ORLANDO, Fla., Oct. 8, 2012 /PRNewswire/ -- Parkway Properties, Inc. (NYSE: PKY) announced today that it is under contract to purchase Westshore Corporate Center in Tampa, Florida for a net purchase price of $22.5 million. Parkway also announced that it has completed the purchase of a parking garage, a 21,000 square foot office building and a vacant parcel of developable land all adjacent to Parkway's currently owned Hayden Ferry Lakeside I and II assets in Tempe, Arizona for $18.2 million on behalf of Parkway Properties Office Fund II, L.P. ("Fund II") and has completed the sale of 111 Capital Building in Jackson, Mississippi for $8.3 million.
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James R. Heistand, Parkway's President and Chief Executive Officer, stated, "These two off-market acquisitions support our investment strategy of gaining critical mass in key, target submarkets that we believe will outperform their respective overall markets. Westshore Corporate Center is well located within the Westshore submarket and is one of our third-party managed assets in the former Eola Capital portfolio, allowing Parkway to achieve attractive pricing given the $850,000 credit we will receive at closing. Additionally, we believe the garage, building, and land we acquired in Tempe complement our assets there and present a great opportunity to add long-term value to the Company. Once developed, we believe this asset will provide a premier office location that is in close proximity to high-end retail with views overlooking Tempe Town Lake. This land is permit-ready with the supporting garage already developed, which should give it a competitive advantage over other developable land in the area."
Westshore Corporate Center
As of October 5, 2012, Parkway is under contract to purchase Westshore Corporate Center, a 170,000 square foot office property located in the Westshore submarket of Tampa, Florida, for a net purchase price of $22.5 million. The property was built in 1988, is currently 77.7% leased, and is expected to generate a 2013 estimated cash net operating income yield of approximately 8.5% based on the net purchase price. Parkway will own 100% of the asset and plans to assume the in-place first mortgage secured by the property, which has a current outstanding balance of approximately $14.5 million with a fixed interest rate of 5.8% and a maturity date of June 1, 2015.
Westshore Corporate Center is currently managed by Parkway Realty Services and was formerly part of the Eola Capital LLC ("Eola") portfolio before Eola merged with Parkway in May 2011. Given the agreement formed between Parkway and the former Eola principals in December 2011, 100% of any proceeds received by the former principals were granted to Parkway, and therefore Parkway will only be required to pay a purchase price of $22.5 million, which is net of an $850,000 credit that would have otherwise been paid to the former Eola principals. Closing is expected to occur by the end of the fourth quarter 2012 and is subject to lender approval of the assumption of the existing mortgage secured by the property and other customary closing conditions.
Other Investment Activity
Hayden Ferry Lakeside Garage, Office Building, and Land – On August 31, 2012, Parkway completed the purchase of a 2,500 space parking garage, a 21,000 square foot office building and a vacant parcel of developable land, all adjacent to Parkway's currently owned Hayden Ferry Lakeside I and II assets in Tempe, Arizona for $18.2 million on behalf of Fund II. This purchase provides Parkway with the contiguous ownership of the entire development, providing the Company the ability to lease all of the properties without the risk of a third-party development. The garage provides parking for Hayden Ferry Lakeside I and II, which Fund II acquired in June 2011 and February 2012, respectively, as well as the future development of phase III at the Hayden Ferry Lakeside office park. The office property was built in 2007 and is currently 40.7% leased. This investment is expected to generate a 2013 estimated cash net operating income yield of approximately 5.4% based on the $18.2 million purchase price.
The vacant parcel of land is developable for a commercial office building and is fully entitled, with core and shell building permits already in place for a 270,000 square foot office property. While Parkway does not plan to develop on this land at this point in time, Parkway believes that it is well positioned to benefit from the consolidation of ownership of all the adjacent assets along with the parking structure.
Fund II increased its investment capacity to pursue this purchase, and Parkway's ownership share in this investment is 30%.
111 Capitol Building – Parkway completed the sale of 111 Capitol Building, a 187,000 square foot office property located in the Central Business District of Jackson, Mississippi, for a gross sale price of $8.3 million. The property was 83.1% leased at closing which occurred on September 7, 2012. Parkway received approximately $6.3 million in net proceeds.
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 39 office properties located in nine states with an aggregate of approximately 10.3 million square feet of leasable space at August 8, 2012. Fee-based real estate services are offered through wholly owned subsidiaries of the Company, which in total manage and/or lease approximately 11.9 million square feet for third-party owners at August 8, 2012.
Parkway Properties, Inc.'s press releases and additional information about the Company are 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 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.