 16, 1997
<PAGE>
Midway Plaza Shopping Center
Statements of Revenue and Certain Expenses
<TABLE>
<CAPTION>
PERIOD FROM
NOVEMBER 2, 1995 PERIOD FROM
(DATE OF JANUARY 1, 1997
COMMENCEMENT OF TO
OPERATIONS) TO YEAR ENDED JUNE 26, 1997
DECEMBER 31, DECEMBER 31, (DATE OF
1995 1996 SALE)
------------------------------------------------------
<S> <C> <C> <C>
Revenue:
Minimum rents $87,582 $739,664 $425,043
Recoveries from tenants - 86,396 49,775
Interest income - - -
Other income/(expense) - 7,158 15,870
------------------------------------------------------
Total revenue 87,582 833,218 490,688
Certain Expenses:
Operating and 934 45,255 21,019
maintenance
Real estate taxes 2,203 60,885 37,966
------------------------------------------------------
Total expenses 3,137 106,140 58,985
Revenue in excess of certain expenses ------------------------------------------------------
$84,445 $727,078 $431,703
======================================================
</TABLE>
See accompanying notes.
<PAGE>
Midway Plaza Shopping Center
Notes to Statements of Revenue and Certain Expenses
Period from November 2, 1995 (date of commencement of operations) to December
31, 1995, Year ended December 31, 1996 and the Period from January 1, 1997 to
June 26, 1997 (date of sale)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying statements of revenue and certain expenses relate to the
operations of Midway Plaza Shopping Center (the "Property") located in
Loganville, Georgia. The Property has a total of 90,496 gross leasable square
feet. From commencement of operations to June 26, 1997, the Property was held in
a limited liability company, which was 50% owned by JDN Realty Corporation ("JDN
Realty") and 50% owned by an unrelated third party. On June 26, 1997, JDN Realty
acquired the 50% interest held by the unrelated third party and thereby became
the sole owner of the Property.
The accompanying statements of revenue and certain expenses were prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in a Form 8-K of JDN Realty Corporation. The
statements are not representative of the actual operations of the Property for
the periods presented nor indicative of future operations as certain expenses,
primarily consisting of mortgage interest expense, depreciation, amortization,
management fees, and corporate expenses have been excluded.
REVENUE RECOGNITION
Minimum base rentals are recognized as revenue on a straight-line basis over the
terms of the operating leases. Tenants are required to pay contingent rentals
based on common area maintenance expenses, and such contingent rentals are
recognized as revenue when earned. Additionally, certain tenants pay
incremental rental amounts based on sales volumes and these percentage rentals
are recognized when billed.
CAPITALIZATION OF CONSTRUCTION COSTS
Costs of construction, property taxes, insurance, interest and other
miscellaneous expenses incurred during the development period were capitalized
until such time as the Property or portions thereof became operational.
<PAGE>
Midway Plaza Shopping Center
Notes to Statements of Revenue and Certain Expenses (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of the statements of revenue and certain expenses in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
2. LEASES AND SIGNIFICANT TENANTS
The tenant base includes primarily national or regional retail chains and local
retailers, and consequently the Property's credit risk is concentrated in the
retail industry.
Kroger, a national grocery chain, is the anchor tenant of the Property. Minimum
rents from Kroger, as a percentage of total minimum rents for the period from
November 2, 1995 (date of commencement of operations) to December 31, 1995, the
year ended December 31, 1996 and the period from January 1, 1997 to June 26,
1997 (date of sale) were 100%, 73% and 64% (unaudited), respectively.
<PAGE>
Report of Independent Auditors
Shareholders and Board of Directors
JDN Realty Corporation
We have audited the statement of revenue and certain expenses of Bermuda Square
Shopping Center as described in Note 1 for the year ended December 31, 1996.
This statement of revenue and certain expenses is the responsibility of Bermuda
Square Shopping Center's management. Our responsibility is to express an
opinion on this statement of revenue and certain expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenue and certain expenses is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of revenue and certain
expenses. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the statement of revenue and certain expenses. We believe that
our audit of the statement of revenue and certain expenses provides a reasonable
basis for our opinion.
The accompanying statement of revenue and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in a Form 8-K of JDN Realty Corporation as
described in Note 1 and is not intended to be a complete presentation of Bermuda
Square Shopping Center's revenue and expenses.
In our opinion, the statement of revenue and certain expenses referred to above
presents fairly, in all material respects, the revenue and certain expenses of
Bermuda Square Shopping Center for the year ended December 31, 1996 in
conformity with generally accepted accounting principles.
Ernst & Young LLP
Atlanta, Georgia
September 24, 1997
<PAGE>
Bermuda Square Shopping Center
Statements of Revenue and Certain Expenses
<TABLE>
<CAPTION>
YEAR ENDED PERIOD FROM
DECEMBER 31, JANUARY 1, 1997 TO
1996 JUNE 30, 1997
----------------------------------------------
(UNAUDITED)
<S> <C> <C>
Revenue:
Minimum and percentage rents $1,034,151 $485,445
Recoveries from tenants 147,894 69,862
Interest income 4,987 1,391
Other income 19,478 9,504
----------------------------------------------
Total revenue 1,206,510 566,202
Certain Expenses:
Operating and maintenance 127,253 56,533
Real estate taxes 81,406 43,270
----------------------------------------------
Total expenses 208,659 99,803
----------------------------------------------
Revenue in excess of certain expenses $ 997,851 $466,399
==============================================
</TABLE>
See accompanying notes.
<PAGE>
Bermuda Square Shopping Center
Notes to Statements of Revenue and Certain Expenses
For the year ended
December 31, 1996 and the period from January 1, 1997 to June 30, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying statements of revenue and certain expenses relate to the
operations of the Bermuda Square Shopping Center (the "Property") located in
Richmond, Virginia. The Property has a total of 116,310 gross leasable square
feet. On September 16, 1997, JDN Realty Corporation (the "Company") acquired
the Property for $8,683,000 from an unrelated third party.
The accompanying statements of revenue and certain expenses were prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in a Form 8-K of the Company. The statements
are not representative of the actual operations of the Property for the periods
presented nor indicative of future operations as certain expenses, primarily
consisting of mortgage interest expense, depreciation, amortization, management
fees, and corporate expenses have been excluded.
REVENUE RECOGNITION
Minimum base rentals are recognized as revenue on a straight-line basis over the
terms of the operating leases. Tenants are required to pay contingent rentals
based on common area maintenance expenses, and such contingent rentals are
recognized as revenue when earned. Additionally, certain tenants pay
incremental rental amounts based on sales volumes and these percentage rentals
are recognized when billed.
USE OF ESTIMATES
The preparation of the statements of revenue and certain expenses in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
<PAGE>
Bermuda Square Shopping Center
Notes to Statements of Revenue and Certain Expenses (continued)
2. LEASES AND SIGNIFICANT TENANTS
The tenant base includes primarily national or regional retail chains and local
retailers, and consequently the Property's credit risk is concentrated in the
retail industry.
The significant tenants of the Property and the minimum rents from these
tenants, as a percentage of total minimum rents for the periods indicated, were
as follows:
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1, 1997
YEAR ENDED THROUGH
ANCHOR TENANT DECEMBER 31, 1996 JUNE 30, 1997
-------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
Ukrop's 16% 16%
Rite Aid 5% 5%
A & N Sports 6% 6%
</TABLE>
<PAGE>
JDN REALTY CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
JDN Realty JDN Realty
Corporation Pro Forma Corporation
Historical (A) Adjustments Pro Forma
---------------- ------------- --------------
(Unaudited)
<S> <C> <C> <C>
ASSETS
Shopping center properties, at cost:
Land $ 57,843 $ 1,302 (B) $ 59,145
Buildings and improvements 298,769 7,381 (B) 306,150
Property under development 64,085 - 64,085
------------ ---------- -----------
420,697 8,683 429,380
Less: accumulated depreciation and amortization (32,835) - (32,835)
------------ ---------- -----------
Shopping center properties, net 387,862 8,683 396,545
Cash and cash equivalents 15,934 - 15,934
Restricted cash - escrow 2,535 - 2,535
Rents receivable 1,272 - 1,272
Investments in and advances to unconsolidated entities 52,931 - 52,931
Deferred costs, net of amortization 5,753 - 5,753
Other assets 11,457 - 11,457
------------ ---------- -----------
$477,744 $ 8,683 $486,427
============ ========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Unsecured line of credit $100,000 $ 8,683 (C) $108,683
Mortgage notes payable 85,032 - 85,032
Accounts payable and accrued expenses 2,092 - 2,092
Other liabilities 1,563 - 1,563
----------- ---------- -----------
Total Liabilities 188,687 8,683 197,370
Shareholders' Equity
Preferred stock, par value $.01 per share-
authorized 20,000,000 shares, none outstanding - - -
Common stock, par value $.01 per share-
authorized 150,000,000 shares, issued and
outstanding 15,461,612 shares in 1997 155 - 155
Paid-in capital 295,991 - 295,991
Accumulated deficit (7,089) - (7,089)
------------ ---------- -----------
Total Shareholders' Equity 289,057 - 289,057
------------ ---------- -----------
$477,744 $ 8,683 $486,427
============ ========== ===========
</TABLE>
SEE NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
<PAGE>
JDN REALTY CORPORATION
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
(UNAUDITED)
(A) Represents the historical consolidated balance sheet of JDN Realty
Corporation (the "Company") as of June 30, 1997. Included in this balance
sheet are the effects of acquisitions made prior to June 30, 1997,
including The Junction Shopping Center, River Hills Shopping Center and
Midway Plaza Shopping Center. No pro forma adjustments are included for
acquisitions made prior to June 30, 1997.
(B) Represents the allocated purchase price for Bermuda Square Shopping
Center.
(C) Represents the financing of the purchase price of Bermuda Square Shopping
Center with an advance on the Company's unsecured line of credit.
<PAGE>
JDN Realty Corporation
Pro Forma Consolidated Statement of Income
Year Ended December 31, 1996
(In thousands, except per share data)
<TABLE>
<CAPTION>
JDN Realty The Junction River Hills Midway Plaza Bermuda Square
Corporation Shopping Shopping Shopping Shopping
Historical (A) Center (B) Center (C) Center (D) Center (E)
-------------- ------------ ----------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Revenues:
Minimum and percentage rents $32,933 $ 491 $ 229 $ 739 $ 1,034
Recoveries from tenants 3,475 128 10 87 148
Other revenue 215 - 850 - -
-------------- ------------ ----------- ------------ --------------
Total revenues 36,623 619 1,089 826 1,182
Operating expenses:
Operating and maintenance 2,586 117 9 45 127
Real estate taxes 1,817 38 3 61 82
General and administrative 3,367 - - - -
Depreciation and amortization 7,786 - - - -
-------------- ------------ ----------- ------------ --------------
Total operating expenses 15,556 155 12 106 209
-------------- ------------ ----------- ------------ --------------
Income from operations 21,067 464 1,077 720 973
Other income (expense):
Interest expense, net (5,868) - - - -
Other income (expense), net 83 - 3 7 25
Equity in net income of unconsolidated entities 1,415 - - - -
-------------- ------------ ----------- ------------ --------------
Income before net loss on real estate sales and
extraordinary items 16,697 464 1,080 727 998
Net loss on real estate sales (15) - - - -
-------------- ------------ ----------- ------------ --------------
Income before extraordinary items 16,682 464 1,080 727 998
Extraordinary items - - - - -
-------------- ------------ ----------- ------------ --------------
Net income $16,682 $ 464 $ 1,080 $ 727 $ 998
============== ============ =========== ============ ==============
Net income per share $1.50
==============
Weighted average shares outstanding 11,086
==============
<CAPTION>
JDN Realty
Pro Forma Corporation
Adjustments Pro Forma
----------- -----------
<S> <C> <C>
Revenues:
Minimum and percentage rents $ - $35,426
Recoveries from tenants - 3,848
Other revenue - 1,065
----------- -----------
Total revenues - 40,339
Operating expenses:
Operating and maintenance - 2,884
Real estate taxes - 2,001
General and administrative - 3,367
Depreciation and amortization 546 (G) 8,332
----------- -----------
Total operating expenses 546 16,584
----------- -----------
Income from operations (546) 23,755
Other income (expense):
Interest expense, net (1,535) (H) (7,403)
Other income (expense), net - 118
Equity in net income of unconsolidated entities (558) (F) 857
----------- -----------
Income before net loss on real estate sales and
extraordinary items (2,639) 17,327
Net loss on real estate sales - (15)
----------- -----------
Income before extraordinary items (2,639) 17,312
Extraordinary items - -
----------- -----------
Net income $(2,639) $17,312
=========== ===========
Net income per share $1.56
===========
Weighted average shares outstanding 11,086
===========
</TABLE>
SEE NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF INCOME
<PAGE>
JDN REALTY CORPORATION
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(A) Represents the historical consolidated statement of income of JDN Realty
Corporation (the "Company") for the year ended December 31, 1996.
(B) Represents the revenue and certain expenses of The Junction Shopping Center
for the period from March 25, 1996 (date of commencement of operations) to
December 31, 1996.
(C) Represents the revenue and certain expenses of River Hills Shopping Center
for the period from September 13, 1996 (date of commencement of operations)
to December 31,1996.
(D) Represents the revenue and certain expenses of Midway Plaza Shopping Center
for the year ended December 31, 1996.
(E) Represents the revenue and certain expenses of Bermuda Square Shopping
Center for the year ended December 31, 1996.
(F) Represents elimination of the Company's income from its 50% interests in
the limited liability companies which owned River Hills Shopping Center and
Midway Plaza Shopping Center.
(G) Represents depreciation expense related to the portion of the purchase
price of the Acquisition Properties allocated to building using a 31.5 year
life.
(H) Represents interest expense related to the Acquisition Properties assuming
the Company incurred or assumed indebtedness at the beginning of the period
to finance these acquisitions.
<PAGE>
JDN Realty Corporation
Pro Forma Consolidated Statement of Income
Six Months Ended June 30, 1997
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
JDN Realty The Junction River Hill Midway Plaza Bermuda Square
Corporation Shopping Shopping Shopping Shopping Pro Forma
Historical (A) Center (B) Center (C) Center (D) Center (E) Adjustments
-------------- ------------ ---------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Minimum and percentage rents $ 19,234 $ 115 $ 624 $ 425 486 $ -
Recoveries from tenants 1,873 21 87 50 70 -
Other revenue 87 - - - - -
-------------- ------------ ---------- ----------- ---------- -------
Total revenues 21,194 136 711 475 556 -
Operating expenses:
Operating and maintenance 1,412 24 30 21 57 -
Real estate taxes 974 9 58 38 43 -
General and administrative 1,967 - - - - -
Depreciation and amortization 4,552 - - - - 358 (G)
-------------- ------------ ---------- ----------- ---------- -------
Total operating expenses 8,905 33 88 59 100 358
-------------- ------------ ---------- ----------- ---------- -------
Income from operations 12,289 103 623 416 456 (358)
Other income (expense):
Interest expense, net (2,137) - - - - (900) (H)
Other income (expense), net 556 - 5 16 10 -
Equity in net income of unconsolidated entities 1,521 - - - - (178) (F)
-------------- ------------ ---------- ----------- ---------- -------
Income before net loss on real estate sales and
extraordinary items 12,229 103 628 432 466 (1,436)
Net loss on real estate sales - - - - - -
-------------- ------------ ---------- ----------- ---------- -------
Income before extraordinary items 12,229 103 628 432 466 (1,436)
Extraordinary items (401) - - - - -
-------------- ------------ ---------- ----------- ---------- -------
Net income $ 11,828 $ 103 $ 628 $ 432$ 466 (1,436)
============== ============ ========== =========== ========== =======
Net income per share $ 0.81
==============
Weighted average shares outstanding 14,543
==============
<CAPTION>
JDN Realty
Corporation
Pro Forma
------------
<S> <C>
Revenues:
Minimum and percentage rents $ 20,884
Recoveries from tenants 2,101
Other revenue 87
------------
Total revenues 23,072
Operating expenses:
Operating and maintenance 1,544
Real estate taxes 1,122
General and administrative 1,967
Depreciation and amortization 4,910
------------
Total operating expenses 9,543
------------
Income from operations 13,529
Other income (expense):
Interest expense, net (3,037)
Other income (expense), net 587
Equity in net income of unconsolidated entities 1,343
------------
Income before net loss on real estate sales and
extraordinary items 12,422
Net loss on real estate sales -
------------
Income before extraordinary items 12,422
Extraordinary items (401)
------------
Net income $ 12,021
===========
Net income per share $ 0.83
===========
Weighted average shares outstanding 14,543
===========
</TABLE>
SEE NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF INCOME
<PAGE>
JDN REALTY CORPORATION
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
(A) Represents the historical consolidated statement of income of JDN Realty
Corporation (the "Company") for the six months ended June 30, 1997.
(B) Represents the revenue and certain expenses of The Junction Shopping Center
for period from January 1, 1997 to February 14, 1997 (date of sale).
(C) Represents the revenue and certain expenses of River Hills Shopping Center
for period from January 1, 1997 to May 28, 1997 (date of sale).
(D) Represents the revenue and certain expenses of Midway Plaza Shopping Center
for period from January 1, 1997 to June 26, 1997 (date of sale).
(E) Represents the revenue and certain expenses of Bermuda Square Shopping
Center for the six months ended June 30, 1997.
(F) Represents elimination of the Company's income from its 50% interests in
the limited liability companies which owned River Hills Shopping Center and
Midway Plaza Shopping Center.
(G) Represents depreciation expense related to the portion of the purchase
price of the Acquisition Properties allocated to building using a 31.5 year
life.
(H) Represents interest expense, net of amounts capitalized, related to the
Acquisition Properties assuming the Company incurred or assumed
indebtedness at the beginning of the period to finance these acquisitions.
<PAGE>
INDEX TO EXHIBITS
Exhibit 23 Consent of Independent Auditors
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-3 No. 333-22339) of JDN Realty Corporation and in the related Prospectus of
our reports dated September 24, 1997, September 16, 1997, September 16, 1997 and
September 24, 1997, with respect to the statements of revenue and certain
expenses of The Junction Shopping Center for the period from March 25, 1996
(date of commencement of operations) to December 31, 1996, the River Hills
Shopping Center for the period from September 13, 1996 (date of commencement of
operations) to December 31, 1996, the Midway Plaza Shopping Center for the
period from November 2, 1995 (date of commencement of operations) to December
31, 1995 and the year ended December 31, 1996, and the Bermuda Square Shopping
Center for the year ended December 31, 1996, respectively, included in the
Current Report on Form 8-K of JDN Realty Corporation dated September 26, 1997.
Ernst & Young LLP
Atlanta, Georgia
September 26, 1997
