<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):
January 23, 1998 (December 31, 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 December 31, 1997, the Company executed an Agreement for Purchase and
Sale with Market Street Associates Limited Partnership and Brown Deer II Limited
Partnership for the purchase of five shopping centers containing an aggregate of
approximately 1.1 million square feet. The Company expects to close the purchase
in February 1998 and will fund the purchase with borrowings under its unsecured
line of credit, assumption of secured indebtedness and the issuance of limited
partnership units
Included in Item 7 herein are combined statements of revenue and certain
expenses of four of these shopping centers for the year ended December 31, 1996
(audited), and for the nine months ended September 30, 1997 (unaudited) which
are being filed pursuant to Rule 3-14 of Regulation S-X.
<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:
Milwaukee Acquisition Properties
--------------------------------
Report of Independent Auditors
Combined Statements of Revenue and Certain Expenses
- Year ended December 31, 1996
- Nine Months Ended September 30, 1997
Notes to combined statements of revenue and certain expenses
B. Pro forma financial information required pursuant to Article 11
of Regulation S-X:
Pro Forma Consolidated Balance Sheet of the Company
- September 30, 1997
Pro forma consolidated statements of operations of the Company
- Year ended December 31, 1996
- Nine months ended September 30, 1997
The unaudited pro forma balance sheet is based on the historical
consolidated balance sheet of the Company as of September 30, 1997 as if the
Company had acquired the Milwaukee Acquisition Properties on September 30, 1997.
The unaudited pro forma consolidated statements of operations are based
upon the historical consolidated statements of operations of the Company and the
Milwaukee Acquisition Properties for the year ended December 31, 1996 and the
nine months ended September 30, 1997 and are presented as if the Company had
acquired the Milwaukee Acquisition Properties on January 1, 1996 and 1997,
respectively.
These unaudited pro forma financial statements should be read in
conjunction with the combined statements of revenue and certain expenses and
notes thereto of the Milwaukee Acquisition Properties included in this report,
the consolidated 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 nine months
ended September 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
2
<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: January 23, 1998
3
<PAGE>
Report of Independent Auditors
Shareholders and Board of Directors
JDN Realty Corporation
We have audited the combined statement of revenue and certain expenses of the
Milwaukee Acquisition Properties as described in Note 1 for the year ended
December 31, 1996. This combined statement of revenue and certain expenses is
the responsibility of the Milwaukee Acquisition Properties' management. Our
responsibility is to express an opinion on this combined 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 combined 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 combined 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 combined statement of revenue and
certain expenses. We believe that our audit of the combined statement of
revenue and certain expenses provides a reasonable basis for our opinion.
The accompanying combined 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
Milwaukee Acquisition Properties' combined revenue and expenses.
In our opinion, the combined statement of revenue and certain expenses referred
to above presents fairly, in all material respects, the combined revenue and
certain expenses of the Milwaukee Acquisition Properties for the year ended
December 31, 1996 in conformity with generally accepted accounting principles.
Ernst & Young LLP
Atlanta, Georgia
January 19, 1998
4
<PAGE>
Milwaukee Acquisition Properties
Combined Statements of Revenue and Certain Expenses
Year ended Nine months ended
December 31, September 30,
1996 1997
-------------- ------------------
(Unaudited)
Revenue:
Minimum and percentage rents $3,917,954 $3,208,454
Recoveries from tenants 1,874,402 1,609,370
Electrical revenue 985,012 746,013
Interest income 45,578 13,643
Other income 2,881 2,294
---------- ----------
Total revenue 6,825,827 5,579,774
Certrain expenses:
Operating and maintenance 1,184,923 1,063,055
Real estate taxes 957,667 718,961
Cost of electricity 784,100 605,480
---------- ----------
Total certain expenses 2,926,690 2,387,496
---------- ----------
Revenue in excess of certain expenses $3,899,137 $3,192,278
========== ==========
See accompanying notes.
5
<PAGE>
Milwaukee Acquisition Properties
Notes to Combined Statements of Revenue and Certain Expenses
For the year ended
December 31, 1996 and nine months ended September 30, 1997 (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying combined statements of revenue and certain expenses relate to
the combined operations of Brown Deer Center, Shoppers World of Brookfield, West
Allis Shopping Center and Point Loomis Shopping Center (collectively, the
"Milwaukee Acquisition Properties"). The Acquisition Properties are located in
Milwaukee, Wisconsin and have a combined total of 949,216 gross leasable square
feet. JDN Realty Corporation (the "Company") intends to acquire the four retail
centers from an unrelated third party during February 1998.
The accompanying combined 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 combined statements are not representative of the combined actual operations
of the Milwaukee Acquisition Properties for the periods presented nor indicative
of future combined operations as certain expenses, primarily consisting of
mortgage interest expense, depreciation, amortization, management fees, loss on
lease terminations 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 combined 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 combined
revenue and expenses during the reporting period. Actual results could differ
from these estimates.
6
<PAGE>
2. LEASES AND SIGNIFICANT TENANTS
The tenant base includes primarily national or regional retail chains and local
retailers, and consequently the Milwaukee Acquisition Properties credit risk is
concentrated in the retail industry.
The significant tenants of the Milwaukee Acquisition Properties and the minimum
rents from these tenants, as a percentage of combined total minimum rents for
the periods indicated, were as follows:
Year ended Nine months ended
Anchor Tenant Shopping Center December 31, 1996 September 30, 1997
- --------------------------------------------------------------------------------
(Unaudited)
T.J. Maxx Brown Deer Center 11.27% 10.32%
Shoppers World of Brookfield
Kohl's Brown Deer Center 21.51% 19.78%
West Allis
Point Loomis
Pick N Save Brown Deer Center 13.95% 12.77%
West Allis
Point Loomis
HomeGoods Shoppers World of Brookfield 19.74% 18.07%
West Allis
Office Max Brown Deer Center 10.09% 9.24%
Shoppers World of Brookfield
7
<PAGE>
<TABLE>
<CAPTION>
JDN REALTY CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET
September 30, 1997
(Dollars in thousands, except per share data)
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 $ 66,908 $ 7,252 (B) $ 74,160
Buildings and improvements 347,605 41,092 (B) 388,697
Property under development 65,501 -- 65,501
-------- ------- --------
480,014 48,344 528,358
Less: accumulated depreciation and amortization (35,358) -- (35,358)
-------- ------- --------
Shopping center properties, net 444,656 48,344 493,000
Cash and cash equivalents 2,207 -- 2,207
Restricted cash - escrow 186 -- 186
Rents receivable 1,940 -- 1,940
Investments in and advances to unconsolidated entities 69,376 -- 69,376
Deferred costs, net of amortization 4,362 -- 4,362
Other assets 11,470 -- 11,470
-------- ------- --------
$534,197 $48,344 $582,541
======== ======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Unsecured notes payable $159,495 -- $159,495
Unsecured line of credit 71,715 45,344 (C) 117,059
Mortgage notes payable 13,657 -- 13,657
Accounts payable and accrued expenses 3,986 -- 3,986
Other liabilities 1,799 -- 1,799
-------- ------- --------
Total Liabilities 250,652 45,344 295,996
Third party investors' interests -- 3,000 (D) 3,000
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 15,493,501 155 -- 155
Paid-in capital 290,479 -- 290,479
Accumulated deficit (7,089) -- (7,089)
-------- ------- --------
Total Shareholders' Equity 283,545 -- 283,545
-------- ------- --------
$534,197 $48,344 $582,541
======== ======= ========
</TABLE>
SEE NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
8
<PAGE>
JDN REALTY CORPORATION
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
(UNAUDITED)
(A) Represents the historical consolidated balance sheet of JDN Realty
Corporation (the "Company") as of September 30, 1997.
(B) Represents the allocated purchase price for the Milwaukee Acquisition
Properties.
(C) Represents the financing of the cash portion of purchase price of the
Milwaukee Acquisition Properties with an advance on the Company's unsecured
line of credit.
(D) The Company and the owners of West Allis Shopping Center (the "Owners")
intend to form a limited partnership to which the Owners will contribute
the shopping center and the Company will contribute cash. The Company
expects to consolidate the limited partnership for financial reporting
purposes. Third party investors' interests represents the Owners' interest
in this limited partnership.
9
<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 Milwaukee JDN Realty
Corporation Acquisition Pro Forma Corporation
Historical (A) Properties (B) Adjustments Pro Forma
-------------- -------------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Minimum and percentage rents $ 32,933 $ 3,918 -- $ 36,851
Recoveries from tenants 3,475 2,859 -- 6,334
Other revenue 215 3 -- 218
-------- ------- ------- --------
Total revenues 36,623 6,780 -- 43,403
Operating expenses:
Operating and maintenance 2,586 1,969 -- 4,555
Real estate taxes 1,817 957 -- 2,774
General and administrative 3,367 -- -- 3,367
Depreciation and amortization 7,786 -- 1,305 (C) 9,091
-------- ------- ------- --------
Total operating expenses 15,556 2,926 1,305 19,787
-------- ------- ------- --------
Income from operations 21,067 3,854 (1,305) 23,616
Other income (expense):
Interest expense, net (5,868) -- (3,302)(D) (9,170)
Other income (expense), net 83 45 -- 128
Equity in net income of unconsolidated entities 1,415 -- -- 1,415
Third party investors' share of income of
consolidated entity 0.00 -- -- (175)(E) (175)
-------- ------- ------- --------
Income before net loss on real estate sales and
extraordinary items 16,697 3,899 (4,782) 15,814
Net loss on real estate sales (15) -- -- (15)
-------- ------- ------- --------
Income before extraordinary items 16,682 3,899 (4,782) 15,799
Extraordinary items -- -- -- --
-------- ------- ------- --------
Net income $ 16,682 $ 3,899 $(4,782) $ 15,799
======== ======= ======= ========
Net income per share:
Basic $ 1.50 $ 1.43
======== ========
Diluted $ 1.50 $ 1.42
======== ========
</TABLE>
SEE NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF INCOME
10
<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 combined revenue and certain expenses of the Milwaukee
Acquisition Properties for the year ended December 31, 1996.
(C) Represents depreciation expense related to the portion of the purchase
price of the Milwaukee Acquisition Properties allocated to building using a
31.5 year life.
(D) Represents interest expense related to the acquisition of the Milwaukee
Acquisition Properties assuming the Company incurred indebtedness at the
beginning of the period to finance these acquisitions.
(E) Represents the Owners' share of the net income of the limited partnership
formed to acquire the West Allis Shopping Center, which is expected to be
consolidated for financial reporting purposes, assuming the limited
partnership had been formed at the beginning of the period.
11
<PAGE>
JDN Realty Corporation
Pro Forma Consolidated Statement of Income
Nine Months Ended September 30, 1997
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
JDN Realty Milwaukee JDN Realty
Corporation Acquisition Pro Forma Corporation
Historical (A) Properties (B) Adjustments Pro Forma
------------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Revenues:
Minimum and percentage rents $30,303 $3,208 $ -- $33,511
Recoveries from tenants 3,111 2,355 -- 5,466
Other revenue 118 3 -- 121
------- ------ ------- -------
Total revenues 33,532 5,566 -- 39,098
Operating expenses:
Operating and maintenance 2,263 1,669 -- 3,932
Real estate taxes 1,675 719 -- 2,394
General and administrative 2,943 -- -- 2,943
Depreciation and amortization 7,125 -- 978 (C) 8,103
------- ------ ------- -------
Total operating expenses 14,006 2,388 978 17,372
------- ------ ------- -------
Income from operations 19,526 3,178 (978) 21,726
Other income (expense):
Interest expense, net (3,588) -- (2,478)(D) (6,066)
Other income (expense), net 887 14 -- 901
Equity in net income of unconsolidated entities 2,834 -- -- 2,834
Third party investors' share of income of
consolidated entity -- -- (137)(E) (137)
------- ------ ------- -------
Income before net loss on real estate sales and
extraordinary items 19,659 3,192 (3,593) 19,258
Net loss on real estate sales (352) -- -- (352)
------- ------ ------- -------
Income before extraordinary items 19,307 3,192 (3,593) 18,906
Extraordinary items (5,940) -- -- (5,940)
------- ------ ------- -------
Net income $13,367 $3,192 $(3,593) $12,966
======= ====== ======= =======
Net income per share:
Basic $ 0.90 $ 0.87
======= =======
Diluted $ 0.88 $ 0.86
======= =======
</TABLE>
SEE NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF INCOME
12
<PAGE>
JDN REALTY CORPORATION
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
(A) Represents the historical consolidated statement of income of JDN Realty
Corporation (the "Company") for the nine months ended September 30, 1997.
(B) Represents the combined revenue and certain expenses of the Milwaukee
Acquisition Properties for the nine months ended September 30, 1997.
(C) Represents depreciation expense related to the portion of the purchase
price of the Acquisition Properties allocated to building using a 31.5 year
life.
(D) Represents interest expense, related to the acquisition of the Milwaukee
Acquisition Properties assuming the Company incurred or assumed
indebtedness at the beginning of the period to finance these acquisitions.
(E) Represents the Owners' share of the net income of the limited partnership
formed to acquire the West Allis Shopping Center which is expected to be
consolidated for financial reporting purposes, assuming the limited
partnership had been formed at the beginning of the period.
13
<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. 333-38611) of JDN Realty Corporation and in the related Prospectus
of our report dated January 19, 1998, with respect to the combined statement of
revenue and certain expenses of Brown Deer Center, Shoppers World of Brookfield,
Point Loomis Shopping Center and West Allis Shopping Center (collectively, the
"Milwaukee Acquisition Properties") for the year ended December 31, 1996,
included in the Current Report on Form 8-K of JDN Realty Corporation dated
January 23, 1998.
Ernst & Young LLP
Atlanta, Georgia
January 19, 1998
