Parkway Announces Agreements To Purchase Tampa Fund II Assets And Tempe Office Property

ORLANDO, Fla., March 19, 2013 /PRNewswire/ -- Parkway Properties, Inc. (NYSE: [ PKY ]) announced today that it has entered into a purchase and sale agreement to acquire its co-investor's 70% interest in three office properties located in the Westshore submarket of Tampa, Florida owned by Parkway Properties Office Fund II, L.P. ("Fund II") and has entered into a purchase and sale agreement to acquire a 75% interest in the US Airways Building, a 225,000 square foot office building located in the Tempe submarket of Phoenix, Arizona.

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James R. Heistand , Parkway's President and Chief Executive Officer, stated, "Our Fund II assets in Tampa have performed well since they were acquired by Fund II, and we believe there is still plenty of opportunity for upside in these properties through both occupancy gains and rental rate growth. The US Airways Building gives us further scale in the Tempe submarket with a high-quality core asset that we believe will generate stable cash flows for a number of years. Our investment strategy is focused on gaining a critical mass in targeted submarkets throughout the Sunbelt that we expect to outperform the overall market. Each of these acquisitions fits well within this approach and complements our blended portfolio of core, core-plus and value-add investments."

Tampa Fund II Assets

Parkway is under contract to acquire its co-investor's 70% interest in three office properties located in the Westshore submarket of Tampa, Florida owned by Fund II (the "Tampa Fund II Assets"). The agreed-upon gross valuation of the Tampa Fund II Assets is $139.3 million. Parkway's purchase price for its co-investor's 70% interest in the Tampa Fund II Assets is $97.5 million, which will be funded at closing using approximately $56.8 million of cash (subject to closing prorations and other customary adjustments) and the assumption of $40.7 million of in-place mortgage indebtedness that is secured by the properties, which represents its co-investor's 70% share of the approximately $58.1 million of current in-place mortgage indebtedness. The three assets include Corporate Center IV at International Plaza, Cypress Center I, II and III, and The Pointe. The Tampa Fund II Assets had a combined occupancy of 93.5% as of March 1, 2013 and are expected to generate an initial full-year cash net operating income yield of approximately 8.1%. Closing is expected to occur by the end of the first quarter 2013, subject to customary closing conditions.

US Airways Building

Parkway is under contract to acquire a 75% interest in the US Airways Building in the Tempe submarket of Phoenix, Arizona. The agreed-upon gross valuation of the US Airways Building is $56.0 million. Parkway's purchase price for the approximate 75% interest is $41.8 million. US Airways will retain the remaining 25% interest in the property. The US Airways Building was built in 1999 and is LEED^® Gold Certified. It is located adjacent to Parkway's Hayden Ferry Lakeside and Tempe Gateway assets and shares a parking garage with Tempe Gateway. The property is 100% leased to US Airways through April 2024 with a current in place net rent of $17.50 per square foot. US Airways has the option to terminate its lease on December 31, 2016 or December 31, 2021 with 12 months prior written notice. The property is expected to generate an initial full-year cash net operating income yield of approximately 7.0%. Closing is expected to occur by the end of the second quarter 2013, subject to customary closing conditions and Parkway's satisfactory completion of due diligence.

About Parkway Properties

Parkway Properties, Inc., a member of the S&P Small Cap 600 Index, is a self-administered real estate investment trust specializing in the ownership of quality office properties in higher-growth submarkets in the Sunbelt region of the United States. Parkway owns or has an interest in 43 office properties located in nine states with an aggregate of approximately 11.9 million square feet of leasable space at January 1, 2013. Fee-based real estate services are offered through wholly owned subsidiaries of the Company, which in total manage and/or lease approximately 10.8 million square feet for third-party owners at January 1, 2013. Additional information about Parkway is available on the Company's website at [ www.pky.com ].

Forward Looking Statement

Certain statements in this press release that are not in the present or past tense or that discuss the Company's expectations (including any use of the words "anticipate," "assume," "believe," "estimate," "expect," "forecast," "guidance," "intend," "may," "might," "project", "should" or similar expressions) are forward-looking statements within the meaning of the federal securities laws and as such are based upon the Company's current beliefs as to the outcome and timing of future events. There can be no assurance that actual future developments affecting the Company will be those anticipated by the Company. Examples of forward-looking statements include projected net operating income, cap rates, internal rates of return, future dividend payment rates, forecasts of FFO accretion, projected capital improvements, expected sources of financing, expectations as to the timing of closing of acquisitions, dispositions and other potential transactions, estimates of market rental rates, the expected operating performance of anticipated near-term acquisitions and descriptions relating to these expectations. These forward-looking statements involve risks and uncertainties (some of which are beyond the control of the Company) and are subject to change based upon various factors, including but not limited to the following risks and uncertainties: changes in the real estate industry and in performance of the financial markets; the demand for and market acceptance of the Company's properties for rental purposes; the ability of the Company to enter into new leases or renew leases on favorable terms; the amount and growth of the Company's expenses; tenant financial difficulties and general economic conditions, including interest rates, as well as economic conditions in those areas where the Company owns properties; risks associated with joint venture partners; risks associated with the ownership and development of real property; termination of property management contracts; the bankruptcy or insolvency of companies for which Parkway provides property management services or the sale of these properties; the outcome of claims and litigation involving or affecting the Company; the ability to satisfy conditions necessary to close pending transactions and the ability to successfully integrate pending transactions; applicable regulatory changes; and other risks and uncertainties detailed from time to time in the Company's SEC filings. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, the Company's business, financial condition, liquidity, cash flows and financial results could differ materially from those expressed in the Company's forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for us to predict the occurrence of those matters or the manner in which they may affect us. The Company does not undertake to update forward-looking statements except as may be required by law.

Contact:
Thomas E. Blalock
Vice President of Investor Relations
(407) 650-0593

SOURCE Parkway Properties, Inc.

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Parkway Announces Agreements To Purchase Tampa Fund II Assets And Tempe Office Property