-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QHKn+JUqMPHgXZjfai8ygJSHWq3qWQoVxs6ZMIKT+aVu9Anb7LgRrnhVjGYSrS1j StN5A7PI6L0dTa4hdbWPNQ== 0000950144-98-011569.txt : 19981020 0000950144-98-011569.hdr.sgml : 19981020 ACCESSION NUMBER: 0000950144-98-011569 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19981019 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981019 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: JDN REALTY CORP CENTRAL INDEX KEY: 0000916836 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 581468053 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-12844 FILM NUMBER: 98727430 BUSINESS ADDRESS: STREET 1: 359 EAST PACES FERRY ROAD STREET 2: STE 400 CITY: ATLANTA STATE: GA ZIP: 30305 BUSINESS PHONE: 4042623252 MAIL ADDRESS: STREET 1: 3359 EAST PACES FERRY RD STREET 2: STE 400 CITY: ATLANTA STATE: GA ZIP: 30305 8-K 1 JDN REALTY CORP 1 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): OCTOBER 19, 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) 2 ITEM 5. OTHER EVENTS. Common Stock Offering. On October 13, 1998, the Company entered into a terms agreement with Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Underwriter") relating to the sale by the Company to the Underwriter of an aggregate of 977,500 shares of the Company's common stock, par value $.01 per share (the "Common Stock"), at a price of $20.6875 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 October 19, 1998. As a result of this offering, 31,850,298 shares of the Company's common stock are issued and outstanding. A registration statement relating to the Common Stock has been filed with the Securities and Exchange Commission (the "Commission") and was declared effective on October 30, 1997. Risk Factors/Cautionary Statements for Purposes of the Private Securities Litigation Reform Act of 1995. In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, the Company is hereby filing cautionary statements identifying important factors that could cause the Company's actual consolidated results of operations to differ materially from those projected in forward-looking statements of the Company made by or on behalf of the Company. Certain of these statements are also intended to inform investors of the most significant risk factors that should be considered in making an investment in the Company's securities. These cautionary statements revise and update those previously filed with the Commission by the Company. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (C) EXHIBITS. Exhibit No. Description ----------- ----------- 1 Terms Agreement dated October 13, 1998 by and between the Company and Merrill Lynch, Pierce, Fenner & Smith 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) 99 Risk Factors/Cautionary Statements for Purposes of the Private Securities Litigation Reform Act of 1995 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: October 19, 1998 4 INDEX TO EXHIBITS Exhibit No. Description ----------- ----------- 1 Terms Agreement dated October 13, 1998 by and between the Company and Merrill Lynch, Pierce, Fenner & Smith 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) 99 Risk Factors/Cautionary Statements for Purposes of the Private Securities Litigation Reform Act of 1995 EX-1 2 TERMS OF AGREEMENT DATED OCTOBER 13 1998 1 EXHIBIT 1 JDN REALTY CORPORATION (a Maryland corporation) 850,000 shares of Common Stock, par value $.01 per share TERMS AGREEMENT Dated: October 13, 1998 To: JDN Realty Corporation 359 E. Paces Ferry Road Suite 400 Atlanta, GA 30305 Ladies and Gentlemen: We (the "Underwriters") understand that JDN Realty Corporation (the "Company") proposes to issue and sell shares of Common Stock, par value $.01 per share (the "Common Stock" or "Underwritten Securities"). Subject to the terms and conditions set forth or incorporated by reference herein, the Underwriters offer to purchase the Initial Underwritten Securities (as defined in the Underwriting Agreement referred to below) set forth below and the Option Underwritten Securities (as defined in the Underwriting Agreement referred to below) to the extent any are purchased, at the purchase price per share of Common Stock set forth below.
Number of Shares of Initial Underwriter Underwritten Securities ----------- ----------------------- Merrill Lynch, Pierce, Fenner & Smith Incorporated..........................................................850,000 ------- Total.................................................................850,000 =======
The Underwritten Securities shall have the following terms: TITLE OF SECURITIES: Common Stock NUMBER OF INITIAL UNDERWRITTEN SECURITIES: 850,000 PAR VALUE: $.01 per share of Common Stock PUBLIC OFFERING PRICE PER SHARE OF COMMON STOCK: $20.6875 PURCHASE PRICE PER SHARE OF COMMON STOCK: $19.6275 NUMBER OF OPTION UNDERWRITTEN SECURITIES, IF ANY, THAT MAY BE PURCHASED BY THE UNDERWRITERS: 127,500 DELAYED DELIVERY CONTRACTS: Not authorized ADDITIONAL CO-MANAGERS, IF ANY: None LOCK-UP AGREEMENT: In accordance with Section 3(k) of the Underwriting Agreement (incorporated herein by reference), the Company will not, without the prior written 2 consent of the Underwriters (which consent shall not be unreasonably withheld), directly or indirectly, issue, sell, offer to sell, grant any option for the sale of, or otherwise dispose of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock for a period of 30 days from the date hereof. Notwithstanding the foregoing, during such period, without obtaining the Underwriter's consent, the Company may issue, sell, offer to sell, grant any option for the sale of or otherwise dispose of shares of Common Stock in connection with (i) the Company's Dividend Reinvestment and Stock Purchase Plan, (ii) the Company's Employee Stock Purchase Plan, (iii) the Company's 1993 Incentive Stock Plan, (iv) the Company's Non-Employee Director Stock Option Plan and (v) upon prior notice to the Underwriters, the issuance, sale and delivery to SunTrust Equitable Securities Corporation of Common Stock with a fair market value of up to $50 million in connection with a firm commitment offering limited to institutional investors. CLOSING DATE AND LOCATION: October 19, 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. 333-22339)" 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 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 -2- 3 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 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; (e) 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 -3- 4 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 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; (f) 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; (g) 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; (h) 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 -4- 5 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 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; (i) 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; (j) 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; (k) 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"; and -5- 6 (l) 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. 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 paragraphs, 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 third paragraph under the caption "Underwriting" in the Prospectus Supplement dated October 13, 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. -6- 7 Please accept this offer no later than 5:00 p.m. (New York City time) on October 13, 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, MERRILL LYNCH & CO. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: /s/ Tjarda Clagett ------------------------------------ Name: Tjarda Clagett Title: Director Accepted: By: JDN REALTY CORPORATION By: /s/ John D. Harris, Jr. --------------------------------------- Name: John D. Harris, Jr. Title: Vice President -7- EX-5 3 OPINION OF WALLER LANSDEN DORTCH & DAVIS 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 FACSIMILE 809 SOUTH MAIN STREET (615) 244-6804 P. O. BOX 1035 COLUMBIA, TN 38402-1035 (615) 388-6031 October 19, 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 an aggregate of 977,500 shares of common stock, $.01 par value (the "Shares"), by JDN Realty Corporation, a Maryland corporation (the "Company"), to Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Underwriter"), 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 October 13, 1998 (the "Prospectus Supplement"), a Terms Agreement between the Company and the Underwriter dated October 13, 1998 and the related Underwriting Agreement, dated July 30, 1997 (collectively, the "Underwriting 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 Underwriting Agreement, will be validly issued, fully paid and non-assessable. 2 JDN Realty Corporation October 19, 1998 Page 2 We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and further consent to the reference to Waller Lansden Dortch & Davis, A Professional Limited Liability Company, under the caption "Legal Matters" in the Prospectus and the Prospectus Supplement. Very truly yours, /s/ WALLER LANSDEN DORTCH & DAVIS, PLLC EX-8 4 TAX OPINION OF WALLER LANSDEN DORTCH & DAVIS 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 FACSIMILES (615) 244-6380 809 SOUTH MAIN STREET (615) 244-6804 P. O. BOX 1035 (615) 244-5686 COLUMBIA, TN 38402-1035 (615) 388-6031 October 19, 1998 MERRILL LYNCH & CO. c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated North Tower World Financial Center New York, New York 10281-1209 RE: JDN REALTY CORPORATION - PROSPECTUS SUPPLEMENT DATED OCTOBER 13, 1998 (TO THE PROSPECTUS DATED OCTOBER 30, 1997) Ladies and Gentlemen: We have acted as special tax counsel to JDN Realty Corporation, a Maryland corporation (the "Company"), in connection with the issue and sale to you of an aggregate of 977,500 shares of Common Stock, par value $.01 per share (the "Shares"), under the terms of the Underwriting Agreement dated July 30, 1997 and the related Terms Agreement, dated October 13, 1998, (the "Agreement"), by and between the Company and you, as underwriter (the "Underwriter"). 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 ending December 31, 1994 and for taxable years ending 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); 2 JDN Realty Corporation October 19, 1998 Page 2 (b) Compliance with the applicable REIT ratios or tests for the taxable years ending December 31, 1994, 1995, 1996 and 1997 and projected compliance with such tests for the taxable 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 September 30, 1998; (2) 25% asset test at the end of each quarter through September 30, 1998; (3) 10% asset test at the end of each quarter through September 30, 1998; and (4) 5% asset test at the end of each quarter through September 30, 1998. 2. The Company's certificate, dated as of October 19, 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. 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. 2 3 JDN Realty Corporation October 19, 1998 Page 3 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 October 19, 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 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 3 4 JDN Realty Corporation October 19, 1998 Page 4 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. This opinion is furnished only for your benefit and the benefit of your counsel in connection with the proposed issue and sale of the Shares and, without our prior written consent, may not be quoted (in whole or in part) or relied on for any other purpose or by any other person or entity. 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 Prospectus Supplement. Very truly yours, /s/ WALLER LANSDEN DORTCH & DAVIS A Professional Limited Liability Company WALLER LANSDEN DORTCH & DAVIS A Professional Limited Liability Company 4 EX-99 5 RISK FACTORS/CAUTIONARY STATEMENTS 1 EXHIBIT 99 RISK FACTORS/CAUTIONARY STATEMENTS FOR PURPOSES OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Management of JDN Realty Corporation may from time to time make certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. When making statements which are not historical in nature, including the words "anticipate," "estimate," "should," "expect," "believe," "intend" and similar expressions, we intend to identify forward-looking statements. Such statements are, by their nature, subject to certain risks and uncertainties. Among the factors that could cause actual consolidated results from operations to differ materially from those that the Company projects in forward-looking statements are the following: SIGNIFICANT RELIANCE ON MAJOR TENANTS; RISK OF TENANT BANKRUPTCY Major Tenants. As of September 30, 1998, each of Wal-Mart and Lowe's leased more than 10% of the gross leaseable area that the Company owned directly. Wal-Mart and Lowe's also each accounted for more than 10% of the Company's total minimum rent. No other single tenant accounts for more than 10% of the Company's gross leaseable area or more than 10% total minimum rent in 1998. If the financial condition or corporate strategy of any of the Company's major tenants changes, these changes could have an adverse impact on the Company, such as reducing distributions. The following is a list of examples of changes that could have a material adverse effect on income and funds from operations and, consequently, could reduce distributions: - Wal-Mart or Lowe's could become unable to complete and lease existing development and redevelopment projects on schedule and within budget; - Wal-Mart or Lowe's could become unable to pay rent as it becomes due; - Wal-Mart or Lowe's could fail to renew leases as they expire; and - Wal-Mart or Lowe's could discontinue providing or provide significantly fewer assignments of development projects to the Company, and the Company could be unable to replace the income from these assignments with economically advantageous assignments from other value-oriented retail anchor tenants. Other Tenants. The bankruptcy or insolvency of a major tenant or a number of smaller tenants may have an adverse impact on the properties affected and on the income that those properties produce. 2 DEPENDENCE ON AND INFLUENCE OF EXECUTIVE OFFICERS AND DIRECTORS The Company depends on the efforts of its executive officers, and particularly J. Donald Nichols and Elizabeth L. Nichols. The loss of their services could have an adverse effect on the operations of the Company. J. Donald Nichols, Elizabeth L. Nichols and the other directors and executive officers of the Company have substantial influence on the affairs of the Company. For example, the directors may amend the investment and financing policies of the Company without a vote of the holders of the Common Stock. Any such amendments could result in decisions that are detrimental to the value of the Company. RISK OF DEBT FINANCING The Company is subject to a variety of risks associated with debt financing. Examples of these risks include the following: - the Company's cash provided by operating activities may be insufficient to meet required payments of principal and interest; - the Company may be unable to pay or refinance indebtedness on its properties; - if prevailing interest rates or other factors at the time of refinancing result in higher interest rates on refinancing, then the Company's interest costs would increase, which may adversely affect the Company's costs and related returns on its development and redevelopment activities, cash provided by operating activities and the ability to make distributions or payments to holders of the Company's securities; - if the Company is unable to secure refinancing of indebtedness on acceptable terms, the Company may be forced to dispose of properties upon disadvantageous terms, which may result in losses to the Company and may adversely affect the Company's funds from operations; and - if a property or properties are mortgaged to secure payment of indebtedness and the Company is unable to meet mortgage payments, the mortgagee may foreclose upon the property or otherwise compel the Company to transfer the property to the mortgagee, resulting in a loss of income and asset value to the Company. In addition, in June 1998 the Division of Banking Supervision and Regulation of the Board of Governors of the Federal Reserve System issued a supervisory letter which addressed the subject of lending standards for business loans. The supervisory letter noted, among other things, a significant increase in bank lending to REITs and concluded that bank examiners should increase their understanding of REITs and related lending and credit risks associated with lending to REITs. Management is uncertain of the future effects of the supervisory letter on the Company. Any changes in bank lending practices as a result of the supervisory letter may affect the Company's ability to successfully negotiate new credit facilities. 3 Company policy currently prohibits the Company from incurring debt (secured or unsecured) in excess of 60% of total market capitalization. The Board of Directors can change this limitation without approval of the holders of the Company's common stock. The Charter and Bylaws of the Company do not limit the amount of borrowings the Company can incur. REAL ESTATE INVESTMENT RISKS General Risks. Real property investments are subject to varying degrees of risk. Among the factors that may affect real estate values and the income generated from real estate investments are the following: - changes in the general economic climate; - local conditions (such as an oversupply of or a reduction in demand for shopping center space in an area); - the quality and philosophy of management; - competition from other available space; - the ability of the owner to provide adequate maintenance and insurance; - variable operating costs (including real estate taxes); - costs associated with federal, state and local government laws and regulations (including, for example, environmental, zoning and other land use laws and regulations); - changes in business conditions and the general economy as they affect interest rate levels; - the availability of financing; and - potential liability under and changes in environmental and other laws. Dependence on rental income from real property. Because rental income from real property represents substantially all of the Company's income and funds from operations, the inability of a significant number of the Company's tenants to meet their obligations to the Company, or the inability of the Company to lease on economically favorable terms a significant amount of space in its properties could adversely affect the Company. In the event of default by a tenant, the Company may experience delays in enforcing, and incur substantial costs to enforce, its rights as landlord. In addition, although circumstances may cause a reduction in income from the investment, there is generally no reduction in certain significant expenditures associated with ownership of real estate (such as mortgage payments, real estate taxes and maintenance costs). Operating Risks. The Company's shopping center properties are subject to all operating risks common to shopping center developments and are particularly subject to 4 the risks of changing economic conditions that affect value-oriented retailers and the retail industry as a whole. Such risks include the following: - competition from other shopping center developments and developers; - excessive building of comparable properties or increases in unemployment in the areas in which the Company's properties are located (either of which might adversely affect occupancy or rental rates); - increases in operating costs due to inflation and other factors (which increases may not necessarily be offset by increased rents); - inability or unwillingness of lessees to pay rent increases; - changes in general economic conditions or consumer preferences that affect the demand for value-oriented retailers or that result in the merger of or closings by such retailers; - the availability of debt and equity capital with favorable terms and conditions; - future enactment of laws regulating public places (including present and possible future laws relating to access by disabled persons); and - limitation by local rental markets of the extent to which rents may be increased to meet increased expenses without decreasing occupancy rates. Any of the above may adversely affect the Company's ability to make distributions or payments to holders of its securities. Illiquidity of Real Estate. Equity real estate investments are relatively difficult to convert to cash and therefore may tend to limit the ability of the Company to react promptly in response to changes in economic or other conditions. Further, restrictions applicable to REITS may affect the Company's ability to sell properties without adversely affecting returns to holders of the Company's securities. Inability to Rent Unleased Space. Many factors, including certain covenants found in some leases with existing tenants that restrict the use of other space at a property, may affect the ability of the Company to rent unleased space. There can be no assurance that any tenant whose lease expires in the future will renew such lease or that the Company will be able to re-lease space on economically advantageous terms. In addition, the Company may incur costs in making improvements or repairs to a property that are required by a new tenant. Effect of Uninsured Loss on Performance. The Company carries comprehensive liability, fire, flood, extended coverage and rental loss insurance with policy specifications and insured limits that are customary for similar properties. Certain types of losses (such as from wars or earthquakes), however, are either uninsurable or insurable only at costs which are not economically justifiable. If an uninsured loss occurs, although the Company would continue to be obligated to repay any recourse mortgage indebtedness on the 5 property, the Company may lose both its invested capital in, and anticipated profits from, the property. Competition. Numerous commercial developers, real estate companies and other owners of real estate (including those that operate in the region in which the Company's properties are located) compete with the Company in seeking land for development, properties for acquisition and tenants for properties. Certain of these competitors may have greater capital and other resources than the Company. Potential Environmental Liability and Cost of Remediation. As an owner of real property, the Company may become liable for the costs of removal or remediation of certain hazardous or toxic substances at, under or disposed of in connection with such property. Also, the Company may become liable for certain other potential costs relating to hazardous or toxic substances (including government fines and injuries to persons and adjacent property). Various federal, state and local environmental laws may impose liability without regard to whether the owner knew of, or was responsible for, the presence or disposal of such substances and may impose liability on the owner in connection with the activities of an operator of the property. The cost of any required remediation, removal, fines or personal or property damages and the owner's liability therefor could exceed the value of the property. In addition, the presence of such substances, or the failure to properly dispose of or remediate such substances, may adversely affect the owner's ability to sell or rent such property or to borrow using such property as collateral which, in turn, would reduce the owner's revenues. Americans with Disabilities Act. The Company's properties and any additional developments or acquisitions must comply with Title III of the Americans with Disabilities Act. Compliance with the ADA's requirements may require removal of structural, architectural or communication barriers to handicapped access and utilization in certain public areas of the Company's properties. Noncompliance could result in injunctive relief, imposition of fines or an award of damages to private litigants. If the Company must make changes to bring any of the properties into compliance with the ADA, expenses associated with such changes could adversely affect the Company's ability to make expected distributions. The Company believes that its competitors face similar costs to comply with the requirements of the ADA. RISKS INHERENT IN DEVELOPMENT AND ACQUISITION ACTIVITIES Developing or expanding existing shopping centers is an integral part of the Company's strategy for maintaining and enhancing the value of its shopping center portfolio. While the Company's policies with respect to its activities are intended to limit some of the risks otherwise associated with those activities (including not commencing construction on a project prior to obtaining a commitment from an anchor tenant), the Company nevertheless will incur certain risks, including risks related to delays in construction and lease-up, costs of materials, financing availability, volatility in interest rates, labor availability and the failure of properties to perform as expected. 6 LIMITATIONS ON POTENTIAL CHANGES IN CONTROL Certain provisions of the Company's Charter and Bylaws and Maryland law may make a change in the control of the Company more difficult, even if a change of control were in the shareholders' interest. These provisions include the following: - the limitation on ownership of the Company's capital stock by any single holder (other than the Nichols, their immediate family and certain affiliates) to (a) 8% of either the number or the value of the outstanding shares of common stock and (b) 8% of either the number or the value of the outstanding shares of preferred stock; - the staggered terms of the Company's Board of Directors; - super-majority voting in certain situations; - business combination provisions under Maryland law; and - the ability of the Company's Board of Directors to issue preferred stock without shareholder approval. ADVERSE TAX CONSEQUENCES Tax Liabilities of Failure to Qualify as a REIT. The Company has elected treatment as a REIT under the Internal Revenue Code of 1986, as amended (the "Code") for federal income tax purposes. We can provide no assurance, however, that the Company will continue to operate in a manner enabling it to remain so qualified. Qualification as a REIT involves the application of highly technical and complex Code provisions which have only a limited number of judicial or administrative interpretations. Also, the determination of various factual matters and circumstances not entirely within the Company's control may impact its ability to qualify as a REIT. In addition, new legislation, regulations, administrative interpretations or court decisions may significantly change the tax laws with respect to the qualification as a REIT or the federal income tax consequences of such qualification. If in any taxable year the Company does not qualify as a REIT, it would be taxed as a corporation and, in computing its taxable income, the Company would not be able to deduct distributions to the holders of the Company's capital stock. In addition, unless entitled to relief under certain statutory provisions, the Company could not elect REIT status for the four taxable years following the year during which qualification was lost. This treatment would reduce the net earnings of the Company available for investment or distribution or payment to holders of its securities because of the additional tax liability to the Company for the year or years involved. In addition, the Company would no longer be required by the Code to make any distributions. To qualify as a REIT, the Company must distribute at least 95% of its taxable income to its shareholders each year. Possible timing differences between receipt of income and payment of expenses and the inclusion and deduction of such amounts in determining taxable income, could require the Company to reduce its dividends below the level 7 necessary to maintain its qualification as a REIT, which would have material adverse tax consequences. Other REIT Taxes. Although qualified for REIT taxation, certain transactions or other events could lead to the Company being taxed at rates ranging from 4% to 100% on certain income or gains. --------------------- We may amend or supplement from time to time in other filings with the Securities and Exchange Commission these risks, uncertainties and factors that could cause actual consolidated results from operations to differ materially from projections in forward-looking statements made by or on behalf of the Company. -----END PRIVACY-ENHANCED MESSAGE-----