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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): FEBRUARY 14, 2000
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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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ITEM 5. OTHER EVENTS.
JDN Realty Corporation (the "Company") is filing this Current
Report on Form 8-K in order to file with the Securities and Exchange Commission
a press release issued by the Company on February 14, 2000. A copy of the
related press release is included as an exhibit to this filing.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(C) EXHIBITS.
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
99.1 Press Release: J. DONALD NICHOLS RESIGNS AS CHIEF
EXECUTIVE OFFICER, TO REMAIN AS CHAIRMAN OF THE BOARD;
INTERIM OFFICE OF CEO CREATED
</TABLE>
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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/ Elizabeth L. Nichols as President
-------------------------------------
Elizabeth L. Nichols
President
Date: February 13, 2000
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
99.1 Press Release: J. DONALD NICHOLS RESIGNS AS CHIEF
EXECUTIVE OFFICER, TO REMAIN AS CHAIRMAN OF THE
BOARD; INTERIM OFFICE OF CEO CREATED
</TABLE>
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE
CONTACT: Sitrick And Company
Michael Geczi
Lisa Weil
Shoreen Maghame
212-573-6100 (February 14-15)
310-788-2850 (afterward)
J. DONALD NICHOLS RESIGNS AS CHIEF EXECUTIVE OFFICER,
TO REMAIN AS CHAIRMAN OF THE BOARD;
INTERIM OFFICE OF CEO CREATED
Year-End Results Delayed; Company Expects to Restate 1994-1998 Results;
Committee Created to Search for Permanent CEO
ATLANTA, February 14, 2000 - JDN Realty Corporation (NYSE: JDN) today
announced that J. Donald Nichols has resigned, effective immediately, as Chief
Executive Officer, but will remain as a non-executive Chairman of the Board of
Directors with responsibility for maintaining and creating tenant relationships
and for identifying development opportunities for the company.
An interim Office of the Chief Executive Officer (CEO) has been created
and will be headed by William J. Kerley, currently Chief Financial Officer, and
Elizabeth L. Nichols, currently President. A search committee of the Board,
chaired by non-management Board member William G. Byrnes, also has been created
to initiate immediately a nationwide search for a permanent CEO. Other members
of the committee are William B. Greene and Philip G. Satre, each of whom is a
non-management Board member.
The company further stated that the public announcement of its earnings
for the year ended December 31, 1999, will be delayed and is not expected to
occur before the beginning of March 2000. The delay is the result of the
company's discovery of certain real estate transactions, which included
undisclosed compensation arrangements and related party transactions involving
Jeb L. Hughes, Senior Vice President of Development for JDN Development Company,
Inc., and C. Sheldon Whittelsey, IV, Vice President of Development, both of whom
have resigned effective immediately. The company said
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these transactions were not accurately recorded in the company's accounting
records, and were not accurately recorded or disclosed in JDN's audited
financial statements for its years ended December 31, 1994 through 1998.
JDN said a substantial number of these transactions were approved by
Mr. Nichols. However, the company added that all of the subject transactions --
including those that were not approved by Mr. Nichols -- violated the policies
of the company or JDN Development Company. The company added that it does not
believe that Mr. Nichols received any personal remuneration from these
transactions. Additionally, JDN said that the subject transactions involved 21
of the company's approximately 150 development projects over the indicated
five-year period.
As a result of the discovery, a special committee of non-management
members of the Board of Directors has been formed, has engaged counsel, and is
conducting an inquiry into the nature and extent of these transactions and their
impact on the company's financial statements and credit agreements.
"JDN is one of the top-performing companies in the REIT industry, and
that success is due in large part to the leadership of Donnie Nichols, who, in
his new role, will continue to serve the company by developing new, and
maintaining long-standing, tenant relationships," said Mr. Kerley.
Added Ms. Nichols: "We have long-term -- and very close --
relationships with a number of outstanding anchor tenants. The company also has
an outstanding management team in place, as well as dedicated employees who are
assisting us through this process. We look forward to continued operating
success and to taking all actions necessary to release our 1999 financial
results as soon as possible while we search for a new CEO."
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3
Financial Impact of the Discovered Transactions
According to information currently available, the company believes that
the approximate total of unreported compensation for the years 1994 through 1998
was as follows:
<TABLE>
<CAPTION>
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1994 1995 1996 1997 1998
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<S> <C> <C> <C> <C> <C>
Unreported $600,000 $800,000 $1,000,000 $1,000,000 $1,500,000
compensation
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</TABLE>
The company continues to review the foregoing periods, as well as the
unaudited periods in 1999. The amounts referred to in the table exclude
additional sums for the excess of the fair value over the cost for certain land
conveyances and also exclude any related payroll or income tax liabilities,
which are still being evaluated. In addition, these amounts include certain sums
that the company may seek to recover.
The company previously has reported net income and funds from operation
(FFO) for the same years as follows:
<TABLE>
<CAPTION>
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1994 1995 1996 1997 1998
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<S> <C> <C> <C> <C> <C>
Net income $3,001,000 $10,737,000 $16,682,000 $21,293,000 $41,337,000
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Funds from $9,836,000 $17,234,000 $24,683,000 $37,701,000 $56,792,000
operations
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</TABLE>
JDN added that the compensation and other amounts are likely to be
accounted for as an expense for each of the years incurred, which would result
in a restatement of the company's financial statements for each of those years,
and reduce net income and funds from operations for those periods.
The company believes the net-asset value of its real estate is
unaffected by these transactions.
The company said it currently believes the inaccuracies in its
financial statements are a breach of certain non-financial and non-operating
covenants included in its principal credit facility and, thus, constitute a
default. The company is discussing with its banks obtaining, to the extent
necessary, a waiver of any uncured default. A default under its
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4
credit agreement, if not waived, may result in a default under the company's
indenture relating to its unsecured medium-term notes.
The company said it does not believe that its qualification as a real
estate investment trust (REIT) for federal income tax purposes is likely to be
affected by the undisclosed compensation or related party transactions.
Management Changes
The company announced that Mr. Hughes' and Mr. Whittelsey's
responsibilities will be assumed by several members of its senior development
team, including Jim Angeloni, Mark Goldberg and Steve Lane, all of whom will
continue to handle tenant relationships and new developments. Additionally,
David Henzlik, who had been JDN's Director of Leasing, joined the development
team late last year.
About JDN Realty
JDN Realty Corporation is a real estate company specializing in the
development and asset management of retail shopping centers anchored by
value-oriented retailers. Headquartered in Atlanta, Georgia, the company owns
and operates, directly or indirectly, 107 properties, containing approximately
13.1 million square feet of gross leasable area, located in 17 states. The
common stock and preferred stock of JDN Realty Corporation are listed on the New
York Stock Exchange under the symbols "JDN" and "JDNPrA," respectively.
Disclaimer on Forward-Looking Statements
JDN Realty Corporation considers the portions of the information
contained in this release and statements made in connection with this release,
with respect to the Company's beliefs and expectations of the outcome of future
events, such as the estimates of the amounts and accounting treatment for the
unreported compensation and transactions noted in this release, to be
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as
amended. Such statements are, by their nature, subject to certain risks and
uncertainties. We caution you that a number of factors, including but not
limited to, the management changes described in this release, the search for a
new Chief Executive Officer, the ability to attract and retain key employees,
the impact of any restated financial statements and the events described in this
release on the market capitalization of the Company and on the Company's
employees, creditors and tenants, the inability to maintain current dividend
levels, or any litigation or regulatory actions taken as a result of the events
described in this release, may adversely affect the Company and its results of
operation. Other risks, uncertainties and factors that could adversely affect
the Company and its operations are detailed from time
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5
to time in reports filed by the Company with the Securities and Exchange
Commission, including Forms 8-K, 10-Q and 10-K. JDN Realty Corporation does no
undertake any obligation to release publicly any revisions to forward-looking
statements contained herein to reflect events or circumstances occurring after
the date hereof or to reflect the occurrence of unanticipated events.
###
Note: The company has scheduled a one-way conference call for 10:30
a.m. EST on Monday, February 14, 2000. Conducting the call will be William J.
Kerley and Elizabeth L. Nichols. The dial-in number is (800) 738-6893 and the
conference ID number is 752187. The conference leader's name is Michael Geczi.
***
