Filed by Developers Diversified Realty Corporation
pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12 under
the Securities Exchange Act of 1934
Subject Company: JDN Realty Corporation
Registration Statement No. 333-100889
On November 5, 2002, JDN Realty Corporation disseminated the following press
release:
###
FOR IMMEDIATE RELEASE
Contact: Charles N. Talbert
Director of Investor Relations
(404) 262-3252
JDN REALTY CORPORATION ANNOUNCES THIRD QUARTER 2002 RESULTS
ATLANTA, GA (November 5, 2002) - JDN Realty Corporation (NYSE: JDN) today
announced results for the quarter ended September 30, 2002. For the third
quarter, diluted funds from operations per share, a supplemental measure of
REIT performance, was $0.30 compared with diluted funds from operations per
share of $0.47 for the third quarter of 2001. Funds from operations was $10.4
million compared with funds from operations for the third quarter of 2001 of
$15.5 million. Net income attributable to common shareholders was $5.9 million,
or $0.17 per share on a diluted basis, compared with net income attributable to
common shareholders for the third quarter of 2001 of $17.0 million, or $0.52
per share on a diluted basis. Total revenues were $25.1 million, compared with
total revenues of $23.5 million for the third quarter of 2001.
For the nine months ended September 30, 2002, diluted funds from operations per
share was $0.94 compared with diluted funds from operations per share of
$(0.37) for the nine months ended September 30, 2001. Funds from operations was
$32.6 million compared with funds from operations for the nine months ended
September 30, 2001 of $(11.9) million. Net income attributable to common
shareholders was $17.8 million, or $0.51 per share on a diluted basis, compared
with net loss attributable to common shareholders for the nine months ended
September 30, 2001, of $(14.0) million, or $(0.43) per share on a diluted
basis. Total revenues were $77.6 million compared with total revenues of $73.6
million for the comparable period last year. Results for the nine months ended
September 30, 2001 included litigation charges of $43.8 million, or $1.34 per
share.
On October 4, 2002, the Company entered into an Agreement and Plan of Merger
with Developers Diversified Realty Corporation (NYSE: DDR) pursuant to which
the Company's common shareholders will receive 0.518 of a share of DDR common
stock in exchange for each share of the Company's common stock. In addition,
the Company's preferred shareholders will receive for each share of the
Company's preferred stock one share of a class of DDR voting preferred stock,
with similar terms and conditions as the Company's preferred stock. The Board
of Directors of each of JDN and DDR has unanimously approved the transaction.
The completion of this transaction, which is expected to occur in the first
quarter of 2003, is subject to approval of the merger and the merger agreement
by JDN shareholders, approval of the issuance of additional DDR common shares
by the DDR shareholders, and other closing conditions described in the merger
agreement, including JDN entering into a closing agreement with the Internal
Revenue Service with respect to certain REIT qualification issues.
For 2002, the Company expects funds from operations per share on a diluted
basis to be in the range of $1.22 to $1.25. This range is based upon a number
of assumptions for the remainder of the year, including the following: delivery
of approximately $45.6 million of projects out of the development pipeline at
an aggregate yield of approximately 9.60%; disposition of approximately $40.7
million in operating properties at a weighted average cap rate of 9.75%; and
non-operating land sales gains of approximately $2.1 million.
During the third quarter of 2002, anchor tenants of the Company opened stores
in Brandon, Florida; Grandville, Michigan; St. John, Missouri; Irving, Texas;
and Mesquite, Texas. These openings, including non-anchor tenant deliveries,
totaled 225,057 square feet of Company-owned gross leasable area (GLA),
representing an investment of approximately $29.5 million. As of September 30,
2002, the Company's development activity included 14 projects under
construction containing 1.1 million square feet of Company-owned GLA,
representing an investment, upon completion, of approximately $161.6 million,
of which $120.0 million has already been expended.
The Company sold three shopping center properties for gross proceeds of $11.4
million and sold $4.0 million of non-operating real estate for an aggregate gain
of $1.3 million during the third quarter of 2002. As of September 30, 2002, the
Company had executed sales contracts on three operating shopping centers or
portions of operating shopping centers and 18 tracts of land, totaling $37.9
million.
For the third quarter of 2002, the Company announced the following leasing and
property management information:
- On a same-property basis, annualized base rent per leased square foot
increased 1.7% to $8.47 as of September 30, 2002, from $8.33 as of September
30, 2001;
- At the end of the quarter, the Company's portfolio was 93.0% leased;
- 25 lease renewals took effect at an average decreased rent of 1.4%; and
- 89 tenants incurred contractual rental increases averaging 5.9%.
The Company paid a cash dividend on its common stock of $0.27 per share on
September 30, 2002, to shareholders of record on September 13, 2002. In
addition, the Company paid a cash dividend on its 9 3/8% Series A Cumulative
Redeemable Preferred Stock of $0.586 per share on September 30, 2002, to
shareholders of record on September 13, 2002.
JDN Realty Corporation is a real estate company specializing in the development
and management of retail shopping centers. Headquartered in Atlanta, Georgia,
the Company owns and operates directly or indirectly 99 properties, containing
approximately 11.4 million square feet of gross leasable area, located in 20
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.
For additional information, visit the Company's home page on the Internet
at http://www.jdnrealty.com.
Management has included herein certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. When used, statements
which are not historical in nature including the words "anticipate," "estimate,"
"should," "expect," "believe," "intend" and similar expressions are intended to
identify forward-looking statements. Forward-looking statements are, by their
nature, subject to known and unknown risks and uncertainties. Forward-looking
statements include statements regarding the following: (1) expected outcome of
the proposed merger; (2) expected range of FFO per share for 2002; (3) expected
returns from the Company's development pipeline; (4) expected dispositions of
real estate and estimated gains therefrom; and (5) amount and timing of shopping
centers delivered from the development pipeline. Among the factors that could
cause actual results to differ materially from those anticipated are the
following, particularly in light of the proposed merger: changes in the
composition of senior management; the outcome of the closing agreement with the
Internal Revenue Service on certain REIT qualification issues; the ability of
the Company to close the proposed merger on the expected timetable and the
disclosed terms; the ability to retain key employees; business conditions and
the general economy, especially as they affect interest rates and value-oriented
retailers; the federal, state and local regulatory environment; the ability to
refinance or extend maturing debt obligations on acceptable terms; the
availability of debt and equity capital with acceptable terms and conditions
including, without limitation, the availability of bank credit to fund
development and redevelopment activities; the ability to sell operating shopping
center properties and parcels of land as projected and upon economically
favorable terms; the availability of new development opportunities; changes in
the financial condition or corporate strategy of or business relations with
primary retail tenants, or the loss of one or more of the Company's primary
retail tenants or their ability to pay rent; the ability to fund, complete and
lease existing development and redevelopment projects on schedule and within
budget; and the ability of the Company to maintain its qualification as a REIT.
Other risks, uncertainties and factors that could cause actual results to differ
materially from those projected are detailed from time to time in press releases
and reports filed by JDN Realty Corporation with the Securities and Exchange
Commission, including Forms 8-K, 10-Q and 10-K. For example, see "Risk Factors"
under Part I, Item 1 of the Company's Annual Report on Form 10-K for the year
ended December 31, 2001. The Company assumes no obligation to publicly release
any revisions to these forward-looking statements, which may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
ADDITIONAL INFORMATION CONCERNING THE MERGER AND WHERE YOU CAN FIND IT
DDR has filed a registration statement on Form S-4, containing a joint proxy
statement/prospectus and other relevant documents, with the SEC concerning the
proposed merger transaction between DDR and JDN. YOU ARE URGED TO READ THE
REGISTRATION STATEMENT CONTAINING THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY
OTHER RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT DDR, JDN
AND THE MERGER. You may obtain the registration statement containing the joint
proxy statement/prospectus and other documents free of charge at the SEC's web
site, www.sec.gov. In addition, you may obtain documents filed with the SEC by
DDR free of charge by requesting them in writing from DDR Investor Relations,
3300 Enterprise Parkway, Beachwood, Ohio 44122, telephone: (216) 755-5500. You
may obtain documents filed with the SEC by JDN free of charge by requesting
them in writing from JDN Investor Relations, 359 E. Paces Ferry Road, Suite
400, Atlanta, Georgia 30305, telephone: (404) 262-3252.
DDR and JDN, and their respective directors and executive officers and other
members of their management and employees, may be deemed to be participants in
the solicitation of proxies from the stockholders of DDR and JDN in connection
with the merger. Information about the directors and executive officers of DDR
and their ownership of DDR shares is set forth in the proxy statement for DDR's
2002 annual meeting of shareholders. Information about the directors and
executive officers of JDN and their ownership of JDN stock is set forth in the
proxy statement for JDN's 2002 annual meeting of stockholders. Investors may
obtain additional information regarding the interests of such participants by
reading the joint proxy statement/prospectus.
###
JDN REALTY CORPORATION
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31,
2002 2001
------------- ------------
(Unaudited)
(In Thousands)
ASSETS
Shopping center properties, at cost:
Land $ 349,019 $ 289,296
Buildings and improvements 630,576 624,759
Property under development 124,188 188,484
------------ ------------
1,103,783 1,102,539
Less: accumulated depreciation and amortization (98,310) (88,152)
Property held for sale 37,928 --
------------ ------------
Shopping center properties, net 1,043,401 1,014,387
Restricted cash - escrow 814 1,815
Accounts receivable 18,920 17,160
Investments in and advances to unconsolidated entities 12,178 12,628
Deferred costs, net of amortization 3,841 6,238
Other assets 13,707 13,235
------------ ------------
$ 1,092,861 $ 1,065,463
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Unsecured notes payable $ 234,806 $ 234,759
Secured line of credit and term loan 230,000 230,000
Mortgage notes payable 141,263 96,362
Accounts payable and accrued expenses 15,224 27,633
Other liabilities 15,897 14,191
------------ ------------
Total liabilities 637,190 602,945
Third party investors' interest 2,996 2,999
Shareholders' Equity
Preferred stock, par value $.01 per share -
authorized 20,000,000 shares: 9 3/8% Series A
Cumulative Redeemable Preferred Stock,
liquidation preference $25 per share, issued
and outstanding 2,000,000 shares in 2002 and
2001, respectively 20 20
Common stock, par value $.01 per share -
authorized 150,000,000 shares, issued and
outstanding 34,793,745 and 34,795,045 shares in
2002 and 2001, respectively 348 348
Paid-in capital 465,544 475,264
Accumulated other comprehensive loss (1,390) (4,266)
Accumulated deficit (11,847) (11,847)
------------ ------------
452,675 459,519
------------ ------------
$ 1,092,861 $ 1,065,463
============ ============
JDN REALTY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended September 30,
2002 2001
------- -------
(In thousands)
Revenues:
Minimum and percentage rates $21,457 $20,202
Recoveries from tenants 3,425 3,182
Other revenue 171 77
------- -------
Total revenues 25,053 23,461
Operating expenses:
Operating and maintenance 2,321 2,269
Real estate taxes 2,421 1,820
General and administrative 2,932 2,607
Impairment loss -- 1,002
Depreciation and amortization 5,317 5,201
Settlement expense -- (3,825)
------- -------
Total operating expenses 12,991 9,074
------- -------
Income from operations 12,062 14,387
Other income (expense):
Interest expense, net (8,516) (7,347)
Other income (expense), net 256 (196)
Equity in net income (loss) of unconsolidated entities 154 (1)
------- -------
Income from continuing operations before minority interest in net income of
consolidated subsidiaries and net gain on real estate sales 3,956 6,843
Minority interest in net income of consolidated subsidiaries (38) (46)
------- -------
Income from continuing operations before net gain on real estate sales 3,918 6,797
Net gain on real estate sales
Depreciated -- 7,393
Undepreciated 1,332 2,788
------- -------
Income from continuing operations 5,250 16,978
Discontinued operations:
Income from operating properties sold or held for sale 717 1,160
Gain on disposal of depreciated properties 1,087 --
------- -------
Net income 7,054 18,138
Dividends to preferred shareholders (1,172) (1,172)
------- -------
Net income attributable to common shareholders $ 5,882 $16,966
======= =======
Income per common share - basic:
Income from continuing operations (net of preferred dividends) $ 0.12 $ 0.48
Discontinued operations 0.05 0.04
------- -------
Net income attributable to common shareholders $ 0.17 $ 0.52
======= =======
Income per common share - diluted:
Income from continuing operations (net of preferred dividends) $ 0.12 $ 0.48
Discontinued operations 0.05 0.04
------- -------
Net income attributable to common shareholders $ 0.17 $ 0.52
======= =======
Dividends per common share $ 0.27 $ 0.27
======= =======
JDN REALTY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Nine Months Ended September 30,
2002 2001
-------- --------
(In thousands)
Revenues:
Minimum and percentage rents $ 63,041 $ 62,297
Recoveries from tenants 11,142 10,468
Other revenue 3,430 782
-------- --------
Total revenues 77,613 73,547
Operating expenses:
Operating and maintenance 7,204 7,620
Real estate taxes 7,150 5,556
General and administrative 8,735 8,709
Corporate investigation and legal costs -- 982
Impairment loss 200 1,323
Depreciation and amortization 15,528 15,433
Settlement expense -- 43,785
-------- --------
Total operating expenses 38,817 83,408
-------- --------
Income (loss) from operations 38,796 (9,861)
Other income (expense):
Interest expense, net (24,276) (23,562)
Other income (expense), net (1,238) 203
Equity in net income (loss) of unconsolidated entities 411 (358)
-------- --------
Income (loss) from continuing operations before minority interest in net income of
consolidated subsidiaries and net gain on real estate sales 13,693 (33,578)
Minority interest in net income of consolidated subsidiaries (116) (130)
-------- --------
Income (loss) from continuing operations before net gain on real estate sales 13,577 (33,708)
Net gain on real estate sales
Depreciated -- 16,673
Undepreciated 2,781 5,323
-------- --------
Income (loss) from continuing operations 16,358 (11,712)
Discontinued operations:
Income from operating properties sold or held for sale 2,796 3,480
Gain on disposal of depreciated properties, net of impairment loss 1,615 (320)
Gain on disposal of undepreciated properties 730 --
-------- --------
Income (loss) before extraordinary item and cumulative effect of change in
accounting principle 21,499 (8,552)
Extraordinary item -- (1,608)
-------- --------
Income (loss) before cumulative effect of change in accounting principle 21,499 (10,160)
Cumulative effect of change in accounting principle (172) (280)
-------- --------
Net income (loss) 21,327 (10,440)
Dividends to preferred shareholders (3,516) (3,516)
-------- --------
Net income (loss) attributable to common shareholders $ 17,811 $(13,956)
======== ========
Income (loss) per common share - basic:
Income (loss) from continuing operations (net of preferred dividends) $ 0.37 $ (0.47)
Discontinued operations 0.15 0.10
Extraordinary item -- (0.05)
Cumulative effect of change in accounting principle (0.01) (0.01)
-------- --------
Net income (loss) attributable to common shareholders $ 0.51 $ (0.43)
======== ========
Income (loss) per common share - diluted:
Income (loss) from continuing operations (net of preferred dividends) $ 0.37 $ (0.47)
Discontinued operations 0.15 0.10
Extraordinary item -- (0.05)
Cumulative effect of change in accounting principle (0.01) (0.01)
-------- --------
Net income (loss) attributable to common shareholders $ 0.51 $ (0.43)
======== ========
Dividends per common share $ 0.81 $ 0.87
======== ========
JDN REALTY CORPORATION
FUNDS FROM OPERATIONS CALCULATION
FUNDS AVAILABLE FOR DISTRIBUTION CALCULATION
(Dollars in thousands, except per share data) Three Months Ended September 30, Nine Months Ended September 30,
2002 2001 2002 2001
-------------- -------------- ------------- --------------
FUNDS FROM OPERATIONS:
Net income (loss) attributable to common shareholders $ 5,882 $ 16,966 $ 17,811 $ (13,956)
Depreciation of real estate assets 4,796 5,037 14,760 14,987
Amortization of tenant allowances and tenant
improvements 117 113 338 330
Amortization of deferred leasing costs 254 212 703 623
Impairment losses on operating shopping centers -- 522 -- 818
Net gain on real estate sales -- (7,393) -- (16,673)
Gain on disposal of operating properties, net of
impairment loss (1,087) -- (1,615) --
Extraordinary items -- -- -- 1,608
Change in accounting principle -- -- 172 280
Adjustments related to activities in unconsolidated
entities 231 10 460 44
-------------- -------------- ------------- --------------
FFO $ 10,373 $ 15,467 $ 32,629 $ (11,939)
============== ============== ============= ==============
Weighted average common shares outstanding
(in thousands):
Basic 34,627 32,591 34,600 32,560
============== ============== ============= ==============
Diluted 34,737 32,699 34,738 32,560
============== ============== ============= ==============
FFO per common shares:
Basic $ 0.30 $ 0.47 $ 0.94 $ (0.37)
============== ============== ============= ==============
Diluted $ 0.30 $ 0.47 $ 0.94 $ (0.37)
============== ============== ============= ==============
FUNDS AVAILABLE FOR DISTRIBUTION:
FFO $ 10,373 $ 15,467 $ 32,629 $ (11,939)
Adjustments:
Amortization of deferred loan costs 1,166 1,080 3,443 3,563
Other depreciation and amortization 174 195 518 563
Straight-line rent (353) (252) (1,069) (836)
Tenant allowances, tenant improvements and
leasing commissions (242) (149) (369) (241)
Building improvements (112) (107) (568) (697)
-------------- -------------- ------------- --------------
Funds available for distribution $ 11,006 $ 16,234 $ 34,584 $ (9,587)
============== ============== ============= ==============
Funds available for distribution per common share:
Basic $ 0.32 $ 0.50 $ 1.00 $ (0.29)
============== ============== ============= ==============
Diluted $ 0.32 $ 0.50 $ 1.00 $ (0.29)
============== ============== ============= ==============
Dividends per common share $ 0.27 $ 0.27 $ 0.81 $ 0.87
============== ============== ============= ==============
Payout ratio of FFO:
Basic 90.1% 56.9% 85.9% -237.3%
============== ============== ============= ==============
Diluted 90.4% 57.1% 86.2% -237.3%
============== ============== ============= ==============
Payout ratio of funds available for distribution:
Basic 84.9% 54.2% 81.0% -295.5%
============== ============== ============= ==============
Diluted 85.2% 54.4% 81.4% -295.5%
============== ============== ============= ==============