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Filed Pursuant to Rule 424(b)(5)
Registration No. 333-38611
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED OCTOBER 30, 1997)
850,000 SHARES
(JDN LOGO)
JDN REALTY CORPORATION
COMMON STOCK
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JDN Realty Corporation is a real estate development company specializing in
the development and asset management of retail shopping centers anchored by
value-oriented retailers. At September 30, 1998, we owned and operated 85
properties containing approximately 10.9 million square feet of gross leasable
area located in 13 states.
We are offering and selling 850,000 shares of common stock with this
Prospectus Supplement and the accompanying Prospectus. To assist us in
maintaining our qualification as a REIT, ownership by any person is limited to
8% of the common stock, with certain exceptions. This offering is a firm
commitment underwriting.
JDN's common stock is listed on the New York Stock Exchange under the
symbol "JDN." On October 13, 1998, the last reported sale price of our common
stock on the NYSE was $20 11/16 per share.
INVESTING IN THE COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS" IN
JDN'S CURRENT REPORT ON FORM 8-K, DATED JANUARY 26, 1998 AND INCORPORATED BY
REFERENCE INTO THE ACCOMPANYING PROSPECTUS.
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<TABLE>
<CAPTION>
PER SHARE TOTAL
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Public Offering Price......................... $20.6875 $17,584,375
Underwriting Discount......................... $ 1.06 $ 901,000
Proceeds, before expenses, to JDN............. $19.6275 $16,683,375
</TABLE>
We have granted an option for an additional 127,500 shares to the
Underwriter to fulfill over-allotments that may occur during the offering
process.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
Prospectus Supplement and the accompanying Prospectus are truthful or complete.
Any representation to the contrary is a criminal offense.
We expect that the shares of common stock will be ready for delivery on or
about October 19, 1998 in New York, New York.
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MERRILL LYNCH & CO.
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The date of this Prospectus Supplement is October 13, 1998.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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PROSPECTUS SUPPLEMENT
Forward-Looking Statements.................................. S-2
The Company................................................. S-4
Recent Developments......................................... S-5
The Offering................................................ S-6
Use of Proceeds............................................. S-6
Certain Federal Income Tax Considerations................... S-6
Underwriting................................................ S-14
Experts..................................................... S-15
Legal Matters............................................... S-15
PROSPECTUS
Available Information....................................... 2
Incorporation of Certain Documents by Reference............. 2
The Company................................................. 3
Use of Proceeds............................................. 3
Ratio of Earnings to Fixed Charges.......................... 4
Description of Capital Stock................................ 4
Description of Common Stock................................. 6
Description of Common Stock Warrants........................ 7
Description of Preferred Stock.............................. 8
Description of Debt Securities.............................. 12
Plan of Distribution........................................ 17
Experts..................................................... 18
Legal Matters............................................... 18
</TABLE>
FORWARD-LOOKING STATEMENTS
This Prospectus Supplement contains certain forward-looking statements. When
used, statements which are not historical in nature including the words
"anticipate," "estimate," "should," "expect," "believe," "intend" and similar
expressions are intended to identify forward-looking statements. These
forward-looking statements are subject to certain risks and uncertainties,
including, among other things:
- business conditions and the general economy, especially as they affect
interest rates and value-oriented retailers;
- the federal, state and local regulatory environment;
- the availability of debt and equity capital with favorable terms and
conditions;
- the availability of new development and acquisition opportunities;
- changes in the financial condition or corporate strategy of the
Company's primary retail tenants and in particular Wal-Mart and
Lowe's;
- the ability to complete and lease existing development and
redevelopment projects on schedule and within budget; and
- the inability of the Company to maintain its qualification as a REIT.
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Other risks, uncertainties and factors that could cause actual results to differ
materially from those projected are detailed from time to time in reports filed
by the Company with the Securities and Exchange Commission, including Forms 8-K,
10-Q and 10-K.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties, and assumptions, the forward-looking
events discussed in this Prospectus Supplement and the accompanying Prospectus
might not occur.
You should rely only on the information contained in this Prospectus Supplement
and the accompanying Prospectus. We have not, and the Underwriter has not,
authorized any other person to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely on
it. We are not, and the Underwriter is not, making an offer to sell these
securities in any jurisdiction where the offer or sale is not permitted. You
should assume that the information appearing in this Prospectus Supplement and
the accompanying Prospectus is accurate as of the date on the front cover of
this Prospectus Supplement and the accompanying Prospectus only. Our business,
financial condition, results of operations and prospects may have changed since
that date.
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The following information is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere in,
or incorporated by reference into, the accompanying Prospectus. Unless indicated
otherwise, the information contained in this Prospectus Supplement assumes no
exercise of the Underwriter's over-allotment option. Unless the context
otherwise requires, as used herein the terms "Company" or "JDN" include JDN
Realty Corporation, its predecessor, JDN Development Company, Inc., subsidiaries
of JDN Realty Corporation and JDN Development Company, Inc., and joint ventures
(including limited liability companies) in which JDN Realty Corporation, JDN
Development Company, Inc. or their subsidiaries own an interest.
THE COMPANY
The Company, which began operations in 1978, is a real estate development
company specializing in the development and asset management of retail shopping
centers anchored by value-oriented retailers. As of September 30, 1998, the
Company owned and operated 85 properties containing approximately 10.9 million
square feet of gross leasable area ("Company GLA") located in 13 states. The
principal tenants of the Company's properties include Wal-Mart, Lowe's and
Kroger. The Company has elected to be treated as a real estate investment trust
("REIT") for federal income tax purposes.
The Company is one of the largest developers of Wal-Mart anchored shopping
centers in the United States. The Company and its founders have developed or
jointly developed 144 shopping center projects, 96 of which were built on
assignment from Wal-Mart, and have developed, sold or leased more than 150
outparcels.
The Company's business objective is to increase its funds from operations per
share by:
- development of new shopping centers anchored by strong retailers;
- redevelopment and expansion of its existing properties;
- effective leasing and management of its properties and ground leasing
of adjacent outparcels; and
- acquisition of existing shopping centers.
The Company is a fully integrated real estate firm with in-house development,
redevelopment, expansion, leasing, property management and acquisition
expertise.
The eight members of the Company's senior management team average approximately
11 years with the Company and each has significant experience in the real estate
industry. As of September 30, 1998, the executive officers and directors of the
Company as a group beneficially owned approximately 9.2% of the outstanding
common stock, $.01 par value per share (the "Common Stock"), of the Company.
JDN Realty Corporation was incorporated under the laws of the State of Maryland
in December 1993. The Company's executive offices are located at 359 East Paces
Ferry Road, Suite 400, Atlanta, Georgia 30305 and its telephone number is (404)
262-3252.
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RECENT DEVELOPMENTS
Preferred Stock Offering. On September 17, 1998, the Company issued 2,000,000
shares of its 9 3/8% Series A Cumulative Redeemable Preferred Stock in a public
offering for net proceeds to the Company of approximately $48.3 million. The
Company used the net proceeds from the Preferred Stock offering to repay
indebtedness outstanding under its new unsecured line of credit (the "New Line
of Credit").
Unsecured Line of Credit. On September 3, 1998, the Company executed the New
Line of Credit replacing its existing $150.0 million unsecured line of credit
(the "Old Line of Credit"). The New Line of Credit differs from the Old Line of
Credit as follows:
(1) increased maximum borrowings to $174,750,000 (expandable to
$200,000,000);
(2) extended the maturity date by one year from May 22, 2000 to May 22,
2001; and
(3) reduced the borrowing rate from LIBOR plus 1.25% to LIBOR plus
1.00%.
Development. During the second quarter of 1998, the Company began construction
on seven shopping centers, bringing the total projects under construction to 41.
These 41 projects are expected to contain 4.1 million square feet which will be
owned by the Company and are expected to represent an investment of $371.0
million.
Acquisition. On October 7, 1998, the Company purchased all of the limited
liability company membership interests in Black Cherry Limited Liability Company
("Black Cherry") for approximately $12.8 million. Black Cherry owns University
Hills Shopping Center, a 244,631 square foot shopping center located in Denver,
Colorado, which is subject to a $25.4 million mortgage loan under which Black
Cherry is the obligor and the Company is the guarantor. The Company funded this
purchase with an advance under the New Line of Credit.
Proposed Dispositions. Based upon a review of shopping centers in its operating
portfolio, the Company has solicited and received offers to sell two of its
shopping centers to third-party purchasers. The Company has entered into letters
of intent for both of these shopping centers with third-party purchasers. One of
these shopping centers is a Wal-Mart and Lowe's anchored shopping center in
Cartersville, Georgia containing 375,828 square feet of Company GLA. The other
shopping center is a Wal-Mart anchored shopping center in Cordele, Georgia
containing 176,054 square feet of Company GLA. The Company anticipates closing
the sales of these two shopping centers in the fourth quarter of 1998. As of the
date of this Prospectus Supplement, the Company has not entered into definitive
sales agreements for these two centers, and there can be no assurance, even if
definitive agreements are entered into, whether or when these sales will be
consummated. If these sales are consummated, the Company anticipates that it
will use the proceeds to fund ongoing development and redevelopment activities.
Tenant Information. On February 2, 1998, Bruno's Inc. ("Bruno's") filed for
Chapter 11 bankruptcy protection in federal bankruptcy court in Delaware. At
that time, Bruno's was a tenant in seven of the Company's shopping centers and
owned space that is part of an eighth shopping center owned by the Company. On
March 9, 1998, Ingles Markets, Incorporated assumed leases on two of the
Company's Bruno's stores. On August 24, 1998, Albertson's Inc. assumed leases on
four of the Company's other Bruno's stores. As of September 30, 1998, Bruno's
represented 0.33% of the Company's annualized base rent.
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THE OFFERING
Common Stock Offered......... 850,000 shares
Common Stock to be
Outstanding after the
Offering................... 32,002,076 shares (1)
Use of Proceeds.............. To reduce the outstanding balance under the New
Line of Credit.
Risk Factors................. See "Risk Factors" in JDN's Current Report on
Form 8-K, dated January 26, 1998 and
incorporated by reference into the accompanying
Prospectus.
NYSE Symbol.................. JDN
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(1) Excludes 3,606,148 shares of Common Stock reserved for issuance under the
Company's 1993 Incentive Stock Plan, 450,000 shares of Common Stock reserved
for issuance under the Company's 1993 Non-Employee Director Stock Option
Plan, 727,998 shares of Common Stock reserved for issuance under the
Company's Dividend Reinvestment and Stock Purchase Plan and 146,993 shares
of Common Stock reserved for issuance under the Company's 1995 Employee
Stock Purchase Plan.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of the Common Stock
offered hereby, after deducting the underwriting discount and estimated expenses
of the offering, are estimated to be approximately $16.5 million ($19.0 million
if the Underwriter's over-allotment option is exercised in full).
The Company intends to use all of the net proceeds from the offering to reduce
the outstanding balance under the New Line of Credit. Borrowings outstanding
under the New Line of Credit were approximately $127.5 million at October 13,
1998. The New Line of Credit bears interest at LIBOR plus 1.00% (6.379% at
October 13, 1998) and matures in May 2001.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain federal income tax considerations is based on
current law, is for general information only and is not tax advice. This
discussion supplements the discussion of the federal income tax treatment of
stockholders contained in the Company's Current Report on Form 8-K, dated
January 26, 1998, and incorporated by reference into the accompanying Prospectus
and does not purport to deal with all aspects of taxation that may be relevant
to particular stockholders in light of their personal investment or tax
circumstances, or to certain types of stockholders (including insurance
companies, tax-exempt organizations, financial institutions or broker-dealers,
foreign corporations and persons who are not citizens or residents of the United
States) subject to special treatment under the federal income tax laws. As used
in the following summary, the terms "JDN" and the "Company" shall mean JDN
Realty Corporation unless otherwise indicated. All references herein to the Code
are to the Internal Revenue Code of 1986, as amended (the "Code").
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This Prospectus Supplement also does not address the taxation of the Company or
the impact on the Company of its election to be taxed as a REIT or the federal
income tax treatment of the Company's Preferred Stock. The federal income tax
treatment of the Company is set forth in the Company's Current Report on Form
8-K, dated January 26, 1998, and incorporated by reference into the accompanying
Prospectus. The discussion set forth below assumes that the Company qualifies as
a REIT under the Code. If in any taxable year the Company were to fail to
qualify as a REIT, and the relief provisions do not apply, the Company will be
subject to tax (including any applicable alternative minimum tax) on its taxable
income at regular corporate rates. Distributions to shareholders in any year in
which the Company fails to qualify will not be deductible by the Company nor
will they be required to be made. In such event, to the extent of current and
accumulated earnings and profits, all distributions to stockholders will be
taxable as ordinary income, and, subject to certain limitations of the Code,
distributions to corporate stockholders may be eligible for the dividends
received deduction. Unless entitled to relief under specific statutory
provisions, the Company will also be disqualified from taxation as a REIT for
the four taxable years following the year during which qualification was lost.
EACH PROSPECTIVE PURCHASER IS ADVISED TO CONSULT HIS OR HER OWN TAX ADVISOR
REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF THE PURCHASE, OWNERSHIP
AND SALE OF COMMON STOCK AND OF THE COMPANY'S ELECTION TO BE TAXED AS A REIT,
INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN INCOME AND OTHER TAX CONSEQUENCES
OF SUCH PURCHASE, OWNERSHIP, SALE AND ELECTION, AND OF POTENTIAL CHANGES IN
APPLICABLE TAX LAWS.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR U.S. STOCKHOLDERS
DIVIDENDS AND OTHER DISTRIBUTIONS
As long as the Company qualifies as a REIT, distributions made to the Company's
taxable domestic stockholders out of current or accumulated earnings and profits
(and not designated as capital gain dividends) will be taken into account by
them as ordinary income. Corporate stockholders will not be entitled to the
dividends received deduction. For purposes of determining whether distributions
on the shares are out of current or accumulated earnings and profits, the
earnings and profits of the Company will be allocated first to the Company's
Preferred Stock, and then allocated to the Company's Common Stock. There can be
no assurance that the Company will have sufficient earnings and profits to cover
distributions on any shares of Preferred Stock.
Distributions that are designated as capital gain dividends, as well as retained
net capital gains, will be taxed as long-term capital gains (to the extent they
do not exceed the Company's actual net capital gain for the taxable year)
without regard to the period for which the holder has held its shares. A taxable
domestic stockholder's share of such capital gain dividend would be an amount
which bears the same ratio to the total amount of dividends paid to such
stockholder for the year as the aggregate amount designated as a capital gain
dividend bears to the aggregate amount of all dividends paid on all classes of
shares for the year. Corporate stockholders may, however, be required to treat
up to 20% of certain capital gain dividends as ordinary income. Distributions in
excess of current and accumulated earnings and profits will not be taxable to a
stockholder to the extent that they do not exceed
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the adjusted tax basis of the stockholder's shares with respect to which the
distributions were made, but rather will reduce the adjusted basis of such
shares. To the extent that such distributions exceed the adjusted basis of a
stockholder's shares with respect to which the distributions were made, they
will be included in income as capital gain, assuming the shares are a capital
asset in the hands of the stockholder.
The Company may designate (by written notice to stockholders) its retained net
capital gain (i.e., net capital gain that is not actually distributed as capital
gain dividends) as undistributed capital gains in respect of a stockholder's
shares. Pursuant to such a designation by the Company with respect to retained
net capital gains, a taxable domestic stockholder would include its
proportionate share of such gain in income as long-term capital gain, and would
be treated as having paid its proportionate share of the tax paid by the Company
with respect to the gain. The taxable domestic stockholder's basis in its shares
would be increased by its share of such gain and decreased by its share of such
tax.
SALE OF COMPANY SHARES
On the sale of Company shares by taxable domestic stockholders, gain or loss
will be recognized by the stockholder in an amount equal to the difference
between (i) the amount of cash and the fair market value of any property
received on such sale (less any portion thereof attributable to accumulated and
declared but unpaid distributions, which will be taxable as described above) and
(ii) the stockholder's adjusted basis in the shares. Such gain or loss will be
capital gain or loss if the shares are held as capital assets, and will be
long-term gain or loss if such shares are held for more than one year and
short-term capital gain or loss if such shares have been held for one year or
less. In general, any loss upon a sale or exchange of shares by a stockholder
who has held such shares for six months or less (after applying certain holding
period rules) will be treated as a long-term capital loss to the extent of
distributions from the Company required to be treated by such stockholder as
long-term capital gain.
The Internal Revenue Service Restructuring and Reform Act of 1998, which was
signed into law on July 22, 1998, reduced the required holding period for the
application of the 20% and 25% capital gain tax rates from more than 18 months
to more than 12 months for sales of capital gain assets in tax years ending
after December 31, 1997.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Company will report to its domestic stockholders and to the Internal Revenue
Service (the "IRS") the amount of dividends paid for each calendar year, and the
amount of tax withheld, if any, with respect thereto. Under the backup
withholding rules, a stockholder may be subject to backup withholding at the
rate of 31% with respect to dividends paid unless such stockholder (i) is a
corporation or comes within certain other exempt categories and, when required,
demonstrates this fact or (ii) provides a taxpayer identification number,
certifies as to no loss of exemption from backup withholding, and otherwise
complies with applicable requirements of the backup withholding rules. A
stockholder that does not provide the Company with its correct taxpayer
identification number may also be subject to penalties imposed by the IRS. Any
amount paid as backup withholding is available as a credit against the
stockholder's income tax liability. In addition, the Company may be required to
withhold a portion of capital gain distributions made to any stockholders who
fail to certify their non-foreign status to the Company.
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STATE AND LOCAL CONSEQUENCES
The Company and its stockholders may be subject to state or local taxation in
various jurisdictions, including those in which it or they transact business or
reside. The state and local tax treatment of the Company and its stockholders
may not conform to the federal income tax consequences discussed above.
Prospective purchasers should consult their own tax advisors regarding the
effect of state and local tax laws on an investment in the Company.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S. STOCKHOLDERS
The following is a discussion of certain anticipated U.S. federal income tax
considerations of the ownership and disposition of the Company's shares
applicable to Non-U.S. Stockholders. A "Non-U.S. Stockholder" is (i) any
individual who is neither a citizen nor resident of the United States, (ii) any
corporation or partnership other than a corporation or partnership created or
organized in the United States or under the laws of the United States or any
state thereof or under the laws of the District of Columbia unless, in the case
of a partnership, Treasury Regulations provide otherwise, (iii) an estate whose
non-U.S. source income which is not effectively connected to a U.S. trade or
business is not includable in U.S. federal gross income or (iv) a trust that is
not a "U.S. Trust." A U.S. Trust is (i) for taxable years beginning after
December 31, 1996, or if the trustee of a trust elects to apply the following
definition to an earlier taxable year ending after August 20, 1996, a trust if,
and only if, (a) a court within the United States is able to exercise primary
supervision over the administration of the trust and (b) one or more U.S.
persons has the authority to control all substantial decisions of the trust and
(ii) for all other taxable years, any trust the income of which is subject to
U.S. federal income taxation regardless of its source. The discussion is based
on current law and is for general information only. The discussion does not
consider any specific facts or circumstances that may apply to a particular
Non-U.S. stockholder.
The rules governing U.S. federal income taxation of the ownership and
disposition of shares of Common Stock by persons that are Non-U.S. Stockholders
are complex and no attempt will be made herein to provide more than a limited
summary of such rules.
EACH PROSPECTIVE NON-U.S. STOCKHOLDER PURCHASER IS ADVISED TO CONSULT HIS OR HER
OWN TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF THE
PURCHASE, OWNERSHIP AND SALE OF COMMON STOCK AND OF THE COMPANY'S ELECTION TO BE
TAXED AS A REIT, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN INCOME AND OTHER
TAX CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP, SALE AND ELECTION, AND OF
POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
DIVIDENDS AND OTHER DISTRIBUTIONS
Ordinary Dividends. The portion of dividends received by a Non-U.S. Stockholder
payable out of the Company's current and accumulated earnings and profits that
are not attributable to capital gains of the Company and that are not
effectively connected with a U.S. trade or business of the Non-U.S. Stockholder
will be subject to U.S. withholding tax at the rate of 30% of the gross amount
of the distribution (unless reduced by treaty or the Non-U.S. Stockholder files
Form 4224 with the Company certifying that the investment to which the
distribution relates is effectively connected to a United States trade or
business of such Non-
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U.S. Stockholder). For purposes of determining whether distributions on the
shares are out of current or accumulated earnings and profits, the earnings and
profits of the Company will be allocated first to the Company's Preferred Stock,
and then allocated to the Company's Common Stock. Under certain limited
circumstances, the amount of tax withheld may be refundable, in whole or in
part, because of the tax status of certain partners or beneficiaries of Non-U.S.
Stockholders that are either foreign partnerships or foreign estates or trusts.
In general, Non-U.S. Stockholders will not be considered engaged in a U.S. trade
or business solely as a result of their ownership of shares of Common Stock. In
cases where the dividend income from a Non-U.S. Stockholder's investment in
Company shares is (or is treated as) effectively connected with the Non-U.S.
Stockholder's conduct of a U.S. trade or business, the Non-U.S. Stockholder
generally will be subject to U.S. tax at graduated rates in the same manner as
U.S. Stockholders are taxed with respect to such dividends (and may also be
subject to the 30% branch profits tax (unless reduced by treaty) in the case of
a Non-U.S. Stockholder that is a foreign corporation).
Under currently applicable Treasury Regulations, withholding agents are required
to determine the applicable withholding rate pursuant to the appropriate tax
treaty and withhold the appropriate amount. New Treasury Regulations (the "New
Treasury Regulations") published in the Federal Register on October 14, 1997,
which have been adopted and (as modified by a Notice published by the IRS)
generally will be effective with respect to payments made after December 31,
1999, subject to certain transition rules. Valid withholding certificates that
are held on December 31, 1999 will remain valid until the earlier of December
31, 2000 or the date of expiration of the certificate under rules currently in
effect (unless otherwise invalidated due to changes in the circumstances of the
person who is named on such certificate). The New Treasury Regulations will
require Non-U.S. Stockholders to file a Form W-8 to obtain the benefit of any
applicable tax treaty providing for a lower rate of withholding tax on dividends
paid after December 31, 1999. Such form will require a representation by the
holder as to foreign status, the holder's name and permanent residence address,
the basis for a reduced withholding rate (e.g., the relevant tax treaty) and
other pertinent information, to be certified by such holder under penalties of
perjury. Such information is subject to being reported to the IRS. A permanent
resident address for this purpose generally is the address in the country where
the person claims to be a resident for the purpose of the country's income tax.
If the beneficial holder is a corporation, then the address is where the
corporation maintains its principal office in its country of incorporation. The
New Treasury Regulations also provide special rules to determine whether, for
purposes of determining the applicability of a tax treaty and for purposes of
the 30% withholding tax described above, dividends paid to a Non-U.S.
Stockholder that is an entity should be treated as paid to the entity or those
holding an interest in that entity. In particular, in the case of a foreign
partnership, the certification requirement will generally be applied to the
partners of the partnership. In addition, the New Treasury Regulations will also
require the partnership to provide certain information, including a United
States taxpayer identification number, and will provide look-through rules for
tiered partnerships. A Non-U.S. Stockholder that is eligible for a reduced rate
of U.S. withholding tax pursuant to an income tax treaty may obtain a refund of
any excess amount withheld by filing an appropriate claim for refund with the
IRS. The New Treasury Regulations contain detailed rules governing tax
certifications during the transition period prior to and immediately following
the effectiveness of the New Treasury Regulations. The discussion under this
heading and under "Information Reporting and Backup Withholding" below is not
intended to be a complete discussion of the provisions of the New Treasury
Regulations, and prospective purchasers are urged to consult their tax
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advisors concerning the tax consequences of their acquiring, holding and
disposing of Common Stock in light of the New Treasury Regulations.
Capital Gain Dividends. Under the Foreign Investment in Real Property Tax Act
of 1980 ("FIRPTA"), any distribution made by the Company to a Non-U.S.
Stockholder, to the extent attributable to gains from dispositions of United
States Real Property Interests ("USRPIs") by the Company ("USRPI Capital
Gains"), will be considered effectively connected with a U.S. trade or business
of the Non-U.S. Stockholder and subject to U.S. income tax at the rates
applicable to U.S. individuals or corporations, without regard to whether such
distribution is designated as a capital gain dividend. Such distribution may
also be subject to the 30% branch profits tax (unless reduced by treaty) in the
case of a Non-U.S. Stockholder that is a foreign corporation. The Company will
be required to withhold tax equal to 35% of the amount of such distribution to
the extent it constitutes USRPI Capital Gains.
Although the law is not entirely clear on the matter, it appears that amounts
designated by the Company as undistributed capital gains would be treated with
respect to Non-U.S. Stockholders in the manner outlined in the preceding
paragraph for actual distribution by the Company of capital gain dividends.
Under that approach, the Non-U.S. Stockholders would be able to offset as a
credit against their U.S. federal income tax liability resulting therefrom their
proportionate share of the tax paid by the Company on such undistributed capital
gains (and to receive from the IRS a refund to the extent their proportionate
share of such tax paid by the Company were to exceed their actual U.S. federal
income tax liability).
Non-Dividend Distributions. Any distributions by the Company that exceed both
current and accumulated earnings and profits of the Company will not be taxed as
either ordinary dividends or capital gain dividends to the extent that they do
not exceed the adjusted basis in the Non-U.S. Stockholder's Company shares with
respect to which the distributions were made, but rather will reduce the
adjusted basis of such shares. If it cannot be determined at the time a
distribution is made, however, whether or not such distribution will be in
excess of current and accumulated earnings and profits, the distribution will be
subject to withholding. Should this occur, the Non-U.S. Stockholder may seek a
refund of over-withholding from the IRS once it is subsequently determined that
such distribution was, in fact, in excess of current and accumulated earnings
and profits of the Company.
SALE OF COMPANY SHARES
The sale or exchange of Company shares by a Non-U.S. Stockholder generally will
not be subject to U.S. income taxation under FIRPTA, unless the shares
constitute USRPIs. Such shares will not constitute USRPIs if the Company is a
"domestically controlled REIT." A domestically controlled REIT is a REIT in
which, at all times during a specified testing period, less than 50% in value of
its shares is held directly or indirectly by Non-U.S. Stockholders. It is
currently believed that the Company is a domestically controlled REIT and,
therefore, the sale of Company shares will not be subject to taxation under
FIRPTA. No assurance can be given that the Company will continue to be a
domestically controlled REIT, or that the current belief is correct.
If the Company does not constitute a domestically controlled REIT, a Non-U.S.
Stockholder's sale or exchange of Company shares generally will still not be
subject to tax under FIRPTA as a sale of USRPIs provided that (i) the shares are
"regularly traded" (as defined
S-11
<PAGE> 12
by applicable Treasury Regulations) on an established securities market and (ii)
the selling Non-U.S. Stockholder held 5% or less of the Company's outstanding
shares at all times during a specified testing period.
If gain on the sale or exchange of Company shares were subject to taxation under
FIRPTA, the Non-U.S. Stockholder would be subject to U.S. income tax at the
rates applicable to U.S. individuals or corporations, and the purchaser of such
shares could be required to withhold 10% of the purchase price and remit such
amount to the IRS. The branch profits tax would not apply to such sales or
exchanges.
Capital gains not subject to FIRPTA will nonetheless be taxable in the United
States to a Non-U.S. Stockholder in two cases: (i) if the Non-U.S. Stockholders
investment in Company shares is effectively connected with a U.S. trade or
business conducted by such Non-U.S. Stockholder, the Non-U.S. Stockholder will
be subject to the same treatment as U.S. Stockholders with respect to such gain;
or (ii) if the Non-U.S. Stockholder is a nonresident alien individual who was
present in the United States for 183 days or more during the taxable year and
has a "tax home" in the United States, the nonresident alien individual will be
subject to 30% tax on the individual's capital gain (unless reduced or
eliminated by treaty).
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Company must report annually to the IRS and to each Non-U.S. Stockholder the
amount of dividends (including any capital gain dividends) paid to, and the tax
withheld with respect to, each Non-U.S. Stockholder. These reporting
requirements apply regardless of whether withholding was reduced or eliminated
by an applicable tax treaty. Copies of these returns may also be made available
under the provisions of a specific treaty or agreement with the tax authorities
in the country in which the Non-US. Stockholder resides.
U.S. backup withholding (which generally is imposed at the rate of 31% on
certain payments to persons that fail to furnish the information required under
the U.S. information reporting requirements) and information reporting will
generally not apply to dividends (including any capital gain dividends) paid on
Company shares to Non-U.S. Stockholders at an address outside the United States.
The New Treasury Regulations would similarly require a Non-U.S. Stockholder to
provide the Form W-8 previously referred to in order for dividends paid after
December 31, 1999 to be exempt from backup withholding and information
reporting.
The payment of the proceeds from the disposition of Company shares to or through
a U.S. office of a broker will be subject to information reporting and backup
withholding unless the owner, under penalties of perjury, certifies, among other
things, its status as a Non-U.S. Stockholder, or otherwise establishes an
exemption. The payment of the proceeds from the disposition of such shares to or
through a non-U.S. office of a Non-U.S. office of a broker which is (i) a U.S.
person, (ii) a "controlled foreign corporation" for U.S. federal income tax
purposes or (iii) a foreign person 50% or more of whose gross income for certain
periods is derived from a U.S. trade or business is subject to information
reporting (but not backup withholding) unless the broker has documentary
evidence in its files that the holder is a Non-U.S. Stockholder (and the broker
has no actual knowledge to the contrary) and certain other conditions are met,
or the holder otherwise establishes an exemption. Under the New Treasury
Regulations, a payment of the proceeds from the disposition of Company shares to
S-12
<PAGE> 13
or through such broker will be subject to backup withholding if such broker has
actual knowledge that the holder is a U.S. person.
Any amounts withheld under the backup withholding rules will be refunded or
credited against the Non-U.S. Stockholder's U.S. federal income tax liability,
provided that required information is furnished to the IRS. Generally, the New
Treasury Regulations do not significantly alter the substantive backup
withholding and information reporting requirements described above.
S-13
<PAGE> 14
UNDERWRITING
Subject to the terms and conditions contained in the terms agreement and related
underwriting agreement (collectively, the "Underwriting Agreement"), the Company
has agreed to sell to Merrill Lynch, Pierce, Fenner & Smith Incorporated (the
"Underwriter") and the Underwriter has agreed to purchase from the Company
850,000 shares of Common Stock. The Underwriting Agreement provides that the
obligation of the Underwriter to pay for and accept delivery of the Common Stock
is subject to approval of certain legal matters by counsel and to certain other
conditions. The Underwriter is obligated to take and pay for all shares of
Common Stock offered hereby (other than those covered by the over-allotment
option described below) if any such shares are taken.
The following table shows the per share and total underwriting discount to be
paid to the Underwriter by the Company. Such amounts are shown assuming both no
exercise and full exercise of the Underwriter's option to purchase 127,500
additional shares of Common Stock.
<TABLE>
<CAPTION>
NO FULL
EXERCISE EXERCISE
-------- ----------
<S> <C> <C>
Per Share.................................... $ 1.06 $ 1.06
Total........................................ $901,000 $1,036,150
</TABLE>
The Underwriter proposes to offer the Common Stock directly to the public at the
public offering price set forth on the cover page of this Prospectus Supplement
and to certain dealers at such price less a concession not in excess of $.60 per
share. The Underwriter may allow, and such dealers may reallow, a concession not
in excess of $.10 per share to certain dealers.
The Company expects to incur expenses of approximately $200,000 in connection
with this offering. These expenses are estimated to include printing costs of
$25,000, legal fees of $50,000, accounting fees of $40,000, blue sky fees and
expenses of $1,000, NYSE listing fees of $10,000 and miscellaneous expenses of
$74,000.
The Company has granted the Underwriter an option exercisable for 30 days after
the date of this Prospectus Supplement to purchase up to 127,500 additional
shares of Common Stock to cover over-allotments, if any, at the public offering
price less the underwriting discount set forth on the cover page of this
Prospectus Supplement. If the Underwriter exercises this option, the Underwriter
will have a firm commitment, subject to certain conditions, to purchase all of
such shares covered thereby.
The Company has agreed not to, directly or indirectly, issue, sell, offer to
sell, grant any option for the sale of, or otherwise dispose of Common Stock or
any security convertible into or exercisable or exchangeable for Common Stock
for a period of 30 days from the date hereof without the prior written consent
of the Underwriter, subject to certain limited exceptions (including the
issuance, sale and delivery of Common Stock with a fair market value of up to
$50 million in connection with a firm commitment offering limited to
institutional investors). The Underwriter may, at any time and without notice,
waive the foregoing lock-up agreement.
The Company has agreed to indemnify the Underwriter against certain liabilities,
including liabilities under the Securities Act of 1933, as amended, or to
contribute to payments the Underwriter may be required to make in respect
thereof.
S-14
<PAGE> 15
In connection with the offering the Underwriter is permitted to engage in
certain transactions that stabilize the price of the Common Stock. Such
transactions consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of the Common Stock.
If the Underwriter creates a short position in the Common Stock in connection
with the offering, i.e., if it sells more shares of Common Stock than are set
forth on the cover page of this Prospectus Supplement, the Underwriter may
reduce that short position by purchasing Common Stock in the open market. The
Underwriter may also elect to reduce any short position by exercising all or
part of the over-allotment option described above.
The Underwriter also may impose a penalty bid on certain selling group members.
This means that if the Underwriter purchases shares of Common Stock in the open
market to reduce the Underwriter's short position or to stabilize the price of
the Common Stock, it may reclaim the amount of the selling concession from the
selling group members who sold those shares as part of the offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might have an effect on the price of a security to the extent that it were to
discourage resales of the security by purchasers in the offering.
Neither the Company nor the Underwriter makes any representation or prediction
as to the direction or magnitude of any effect that the transactions described
above may have on the price of the Common Stock. In addition, neither the
Company nor the Underwriter makes any representation that the Underwriter will
engage in such transactions or that such transactions, once commenced, will not
be discontinued without notice.
The Underwriter or its affiliates have provided, and may in the future provide,
investment banking, financial advisory or commercial banking services for the
Company, for which they have received and may receive customary compensation.
EXPERTS
The consolidated financial statements and schedules of JDN Realty Corporation
included in JDN Realty Corporation's Annual Report (Form 10-K) for the year
ended December 31, 1997, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon included therein and
incorporated herein by reference. Such consolidated financial statements and
schedules are incorporated herein by reference in reliance upon such reports
given upon the authority of such firm as experts in accounting and auditing.
LEGAL MATTERS
The validity of the Common Stock offered hereby, as well as certain legal
matters relating to the Company, will be passed upon for the Company by Waller
Lansden Dortch & Davis, A Professional Limited Liability Company, Nashville,
Tennessee. In addition, the description of federal income tax considerations
contained in the section of this Prospectus Supplement entitled "Certain Federal
Income Tax Considerations" is based upon the opinion of Waller Lansden Dortch &
Davis, A Professional Limited Liability Company. Waller Lansden Dortch & Davis,
A Professional Limited Liability Company, will rely on the opinion of Brown &
Wood LLP, Washington, D.C., as to certain matters of Maryland law.
Certain legal matters related to the offering will be passed upon for the
Underwriter by Hogan & Hartson L.L.P., Washington, D.C.
S-15
<PAGE> 16
PROSPECTUS
JDN REALTY CORPORATION
$600,000,000
COMMON STOCK, COMMON STOCK WARRANTS, PREFERRED STOCK AND DEBT SECURITIES
JDN Realty Corporation (the "Company") operates as a real estate investment
trust ("REIT") under the Internal Revenue Code of 1986, as amended, and may from
time to time offer in one or more series (i) shares of common stock, par value
$.01 per share (the "Common Stock"), (ii) warrants to purchase Common Stock (the
"Common Stock Warrants"), (iii) shares of preferred stock, par value $.01 per
share (the "Preferred Stock"), or (iv) debt securities (the "Debt Securities"),
with an aggregate public offering price of up to $600,000,000 (or the equivalent
thereof in foreign currencies or currency units) in amounts, at prices and on
terms to be determined at the time of any such offering. The Company may offer
the Common Stock, Common Stock Warrants, Preferred Stock, and Debt Securities
(collectively, the "Securities") from time to time, separately or together, in
separate series, in amounts, at prices and on terms to be set forth in
supplements to this Prospectus (each a "Prospectus Supplement").
The specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in the applicable Prospectus Supplement and
will include, where applicable: (i) in the case of Common Stock, the specific
number of shares and issuance price per share; (ii) in the case of Common Stock
Warrants, the duration, offering price, exercise price and detachability; (iii)
in the case of Preferred Stock, the specific number of shares, designation, any
dividend, liquidation, redemption, conversion, voting and other rights, and any
initial public offering price; and (iv) in the case of Debt Securities, the
specific title, aggregate principal amount, currency of denomination and
payment, form (which may be registered or bearer, or certificated or global),
authorized denominations, maturity, rate (or manner of calculation thereof) and
time of payment of interest, terms for redemption at the option of the Company
or repayment at the option of the holder, terms for any sinking fund payments,
terms for conversion into Common Stock, Preferred Stock or Debt Securities of
another series, and any initial public offering price. In addition, such
specific terms may include limitations on direct or beneficial ownership and
restrictions on transfer of the Securities, in each case as may be appropriate
to preserve the status of the Company as a REIT for federal income tax purposes.
The applicable Prospectus Supplement will also contain information, where
applicable, about certain federal income tax considerations relating to, and any
listing on a securities exchange of, the Securities covered by such Prospectus
Supplement.
The Securities may be offered by the Company directly, through agents
designated from time to time by the Company, or to or through underwriters or
dealers. If any agents or underwriters are involved in the sale of any of the
Securities, their names, and any applicable purchase price, fee, commission or
discount arrangement between or among them will be set forth, or will be
calculable from the information set forth, in the applicable Prospectus
Supplement. See "Plan of Distribution." No Securities may be sold without
delivery of the applicable Prospectus Supplement describing the method and terms
of the offering of such series of Securities.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
---------------------
THE DATE OF THIS PROSPECTUS IS OCTOBER 30, 1997
<PAGE> 17
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities of the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional
Offices of the Commission: Midwest Regional Office, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511; Northeast Regional
Office, 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of
such material may be obtained from the Public Reference Section of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates. The Commission maintains a Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The address
of the Commission's Web site is: http://www.sec.gov. The Common Stock is listed
on the NYSE and such reports, proxy statements and other information concerning
the Company can be inspected at the offices of the NYSE, 20 Broad Street, New
York, New York 10005.
The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Securities. The Prospectus and any
accompanying Prospectus Supplement do not contain all of the information
included in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the Securities, reference is hereby
made to the Registration Statement, including the exhibits and schedules
thereto. Statements contained in this Prospectus and any accompanying Prospectus
Supplement concerning the provisions or contents of any contract, agreement or
any other document referred to herein are not necessarily complete. With respect
to each such contract, agreement or document filed as an exhibit to the
Registration Statement, reference is made to such exhibit for a more complete
description of the matters involved, and each such statement shall be deemed
qualified in its entirety by such reference to the copy of the applicable
document filed with the Commission. The Registration Statement, including the
exhibits and schedules thereto, may be inspected without charge at the
Commission's principal office at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and copies of it or any part thereof may be obtained from
such office, upon payment of the fees prescribed by the Commission.
---------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have previously been filed by the Company
with the Commission under the Exchange Act (File No. 1-12844) are incorporated
herein by reference:
(a) Annual Report on Form 10-K for the year ended December 31, 1996;
(b) Quarterly Report on Form 10-Q for the quarter ended March 31,
1997;
(b) Quarterly Report on Form 10-Q for the quarter ended June 30, 1997;
(c) Quarterly Report on Form 10-Q for the quarter ended September 30,
1997;
(d) Current Report on Form 8-K, dated March 3, 1997;
(e) Current Report on Form 8-K, dated March 12, 1997;
(f) Current Report on Form 8-K, dated March 25, 1997;
(g) Current Report on Form 8-K, dated May 30, 1997;
(h) Current Report on Form 8-K, dated August 1, 1997;
(i) Current Report on Form 8-K, dated September 26, 1997;
2
<PAGE> 18
(j) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the Company's fiscal year ended December 31,
1996; and
(k) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A, filed with the Commission on February
23, 1994, and the information therein incorporated by reference contained
in the Company's Registration Statement on Form S-11 (File No. 33-73710).
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Securities made hereby shall be deemed to be
incorporated in this Prospectus by reference and to be a part hereof from the
date of filing of such documents. Any statement contained herein, or in a
document incorporated or deemed to be incorporated by reference herein, shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein (or in an applicable Prospectus
Supplement) or in any subsequently filed document which also is or is deemed to
be incorporated by reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus or any
Prospectus Supplement.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, on the written
request of any such person, a copy of any or all of the documents incorporated
herein by reference, except the exhibits to such documents (unless such exhibits
are specifically incorporated by reference in such documents). Requests for such
copies should be directed to the Company, at 3340 Peachtree Road, Suite 1530,
Atlanta, Georgia 30326, Attention: Investor Relations, (404) 262-3252.
Unless the context otherwise requires, as used herein the terms "Company"
or "JDN" include JDN Realty Corporation, its predecessor, JDN Development
Company, Inc., subsidiaries of JDN Realty Corporation and JDN Development
Company, Inc., and joint ventures (including limited liability companies) in
which JDN Realty Corporation, JDN Development Company, Inc. or their
subsidiaries own an interest.
THE COMPANY
JDN Realty Corporation (the "Company"), which began operations in 1978, is
a real estate development company operating as a REIT and specializing in the
development and asset management of retail shopping centers anchored by
value-oriented retailers. As of September 30, 1997, the Company owned and
operated, either directly or through affiliated entities or joint ventures, 61
shopping center properties containing approximately 7.3 million square feet of
gross leasable area, located in eleven states, primarily in the Southeast.
The Company is one of the largest developers of Wal-Mart anchored shopping
centers in the United States. The Company credits much of its success to its
strong relationships with national, regional and local tenants which it has
developed during its years of operations. The Company continuously works to
improve existing tenant relationships and to develop new tenant relationships.
The Company's business objective is to increase its funds from operations
by (i) development of new shopping centers anchored by strong retail tenants
with high credit quality, (ii) redevelopment and expansion of its existing
properties, (iii) effective leasing and management of its properties and ground
leasing of adjacent outparcels, and (iv) acquisition of existing shopping
centers. The Company is a fully integrated real estate firm with in-house
development, redevelopment, expansion, leasing, property management and
acquisition expertise.
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement
accompanying this Prospectus, the Company intends to use the net proceeds from
the sale of the Securities for general corporate purposes, which may include the
development, redevelopment and acquisition of shopping center properties as
suitable opportunities arise, the expansion and improvement of certain
properties in the Company's portfolio and the repayment of outstanding
indebtedness.
3
<PAGE> 19
Pending such uses, net proceeds of any offering of Securities will be
invested in short-term, investment grade instruments, interest-bearing bank
accounts or certificates of deposit, consistent with the Company's qualification
as a REIT, the Company's Charter, as amended (the "Charter") and the Company's
agreements with its lenders.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges of
the Company for the years indicated:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------- ------------------------------------
1997 1996 1996 1995 1994 1993 1992
----- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges........................ 2.81x 2.28x 2.29x 1.90x 1.64x * *
</TABLE>
- ---------------
* Prior to completion of the Company's initial public offering of its common
stock on March 29, 1994, the Company and its predecessor businesses were
privately held and operated in a manner to minimize net taxable income and to
fund any operating cash flow deficits through the sale of shopping center
properties. As a result, although the Company historically generated positive
cash flow, it had net losses for the years ended December 31, 1993 and 1992.
Consequently, the computation of the ratio of earnings to fixed charges for
such years indicates that earnings were inadequate to cover fixed charges by
approximately $1.2 million and $1.8 million for the years ended December 31,
1993 and 1992, respectively.
For purposes of calculating the ratio of earnings to fixed charges,
earnings have been calculated by adding fixed charges (excluding capitalized
interest) to income (loss) before income tax benefits, net gain (loss) on real
estate sales, extraordinary items and cumulative effect of changes in accounting
principles. Fixed charges consist of interest costs, whether expensed or
capitalized, and amortization of deferred debt costs. To date, the Company has
not issued any Preferred Stock; therefore, the ratios of earnings to fixed
charges and Preferred Stock dividend requirements are the same as the ratios of
earnings to fixed charges presented above.
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue an aggregate of 170,000,000 shares of
capital stock, which includes 150,000,000 shares of Common Stock and 20,000,000
shares of Preferred Stock. On the date hereof, 15,493,501 shares of Common Stock
were outstanding and no shares of Preferred Stock were outstanding.
RESTRICTIONS ON OWNERSHIP
For the Company to qualify as a REIT under the Code in any taxable year,
(i) not more than 50% in value of its outstanding capital stock may be owned,
directly or indirectly (after application of certain complex attribution rules),
by five or fewer individuals (as defined in the Code) at any time during the
last half of its taxable year, and (ii) its stock must be beneficially owned by
100 or more persons during at least 335 days of a taxable year of 12 months or
during a proportionate part of a shorter taxable year. In order to ensure that
requirement (i) above is satisfied, the Board of Directors shall refuse to
transfer shares of the Common Stock to any person whose acquisition of such
shares would result in the direct or indirect ownership of more than 8% either
in number or value of the outstanding Common Stock and to transfer shares of
Preferred Stock to any person whose acquisition of such shares would result in
the direct or indirect ownership of more than 8% either in number or value.
In connection with the foregoing, if the Board of Directors shall, at any
time and in good faith, believe that direct or indirect ownership (as determined
under applicable federal tax attribution rules) of at least 8% or more either in
number or value of the outstanding capital stock has or may become concentrated
in the hands of one beneficial owner (other than the Nichols, their family and
certain affiliates), the Board of Directors shall refuse to transfer or issue
capital stock to a person whose acquisition of such capital stock
4
<PAGE> 20
would cause a beneficial holder to hold in excess of 8% in value of the
outstanding capital stock, subject to certain exceptions specified in the
Charter. Further, any transfer of capital stock that would create a beneficial
owner of more than 8% of the outstanding capital stock (other than to the
Nichols, their family and certain affiliates, and certain exceptions specified
in the Charter) shall be deemed void and the intended transferee shall be deemed
never to have had an interest therein. As of December 31, 1996, the Nichols,
members of their family and certain affiliates beneficially owned in excess of
8% in value of the outstanding Common Stock of the Company and may continue to
do so. The Nichols, members of their family and certain affiliates may acquire
additional shares of Common Stock but not such that any five individuals (as
defined in the Code), taking into account the 8% limit, would beneficially own
more than 49.9% of the Company's outstanding Common Stock.
The Board of Directors is entitled to waive the ownership limit with
respect to a particular stockholder if evidence satisfactory to the Board of
Directors and the Company's tax counsel is presented that such ownership will
not then or in the future jeopardize the Company's status as a REIT. As a
condition of such waiver, the Board of Directors may require opinions of counsel
satisfactory to it and/or an undertaking from the stockholder with respect to
preserving the REIT status of the Company.
If at any time there is a transfer in violation of such restrictions, those
shares of outstanding capital stock in excess of 8% either in number or value of
the Company's outstanding Common Stock, and those shares of outstanding
Preferred Stock in excess of 8% either in number or value of the Company's
outstanding Preferred Stock, subject to the foregoing exceptions ("Excess
Shares"), shall be deemed to have been transferred to the Company, as trustee
for the benefit of such persons to whom the Excess Shares are later transferred.
Subject to the Company's right to purchase the Excess Shares, the interest in
the trust representing the Excess Shares shall be freely transferable by the
intended transferee at a price that does not exceed the price paid by the
intended transferee for the Excess Shares. Excess Shares shall have no voting
rights, and shall not be considered for the purpose of any shareholder vote or
determining a quorum, but shall continue to be reflected as issued and
outstanding stock. No dividends shall be paid with respect to Excess Shares. The
Company shall have the right to purchase Excess Shares for the lesser of the
amount paid by the intended transferee for the Excess Shares or the market
price. The market price for any capital stock so purchased, shall be equal to
the fair market value of such Excess Shares reflected in (i) the closing sales
price for the capital stock, if then listed on only one national securities
exchange, or (ii) the average closing sales price of such capital stock if then
listed on more than one national securities exchange, or (iii) if the capital
stock is not then listed on a national securities exchange, the latest bid
quotation for the capital stock if then traded over-the-counter, as of the day
immediately preceding the date on which notices of such purchase are sent by the
Company. If no such closing sales prices or quotations are available, the
purchase price shall equal the net asset value of such capital stock as
determined by the Board of Directors in good faith.
All persons who own a specified percentage (or more) of the outstanding
capital stock of the Company must file a certificate with the Company containing
information regarding their ownership of stock as set forth in the Treasury
Regulations. Under current Treasury Regulations, the percentage is set between
one-half of one percent and five percent, depending on the number of record
holders of stock. In addition, each stockholder shall, upon demand, be required
to disclose to the Company in writing such information with respect to the
direct, indirect, and constructive ownership of shares of stock of the Company
as the Board of Directors deems necessary to comply with the provisions of the
Code applicable to a REIT or to comply with the requirements of any taxing
authority or governmental agency.
All certificates representing shares of capital stock bear a legend
referring to the restrictions described above.
BUSINESS COMBINATIONS
Under the Maryland General Corporation Law, certain "business combinations"
(including a merger, consolidation, share exchange, or, in certain
circumstances, an asset transfer or issuance or reclassification of equity
securities) between a Maryland corporation and any person who beneficially owns
10% or more of the corporation's stock (an "Interested Shareholder") must be:
(a) recommended by the corporation's board of
5
<PAGE> 21
directors; and (b) approved by the affirmative vote of at least (i) 80% of the
corporation's outstanding shares entitled to vote and (ii) two-thirds of the
outstanding shares entitled to vote which are not held by the Interested
Shareholder with whom the business combination is to be effected, unless, among
other things, the corporation's holders of capital stock receive a minimum price
(as defined in the statute) for their shares and the consideration is received
in cash or in the same form as previously paid by the Interested Shareholder for
his shares. In addition, an Interested Shareholder or affiliate thereof may not
engage in a business combination with the corporation for a period of five years
following the most recent date the person became an Interested Shareholder.
These provisions of Maryland law do not apply, however, to business combinations
that are approved by the board of directors of a Maryland corporation prior to a
person's becoming an Interested Shareholder.
CONTROL SHARE ACQUISITIONS
The Maryland General Corporation Law provides that "control shares" of a
Maryland corporation acquired in a "control share acquisition" may not be voted
except to the extent approved by a vote of two-thirds of all the corporation's
shares entitled to vote on the matter, excluding all interested shares. "Control
shares" are shares which, if aggregated with all other shares owned by the
person or in respect of which that person is entitled to exercise or direct the
exercise of voting power, except solely by virtue of a revocable proxy, would
entitle the acquirer to vote (i) 20% or more but less than one-third, (ii)
one-third or more but less than a majority, or (iii) a majority or more of the
outstanding shares entitled to vote. Control shares do not include shares which
the acquiring person is entitled to vote as a result of having previously
obtained the required shareholder approval. A "control share acquisition" means
the acquisition of control shares, subject to certain exceptions.
A person who has made or proposes to make a control share acquisition and
who has undertaken to reimburse certain expenses of the corporation and has
obtained a definitive financing agreement with a responsible financial
institution providing for any amount of financing not to be provided by the
acquiring person may compel the corporation's board of directors to call a
special meeting of shareholders to be held within 50 days of demand to consider
the voting rights of the shares. If no request for a meeting is made, the
corporation may itself present the question at any shareholders meeting.
Subject to certain conditions and limitations, if the voting rights of the
control shares were considered and not approved, the corporation may redeem any
or all of the control shares, except those for which voting rights have
previously been approved, for fair value determined, without regard to absence
of voting rights, as of the date of the last control share acquisition by the
acquirer or as of the date of any meeting of shareholders at which the voting
rights of such shares are considered and not approved. If voting rights for
control shares are approved at a shareholders meeting and the acquirer is
entitled to vote a majority of the shares entitled to vote, prior to the control
share acquisition all other shareholders may exercise appraisal rights, unless
the charter or bylaws of the corporation provide otherwise. The fair value of
the shares as determined for purposes of such appraisal rights may not be less
than the highest price per share paid by the acquiring person in the control
share acquisition. Certain limitations and restrictions otherwise applicable to
the exercise of dissenters' rights do not apply in the context of a control
share acquisition.
The control share acquisition statute does not apply to shares acquired in
a merger, consolidation or share exchange if the corporation is a party to the
transaction, or to the acquisitions approved or exempted by the charter or
bylaws of the corporation prior to a control share acquisition.
The limitation on ownership of the Company's Stock set forth in the
Charter, as well as the provisions of Maryland law described above, could have
the effect of discouraging offers to acquire the Company and of increasing the
difficulty of consummating any such offer.
DESCRIPTION OF COMMON STOCK
The Company is authorized to issue 150,000,000 shares of Common Stock. On
the date hereof, 15,493,501 shares of Common Stock were outstanding, held by
approximately 416 record holders.
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The following description of the Common Stock sets forth certain general
terms and provisions of the Common Stock to which any Prospectus Supplement may
relate, including a Prospectus Supplement providing that Common Stock will be
issuable upon conversion of Debt Securities or Preferred Stock of the Company or
upon the exercise of Common Stock Warrants issued by the Company. The statements
below describing the Common Stock are in all respects subject to and qualified
in their entirety by reference to the applicable provisions of the Charter.
Holders of shares of Common Stock are entitled to receive such dividends as
the Board of Directors may declare out of funds legally available for the
payment of dividends. Upon issuance, the shares of Common Stock will be fully
paid and nonassessable and have no preferences or conversion, exchange or
preemptive rights. In the event of any liquidation, dissolution or winding-up of
the Company, the holders of shares of Common Stock are entitled to share ratably
in any of the Company's assets remaining after the satisfaction of all
obligations and liabilities of the Company and after required distributions to
holders of Preferred Stock, if any. Each share is entitled to one vote on all
matters voted upon by the holders of Common Stock. Holders of shares of Common
Stock have no cumulative voting rights.
EXCHANGE LISTING
The Company's Common Stock is listed on the New York Stock Exchange under
the symbol JDN.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
The Company initially reserved 500,000 shares of Common Stock for issuance
under its Dividend Reinvestment and Stock Purchase Plan (the "Plan") to provide
record owners of the Company's Common Stock with a method of investing dividends
and other distributions paid in cash in additional shares of the Company's
Common Stock. The Company may issue original issue shares under the Plan or,
from time to time, direct First Union National Bank of North Carolina, as the
Company's agent under the Plan, to repurchase shares of the Company's Common
Stock in the open market for sale under the Plan. To the extent shares of Common
Stock purchased under the Plan are purchased from the Company, the Company will
receive additional funds to be used for its general corporate purposes. On the
date hereof, 492,775 shares of Common Stock are reserved for issuance under this
plan.
EMPLOYEE STOCK PURCHASE PLAN
The Company initially reserved 100,000 shares of Common Stock for issuance
under the JDN Corporation 1995 Employee Stock Purchase Plan, which provides an
opportunity for eligible employees of JDN Realty Corporation and its
subsidiaries to acquire an interest in the Company through acquisitions of
shares of the Company's Common Stock at a discount. The proceeds of shares
purchased under this plan will be used for the Company's general corporate
purposes. On the date hereof, 99,168 shares of Common Stock are reserved for
issuance under this plan.
RESTRICTIONS ON OWNERSHIP
The Common Stock is subject to certain restrictions on ownership described
above under "Description of Capital Stock -- Restrictions on Ownership".
TRANSFER AGENT
The transfer agent and registrar for the Company's Common Stock is First
Union National Bank of North Carolina ("First Union").
DESCRIPTION OF COMMON STOCK WARRANTS
The Company may issue Common Stock Warrants for the purchase of Common
Stock. Common Stock Warrants may be issued independently or together with any
other Securities offered pursuant to any Prospectus Supplement and may be
attached to or separate from such Securities. Each series of Common
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Stock Warrants will be issued under a separate warrant agreement (each, a
"Warrant Agreement") to be entered into between the Company and the warrant
recipient or, if the recipients are numerous, a warrant agent identified in the
applicable Prospectus Supplement (the "Warrant Agent"). The Warrant Agent, if
engaged, will act solely as an agent of the Company in connection with the
Common Stock Warrants of such series and will not assume any obligation or
relationship of agency or trust for or with any holders or beneficial owners of
Common Stock Warrants. Further terms of the Common Stock Warrants and the
applicable Warrant Agreements will be set forth in the applicable Prospectus
Supplement.
The applicable Prospectus Supplement will describe the terms of any Common
Stock Warrants in respect of which this Prospectus is being delivered,
including, where applicable, the following: (1) the title of such Common Stock
Warrants; (2) the aggregate number of such Common Stock Warrants; (3) the price
or prices at which such Common Stock Warrants will be issued; (4) the
designation, number and terms of the shares of Common Stock purchasable upon
exercise of such Common Stock Warrants; (5) the designation and terms of the
other Securities with which such Common Stock Warrants are issued and the number
of such Common Stock Warrants issued with such offered Securities; (6) the date,
if any, on and after which such Common Stock Warrants and the related Common
Stock will be separately transferable; (7) the price at which each share of
Common Stock purchasable upon exercise of such Common Stock Warrants may be
purchased; (8) the date on which the right to exercise such Common Stock
Warrants shall commence and the date on which such right shall expire; (9) the
minimum or maximum amount of such Common Stock Warrants which may be exercised
at any one time; (10) information with respect to book-entry procedures, if any;
(11) a discussion of certain federal income tax considerations relevant to a
holder of such Common Stock Warrants; and (12) any other terms of such Common
Stock Warrants, including terms, procedures and limitations relating to the
exchange and exercise of such Common Stock Warrants.
Reference is made to the section captioned "Description of Common Stock"
for a general description of the Common Stock to be acquired upon the exercise
of the Common Stock Warrants. Additionally, the section captioned "Description
of Capital Stock" includes a description of certain restrictions on transfer of
the Common Stock.
DESCRIPTION OF PREFERRED STOCK
GENERAL
The Company is authorized to issue 20,000,000 shares of Preferred Stock,
par value $.01 per share, none of which were outstanding on the date hereof.
The following description of the Preferred Stock sets forth certain
anticipated general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. Certain other terms of any series of Preferred
Stock (which terms may be different than those stated below) will be described
in the Prospectus Supplement to which such series relates. The statements below
describing the Preferred Stock are in all respects subject to and qualified in
their entirety by reference to the applicable provisions of the applicable
Prospectus Supplement and Charter (including the amendment describing the
designations, rights, and preferences of each series of Preferred Stock) and
Bylaws.
Subject to limitations prescribed by Maryland law and the Charter, the
Company's Board of Directors is authorized to fix the number of shares
constituting each series of Preferred Stock and the designations and powers,
preferences and relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof, including such provisions
as may be desired concerning voting, redemption, dividends, dissolution or the
distribution of assets, conversion or exchange, and such other subjects or
matters as may be fixed by resolution of the Board of Directors or the duly
authorized committee thereof. The Preferred Stock will, when issued, be fully
paid and nonassessable and will have no preemptive rights.
Reference is made to the Prospectus Supplement relating to the Preferred
Stock offered thereby for specific terms, including: (1) the title and stated
value of such Preferred Stock; (2) the number of shares of such Preferred Stock
offered, the liquidation preference per share and the offering price of such
Preferred
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Stock; (3) the dividend rate(s), period(s) and or payment date(s) or method(s)
of calculation thereof applicable to such Preferred Stock; (4) the date from
which dividends on such Preferred Stock shall accumulate, if applicable; (5) the
procedures for any auction and remarketing, if any, for such Preferred Stock;
(6) the provision for a sinking fund, if any, for such Preferred Stock; (7) the
provisions for redemption, if applicable, of such Preferred Stock; (8) any
listing of such Preferred Stock on any securities exchange; (9) the terms and
conditions, if applicable, upon which such Preferred Stock will be convertible
into Common Stock, including the conversion price (or manner of calculation
thereof); (10) a discussion of certain federal income tax considerations
relevant to a holder of such Preferred Stock; (11) the relative ranking and
preferences of such Preferred Stock as to dividend rights and rights upon
liquidation, dissolution or winding up of the affairs of the Company; (12) any
limitations on issuance of any series of Preferred Stock ranking senior to or on
a parity with such series of Preferred Stock as to dividend rights and rights
upon liquidation, dissolution or winding up of the affairs of the Company; (13)
any limitations on direct or beneficial ownership and restrictions on transfer,
in each case as may be appropriate to preserve the status of the Company as a
REIT and (14) any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Stock.
RANK
Unless otherwise specified in the applicable Prospectus Supplement, the
Preferred Stock will, with respect to dividend rights and rights upon
liquidation, dissolution or winding up of the Company, rank (i) senior to all
classes or series of Common Stock of the Company, and to all equity and debt
securities which are specifically designated as ranking junior to such Preferred
Stock with respect to dividend rights or rights upon liquidation, dissolution or
winding up of the Company; (ii) on a parity with all equity and debt securities
issued by the Company the terms of which specifically provide that such equity
and debt securities rank on a parity with the Preferred Stock with respect to
dividend rights or rights upon liquidation, dissolution or winding up of the
Company; and (iii) junior to all equity and debt securities issued by the
Company the terms of which specifically provide that such equity and debt
securities rank senior to the Preferred Stock with respect to dividend rights or
rights upon liquidation, dissolution or winding up of the Company.
DIVIDENDS
Holders of shares of the Preferred Stock of each series shall be entitled
to receive, when, as and if declared by the Board of Directors of the Company,
out of assets of the Company legally available for payment, cash dividends (or
dividends in kind or in other property if expressly permitted and described in
the applicable Prospectus Supplement) at such rates and on such dates as will be
set forth in the applicable Prospectus Supplement. Each such dividend shall be
payable to holders of record as they appear on the stock transfer books of the
Company on such record dates as shall be fixed by the Board of Directors of the
Company.
Dividends on any series of the Preferred Stock may be cumulative or
non-cumulative, as provided in the applicable Prospectus Supplement. Dividends,
if cumulative, will be cumulative from and after the date set forth in the
applicable Prospectus Supplement. If the Board of Directors of the Company fails
to declare a dividend payable on a dividend payment date on any series of the
Preferred Stock for which dividends are noncumulative, then the holders of such
series of the Preferred Stock will have no right to receive a dividend in
respect of the dividend period ending on such dividend payment date, and the
Company will have no obligation to pay the dividend accrued for such period,
whether or not dividends on such series are declared payable on any future
dividend payment date.
Unless otherwise specified in the applicable Prospectus Supplement, if any
shares of the Preferred Stock of any series are outstanding, no full dividends
shall be declared or paid or set apart for payment on the Preferred Stock of the
Company of any other series ranking, as to dividends, on a parity with or junior
to the Preferred Stock of such series for any period unless full dividends
(which include all unpaid dividends in the case of cumulative dividend Preferred
Stock) have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for such payment on the
Preferred Stock of such series.
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When dividends are not paid in full (or a sum sufficient for such full
payment is not so set apart) upon the shares of Preferred Stock of any series
and the shares of any other series of Preferred Stock ranking on a parity as to
dividends with the Preferred Stock of such series, all dividends declared upon
shares of Preferred Stock of such series and any other series of Preferred Stock
ranking on a parity as to dividends with such Preferred Stock shall be declared
pro rata among the holders of such series. No interest, or sum of money in lieu
of interest, shall be payable in respect of any dividend payment or payments on
Preferred Stock of such series which may be in arrears.
Until required dividends are paid, no dividends (other than in Common Stock
or other capital stock ranking junior to the Preferred Stock of such series as
to dividends and upon liquidation) shall be declared or paid or set aside for
payment or other distribution shall be declared or made upon the Common Stock or
any other capital stock of the Company ranking junior to or on a parity with the
Preferred Stock of such series as to dividends or upon liquidation, nor shall
any Common Stock or any other capital stock of the Company ranking junior to or
on a parity with the Preferred Stock of such series as to dividends or upon
liquidation be redeemed, purchased or otherwise acquired for any consideration
(or any moneys be paid to or made available for a sinking fund for the
redemption of any shares of any such stock) by the Company (except by conversion
into or exchange for other capital stock of the Company ranking junior to the
Preferred Stock of such series as to dividends and upon liquidation).
Any dividend payment made on shares of a series of Preferred Stock shall
first be credited against the earliest accrued but unpaid dividend due with
respect to shares of Preferred Stock of such series which remains payable.
REDEMPTION
If so provided in the applicable Prospectus Supplement, the shares of
Preferred Stock will be subject to mandatory redemption or redemption at the
option of the Company, as a whole or in part, in each case upon the terms, at
the times and at the redemption prices set forth in such Prospectus Supplement.
The Prospectus Supplement relating to a series of Preferred Stock that is
subject to mandatory redemption will specify the number of shares of such
Preferred Stock that shall be redeemed by the Company in each year commencing
after a date to be specified, at a redemption price per share to be specified,
together with an amount equal to all accrued and unpaid dividends thereon (which
shall not, if such Preferred Stock does not have a cumulative dividend, include
any accumulation in respect of unpaid dividends for prior dividend periods) to
the date of redemption. The redemption price may be payable in cash or other
property, as specified in the applicable Prospectus Supplement. If the
redemption price for Preferred Stock of any series is payable only from the net
proceeds of the issuance of capital stock of the Company, the terms of such
Preferred Stock may provide that, if no such capital stock shall have been
issued or to the extent the net proceeds from any issuance are insufficient to
pay in full the aggregate redemption price then due, such Preferred Stock shall
automatically and mandatorily be converted into shares of the applicable capital
stock of the Company pursuant to conversion provisions specified in the
applicable Prospectus Supplement.
So long as any dividends on shares of any series of the Preferred Stock of
the Company ranking on a parity as to dividends and distributions of assets with
such series of the Preferred Stock are in arrears, no shares of any such series
of the Preferred Stock of the Company will be redeemed (whether by mandatory or
optional redemption) unless all such shares are simultaneously redeemed, and the
Company will not purchase or otherwise acquire any such shares; provided,
however, that the foregoing will not prevent the purchase or acquisition of such
shares of Preferred Stock to preserve the REIT status of the Company or pursuant
to a purchase or exchange offer made on the same terms to holders of all
outstanding shares of Preferred Stock of such series and, unless the full
cumulative dividends on all outstanding shares of any cumulative Preferred Stock
of such series and any other stock of the Company ranking on a parity with such
series as to dividends and upon liquidation shall have been paid or
contemporaneously are declared and paid for all past dividend periods, the
Company shall not purchase or otherwise acquire directly or indirectly any
shares of Preferred Stock of such series (except by conversion into or exchange
for stock of the Company ranking junior to the Preferred Stock of such series as
to dividends and upon liquidation); provided, however, that the foregoing will
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not prevent the purchase or acquisition of such shares of Preferred Stock to
preserve the REIT status of the Company or pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding shares of Preferred
Stock of such series.
If fewer than all of the outstanding shares of Preferred Stock of any
series are to be redeemed, the number of shares to be redeemed will be
determined by the Company and such shares may be redeemed pro rata from the
holders of record of such shares in proportion to the number of such shares held
by such holders (with adjustments to avoid redemption of fractional shares) or
any other equitable method determined by the Company that will not result in the
issuance of any Excess Shares.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of a share of Preferred
Stock of any series to be redeemed at the address shown on the stock transfer
books of the Company. If notice of redemption of any shares of Preferred Stock
has been given and if the funds necessary for such redemption have been set
aside by the Company in trust for the benefit of the holders of any shares of
Preferred Stock so called for redemption, then from and after the redemption
date dividends will cease to accrue on such shares of Preferred Stock, such
shares of Preferred Stock shall no longer be deemed outstanding and all rights
of the holders of such shares will terminate, except the right to receive the
redemption price.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company, then, before any distribution or payment shall be
made to the holders of Common Stock, or any other class or series of capital
stock of the Company ranking junior to the Preferred Stock in the distribution
of assets upon any liquidation, dissolution or winding up of the Company, the
holders of each series of Preferred Stock shall be entitled to receive out of
assets of the Company legally available for distribution to shareholders
liquidating distributions in the amount of the liquidation preference per share
(set forth in the applicable Prospectus Supplement), plus an amount equal to all
dividends accrued and unpaid thereon (which shall not include any accumulation
in respect of unpaid dividends for prior dividend periods if such Preferred
Stock does not have a cumulative dividend). After payment of the full amount of
the liquidating distributions to which they are entitled, the holders of shares
of Preferred Stock will have no right or claim to any of the remaining assets of
the Company. In the event that, upon any such voluntary or involuntary
liquidation, dissolution or winding up, the legally available assets of the
Company are insufficient to pay the amount of the liquidating distributions on
all outstanding shares of Preferred Stock and the corresponding amounts payable
on all shares of other classes or series of capital stock of the Company ranking
on a parity with the Preferred Stock in the distribution of assets upon
liquidation, dissolution or winding up, then the holders of the Preferred Stock
and all other such classes or series of capital stock shall share ratably in any
such distribution of assets in proportion to the full liquidating distributions
to which they would otherwise be respectively entitled.
If liquidating distributions shall have been made in full to all holders of
shares of Preferred Stock, the remaining assets of the Company shall be
distributed among the holders of any other classes or series of capital stock
ranking junior to the Preferred Stock upon liquidation, dissolution or winding
up, according to their respective rights and preferences and in each case
according to their respective number of shares.
VOTING RIGHTS
Holders of the Preferred Stock will not have any voting rights, except as
set forth below or as otherwise from time to time required by law or as
indicated in the applicable Prospectus Supplement.
Any series of Preferred Stock may provide that, so long as any shares of
such series of Preferred Stock remain outstanding, the holders of such series
may vote as a separate class on certain specified matters, which may include
changes in the Company's capitalization, amendments to the Charter, and mergers
and dispositions.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of such series of Preferred
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Stock shall have been redeemed or called for redemption upon proper notice and
sufficient funds shall have been irrevocably deposited in trust to effect such
redemption.
The provisions of a series of Preferred Stock may provide for additional
rights, remedies, and privileges if dividends on such series are in arrears for
specified periods, which rights and privileges will be described in the
applicable Prospectus Supplement.
Under Maryland law, notwithstanding anything to the contrary set forth
above, holders of each series of Preferred Stock will be entitled to vote upon a
proposed amendment to the Charter, whether or not entitled to vote thereon by
the Charter, if the amendment would alter the contract rights, as set forth in
the Charter, of their shares of stock.
CONVERSION RIGHTS
The terms and conditions, if any, upon which shares of any series of
Preferred Stock are convertible into Common Stock will be set forth in the
applicable Prospectus Supplement relating thereto. Such terms will include the
number of shares of Common Stock into which the Preferred Stock is convertible,
the conversion price (or manner of calculation thereof), the conversion period,
provisions as to whether conversion will be at the option of the holders of the
Preferred Stock or the Company, the events requiring an adjustment of the
conversion price and provisions affecting conversion in the event of the
redemption of such Preferred Stock.
RESTRICTIONS ON OWNERSHIP
The Preferred Stock is subject to certain restrictions on ownership
described above under "Description of Capital Stock -- Restrictions on
Ownership".
DESCRIPTION OF DEBT SECURITIES
The Company may issue Debt Securities under one or more trust indentures
(each an "Indenture") to be executed by the Company and one or more trustees
(each a "Trustee") meeting the requirements of a trustee under the Trust
Indenture Act of 1939, as amended (the "TIA"). The Indentures will be qualified
under the TIA.
The following description sets forth certain anticipated general terms and
provisions of the Debt Securities to which any Prospectus Supplement may relate.
The particular terms of the Debt Securities offered by any Prospectus Supplement
(which terms may be different than those stated below) and the extent, if any,
to which such general provisions may apply to the Debt Securities so offered
will be described in the Prospectus Supplement relating to such Debt Securities.
Accordingly, for a description of the terms of a particular issue of Debt
Securities, reference must be made to both the Prospectus Supplement relating
thereto and the following description. Forms of the Senior Indenture (as defined
herein) and the Subordinated Indenture (as defined herein) have been filed as
exhibits to the Registration Statement of which this Prospectus is a part.
GENERAL
The Debt Securities will be direct obligations of the Company and may be
either senior Debt Securities ("Senior Securities") or subordinated Debt
Securities ("Subordinated Securities"). The indebtedness represented by
Subordinated Securities will be subordinated in right of payment to the prior
payment in full of the Senior Debt (as defined in the applicable Indenture) of
the Company. Senior Securities and Subordinated Securities will be issued
pursuant to separate indentures (respectively, a "Senior Indenture" and a
"Subordinated Indenture"), in each case between the Company and a Trustee.
Except as set forth in the applicable Indenture and described in a
Prospectus Supplement relating thereto, the Debt Securities may be issued
without limit as to aggregate principal amount, in one or more series, secured
or unsecured, in each case as established from time to time in or pursuant to
authority granted by a resolution of the Board of Directors of the Company or as
established in the applicable Indenture. All
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Debt Securities of one series need not be issued at the same time and, unless
otherwise provided, a series may be reopened, without the consent of the holders
of the Debt Securities of such series, for issuances of additional Debt
Securities of such series.
The Prospectus Supplement relating to any series of Debt Securities being
offered will contain the applicable terms thereof, including, for example:
(1) the title of such Debt Securities and whether such Debt Securities
are Senior Securities or Subordinated Securities;
(2) the aggregate principal amount of such Debt Securities and any
limit on such aggregate principal amount;
(3) the percentage of the principal amount at which such Debt
Securities will be issued and, if other than the principal amount thereof,
the portion of the principal amount thereof payable upon declaration of
acceleration of the maturity thereof, or (if applicable) the portion of the
principal amount of such Debt Securities which is convertible into Common
Stock or Preferred Stock, or the method by which any such portion shall be
determined;
(4) if convertible, any applicable limitations on the ownership or
transferability of the Common Stock or Preferred Stock into which such Debt
Securities are convertible;
(5) the date or dates, or the method for determining such date or
dates, on which the principal of such Debt Securities will be payable;
(6) the rate or rates (which may be fixed or variable), or the method
by which such rate or rates shall be determined, at which such Debt
Securities will bear interest, if any;
(7) the date or dates, or the method for determining such date or
dates, from which any interest will accrue, the interest payment dates on
which any such interest will be payable, the regular record dates for such
interest payment dates, or the method by which any such date shall be
determined, the person to whom such interest shall be payable, and the
basis upon which interest shall be calculated if other than that of a
360-day year of twelve 30-day months;
(8) the place or places where the principal of (and premium, if any)
and interest, if any, on such Debt Securities will be payable, such Debt
Securities may be surrendered for conversion or registration of transfer or
exchange and notices or demands to or upon the Company in respect of such
Debt Securities and the applicable Indenture may be served;
(9) the period or periods within which, the price or prices at which
and the terms and conditions upon which such Debt Securities may be
redeemed, as a whole or in part, at the option of the Company, if the
Company is to have such an option;
(10) the obligation, if any, of the Company to redeem, repay or
purchase such Debt Securities pursuant to any sinking fund or analogous
provision or at the option of a holder thereof, and the period or periods
within which, the price or prices at which and the terms and conditions
upon which such Debt Securities will be redeemed, repaid or purchased, as a
whole or in part, pursuant to such obligation;
(11) if other than U.S. dollars, the currency or currencies in which
such Debt Securities are denominated and payable, which may be a foreign
currency or units of two or more foreign currencies or a composite currency
or currencies, and the terms and conditions relating thereto;
(12) whether the amount of payments of principal of (and premium, if
any) or interest, if any, on such Debt Securities may be determined with
reference to an index, formula or other method (which index, formula or
method may, but need not be, based on a currency, currencies, currency unit
or units or composite currency or currencies) and the manner in which such
amounts shall be determined;
(13) any additions to, modifications of or deletions from the terms of
such Debt Securities with respect to the Events of Default or covenants set
forth in the Indenture;
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(14) any provisions for collateral security for repayment of such Debt
Securities;
(15) whether such Debt Securities will be issued in certificated
and/or book-entry form;
(16) whether such Debt Securities will be in registered or bearer form
and, if in registered form, the denominations thereof if other than $1,000
and any integral multiple thereof and, if in bearer form, the denominations
thereof and terms and conditions relating thereto;
(17) the applicability, if any, of defeasance and covenant defeasance
provisions of the applicable Indenture;
(18) the terms, if any, upon which such Debt Securities may be
convertible into Common Stock or Preferred Stock of the Company and the
terms and conditions upon which such conversion will be effected,
including, without limitation, the initial conversion price or rate and the
conversion period;
(19) whether and under what circumstances the Company will pay
additional amounts as contemplated in the Indenture on such Debt Securities
in respect of any tax, assessment or governmental charge and, if so,
whether the Company will have the option to redeem such Debt Securities in
lieu of making such payment; and
(20) any other terms of such Debt Securities not inconsistent with the
provisions of the applicable Indenture.
The Debt Securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof
("Original Issue Discount Securities"). Special federal income tax, accounting
and other considerations applicable to Original Issue Discount Securities will
be described in the applicable Prospectus Supplement.
Except as set forth in the applicable Indenture, the applicable Indenture
will not contain any provisions that would limit the ability of the Company to
incur indebtedness or that would afford Holders of Debt Securities protection in
the event of a highly leveraged or similar transaction involving the Company or
in the event of a change of control. Restrictions on ownership and transfers of
the Company's Common Stock and Preferred Stock are designed to preserve its
status as a REIT and, therefore, may act to prevent or hinder a change of
control. See "Description of Capital Stock -- Restrictions on Ownership."
Reference is made to the applicable Prospectus Supplement for information with
respect to any deletions from, modifications of or additions to the Events of
Default or covenants of the Company that are described below, including any
addition of a covenant or other provision providing event risk or similar
protection.
MERGER, CONSOLIDATION OR SALE
It is expected that the Indenture will provide that the Company may
consolidate with, or sell, lease or convey all or substantially all of its
assets to, or merge with or into, any other corporation, provided that (a)
either the Company shall be the continuing corporation, or the successor
corporation (if other than the Company) formed by or resulting from any such
consolidation or merger or which shall have received the transfer of such assets
shall expressly assume payment of the principal of (and premium, if any), and
interest on, all of the applicable Debt Securities and the due and punctual
performance and observance of all of the covenants and conditions contained in
the applicable Indenture; (b) immediately after giving effect to such
transaction and treating any indebtedness which becomes an obligation of the
Company or any subsidiary as a result thereof as having been incurred by the
Company or such subsidiary at the time of such transaction, no Event of Default
under the applicable Indenture, and no event which, after notice or the lapse of
time, or both, would become such an Event of Default, shall have occurred and be
continuing; and (c) an officer's certificate and legal opinion covering such
conditions shall be delivered to the Trustee.
COVENANTS
The Indenture will contain covenants requiring the Company to take certain
actions and prohibiting the Company from taking certain actions. The covenants
with respect to any series of Debt Securities will be described in the
Prospectus Supplement relating thereto.
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EVENTS OF DEFAULT, NOTICE AND WAIVER
Each Indenture will describe specific "Events of Default" with respect to
any series of Debt Securities issued thereunder. Such "Events of Default" are
likely to include (with grace and cure periods): (i) default in the payment of
any installment of interest on any Debt Security of such series; (ii) default in
the payment of principal of (or premium, if any, on) any Debt Security of such
series at its maturity; (iii) default in making any required sinking fund
payment for any Debt Security of such series; (iv) default in the performance or
breach of any other covenant or warranty of the Company contained in the
applicable Indenture (other than a covenant added to the Indenture solely for
the benefit of a series of Debt Securities issued thereunder other than such
series), continued for a specified period of days after written notice as
provided in the applicable Indenture; (v) default in the payment of specified
amounts of indebtedness of the Company or any mortgage, indenture or other
instrument under which such indebtedness is issued or by which such indebtedness
is secured, such default having occurred after the expiration of any applicable
grace period and having resulted in the acceleration of the maturity of such
indebtedness, but only if such indebtedness is not discharged or such
acceleration is not rescinded or annulled and (vi) certain events of bankruptcy,
insolvency or reorganization, or court appointment of a receiver, liquidator or
trustee of the Company or any Significant Subsidiary or either of its property.
If an Event of Default under any Indenture with respect to Debt Securities
of any series at the time outstanding occurs and is continuing, then in every
such case the applicable Trustee or the holders of not less than 25% of the
principal amount of the outstanding Debt Securities of that series will have the
right to declare the principal amount (or, if the Debt Securities of that series
are Original Issue Discount Securities or indexed securities, such portion of
the principal amounts may be specified in the terms thereof) of all the Debt
Securities of that series to be due and payable immediately by written notice
thereof to the Company (and to the applicable Trustee if given by the holders).
However, at any time after such a declaration of acceleration with respect to
Debt Securities of such series (or of all Debt Securities then outstanding under
any Indenture, as the case may be) has been made, but before a judgment or
decree for payment of the money due has been obtained by the applicable Trustee,
the holders of not less than a majority in principal amount of outstanding Debt
Securities of such series (or of all Debt Securities then outstanding under the
applicable Indenture, as the case may be) may rescind and annul such declaration
and its consequences if (a) the Company shall have deposited with the applicable
Trustee all required payments of the principal of (and premium, if any) and
interest on the Debt Securities of such series (or of all Debt Securities then
outstanding under the applicable Indenture, as the case may be), plus certain
fees, expenses, disbursements and advances of the applicable Trustee and (b) all
events of default, other than the non-payment of accelerated principal (or
specified portion thereof), with respect to Debt Securities of such series (or
of all Debt Securities then outstanding under the applicable Indenture, as the
case may be) have been cured or waived as provided in such Indenture. Each
Indenture also will provide that the holders of not less than a majority in
principal amount of the outstanding Debt Securities of any series (or of all
Debt Securities then outstanding under the applicable Indenture, as the case may
be) may waive any past default with respect to such series and its consequences,
except a default (x) in the payment of the principal of (or premium, if any) or
interest on any Debt Security of such series or (y) in respect of a covenant or
provision contained in the applicable Indenture that cannot be modified or
amended without the consent of the holder of each outstanding Debt Security
affected thereby.
Each Trustee will be required to give notice to the holders of Debt
Securities within 90 days of a default under the applicable Indenture unless
such default shall have been cured or waived; provided, however, that such
Trustee may withhold notice to the holders of any series of Debt Securities of
any default with respect to such series (except a default in the payment of the
principal of (or premium, if any) or interest on any Debt Security of such
series or in the payment of any sinking fund installment in respect of any Debt
Security of such series) if specified responsible officers of such Trustee
consider such withholding to be in the interest of such holders.
Each Indenture will provide that no holders of Debt Securities of any
series may institute any proceedings, judicial or otherwise, with respect to
such Indenture or for any remedy thereunder, except in the cases of failure of
the applicable Trustee, for 60 days, to act after it has received a written
request to institute proceedings in respect of a Event of Default from the
holders of not less than 25% in principal amount of the
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outstanding Debt Securities of such series, as well as an offer of indemnity
reasonably satisfactory to it. This provision will not prevent, however, any
holder of Debt Securities from instituting suit for the enforcement of payment
of the principal of (and premium, if any) and interest on such Debt Securities
at the respective due dates thereof.
Subject to provisions in each Indenture relating to its duties in case of
default, no Trustee will be under any obligation to exercise any of its rights
or powers under an Indenture at the request or direction of any holders of any
series of Debt Securities then outstanding under such Indenture, unless such
holders shall have offered to the Trustee thereunder reasonable security or
indemnity. The holders of not less than a majority in principal amount of the
outstanding Debt Securities of any series (or of all Debt Securities then
outstanding under an Indenture, as the case may be) shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the applicable Trustee, or of exercising any trust or power
conferred upon such Trustee. However, a Trustee may refuse to follow any
direction which is in conflict with any law or the applicable Indenture, which
may involve such Trustee in personal liability or which may be unduly
prejudicial to the holders of Debt Securities of such series not joining
therein.
Within 120 days after the close of each fiscal year, the Company will be
required to deliver to each Trustee a certificate, signed by one of several
specified officers, stating whether or not such officer has knowledge of any
default under the applicable Indenture and, if so, specifying each such default
and the nature and status thereof.
MODIFICATION OF THE INDENTURES
It is anticipated that modifications and amendments of an Indenture may be
made by the Company and the Trustee, with the consent of the holders of not less
than a majority in aggregate principal amount of each series of the outstanding
Debt Securities issued under the Indenture which are affected by the
modification or amendment, provided that no such modification or amendment may,
without a consent of each holder of such Debt Securities affected thereby: (1)
change the stated maturity date of the principal of (or premium, if any) or any
installment of interest, if any, on any such Debt Security; (2) reduce the
principal amount of (or premium, if any) or the interest, if any, on any such
Debt Security or the principal amount due upon acceleration of an Original Issue
Discount Security; (3) change the place or currency of payment of principal of
(or premium, if any) or interest, if any, on any such Debt Security; (4) impair
the right to institute suit for the enforcement of any such payment on or with
respect to any such Debt Security; (5) reduce the above-stated percentage of
holders of Debt Securities necessary to modify or amend the Indenture; or (6)
modify the foregoing requirements or reduce the percentage of outstanding Debt
Securities necessary to waive compliance with certain provisions of the
Indenture or for waiver of certain defaults. A record date may be set for any
act of the holders with respect to consenting to any amendment.
The holders of not less than a majority in principal amount of outstanding
Debt Securities of each series affected thereby will have the right to waive
compliance by the Company with certain covenants in such Indenture.
Each Indenture will contain provisions for convening meetings of the
holders of Debt Securities of a series to take permitted action.
REDEMPTION OF SECURITIES
The Indenture will provide that the Debt Securities may be redeemed at any
time at the option of the Company, in whole or in part, for certain reasons
intended to protect the Company's status as a REIT. Debt Securities may also be
subject to optional or mandatory redemption on terms and conditions described in
the applicable Prospectus Supplement.
From and after notice has been given as provided in the Indenture, if funds
for the redemption of any Debt Securities called for redemption shall have been
made available on such redemption date, such Debt Securities will cease to bear
interest on the date fixed for such redemption specified in such notice, and the
only right of the holders of the Debt Securities will be to receive payment of
the Redemption Price.
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CONVERSION OF SECURITIES
The terms and conditions, if any, upon which the Debt Securities are
convertible into Common Stock or Preferred Stock will be set forth in the
applicable Prospectus Supplement relating thereto. Such terms will include
whether such Debt Securities are convertible into Common Stock or Preferred
Stock, the conversion price (or manner of calculation thereof), the conversion
period, provisions as to whether conversion will be at the option of the holders
or the Company, the events requiring an adjustment of the conversion price and
provisions affecting conversion in the event of the redemption of such Debt
Securities and any restrictions on conversion, including restrictions directed
at maintaining the Company's REIT status.
SUBORDINATION
Upon any distribution to creditors of the Company in a liquidation,
dissolution or reorganization, the payment of the principal of and interest on
any Subordinated Securities will be subordinated to the extent provided in the
applicable Indenture in right of payment to the prior payment in full of all
Senior Securities. No payment of principal or interest will be permitted to be
made on Subordinated Securities at any time if a default in Senior Securities
exists that permits the Holders of such Senior Securities to accelerate their
maturity and the default is the subject of judicial proceedings or the Company
receives notice of the default. After all Senior Securities are paid in full and
until the Subordinated Securities are paid in full, Holders of Subordinated
Securities will be subrogated to the right of Holders of Senior Securities to
the extent that distributions otherwise payable to Holders of Subordinated
Securities have been applied to the payment of Senior Securities. By reason of
such subordination, in the event of a distribution of assets upon insolvency,
certain general creditors of the Company may recover more, ratably, than Holders
of Subordinated Securities. If this Prospectus is being delivered in connection
with a series of Subordinated Securities, the accompanying Prospectus Supplement
or the information incorporated herein by reference will contain the approximate
amount of Senior Securities outstanding as of the end of the Company's most
recent fiscal quarter.
PLAN OF DISTRIBUTION
The Company may sell Securities through underwriters for public offer and
sale by them, and also may sell Securities offered hereby to investors directly
or through agents. Any such underwriter or agent involved in the offer and sale
of the Securities will be named in the applicable Prospectus Supplement.
Underwriters may offer and sell the Securities at a fixed price or prices,
which may be changed, at prices related to the prevailing market prices at the
time of sale or at negotiated prices. The Company also may, from time to time,
authorize underwriters acting as the Company's agents to offer and sell
Securities upon terms and conditions set forth in the applicable Prospectus
Supplement. In connection with the sale of the Securities, underwriters may be
deemed to have received compensation from the Company in the form of
underwriting discounts or commissions and may also receive commissions from
purchasers of the Securities for whom they may act as agent. Underwriters may
sell Securities to or through dealers, and such dealers may receive compensation
in the form of discounts, concessions or commissions from the underwriters
and/or commissions from the purchasers for whom they may act as agent.
Any underwriters or agents in connection with an offering of the
Securities, and any discounts, concessions or commissions allowed by
underwriters to participating dealers, will be set forth in the applicable
Prospectus Supplement. Underwriters, dealers and agents participating in the
distribution of the Securities may be deemed to be underwriters, and any
discounts and commissions received by them and any profit realized by them on
resale of the Securities may be deemed to be underwriting discounts and
commissions, under the Securities Act. Underwriters, dealers and agents may be
entitled, under agreements to be entered into with the Company, to
indemnification against and contribution toward certain civil liabilities,
including liabilities under the Securities Act.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize underwriters or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase Securities from the Company
at the public offering price set forth in such Prospectus Supplement pursuant to
delayed
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delivery contracts providing for payment and delivery on the date or dates
stated in such Prospectus Supplement. Each delayed delivery contract will be for
an amount not less than, and the aggregate principal amount of Securities sold
pursuant to delayed delivery contracts shall be not less nor more than, the
respective amounts stated in the applicable Prospectus Supplement. Institutions
with whom delayed delivery contracts, when authorized, may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions, and other institutions but
will in all cases be subject to the approval of the Company. Delayed delivery
contracts will not be subject to any conditions except (i) the purchase by an
institution of the Securities covered by its delayed delivery contracts shall
not at the time of delivery be prohibited under the laws of any jurisdiction in
the United States to which such institution is subject, and (ii) if the
Securities are being sold to underwriters, the Company shall have sold to such
underwriters the total principal amount of the Securities less the principal
amount thereof covered by delayed delivery contracts.
EXPERTS
The consolidated financial statements and schedules of JDN Realty
Corporation included in JDN Realty Corporation's Annual Report (Form 10-K) for
the year ended December 31, 1996 and 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
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their reports thereon included therein and incorporated herein by reference.
Such consolidated financial statements, schedules and statements of revenue and
certain expenses are incorporated herein by reference in reliance upon such
reports given upon the authority of such firm as experts in accounting and
auditing.
LEGAL MATTERS
The validity of the Securities will be passed upon for the Company by
Waller Lansden Dortch & Davis, A Professional Limited Liability Company,
Nashville, Tennessee.
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850,000 SHARES
(JDN LOGO)
JDN REALTY CORPORATION
COMMON STOCK
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PROSPECTUS SUPPLEMENT
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MERRILL LYNCH & CO.
OCTOBER 13, 1998
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