<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): SEPTEMBER 18, 1998
(SEPTEMBER 10, 1998)
------------------------------
JDN REALTY CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
MARYLAND 1-12844 58-1468053
(State or Other (Commission File (I.R.S. Employer
Jurisdiction of Number) Identification
Incorporation) Number)
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)
NOT APPLICABLE
(Former Name)
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<PAGE> 2
ITEM 5. OTHER EVENTS.
On September 10, 1998, the Company entered into a terms
agreement with A.G. Edwards & Sons, Inc., J.C. Bradford & Co., LLC,
Interstate/Johnson Lane Corporation and Stifel, Nicolaus & Company, Incorporated
(collectively, the "Underwriters") relating to the sale by the Company to the
Underwriters of 2,000,000 shares of the Company's 9 3/8% Series A Cumulative
Redeemable Preferred Stock, par value $.01 per share (the "Preferred Stock"), at
a price of $25.00 per share. The related Underwriting Agreement, dated July 30,
1997, was filed as an exhibit to the Company's Current Report on Form 8-K filed
on August 1, 1997. This offering closed on September 17, 1998.
A registration statement on Form S-3 relating to the Preferred
Stock has been filed with the Securities and Exchange Commission and was
declared effective on October 30, 1997.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(C) EXHIBITS.
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
1 Terms Agreement dated September 10, 1998 by and between the Company
and A.G. Edwards & Sons, Inc., J.C. Bradford & Co., LLC,
Interstate/Johnson Lane Corporation and Stifel, Nicolaus & Company,
Incorporated and related Underwriting Agreement (Underwriting
Agreement filed as Exhibit 1.1 to the Company's Current Report on
Form 8-K filed on August 1, 1997 and incorporated herein by reference)
5 Opinion of Waller Lansden Dortch & Davis, A Professional Limited
Liability Company
8 Tax Opinion of Waller Lansden Dortch & Davis, A Professional Limited
Liability Company
23 Consent of Waller Lansden Dortch & Davis, A Professional Limited
Liability Company (included in Exhibits 5 and 8)
</TABLE>
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
JDN REALTY CORPORATION
By: /s/ William J. Kerley
------------------------------------
William J. Kerley
Chief Financial Officer
Date: September 16, 1998
<PAGE> 4
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
1 Terms Agreement dated September 10, 1998 by and between the Company
and A.G. Edwards & Sons, Inc., J.C. Bradford & Co., LLC,
Interstate/Johnson Lane Corporation and Stifel, Nicolaus & Company,
Incorporated and related Underwriting Agreement (Underwriting
Agreement filed as Exhibit 1.1 to the Company's Current Report on
Form 8-K filed on August 1, 1997 and incorporated herein by reference)
5 Opinion of Waller Lansden Dortch & Davis, A Professional Limited
Liability Company
8 Tax Opinion of Waller Lansden Dortch & Davis, A Professional Limited
Liability Company
23 Consent of Waller Lansden Dortch & Davis, A Professional Limited
Liability Company (included in Exhibits 5 and 8)
</TABLE>
<PAGE> 1
EXHIBIT 1
JDN REALTY CORPORATION
(a Maryland corporation)
2,000,000 Shares of 9 3/8% Series A Cumulative Redeemable Preferred Stock,
par value $.01 per share
(Liquidation Preference $25.00 per share)
TERMS AGREEMENT
---------------
Dated: September 10, 1998
To: JDN Realty Corporation
359 E. Paces Ferry Road
Suite 400
Atlanta, GA 30305
Ladies and Gentlemen:
We, the below listed underwriters (the "Representatives"),
understand that JDN Realty Corporation (the "Company") proposes to issue and
sell shares of 9 3/8% Series A Cumulative Redeemable Preferred Stock (the
"Series A Preferred Shares" or "Underwritten Securities"). Subject to the terms
and conditions set forth or incorporated by reference herein, each of the
underwriters named below (the "Underwriters") offers to purchase, severally and
not jointly, the respective numbers of Initial Underwritten Securities (as
defined in the Underwriting Agreement referred to below) set forth below
opposite their respective names, and a proportionate share of Option
Underwritten Securities (as defined in the Underwriting Agreement referred to
below) to the extent any are purchased, at the purchase price per Series A
Preferred Share set forth below.
<TABLE>
<CAPTION>
Number of Shares of Initial
Underwriter Underwritten Securities
----------- -----------------------
<S> <C>
A.G. Edwards & Sons, Inc. 845,000
J.C. Bradford & Co., LLC 327,500
Interstate/Johnson Lane Corporation 327,500
Stifel, Nicolaus & Company Incorporated 500,000
---------
Total 2,000,000
=========
</TABLE>
The Underwritten Securities shall have the following terms:
TITLE OF SECURITIES: 9 3/8% Series A Cumulative Redeemable Preferred Stock
NUMBER OF INITIAL UNDERWRITTEN SECURITIES: 2,000,000
PAR VALUE: $.01 per Series A Preferred Share
PUBLIC OFFERING PRICE PER SERIES A PREFERRED SHARE: $25.00
PURCHASE PRICE PER SERIES A PREFERRED SHARE: $24.2125
<PAGE> 2
NUMBER OF OPTION UNDERWRITTEN SECURITIES, IF ANY, THAT MAY BE PURCHASED BY THE
UNDERWRITERS: 300,000
DELAYED DELIVERY CONTRACTS: Not authorized
MANAGERS: A.G. Edwards & Sons, Inc., J.C. Bradford & Co., LLC,
Interstate/Johnson Lane Corporation, Stifel, Nicolaus & Company
Incorporated
LIQUIDATION PREFERENCE: $25.00 per Series A Preferred Share
DIVIDENDS: Cumulative from the date of original issue; payable quarterly on or
about the last day of March, June, September and December of each year,
when and as declared, commencing September 30, 1998, at the rate of
9 3/8% of the $25.00 liquidation preference per annum (equivalent to a
fixed annual dividend of $2.3438 per share); dividends will accrue
whether or not the Company has earnings, whether or not there are funds
legally available for the payment of such dividends and whether or not
such dividends are authorized
REDEMPTION: The Series A Preferred Shares are not redeemable prior to September
15, 2003; on or after September 15, 2003, the Series A Preferred Shares
will be redeemable for cash at the option of the Company, in whole or
from time to time in part, at a redemption price of $25.00 per share,
plus accumulated, accrued and unpaid dividends, if any, to the
redemption date; the redemption price for any Series A Preferred Share
(other than any portion thereof consisting of accumulated, accrued and
unpaid dividends) shall be payable solely with the proceeds from the
sale by the Company of other capital shares (which term includes common
stock, preferred stock and other ownership interests) of the Company
(whether or not such sale occurs concurrently with such redemption) and
from no other source
RANKING: The Series A Preferred Shares will rank senior to any shares of the
Company's common stock, par value $.01 per share, with respect to the
payment of dividends and the distribution of amounts upon liquidation,
dissolution or winding up
VOTING RIGHTS: The Series A Preferred Shares generally will have no voting
rights; however, whenever dividends on the Series A Preferred Shares
are in arrears for six or more quarterly periods (whether or not
consecutive), the holders of such shares (voting together as a single
class with all other shares of any class or series of stock ranking on
a parity with the Series A Preferred Shares which are entitled to
similar voting rights) will been entitled to vote for the election of
two additional directors of the Company until all dividends in arrears
on outstanding Series A Preferred Shares have been paid or declared and
set apart for payment; in addition, certain changes to the terms of the
Series A Preferred Shares that would be materially adverse to the
rights of the holders of Series A Preferred Shares cannot be made
without the affirmative vote of holders of at least 66-2/3% of the
outstanding Series A Preferred Shares and shares of any class or series
of stock ranking on a parity with the Series A Preferred Shares which
are entitled to similar voting rights, voting as a single class
LISTING: Application shall be made to list the Series A Preferred Shares on the
New York Stock Exchange under the symbol "JDNPrA"
CONVERSION: The Series A Preferred Shares are not convertible into or
exchangeable for any other securities or property of the Company
MATURITY: The Series A Preferred Shares have no stated maturity and will not be
subject to any sinking fund or mandatory redemption
LOCK-UP AGREEMENT: In accordance with Section 3(k) of the Underwriting Agreement
(incorporated herein by reference), the Company shall not offer, sell,
offer to sell,
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<PAGE> 3
contract to sell, pledge, grant any option to purchase or otherwise
sell or dispose (or announce any offer, sale, offer of sale, contract
of sale, pledge, grant of any option to purchase or other sale or
disposition) of any Series A Preferred Shares or any securities
convertible or exercisable or exchangeable for any Series A Preferred
Shares or other securities of the Company which are substantially
similar to the Series A Preferred Shares, for a period of 30 days from
the date hereof in each case without the written consent of A.G.
Edwards & Sons, Inc. (which will not be unreasonably withheld)
CLOSING DATE AND LOCATION: September 17, 1998, Hogan & Hartson L.L.P., Columbia
Square, 555 Thirteenth Street, N.W., Washington, DC 20004
All the provisions contained in the document attached as Annex A hereto
entitled "JDN Realty Corporation (a Maryland corporation) -- Common Stock,
Common Stock Warrants, Preferred and Debt Securities -- Underwriting Agreement,"
dated July 30, 1997 (the "Underwriting Agreement"), are hereby incorporated by
reference in their entirety herein and, subject to any modifications to such
terms set forth below, shall be deemed to be a part of this Terms Agreement to
the same extent as if such provisions had been set forth in full herein. In
furtherance of the foregoing, certain provisions of the Underwriting Agreement
hereby are modified as follows:
(a) by deleting the reference to "$400 million" in the first paragraph
thereof and by inserting "$600 million" in lieu thereof;
(b) by deleting the reference to "(No. 333-22399)" contained in the
first sentence of the eighth paragraph thereof in its entirety and to insert
"(No. 333-38611, or any successor thereto)" in lieu thereof;
(c) by deleting the phrase "prior to the execution of this Underwriting
Agreement" in the 19th line of the eighth paragraph thereof and by inserting "as
of the date of such Registration Statement or Prospectus, as the case may be,
and all references to the `Prospectus' shall be deemed to include all documents
incorporated by reference therein prior to the termination of the offering of
the Underwritten Securities by the Underwriters" in lieu thereof;
(d) by deleting each reference to Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated" and "Merrill Lynch" therein and by
inserting "A.G. Edwards & Sons, Inc." in lieu thereof;
(e) by deleting Paragraph (4) ("Financial Statements") of Section 1
thereof in its entirety and by inserting in lieu thereof the following:
(4) Financial Statements. The consolidated financial statements
of the Company included in the Registration Statement and the
Prospectus, together with the related schedules and notes, as well as
those financial statements, schedules and notes of any other entity
included in the Registration Statement and the Prospectus, present
fairly the consolidated financial position of the Company and its
subsidiaries, or such other entity, as the case may be, at the dates
indicated and the consolidated statements of operations, shareholders'
equity and cash flows of the
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<PAGE> 4
Company and its subsidiaries, or such other entity, as the case may
be, for the periods specified; the combined statements of revenue and
certain expenses of certain properties acquired or to be acquired by
the Company included in the Registration Statement and the Prospectus,
together with the related notes, present fairly the combined revenues
and expenses of such properties at the dates indicated and are in
conformity with the requirements of Rule 3-14 of Regulation S-X
promulgated under the 1933 Act; such financial statements have been
prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods
involved; the supporting schedules, if any, included in the
Registration Statement and the Prospectus, when considered in relation
to the basic financial statements taken as a whole, present fairly in
accordance with GAAP the information required to be stated therein;
any selected financial data and the summary financial information
included in the Registration Statement and the Prospectus present
fairly the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in
the Registration Statement and the Prospectus; and any pro forma
consolidated financial statements of the Company and its subsidiaries
and the related notes thereto included in the Registration Statement
and the Prospectus present fairly the information shown therein, have
been prepared in accordance with the Commission's rules and guidelines
with respect to pro forma financial statements, and have been properly
compiled on the bases described therein, and the assumptions used in
the preparation thereof are reasonable and the adjustments used
therein are appropriate to give effect to the transactions and
circumstances referred to therein. No other financial statements are
required to be set forth or to be incorporated by reference in the
Registration Statement or the Prospectus under the 1933 Act or the
1933 Act Regulations;
(f) by deleting Paragraph (7) ("Good Standing of Subsidiaries") of
Section 1 thereof in its entirety and by inserting in lieu thereof the
following:
(7) Good Standing of Significant Subsidiaries. Each significant
subsidiary (as such term is defined in Rule 1-02 of Regulation S-X
promulgated under the 1933 Act), if any, and JDN Development (each, a
"Significant Subsidiary") has been duly organized and is validly
existing and in good standing under the laws of the jurisdiction of
its formation, has the requisite power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure to so qualify or be in good standing would not result in a
Material Adverse Effect; except as stated in the Prospectus, all of
the issued and outstanding equity securities of each Significant
Subsidiary have been duly authorized and are validly issued, fully
paid and non-assessable and are owned by the Company, directly or
through subsidiaries (except in the case of JDN Development, the
outstanding voting common stock of which is owned 99% by J. Donald
Nichols and 1% by the Company, and the outstanding non-voting common
stock of which is owned 100% by the Company), free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity; and none of the
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<PAGE> 5
outstanding shares of capital stock of any Significant Subsidiary was
issued in violation of preemptive or other similar rights of any
securityholder of such Significant Subsidiary;
(g) by deleting Paragraph (8) ("Capitalization") of Section 1 thereof
in its entirety and by inserting in lieu thereof the following:
(8) Capitalization. The Company has authorized, issued and
outstanding stock as set forth in the Company's Quarterly Report on
Form 10-Q filed with the Commission for the period ended June 30, 1998
(except for subsequent issuances of Common Stock pursuant to the
Company's Dividend Reinvestment and Stock Purchase Plan, 1995 Employee
Stock Purchase Plan, 1993 Incentive Stock Plan and 1993 Non-Employee
Director Stock Option Plan). Such shares of capital stock have been
duly authorized and validly issued by the Company and are fully paid
and non-assessable, and none of such shares of capital stock was
issued in violation of preemptive or other similar rights of any
securityholder of the Company;
(h) by deleting Paragraph (23) ("Absence of Further Requirements") of
Section 1 thereof in its entirety and by inserting in lieu thereof the
following:
(23) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations under this Underwriting Agreement or the applicable
Terms Agreement or in connection with the transactions contemplated
under this Underwriting Agreement, such Terms Agreement or any
applicable Indenture or Warrant Agreement, except for the registration
of the Underwritten Securities under the 1933 Act or under state
securities laws, compliance with the listing requirements of the New
York Stock Exchange, or approval of the National Association of
Securities Dealers, Inc., if applicable, all of which have been or
will be effected in accordance with this Agreement;
(i) by deleting Paragraph (26) ("Title to Property") of Section 1
thereof in its entirety and by inserting in lieu thereof the following:
(26) Title to Property. The Company and its Subsidiaries have
good and marketable title to all of the properties and assets
reflected in the financial statements (or as described in or
incorporated by reference into the Registration Statement or
Prospectus), in each case, free and clear of all mortgages, pledges,
liens, security interests, claims, restrictions or encumbrances of any
kind except (A) as otherwise stated in the Registration Statement and
the Prospectus or (B) those which do not, singly or in the aggregate,
materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company
or any of its subsidiaries. Except as described in or incorporated by
reference into the Registration Statement or the Prospectus, and with
respect to other Properties that, singly or in the aggregate, did not
account for more than either (i) 10 percent of the total assets on the
Company's December 31, 1997 or June 30, 1998 consolidated balance
sheets or (ii) 10 percent of the
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<PAGE> 6
Company's total revenues on the Company's consolidated statements of
income for the year ended December 31, 1997 or the six months ended
June 30, 1998, no person has an option or right of first refusal to
purchase all or part of any Property or any interest therein. All of
the leases and subleases material to the business of the Company and
its Subsidiaries considered as one enterprise, and under which the
Company or any Subsidiary holds Properties described in the
Prospectus, are in full force and effect, and neither the Company nor
any of its Subsidiaries has received any notice of any material claim
of any sort that has been asserted by anyone adverse to the rights of
the Company or any of its Subsidiaries under any of the leases or
subleases mentioned above, or affecting or questioning the rights of
the Company or such Subsidiary of the continued possession of the
leased or subleased premises under any such lease or sublease;
(j) by deleting Paragraph (27) ("Leases") of Section 1 thereof in its
entirety and by inserting in lieu thereof the following:
(27) Leases. Each lease of real property by the Company as
lessor is the legal, valid and binding obligation of the lessee in
accordance with the terms of such lease (except for such leases as are
not material to the business of the Company and except that the remedy
of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought and to
the Federal Bankruptcy Code). The rents with respect to the Properties
which at present are or remain due and unpaid for more than 30 days
are not payable under leases such that, were no further rental
payments to be received by the Company under such leases, there would
result a Material Adverse Effect. Except as disclosed in or
incorporated by reference into the Prospectus and except as would not
have a Material Adverse Effect, the Company has no knowledge that any
tenant which is responsible for aggregate annualized base rent in
excess of $1,200,000 under all of its leases at the Properties is not
financially capable of performing its obligations thereunder. The
Company occupies its leased properties under valid and binding leases
conforming in all material respects to any description thereof set
forth in or incorporated by reference into the Registration Statement
or Prospectus;
(k) by deleting the word "and" in the 31st ;line of Paragraph (30)
("Environmental Laws") of Section 1 thereof and by inserting the following in
the 34th line thereof after the comma and before the word "the:"
and (5) a corrective action plan required by the State of
Georgia (relating to soil and ground water affected by an underground
storage tank release) of the owner of the Golden Gallon site near the
Company's Lafayette, Georgia property;
(l) by renumbering Paragraph (32) ("Tax Compliance") of Section 1
thereof as Paragraph (31) and by adding in the eighth line of such Paragraph
after the word "paid" and before the comma the following: "except where failure
to pay would not result in a Material Adverse Effect";
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<PAGE> 7
(m) by deleting the references to "signed" in the third and sixth lines
of Paragraph (c) of Section 3 thereof and by inserting "conformed" in lieu
thereof; and
(n) by deleting the words "Merrill Lynch at World Financial Center,
North Tower, New York, New York 10281-1201 attention of: Tjarda Clagett,
Director" in the second sentence of Section 11 thereof and by inserting the
words "A.G. Edwards & Sons, Inc., One North Jefferson Avenue, St. Louis,
Missouri 63103, Attention: Syndicate" in lieu thereof.
The Company represents and warrants to the Underwriters that the
representations and warranties of the Company set forth in Section 1 of the
Underwriting Agreement, as modified in the preceding paragraph, are accurate as
though expressly made at and as of the date hereof.
The parties hereto agree and acknowledge that the information set forth
in the last paragraph on the cover page and in the second paragraph under the
caption "Underwriting" in the Prospectus Supplement dated September 10, 1998
constitutes the only information furnished by the Underwriters to the Company
for inclusion in the Registration Statement and the Prospectus.
Except as otherwise defined herein, terms defined in the Underwriting
Agreement are used herein as therein defined.
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<PAGE> 8
Please accept this offer no later than 12:00 p.m. (New York City time)
on September 10, 1998 by signing a copy of this Terms Agreement in the space set
forth below and returning the signed copy to us.
Very truly yours,
A.G. Edwards & Sons, Inc.
J.C. Bradford & Co., LLC
Interstate/Johnson Lane Corporation
Stifel, Nicolaus & Company Incorporated
By: A.G. EDWARDS & SONS, INC.
By: /s/ John Moriarty
-------------------------------
Name: John Moriarty
Title: Vice President
Accepted:
By: JDN REALTY CORPORATION
By: /s/ J. Donald Nichols
-----------------------------------
Name: J. Donald Nichols
Title: Chairman and Chief Executive Officer
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<PAGE> 1
EXHIBIT 5
WALLER LANSDEN DORTCH & DAVIS
A PROFESSIONAL LIMITED LIABILITY COMPANY
NASHVILLE CITY CENTER
511 UNION STREET, SUITE 2100
POST OFFICE BOX 198966
NASHVILLE, TENNESSEE 37219-8966
(615) 244-6380
FACSIMILES 809 SOUTH MAIN STREET
(615) 244-6804 P. O. BOX 1035
(615) 244-5686 COLUMBIA, TN 38402-1035
(615) 388-6031
September 17, 1998
JDN Realty Corporation
359 East Paces Ferry Road, Suite 400
Atlanta, Georgia 30305
Re: JDN REALTY CORPORATION - PROSPECTUS SUPPLEMENT
(TO THE PROSPECTUS DATED OCTOBER 30, 1997)
Ladies and Gentlemen:
We are acting as your counsel in connection with the issue and
sale of 2,000,000 shares of 9 3/8% Series A Cumulative Redeemable Preferred
Stock, $.01 par value (the "Shares"), by JDN Realty Corporation, a Maryland
corporation (the "Company"), to A.G. Edwards & Sons, Inc., J.C. Bradford & Co.,
LLC, Interstate/Johnson Lane Corporation and Stifel, Nicolaus & Company,
Incorporated (collectively, the "Underwriters"), pursuant to a Registration
Statement on Form S-3 (Registration No. 333-38611) (the "Registration
Statement"), including the Prospectus dated October 30, 1997 contained therein
(the "Prospectus") as supplemented by the Prospectus Supplement dated September
10, 1998 (the "Prospectus Supplement"), and a Terms Agreement between the
Company and the Underwriters dated September 10, 1998 (the "Agreement").
As such counsel and in connection with the foregoing, we have
examined and relied upon such records, documents and other instruments as in our
judgment are necessary or appropriate in order to express the opinion
hereinafter set forth, and have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
to original documents of all documents submitted to us as certified or
photostatic copies.
Based upon and subject to the foregoing and such other matters
as we have deemed relevant, we are of the opinion that the Shares have been duly
authorized by all necessary corporate action and, when delivered and issued upon
payment therefor in the manner and on the terms described in the Registration
Statement, the Prospectus, the Prospectus Supplement and the Agreement, will be
validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and further consent to the reference to us under
the caption "Legal Matters" in the Prospectus and the Prospectus Supplement.
Very truly yours,
/s/ Waller Lansden Dortch & Davis, PLLC
<PAGE> 1
EXHIBIT 8
WALLER LANSDEN DORTCH & DAVIS
A PROFESSIONAL LIMITED LIABILITY COMPANY
NASHVILLE CITY CENTER
511 UNION STREET, SUITE 2100
POST OFFICE BOX 198966
NASHVILLE, TENNESSEE 37219-8966
(615) 244-6380
FACSIMILES 809 SOUTH MAIN STREET
(615) 244-6804 P. O. BOX 1035
(615) 244-5686 COLUMBIA, TN 38402-1035
(615) 388-6031
September 17, 1998
JDN Realty Corporation
359 East Paces Ferry Road
Suite 400
Atlanta, Georgia 30305
RE: JDN REALTY CORPORATION - PROSPECTUS SUPPLEMENT
DATED SEPTEMBER 10, 1998 (TO THE PROSPECTUS DATED
OCTOBER 30, 1997)
Ladies and Gentlemen:
We have acted as special tax counsel to you, JDN Realty Corporation, a
Maryland corporation (the "Company"), in connection with the issue and sale of
2,000,000 shares of 9 3/8% Series A Cumulative Redeemable Preferred Stock, par
value $.01 per share (the "Shares"), under the terms of the Terms Agreement,
dated September 10, 1998, (the "Agreement"), by and between the Company and A.G.
Edwards & Sons, Inc., J.C. Bradford & Co., LLC, Interstate/Johnson Lane
Corporation and Stifel, Nicolaus and Company, Incorporated, as underwriters
(collectively, the "Underwriters"). In connection with the proposed issue and
sale of the Shares, you have requested our opinion as to certain federal income
tax matters.
All capitalized terms used herein, unless specifically indicated
otherwise, shall have the respective meanings set forth in the Agreement. All
section references herein, unless otherwise specified, are to the Internal
Revenue Code of 1986, as amended (the "Code").
In rendering our opinion, we have examined and relied upon the
following documents and other materials:
1. Schedules prepared or delivered by officials of the Company
setting forth:
(a) REIT taxable and gross income for the short taxable year
ended December 31, 1994 and for fiscal years ended December 31, 1995, 1996 and
1997, together with a schedule of actual dividends distributed and projected
dividends to be distributed in accordance with Code Section 858 and compliance
with the distribution requirements of Code Section 857(a);
<PAGE> 2
JDN Realty Corporation
September 17, 1998
Page 2
(b) Compliance with the applicable REIT ratios or tests for the
fiscal years ended December 31, 1994, 1995, 1996 and 1997 and projected
compliance with such tests for the fiscal year ending December 31, 1998,
including:
Income tests:
(1) 95% gross income test for the year;
(2) 75% gross income test for the year; and
(3) 30% gross income test for each year prior to the fiscal
year ending December 31, 1998; and
Asset tests:
(1) 75% asset test at the end of each quarter through
June 30, 1998;
(2) 25% asset test at the end of each quarter through
June 30, 1998;
(3) 10% asset test at the end of each quarter through
June 30, 1998; and
(4) 5% asset test at the end of each quarter through
June 30, 1998.
2. The Company's certificate, dated as of September 17, 1998. With
respect to such certificate, we assume that any certifications as to the
Company's belief (or similar qualification) are in fact accurate and true.
In addition, we have examined such additional records, documents,
certificates and other instruments and made such investigations of fact and law
as in our judgment are necessary or appropriate to enable us to render the
opinion expressed below.
In rendering our opinion, we have relied upon the following
representations of the Company. To the extent that the representations of the
Company are with respect to matters set forth in the Code or Treasury
Regulations, we have discussed with the Company's officers the relevant
provisions of the Code, the applicable Treasury Regulations and published
administrative interpretations thereof.
1. The common stock of the Company has been since the completion of the
initial public offering, and will continue to be beneficially owned by over 100
persons, as defined for purposes of Section 856(a)(5) of the Code; and five or
fewer persons have not owned, directly or indirectly under the rules of Section
544 as modified by Section 856(h) of the Code, at any time since the completion
of the initial public offering, over 50% in value of the stock of the Company;
and no person has owned, directly or indirectly, over 8% in number of shares or
value of the outstanding stock or of any class of stock of the Company;
provided, however, that "Excluded Holders" may hold up to the "Excluded Holder
Ownership Limit," as such terms are defined in the Company's Charter.
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JDN Realty Corporation
September 17, 1998
Page 3
2. The Company has at all times and will continue to comply with any
and all procedural requirements for REIT status set forth in Sections 856
through 860 of the Code and the regulations thereunder.
3. Additional properties acquired will constitute "real estate assets"
and any other investments made by the Company will be made in a manner to
satisfy the asset tests of Section 856(c) of the Code.
4. The income from existing and additional leases entered into or
acquired and the income from other investments will not cause the Company to
fail to satisfy the income tests of Section 856(c) of the Code.
5. The Company will actually operate in accordance with its past and
proposed method of operation as described in its filings with the Securities and
Exchange Commission under the Securities Act of 1933 and the Securities Exchange
Act of 1934.
6. The Company had no undistributed "C" corporation earnings and
profits at December 31, 1994, December 31, 1995, December 31, 1996 or
December 31, 1997.
7. The representations contained in the Company's certificate, dated as
of September 17, 1998, are accurate and true.
8. All partnerships in which the Company may have an ownership interest
will own only "real estate assets" and cash reserves. All activities of those
partnerships will consist of activities permitted to be undertaken by a REIT and
income, other than interest income on cash reserves, shall be "rents from real
property."
9. Each corporation in which the Company has acquired or acquires an
equity interest shall either be a "Qualified REIT Subsidiary" under Section
856(i) of the Code or the Company will not own over ten percent (10%) of the
outstanding voting securities of such corporation or other issuer and the
securities owned of such issuer will not be greater in value than five percent
(5%) of the value of the total assets of the Company.
On the basis of and in reliance on the foregoing, we wish to advise you
that under current law, including relevant statutes, regulations and judicial
and administrative precedent (which law is subject to change on a retroactive
basis), in our opinion the Company was organized and has operated in conformity
with the requirements for qualification and taxation as a REIT under the Code
for its taxable years ended December 31, 1994, December 31, 1995, December 31,
1996 and December 31, 1997 and the Company's current organization and method of
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JDN Realty Corporation
September 17, 1998
Page 4
operation will enable it to continue to meet the requirements for qualification
and taxation as a REIT under the Code.
The Company's qualification and taxation as a REIT depend upon the
Company's ability to meet on a continuing basis, through actual annual operating
and other results, the various requirements under the Code and described in or
incorporated by reference into the Registration Statement with regard to, among
other things, the sources of its gross income, the composition of its assets,
the level of its distributions to shareholders, and the diversity of its stock
ownership. Waller Lansden Dortch & Davis, A Professional Limited Liability
Company will not review the Company's compliance with these requirements on a
continuing basis. Accordingly, no assurance can be given that the actual results
of operations of the Company and its subsidiaries, the sources of their income,
the nature of their assets, the level of the Company's distributions to
shareholders and the diversity of its stock ownership for any given taxable year
will satisfy the requirements under the Code for qualification and taxation as a
REIT.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and further consent to the reference to us under the
caption "Legal Matters" in the Prospectus and the Prospectus Supplement.
Very truly yours,
/s/ WALLER LANSDEN DORTCH & DAVIS
A Professional Limited Liability Company
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