<PAGE>
=====================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported):
December 23, 1998 (February 4, 1998)
_______________________
JDN REALTY CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
MARYLAND 1-12844 58-1468053
(State or Other (Commission File Number) (I.R.S. Employer
Jurisdiction of Identification
Incorporation) Number)
359 EAST PACES FERRY ROAD
SUITE 400
ATLANTA, GEORGIA 30305
(Address of Principal Executive Offices) (Zip Code)
(404) 262-3252
(Registrant's Telephone Number, including Area Code)
=====================================================
<PAGE>
Item 5. Other Events
- ------- ------------
On February 4, 1998, JDN Realty Corporation (the "Company") acquired a
portfolio of five shopping centers in Milwaukee, Wisconsin containing an
aggregate of approximately 1.1 million square feet (the "Milwaukee
Acquisitions") from two third parties for an aggregate purchase price of
approximately $58.5 million. The two third party sellers are related to one
another but are unrelated to the Company. The Company financed the purchase of
the Milwaukee Acquisitions with an advance under its unsecured line of credit,
assumption of secured indebtedness of $5.4 million, and sponsored a limited
partnership that issued limited partnership units valued at $3.0 million in a
limited partnership formed to own and operate one of the shopping centers.
Subject to certain conditions, the limited partnership units are exchangeable
for cash or 139,535 shares of the Company's common stock beginning in February
1999.
On February 23, 1998, the Company acquired Cross Pointe Shopping Center, a
205,491 square foot shopping center in Fayetteville, North Carolina for
approximately $12.9 million from an unrelated third party. The Company financed
this acquisition with an advance under its unsecured line of credit in the
amount of $2.4 million and by canceling a $10.5 million mortgage loan receivable
from the seller in consideration for a credit at closing.
On June 22, 1998, the Company acquired Candlers Station Shopping Center, a
270,765 square foot shopping center in Lynchburg, Virginia for $18.3 million
from an unrelated third party. The Company financed this acquisition with an
advance under its unsecured line of credit.
On October 7, 1998, the Company acquired all of the limited liability
company membership interests in an entity which owns University Hills Shopping
Center, a 244,631 square foot shopping center in Denver, Colorado, for
approximately $12.8 million. The Company financed this acquisition with an
advance under its unsecured line of credit. The shopping center is subject to a
$25.4 million mortgage loan under which the limited liability company is the
obligor and the Company is the guarantor.
Financial statements for these acquired properties and pro forma financial
information of the Company related to these acquisitions are included in this
report.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
- ------- ------------------------------------------------------------------
The following financial statements, pro forma financial information and
exhibits are filed as part of this report:
A. Financial statements of real estate acquired, pursuant to Rule 3-14 of
Regulation S-X:
MILWAUKEE ACQUISITIONS
----------------------
Report of Independent Auditors
Statements of Revenue and Certain Expenses
- Year ended December 31, 1997
- Period from January 1, 1998 to February 4, 1998
Notes to statements of revenue and certain expenses
CROSS POINTE SHOPPING CENTER
----------------------------
Report of Independent Auditors
Statements of Revenue and Certain Expenses
- Year ended December 31, 1997
- Period from January 1, 1998 to February 23, 1998
Notes to statements of revenue and certain expenses
CANDLERS STATION SHOPPING CENTER
--------------------------------
Report of Independent Auditors
Statements of Revenue and Certain Expenses
- Year ended December 31, 1997
- Period from January 1, 1998 to June 22, 1998
Notes to statements of revenue and certain expenses
UNIVERSITY HILLS SHOPPING CENTER
--------------------------------
Report of Independent Auditors
Statements of Revenue and Certain Expenses
- Year ended December 31, 1997
- Nine months ended September 30, 1998
Notes to statements of revenue and certain expenses
B. Pro forma financial information required pursuant to Article 11 of
Regulation S-X:
Pro forma consolidated balance sheet of the Company
- September 30, 1998
Pro forma consolidated statements of income of the Company
- Year ended December 31, 1997
- Nine months ended September 30, 1998
The unaudited pro forma balance sheet is based on the historical
consolidated balance sheet of the Company as of September 30, 1998 as if the
Company had acquired University Hills Shopping Center on September 30, 1998.
Included in the historical balance sheet of the Company are the effects of
acquisitions made prior to September 30, 1998, including Cross Pointe Shopping
Center, Candlers Station Shopping Center and the Milwaukee Acquisitions.
<PAGE>
The unaudited pro forma balance sheet is based on the historical
consolidated balance sheet of the Company as of September 30, 1997 as if the
Company had acquired the Milwaukee Acquisitions on September 30, 1997.
The unaudited pro forma consolidated statements of operations are based
upon the historical consolidated statements of operations of the Company, the
Milwaukee Acquisitions, Cross Point Shopping Center, Candlers Station Shopping
Center and University Hills Shopping Center for the year ended December 31, 1997
and the nine months ended September 30, 1998 and are presented as if the Company
had acquired these shopping centers on January 1, 1997 and 1998, respectively.
These unaudited pro forma financial statements should be read in
conjunction with the combined statements of revenue and certain expenses and
notes thereto of the Milwaukee Acquisitions, Cross Pointe Shopping Center,
Candlers Station Shopping Center and University Hills Shopping Center included
in this report, the consolidated financial statements of the Company included in
its annual report on Form 10-K for the year ended December 31, 1997 and the
unaudited interim financial statements of the Company on Form 10-Q for the nine
months ended September 30, 1998. These unaudited pro forma financial statements
are not necessarily indicative of what the actual results of the Company would
have been assuming the transactions had been completed as set forth above nor
are they indicative of the future results of the Company.
C. Exhibits
Exhibit 23. Consent of Independent Auditors
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf of the
undersigned hereunto duly authorized.
JDN REALTY CORPORATION
BY: /s/William J. Kerley
--------------------------
William J. Kerley
Senior Vice President and
Chief Financial Officer
Date: December 23, 1998
<PAGE>
Report of Independent Auditors
Shareholders and Board of Directors
JDN Realty Corporation
We have audited the combined statement of revenue and certain expenses of the
Milwaukee Acquisitions as described in Note 1 for the year ended December 31,
1997. This combined statement of revenue and certain expenses is the
responsibility of the Milwaukee Acquisitions' management. Our responsibility is
to express an opinion on this combined statement of revenue and certain expenses
based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the combined statement of revenue and certain expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the combined statement of
revenue and certain expenses. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the combined statement of revenue and
certain expenses. We believe that our audit of the combined statement of revenue
and certain expenses provides a reasonable basis for our opinion.
The accompanying combined statement of revenue and certain expenses was prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission for inclusion in a Form 8-K of JDN Realty Corporation as
described in Note 1 and is not intended to be a complete presentation of the
Milwaukee Acquisitions' combined revenue and expenses.
In our opinion, the combined statement of revenue and certain expenses referred
to above presents fairly, in all material respects, the combined revenue and
certain expenses of the Milwaukee Acquisitions for the year ended December 31,
1997 in conformity with generally accepted accounting principles.
Ernst & Young LLP
Atlanta, Georgia
November 25, 1998
<PAGE>
Milwaukee Acquisitions
Combined Statements of Revenue and Certain Expenses
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED JANUARY 1, 1998 TO
DECEMBER 31, FEBRUARY 4,
1997 1998
--------------------------------------------
(UNAUDITED)
<S> <C> <C>
Revenue:
Minimum and percentage rents $5,369,951 $555,767
Recoveries from tenants 2,422,687 258,331
Electrical revenue 1,205,947 109,677
Interest income 44,411 8,919
Other income 9,565 760
---------------------------------------------
Total revenue 9,052,561 933,454
Certain expenses:
Operating and maintenance 1,303,386 152,662
Real estate taxes 1,255,994 120,438
Cost of electricity 1,003,905 87,821
---------------------------------------------
Total certain expenses 3,563,285 360,921
---------------------------------------------
Revenue in excess of certain expenses $5,489,276 $572,533
=============================================
</TABLE>
See accompanying notes.
<PAGE>
Milwaukee Acquisitions
Notes to Combined Statements of Revenue and Certain Expenses
Year ended December 31, 1997
and period from January 1, 1998 to February 4, 1998 (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying combined statements of revenue and certain expenses relate to
the combined operations of Marketplace at Brown Deer, Brown Deer Center,
Shoppers World of Brookfield, West Allis Center and Pointe Loomis retail
shopping centers (collectively, the "Milwaukee Acquisitions"). The Milwaukee
Acquisitions are located in Milwaukee, Wisconsin and have a combined total of
approximately 1.1 million gross leasable square feet. During February 1998, JDN
Realty Corporation (the "Company") acquired the Milwaukee Acquisitions from two
third parties, who are related to each other but are unrelated to the Company.
The accompanying combined statements of revenue and certain expenses were
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in a Form 8-K of the Company.
The combined statements are not representative of the combined actual operations
of the Milwaukee Acquisitions for the periods presented nor indicative of future
combined operations as certain expenses, primarily consisting of mortgage
interest expense, depreciation, amortization, management fees and corporate
expenses have been excluded.
REVENUE RECOGNITION
Minimum base rentals are recognized as revenue on a straight-line basis over the
terms of the operating leases. Tenants are required to pay contingent rentals
based on common area maintenance expenses, and such contingent rentals are
recognized as revenue when earned. Additionally, certain tenants pay incremental
rental amounts based on sales volumes and these percentage rentals are
recognized as earned.
USE OF ESTIMATES
The preparation of the combined statements of revenue and certain expenses in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of combined
revenue and expenses during the reporting period. Actual results could differ
from these estimates.
<PAGE>
Milwaukee Acquisitions
Notes to Combined Statements of Revenue and Certain Expenses (continued)
Year ended December 31, 1997
and period from January 1, 1998 to February 4, 1998 (Unaudited)
2. LEASES AND SIGNIFICANT TENANTS
The tenant base includes primarily national or regional retail chains and local
retailers, and consequently the Milwaukee Acquisitions' credit risk is
concentrated in the retail industry.
The significant tenants of the Milwaukee Acquisitions and the minimum rents from
these tenants, as a percentage of combined total minimum rents for the periods
indicated, were as follows:
<TABLE>
<CAPTION>
YEAR ENDED PERIOD FROM JANUARY 1, 1998
TENANT SHOPPING CENTER DECEMBER 31, 1997 TO FEBRUARY 4, 1998
- ------------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C> <C>
Kohl's Brown Deer Center 15.7% 14.5%
West Allis Center
Pointe Loomis
Pick `N Save Brown Deer Center 17.0% 15.8%
Marketplace at Brown Deer
West Allis Center
Pointe Loomis
Home Goods Shoppers World of Brookfield 21.7% 20.1%
West Allis Center
Marketplace at Brown Deer
</TABLE>
<PAGE>
Report of Independent Auditors
Shareholders and Board of Directors
JDN Realty Corporation
We have audited the statement of revenue and certain expenses of Cross Pointe
Shopping Center for the year ended December 31, 1997. This statement of revenue
and certain expenses is the responsibility of the Cross Pointe Shopping Center's
management. Our responsibility is to express an opinion on this statement of
revenue and certain expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenue and certain expenses is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of revenue and certain
expenses. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the statement of revenue and certain expenses. We believe that
our audit of the statement of revenue and certain expenses provides a reasonable
basis for our opinion.
The accompanying statement of revenue and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the Form 8-K of JDN Realty Corporation as
described in Note 1 and is not intended to be a complete presentation of Cross
Pointe Shopping Center's revenue and expenses.
In our opinion, the statement of revenue and certain expenses referred to above
presents fairly, in all material respects, the revenue and certain expenses of
Cross Pointe Shopping Center for the year ended December 31, 1997 in conformity
with generally accepted accounting principles.
Ernst & Young LLP
Atlanta, Georgia
July 30, 1998
<PAGE>
Cross Pointe Shopping Center
Statements of Revenue and Certain Expenses
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1,
YEAR ENDED 1998 TO
DECEMBER 31, FEBRUARY 23,
1997 1998
-----------------------------------------
(UNAUDITED)
<S> <C> <C>
Revenue:
Minimum rents $ 1,488,984 $ 206,746
Recoveries from tenants 224,627 32,739
Interest income 11,839 5,163
Other income 3,671 109
-----------------------------------------
Total revenue 1,729,121 244,757
Certain expenses:
Operating and maintenance 210,196 17,900
Real estate taxes 150,839 21,636
----------------------------------------
Total certain expenses 361,035 39,536
----------------------------------------
Revenue in excess of certain expenses $ 1,368,086 $ 205,221
========================================
</TABLE>
See accompanying notes.
<PAGE>
Cross Pointe Shopping Center
Notes to Statements of Revenue and Certain Expenses
Year Ended December 31, 1997 and period from January 1, 1998 to February 23,
1998 (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying statements of revenue and certain expenses relate to the
operations of Cross Pointe Shopping Center. The property is located in
Fayetteville, North Carolina and has a total of 204,291 gross leasable square
feet. JDN Realty Corporation (the "Company") acquired the center from an
unrelated third party during February 1998.
The accompanying statements of revenue and certain expenses were prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in a Form 8-K of the Company. The statements
are not representative of the actual operations of Cross Pointe Shopping Center
for the periods presented nor indicative of future operations as certain
expenses, primarily consisting of mortgage interest expense, depreciation,
amortization, management fees and corporate expenses have been excluded.
REVENUE RECOGNITION
Minimum base rentals are recognized as revenue on straight-line basis over the
terms of the operating leases. Tenants are required to pay contingent rentals
based on common area maintenance expenses, and such contingent rentals are
recognized as revenue when earned.
USE OF ESTIMATES
The preparation of the statements of revenue and certain expenses in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
<PAGE>
Cross Pointe Shopping Center
Notes to Statements of Revenue and Certain Expenses (continued)
2. LEASES AND SIGNIFICANT TENANTS
The tenant base includes primarily national or regional retail chains and local
retailers, and consequently Cross Pointe Shopping Center's credit risk is
concentrated in the retail industry.
The significant tenants of Cross Pointe Shopping Center and the minimum rents
recognized from these tenants, as a percentage of total minimum rents for the
periods indicated, were as follows:
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED JANUARY 1, 1998 TO
DECEMBER 31, FEBRUARY 23,
TENANT 1997 1998
---------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
TJ Maxx 19.3% 19.9%
General Cinemas 24.7% 25.5%
Hechlinger 14.1% 14.5%
Discovery Zone 9.9% 10.2%
</TABLE>
<PAGE>
Report of Independent Auditors
Shareholders and Board of Directors
JDN Realty Corporation
We have audited the statement of revenue and certain expenses of Candlers
Station Shopping Center for the year ended December 31, 1997. This statement of
revenue and certain expenses is the responsibility of the Candlers Station
Shopping Center's management. Our responsibility is to express an opinion on
this statement of revenue and certain expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenue and certain expenses is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of revenue and certain
expenses. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the statement of revenue and certain expenses. We believe that
our audit of the statement of revenue and certain expenses provides a reasonable
basis for our opinion.
The accompanying statement of revenue and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in a Form 8-K of JDN Realty Corporation as
described in Note 1 and is not intended to be a complete presentation of
Candlers Station Shopping Center's revenue and expenses.
In our opinion, the statement of revenue and certain expenses referred to above
presents fairly, in all material respects, the revenue and certain expenses of
Candlers Station Shopping Center for the year ended December 31, 1997 in
conformity with generally accepted accounting principles.
Ernst & Young LLP
Atlanta, Georgia
August 7, 1998
<PAGE>
Candlers Station Shopping Center
Statements of Revenue and Certain Expenses
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1,
YEAR ENDED 1998 TO
DECEMBER 31, JUNE 22,
1997 1998
-----------------------------------------
(UNAUDITED)
<S> <C> <C>
Revenue:
Minimum and percentage rents $ 1,763,766 $ 850,834
Recoveries from tenants 218,536 100,567
Other income 7,086 229
-----------------------------------------
Total revenue 1,989,388 951,630
Certain expenses:
Operating and maintenance 201,965 76,259
Real estate taxes 150,901 71,523
-----------------------------------------
Total certain expenses 352,866 147,782
-----------------------------------------
Revenue in excess of certain expenses $ 1,636,522 $ 803,848
=========================================
</TABLE>
See accompanying notes.
<PAGE>
Candlers Station Shopping Center
Notes to Statements of Revenue and Certain Expenses
Year ended December 31, 1997 and period from January 1, 1998 to June 22, 1998
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying statements of revenue and certain expenses relate to the
operations of Candlers Station Shopping Center. The property is located in
Lynchburg, Virginia and has a total of 270,765 gross leasable square feet. JDN
Realty Corporation (the "Company") acquired the center from an unrelated third
party during June 1998.
The accompanying statements of revenue and certain expenses were prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in a Form 8-K of the Company. The statements
are not representative of the actual operations of Candlers Station Shopping
Center for the periods presented nor indicative of future operations as certain
expenses, primarily consisting of mortgage interest expense, depreciation,
amortization, management fees and corporate expenses have been excluded.
REVENUE RECOGNITION
Minimum base rentals are recognized as revenue on straight-line basis over the
terms of the operating leases. Tenants are required to pay contingent rentals
based on common area maintenance expenses, and such contingent rentals are
recognized as revenue when earned. Additionally, certain tenants pay incremental
rental amounts based on sales volumes and these percentage rentals are
recognized as earned.
USE OF ESTIMATES
The preparation of the statements of revenue and certain expenses in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
<PAGE>
Candlers Station Shopping Center
Notes to Statements of Revenue and Certain Expenses (continued)
2. LEASES AND SIGNIFICANT TENANTS
The tenant base includes primarily national or regional retail chains and local
retailers, and consequently Candlers Station Shopping Center's credit risk is
concentrated in the retail industry.
The significant tenants of Candlers Station Shopping Center and the minimum
rents recognized from these tenants, as a percentage of total minimum rents for
the periods indicated, were as follows:
<TABLE>
<CAPTION>
PERIOD FROM JANUARY 1,
YEAR ENDED 1998 TO
DECEMBER 31, JUNE 22,
TENANT 1997 1998
-------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
Goody's 15.4% 16.0%
Cinemark 21.3% 20.3%
</TABLE>
<PAGE>
Report of Independent Auditors
Shareholders and Board of Directors
JDN Realty Corporation
We have audited the statement of revenue and certain expenses of University
Hills Shopping Center for the year ended December 31, 1997. This statement of
revenue and certain expenses is the responsibility of the University Hills
Shopping Center's management. Our responsibility is to express an opinion on
this statement of revenue and certain expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenue and certain expenses is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of revenue and certain
expenses. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the statement of revenue and certain expenses. We believe that
our audit of the statement of revenue and certain expenses provides a reasonable
basis for our opinion.
The accompanying statement of revenue and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in a Form 8-K of JDN Realty Corporation as
described in Note 1 and is not intended to be a complete presentation of
University Hills Shopping Center's revenue and expenses.
In our opinion, the statement of revenue and certain expenses referred to above
presents fairly, in all material respects, the revenue and certain expenses of
University Hills Shopping Center for the year ended December 31, 1997 in
conformity with generally accepted accounting principles.
Ernst & Young LLP
Atlanta, Georgia
August 14, 1998
<PAGE>
University Hills Shopping Center
Statements of Revenue and Certain Expenses
<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED JANUARY 1, 1998 TO
DECEMBER 31, SEPTEMBER 30,
1997 1998
-------------------------------------------
(UNAUDITED)
<S> <C> <C>
Revenue:
Minimum and percentage rents $ 1,021,736 $ 2,457,039
Recoveries from tenants 120,819 394,273
Other income 4,265 12,497
-------------------------------------------
Total revenue 1,146,820 2,863,809
Certain expenses:
Operating and maintenance 303,250 251,082
Real estate taxes 62,912 236,923
-------------------------------------------
Total certain expenses 366,162 488,005
-------------------------------------------
Revenue in excess of certain expenses $ 780,658 $ 2,375,804
===========================================
</TABLE>
See accompanying notes.
<PAGE>
University Hills Shopping Center
Notes to Statements of Revenue and Certain Expenses
Year ended December 31, 1997 and period from January 1, 1998 to
September 30, 1998 (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying statements of revenue and certain expenses relate to the
operations of University Hills Shopping Center. The property is located in
Denver, Colorado and has a total of 219,642 gross leasable square feet with
additional square feet under construction. JDN Realty Corporation (the
"Company") acquired all of the limited liability company membership interests in
the entity, which owns University Hills Shopping Center from an unrelated third
party during October 1998.
The accompanying statements of revenue and certain expenses are not
representative of the actual operations of University Hills Shopping Center for
the periods presented nor indicative of future operations as certain expenses,
primarily consisting of mortgage interest expense, depreciation, amortization,
management fees, and corporate expenses have been excluded.
REVENUE RECOGNITION
Minimum base rentals are recognized as revenue on straight-line basis over the
terms of the operating leases. Tenants are required to pay contingent rentals
based on common area maintenance expenses, and such contingent rentals are
recognized as revenue when earned. Additionally, certain tenants pay incremental
rental amounts based on sales volumes and these percentage rentals are
recognized as earned.
USE OF ESTIMATES
The preparation of the statements of revenue and certain expenses in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
<PAGE>
University Hills Shopping Center
Notes to Statements of Revenue and Certain Expenses (continued)
2. LEASES AND SIGNIFICANT TENANTS
The tenant base includes primarily national or regional retail chains and local
retailers, and consequently University Hills Shopping Center's credit risk is
concentrated in the retail industry.
The significant tenants of University Hills Shopping Center and the minimum
rents recognized from these tenants, as a percentage of total minimum rents for
the periods indicated, were as follows:
<TABLE>
<CAPTION>
PERIOD FROM JANUARY 1,
YEAR ENDED 1998 TO
DECEMBER 31, SEPTEMBER 30,
TENANT 1997 1998
-------------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
King Soopers 36.2% 21.0%
Office Max 15.5% 12.3%
Homeplace 11.4% 24.6%
Just For Feet 9.9% 12.6%
</TABLE>
Effective January 5, 1998, HomePlace Stores, Inc. declared bankruptcy. Under the
direction of the bankruptcy trustee, Homeplace is to remain current on their
1998 lease payments. The outcome of the bankruptcy is unknown and management is
unable to determine the ultimate effect of this matter on the property, however,
management has considered this in its evaluation of bad debt expense.
<PAGE>
JDN REALTY CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
JDN Realty JDN Realty
Corporation Pro Forma Corporation
Historical (A) Adjustments Pro Forma
------------------ ------------------ ---------------
(Unaudited)
<S> <C> <C> <C>
ASSETS
Shopping center properties, at cost:
Land $ 118,796 $ 15,272 (B) $ 134,068
Buildings and improvements 542,176 18,212 (B) 560,388
Property under development 107,662 1,031 (B) 108,693
----------------- ---------------- ---------------
768,634 34,515 803,149
Less: accumulated depreciation and amortization (49,627) - (49,627)
----------------- ---------------- ---------------
Shopping center properties, net 719,007 34,515 753,522
Rents receivable 5,472 181 (E) 5,653
Investments in and advances to unconsolidated entities 125,344 - 125,344
Deferred costs, net of amortization 4,629 55 (E) 4,684
Other assets 11,772 2,048 (E) 13,820
----------------- ---------------- ---------------
$ 866,224 $ 36,799 $ 903,023
================= ================ ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Unsecured notes payable $ 234,557 $ - $ 234,557
Unsecured lines of credit 105,507 13,242 (C) 118,749
Mortgage notes payable 18,603 23,162 (D) 41,765
Accounts payable and accrued expenses 9,109 372 (E) 9,481
Other liabilities 10,269 23 (E) 10,292
----------------- ----------------- ---------------
Total Liabilities 378,045 36,799 414,844
Third party investors' interest 3,000 - 3,000
Shareholders' Equity
Preferred stock, par value $.01 per share -
authorized 20,000,000 shares: 9 3/8% Series
A Cumulative Redeemable Preferred Stock, liquidation
preference $25 per share, issued and
outstanding 2,000,000 shares 20 - 20
Common stock, par value $.01 per share -
authorized 150,000,000 shares, issued and
outstanding 31,000,298 shares 310 - 310
Paid-in capital 491,938 - 491,938
Accumulated deficit (7,089) - (7,089)
----------------- ---------------- ---------------
Total Shareholders' Equity 485,179 - 485,179
----------------- ---------------- ---------------
$ 866,224 $ 36,799 $ 903,023
================= ================ ===============
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998
(UNAUDITED)
(A) Represents the historical consolidated balance sheet of JDN Realty
Corporation (the "Company") as of September 30, 1998. Included in this
balance sheet are the effects of acquisitions made prior to September 30,
1998, including Cross Pointe Shopping Center, Candlers Station Shopping
Center and the Milwaukee Acquisitions. No pro forma adjustments are
included for acquisitions made prior to September 30, 1998.
(B) Represents the allocated purchase price for the University Hills Shopping
Center.
(C) Represents the financing of the purchase of all of the limited liability
company membership interests in the entity which owns University Hills
Shopping Center with an advance under the Company's unsecured line of
credit.
(D) Represents a mortgage loan which the Company assumed in connection with
the acquisition of the entity which owns University Hills Shopping
Center.
(E) Represents miscellaneous assets and liabilities assumed in connection
with the acquisition of the entity which owns University Hills Shopping
Center.
<PAGE>
JDN Realty Corporation
Pro Forma Consolidated Statement of Income
Year Ended December 31, 1997
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
JDN Realty Cross Pointe Candlers Station
Corporation Milwaukee Shopping Shopping
Historical (A) Acquisitions (B) Center (C) Center (D)
-------------- ---------------- -------------- ------------------
<S> <C> <C> <C> <C>
Revenues:
Minimum and percentage rents $ 43,346 $ 5,370 $ 1,489 $ 1,764
Recoveries from tenants 4,512 3,629 225 219
Other revenue 147 10 4 7
-------------- ---------------- -------------- ------------------
Total revenues 48,005 9,009 1,718 1,990
Operating expenses:
Operating and maintenance 3,201 2,307 210 202
Real estate taxes 2,540 1,256 151 151
General and administrative 4,265 - - -
Depreciation and amortization 10,130 - - -
-------------- ---------------- -------------- ------------------
Total operating expenses 20,136 3,563 361 353
-------------- ---------------- -------------- ------------------
Income from operations 27,869 5,446 1,357 1,637
Other income (expense):
Interest expense, net (4,856) - - -
Other income, net 1,205 44 12 -
Equity in net income of unconsolidated entities 3,367 - - -
Third party investors' share of income of
consolidated entity - - - -
-------------- ---------------- -------------- ------------------
Income before net loss on real estate sales and
extraordinary items 27,585 5,490 1,369 1,637
Net loss on real estate dealer (352) - - -
-------------- ---------------- -------------- ------------------
Income before extraordinary items 27,233 5,490 1,369 1,637
Extraordinary items (5,940) - - -
-------------- ---------------- -------------- ------------------
Net income $ 21,293 $ 5,490 $ 1,369 $ 1,637
============== ================ ============== ==================
Net income per share - basic:
Income before extraordinary items $ 1.18
Extraordinary items (0.26)
--------------
Net income $ 0.92
==============
Net income per share - diluted:
Income before extraordinary items $ 1.16
Extraordinary items (0.25)
--------------
Net income $ 0.91
==============
Weighted average shares outstanding 23,066
Diluted shares outstanding 416
--------------
Weighted average shares outstanding with diluted shares 23,482
==============
<PAGE>
<CAPTION>
University
Hills JDN Reality
Shopping Pro Forma Corporation
Center (E) Adjustments Pro Forma
-------------- ------------- -------------
<S> <C> <C> <C>
Revenues:
Minimum and percentage rents $ 1,022 $ - $ 52,991
Recoveries from tenants 121 - 8,706
Other revenue 4 - 172
-------------- ------------- -------------
Total revenues 1,147 - 61,869
Operating expenses:
Operating and maintenance 303 - 6,223
Real estate taxes 63 - 4,161
General and administrative - - 4,265
Depreciation and amortization - 3,063 (F) 13,193
-------------- ------------- -------------
Total operating expenses 366 3,063 27,842
-------------- ------------- -------------
Income from operations 781 (3,063) 34,027
Other income (expense):
Interest expense, net - (8,678) (G) (13,534)
Other income, net - - 1,261
Equity in net income of unconsolidated entities - - 3,367
Third party investors' share of income of
consolidated entity - (184) (H) (184)
-------------- ------------- -------------
Income before net loss on real estate sales and
extraordinary items 781 (11,925) 24,937
Net loss on real estate dealer - - (352)
-------------- ------------- -------------
Income before extraordinary items 781 (11,925) 24,585
Extraordinary items - - (5,940)
-------------- ------------- -------------
Net income $ 781 $ (11,925) $ 18,645
============== ============= =============
Net income per share - basic:
Income before extraordinary items $ 1.07
Extraordinary items (0.26)
-------------
Net income $ 0.81
=============
Net income per share - diluted:
Income before extraordinary items $ 1.05
Extraordinary items (0.25)
-------------
Net income $ 0.80
=============
Weighted average shares outstanding 23,066
Diluted shares outstanding 416
-------------
Weighted average shares outstanding with diluted shares 23,482
=============
</TABLE>
SEE NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF INCOME
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(A) Represents the historical consolidated statement of income of JDN Realty
Corporation (the "Company") for the year ended December 31, 1997.
(B) Represents the revenue and certain expenses of the Milwaukee Acquisitions
for the year ended December 31, 1997.
(C) Represents the revenue and certain expenses of Cross Pointe Shopping
Center for the year ended December 31, 1997.
(D) Represents the revenue and certain expenses of Candlers Station Shopping
Center for the year ended December 31, 1997.
(E) Represents the revenue and certain expenses of University Hills Shopping
Center for the year ended December 31, 1997.
(F) Represents depreciation expense related to the portion of the purchase
prices allocated to building using a 31.5 year life for the following:
Milwaukee Acquisitions $1,579,000
Cross Pointe Shopping Center 354,000
Candlers Station Shopping Center 496,000
University Hills Shopping Center 634,000
----------
$3,063,000
==========
(G) Represents interest expense assuming the Company incurred or assumed
indebtedness at the beginning of the period to finance these
acquisitions. The effect on interest expense of each of the acquisitions
is as follows:
Milwaukee Acquisitions $4,096,000
Cross Pointe Shopping Center 182,000
Candlers Station Shopping Center 1,354,000
University Hills Shopping Center 3,046,000
----------
$8,678,000
==========
(H) Represents the third party investors' share of the net income of the
limited partnership formed to acquire one of the Milwaukee Acquisitions,
which is consolidated for financial reporting purposes.
<PAGE>
JDN REALTY CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
JDN Realty Cross Pointe Candlers Station
Corporation Milwaukee Shopping Shopping
Historical (A) Acquisitions (B) Center (C) Center (D)
-------------- ---------------- ------------ ----------------
<S> <C> <C> <C> <C>
Revenues:
Minimum and percentage rents $ 50,590 $ 556 $ 207 $ 851
Recoveries from tenants 6,187 368 33 101
Other revenue 95 1 - -
-------------- ---------------- ------------ ----------------
Total revenues 56,872 925 240 952
Operating expenses:
Operating and maintenance 4,393 241 18 76
Real estate taxes 3,042 120 22 72
General and administrative 5,309 - - -
Depreciation and amortization 11,828 - - -
-------------- ---------------- ------------ ----------------
Total operating expenses 24,572 361 40 148
-------------- ---------------- ------------ ----------------
Income from operations 32,300 564 200 804
Other income (expense):
Interest expense, net (6,428) - - -
Other income, net 647 9 5 -
Equity in net income of unconsolidated entities 2,968 - - -
Third party investors' share of income of
consolidated entity (146) - - -
-------------- ---------------- ------------ ----------------
Income before net loss on real estate sales 29,341 573 205 804
Net gain on real estate sales 379 - - -
-------------- ---------------- ------------ ----------------
Net income 29,720 573 205 804
Dividends to preferred shareholders (169) - - -
-------------- ---------------- ------------ ----------------
Net income attributable to common shareholders $ 29,551 $ 573 $ 205 $ 804
============== ================ ============= ================
Net income per common share:
Basic $ 0.98
==============
Diluted $ 0.96
==============
Weighted average shares outstanding 30,213
Diluted shares outstanding 537
==============
Weighted average shares outstanding with diluted shares 30,750
==============
<CAPTION>
University Hills JDN Realty
Shopping Pro Forma Corporation
Center (E) Adjustments Pro Forma
---------------- ----------- -----------
<S> <C> <C> <C>
Minimum and percentage rents $ 2,457 $ - $ 54,661
Recoveries from tenants 394 - 7,083
Other revenue 12 - 108
---------------- ----------- -----------
Total revenues 2,863 - 61,852
Operating expenses:
Operating and maintenance 251 - 4,979
Real estate taxes 237 - 3,493
General and administrative - - 5,309
Depreciation and amortization - 1,046 (F) 12,874
---------------- ----------- ----------
Total operating expenses 488 1,046 26,655
--------------- ----------- ----------
Income from operations 2,375 (1,046) 35,197
Other income (expense):
Interest expense, net - (3,507) (G) (9,935)
Other income, net - - 661
Equity in net income of unconsolidated entities - - 2,968
Third party investors' share of income of
consolidated entity - - (146)
--------------- -------------- ---------
Income before net loss on real estate sales 2,375 (4,553) 28,745
Net gain on real estate sales - - 379
---------------- -------------- ---------
Net income $ 2,375 (4,553) 29,124
Dividends to preferred shareholders - - (169)
---------------- ----------- -----------
Net income attributable to common shareholders $ 2,375 $ (4,553) $ 28,955
================ ============ ===========
Net income per common share:
Basic $ 0.96
===========
Diluted $ 0.94
===========
Weighted average shares outstanding 30,213
Diluted shares outstanding 537
===========
Weighted average shares outstanding with diluted shares 30,750
===========
</TABLE>
SEE NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF INCOME
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED)
(A) Represents the historical consolidated statement of income of JDN Realty
Corporation (the "Company") for the nine months ended September 30, 1997.
(B) Represents the revenue and certain expenses of the Milwaukee Acquisitions
for period from January 1, 1998 to February 4, 1998 (date of purchase by
the Company).
(C) Represents the revenue and certain expenses of Cross Pointe Shopping
Center for period from January 1, 1998 to February 23, 1998 (date of
purchase by the Company).
(D) Represents the revenue and certain expenses of Candlers Station Shopping
Center for period from January 1, 1998 to June 22, 1998 (date of purchase
by the Company).
(E) Represents the revenue and certain expenses of University Hills
Shopping Center for period from January 1, 1998 to September 30, 1998.
(F) Represents depreciation expense related to the portion of the purchase
prices of these acquisitions allocated to building using a 31.5 year
life for the following:
Milwaukee Acquisitions $ 263,000
Cross Pointe Shopping Center 59,000
Candlers Station Shopping Center 248,000
University Hills Shopping Center 476,000
-----------
$ 1,046,000
===========
(G) Represents interest expense assuming the Company incurred or assumed
indebtedness at the beginning of the period to finance these
acquisitions. The effect on interest expense of each of the acquisitions
is as follows:
Milwaukee Acquisitions $ 603,000
Cross Pointe Shopping Center 26,000
Candlers Station Shopping Center 618,000
University Hills Shopping Center 2,260,000
-----------
$ 3,507,000
===========
<PAGE>
INDEX TO EXHIBITS
EXHIBIT 23 Consent of Independent Auditors
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-3 No. 333-38611) of JDN Realty Corporation and in the related prospectus, in
the Registration Statement (Form S-3 No. 33-90868) pertaining to the JDN Realty
Corporation Dividend Reinvestment and Stock Purchase Plan and the related
prospectus, and in the Registration Statement (Form S-8 No. 333-60489)
pertaining to the JDN Realty Corporation 1993 Incentive Stock Plan, JDN Realty
Corporation 1993 Non-Employee Director Stock Option Plan and JDN Realty
Corporation 1995 Stock Purchase Plan and the related prospectus of our report
dated November 23, 1998 with respect to the combined statement of revenue and
certain expenses of Marketplace at Brown Deer, Brown Deer Center, Shoppers World
of Brookfield, West Allis Center and Pointe Loomis retail shopping centers
(collectively, the "Milwaukee Acquisitions") for the year ended December 31,
1997, our report dated July 30, 1998 with respect to the statement of revenue
and certain expenses of Cross Pointe Shopping Center for the year ended December
31, 1997, our report dated August 7, 1998 with respect to the statement of
revenue and certain expenses of Candlers Station Shopping Center for the year
ended December 31, 1997 and our report dated August 14, 1998 with respect to the
statement of revenue and certain and certain expenses of University Hills
Shopping Center for the year ended December 31, 1997, included in the Current
Report on Form 8-K of JDN Realty Corporation dated December 23, 1998.
Ernst & Young LLP
Atlanta, Georgia
December 21, 1998
