Parkway Reports Third Quarter 2012 Results

                  Parkway Reports Third Quarter 2012 Results

PR Newswire

ORLANDO, Fla., Nov. 1, 2012

ORLANDO,Fla., Nov. 1, 2012 /PRNewswire/ --Parkway Properties, Inc. (NYSE:
PKY) today announced results for its third quarter ended September 30, 2012.

(Logo: http://photos.prnewswire.com/prnh/20030513/PARKLOGO )

Highlights for Third Quarter 2012 and Recent Events

  oFFO and recurring FFO of $0.36 per share
  oFAD of $0.27 per share
  oIncreased occupancy to 89.6%, with portfolio 90.4% leased
  oPlaced $125 million unsecured term loan and exercised $25 million
    accordion on credit facility
  oCompleted or under contract to complete $140.6 million in new investments
    and disposed of $19.7 million

James R. Heistand, President and Chief Executive Officer of Parkway commented,
"Our third quarter was marked by the ongoing improvement in our operations as
we continue to transform and enhance our portfolio. Occupancy improved
another 220 basis points during the third quarter to 89.6%, and we are now 570
basis points higher in occupancy than the end of last year. Our same-store
recurring cash NOI for the third quarter increased 8.0% from the prior year,
and our NOI margins showed continued improvement. We have also recently
announced several off-market investments that will advance our strategy of
gaining critical mass in our target submarkets while providing an opportunity
to drive additional value through leasing. With minimal near-term expirations
and a transformed portfolio of better assets in higher growth submarkets, we
are well positioned for continued, long-term improvement in our operational
performance, occupancy, and cash flow."

During the third quarter 2012, funds from operations ("FFO") available to
common shareholders was $13.2 million, or $0.36 per diluted share, and
recurring FFO was $13.2 million, or $0.36 per diluted share. Funds available
for distribution ("FAD") during the third quarter 2012 was $9.9 million, or
$0.27 per diluted share. A reconciliation of FFO, recurring FFO and FAD to
net income is included on page nine. Net income, FFO, recurring FFO, and FAD
for thethird quarter 2012 and year-to-date, as well as a comparison to the
prior year periods as follows:

(Amounts in thousands, except per share)
             Three Months Ended September 30        Nine Months Ended September 30
             2012             2011                  2012              2011
                      Per                Per                 Per                 Per
             Amount           Amount                Amount   Share    Amount
                      Share              Share                                   Share
Net Income   $ 2,129  $ 0.06  $ (53,028) $ (2.46)   $ 9,607  $ 0.34   $ (69,852) $  (3.24)
(Loss)
Funds From   $ 13,204 $ 0.36  $ 16,764   $ 0.78     $ 31,283 $ 1.11   $ 31,115   $  1.44
Operations
Recurring
Funds From   $ 13,220 $ 0.36  $ 12,249   $ 0.57     $ 32,809 $ 1.16   $ 37,673   $  1.75
Operations
Funds
Available    $ 9,890  $ 0.27  $ 5,707    $ 0.26    $  16,169 $ 0.57  $  15,122   $  0.70
for
Distribution
Weighted
Average        36,814           21,583                28,305            21,572
Diluted
Shares/Units

Operational Results

Occupancy increased to 89.6% at the end of the third quarter 2012, compared to
87.4% at the end of the prior quarter. Including leases that have been signed
but have yet to commence,the Company'sleased percentage at the end of the
third quarter 2012 was 90.4%.

Parkway'sshare of recurring same-store net operating income ("NOI") was $15.4
million on a GAAP basis during the third quarter 2012, which was an increase
of $769,000, or 5.2%, as compared to the same period of the prior year. On a
cash basis,the Company'sshare of recurring same-store NOI was $15.3 million
during the third quarter 2012, which was an increase of $1.1 million, or 8.0%,
as compared to the same period of the prior year.

The Company'sportfolio GAAP NOI margin was 61.4% during the third quarter
2012, as compared to 56.3% during the same period of the prior year.

Leasing Activity

During the third quarter 2012,Parkway signed a total of 439,000 square feet
of leases at an average rent per square foot of $21.78 and at an average cost
of $3.68 per square foot per year.

New & Expansion Leasing – During the third quarter 2012,the Companysigned
124,000 square feet of new leases at an average rent per square foot of $19.73
and at an average cost of $3.78 per square foot per year. Expansion leases
during the quarter totaled 62,000 square feet at an average rent per square
foot of $25.49 and at an average cost of $5.53 per square foot per year.

Renewal Leasing – Customer retention during the third quarter 2012 was
76.0%.The Companysigned 253,000 square feet of renewal leases at an average
rent per square foot of $21.88, representing an 8.8% rate decrease from the
expiring rate. The average cost of renewal leases was $2.75 per square foot
per year.

Significant operational and leasing statistics for the quarter as compared to
prior quarters is as follows:

(Amounts in thousands, except per square foot data)
                              For the Three Months Ended
                              09/30/12  06/30/12  03/31/12  12/31/11  09/30/11
Ending Occupancy              89.6%     87.4%     85.9%     83.9%     84.4%
Customer Retention            76.0%     63.2%     46.8%     47.1%     45.4%
Square Footage of Total       439       394       368       526       572
Leases Signed
Average Revenue Per Square    $21.78    $19.60    $22.55    $23.04    $20.93
Foot of Total Leases Signed
Average Cost Per Square Foot
Per Year of Total Leases      $3.68     $2.93     $4.72     $4.37     $4.18
Signed



Investment Activity

On August 31, 2012,the Companycompleted 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 Hayden Ferry Lakeside I and II assets in
Tempe, Arizona for $18.2 million on behalf of Parkway Properties Office Fund
II, L. P. Parkway's equity contribution of $5.5 million was funded using the
Company's revolving credit facility.

On September 7, 2012,the Companycompleted 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. Parkway
received approximately $6.3 million in net proceeds, which was used to reduce
amounts outstanding under the Company's revolving credit facility.

On October 5, 2012,the Companyentered into a purchase and sale agreement to
acquire 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 and is currently 77.7%
leased. 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 May 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 approximately $22.5 million. 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. Parkway will fund the equity using excess cash and borrowings
from its revolving credit facility.

On October 31, 2012, the Company entered into a purchase and sale agreement to
acquire NASCAR Plaza, a 390,000 square foot office tower located in the
central business district of Charlotte, North Carolina, for a gross purchase
price of approximately $100 million. NASCAR Plaza was built in 2009 and is a
20-story, LEED^® Silver certified office tower. The property is currently 88%
leased with an average in place rent per square foot of $25.61. Parkway will
own 100% of the asset and plans to assume the first mortgage secured by the
property, which has a current outstanding balance of approximately $42.3
million with acurrent interest rate of 4.7% and a maturity date of March 30,
2016; however, Parkway intends to amend and restate the loan upon assumption
to current market terms. Closing is expected to occur by the end of the
fourth quarter 2012 and is subject to customary closing conditions. Parkway
will fund the equity using excess cash and borrowings from its revolving
credit facility.

On October 23, 2012, Parkway completed the sale of Sugar Grove, a 124,000
square foot office property located in Houston, Texas, for a gross sale price
of $11.4 million. Parkway received approximately $10.0 million in net
proceeds, whichwill be used to fund future acquisitions.

Capital Structure

At September 30, 2012, the Company did not have any amounts outstanding under
its revolving credit facility, and held $53.6 million in cash and cash
equivalents, of which $30.1 million of cash and cash equivalents was Parkway's
share. Parkway's share of secured debt totaled $276.6 million at September
30, 2012.

Additionally, the Company closed a $125 million unsecured term loan on
September 27, 2012. The term loan has a maturity date of September 27, 2017,
and has an accordion feature that allows for an increase in the size of the
term loan to as much as $250 million. Interest on the term loan is based on
LIBOR plus an applicable margin, initially 1.5%. On September 28, 2012, the
Company executed two floating-to-fixed interest rate swaps totaling $125
million, locking LIBOR at 0.7% for five years, which result in an initial
all-in interest rate of 2.2%. The term loan will have substantially the same
operating and financial covenants as required by the Company's current
unsecured revolving credit facility. The term loan had an outstanding balance
of $125 million at September 30, 2012.

On October 10, 2012, the Company exercised $25 million of the $160 million
accordion feature of its existing unsecured revolving credit facilitythat
matures in March 2016 and increased capacity from $190 million to $215 million
with the additional borrowing capacity being provided by U.S. Bank National
Association, bringing the total number of participating lenders to nine. The
interest rate on the credit facility is currently LIBOR plus 160 basis
points. Other terms and conditions under the credit facility remain
unchanged.

At September 30, 2012, the Company's net debt to EBITDA multiple was 4.5x,
using the quarter's annualized EBITDA after adjusting for the impact of new
investments and dispositions completed for the period, as compared to 4.6x at
June 30, 2012, and 6.1x at September 30, 2011. At September 30, 2012, the
Company's net debt plus preferred to EBITDA multiple was 6.1x, as compared to
6.2x at June 30, 2012, and 7.3x at September 30, 2011.

Common Dividend

The Company's previously announced third quarter cash dividend of $0.1125 per
share, which represents an annualized dividend of $0.45 per share, was paid on
September 26, 2012 to shareholders of record as of September 12, 2012.

2012 Outlook

The Company is reiterating its previously disclosed outlook range for the
remainder of 2012. The reconciliation of projected EPS to projected FFO per
diluted share is as follows: 

Outlook for 2012                                  Range
Fully diluted EPS                                 ($0.11-$0.05)
Parkway's share of depreciation and amortization  $1.51-$1.51
Parkway's share of gain on sale of real estate    ($0.16-$0.16)
Reported FFO per diluted share                    $1.24-$1.30



Webcast and Conference Call

The Company will conduct its third quarter conference call on Thursday,
November 1, 2012 at 5:00 p.m. Eastern Time. The earnings release and
supplemental information package will be posted to the Company's website prior
to the conference call.

To participate in Parkway's third quarter earnings conference call, please
dial 877-941-8601, or 1-480-629-9762 for international participants, at least
five minutes prior to the scheduled start time. A live audio webcast will
also be available on the "Corporate" section of the Company's website
(www.pky.com). A taped replay of the call can be accessed 24 hours a day
through November 8, 2012, by dialing 877-870-5176, or 1-858-384-5517 for
international callers, and using the passcode 4573766. An audio replay will
also be archived and indexed on the "Corporate" section of the Company's
website.

Additional information on Parkway Properties, Inc., including an archive of
corporate press releases and conference calls, is available on the Company's
website. The Company's third quarter 2012 Supplemental Operating and
Financial Data, which includes a reconciliation of Non-GAAP financial
measures, is available on the Company's website.

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 38 office properties
located in nine states with an aggregate of approximately 10.0 million square
feet of leasable space at November 1, 2012. Fee-based real estate services
are offered through wholly-owned subsidiaries of the Company, which in total
manage and/or lease approximately 11.6 million square feet for third-party
owners at November 1, 2012.

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.

Company's Use of Non-GAAP Financial Measures

FFO, FAD, NOI and EBITDA, including related per share amounts, are used by
management, investors and industry analysts as supplemental measures of
operating performance of equity REITs and should be evaluated along with GAAP
net income and income per diluted share (the most directly comparable GAAP
measures), as well as cash flow from operating activities, investing
activities and financing activities, in evaluating the operating performance
of the Company. Management believes that FFO, FAD, NOI and EBITDA are helpful
to investors as supplemental performance measures because these measures
exclude the effect of depreciation, amortization and gains or losses from
sales of real estate, all of which are based on historical costs which
implicitly assumes that the value of real estate diminishes predictably over
time. Since real estate values instead have historically risen or fallen with
market conditions, these non-GAAP measures can facilitate comparisons of
operating performance between periods and among other equity REITs. Non-GAAP
measures have limitations in that they do not reflect all of the amounts
associated with the Company's results of operations determined in accordance
with GAAP. FFO, FAD, NOI and EBITDA do not represent cash generated from
operating activities in accordance with GAAP and are not necessarily
indicative of cash available to fund cash needs as disclosed in the Company's
Consolidated Statements of Cash Flows. FFO, FAD, NOI and EBITDA should not be
considered as an alternative to net income as an indicator of the Company's
operating performance or as an alternative to cash flows as a measure of
liquidity. The Company's calculation of these non-GAAP measures may not be
comparable to similarly titled measures reported by other companies.

FFO – Parkway computes FFO in accordance with standards established by the
National Association of Real Estate Investment Trusts ("NAREIT"), which may
not be comparable to FFO reported by other REITs that do not define the term
in accordance with the current NAREIT definition. FFO is defined as net
income, computed in accordance with GAAP, reduced by preferred dividends,
excluding gains or losses on depreciable real estate, plus real estate related
depreciation and amortization. Adjustments for Parkway's share of
partnerships and joint ventures are included in the computation of FFO on the
same basis. On October 31, 2011, NAREIT issued updated guidance on reporting
FFO such that impairment losses on depreciable real estate should be excluded
from the computation of FFO for current and prior periods presented.

Recurring FFO – In addition to FFO, Parkway also discloses recurring FFO,
which considers Parkway's share of adjustments for non-recurring lease
termination fees, gains and losses on extinguishment of debt, gains and
losses, acquisition costs, fair value adjustments or other unusual items.
Although this is a non-GAAP measure that differs from NAREIT's definition of
FFO, the Company believes it provides a meaningful presentation of operating
performance.

FAD – There is not a generally accepted definition established for FAD.
Therefore, the Company's measure of FAD may not be comparable to FAD reported
by other REITs. Parkway defines FAD as FFO, excluding the amortization of
share-based compensation, amortization of above and below market leases,
straight line rent adjustments, gains and losses, acquisition costs, fair
value adjustments, gain or loss on extinguishment of debt, amortization of
loan costs, non-cash charges and reduced by recurring non-revenue enhancing
capital expenditures for building improvements, tenant improvements and
leasing costs. Adjustments for Parkway's share of partnerships and joint
ventures are included in the computation of FAD on the same basis.

EBITDA – Parkway defines EBITDA, a non-GAAP financial measure, as net income
before interest expense, amortization of financing costs, amortization of
share-based compensation, income taxes, depreciation, amortization,
acquisition costs, gains and losses on early extinguishment of debt, other
gains and losses and fair value adjustments. Adjustments for Parkway's share
of partnerships and joint ventures are included in the computation of EBITDA
on the same basis. EBITDA, as calculated by us, is not comparable to EBITDA
reported by other REITs that do not define EBITDA exactly as we do. EBITDA
does not represent cash generated from operating activities in accordance with
GAAP, and should not be considered an alternative to operating income or net
income as an indicator of performance or as an alternative to cash flows from
operating activities as an indicator of liquidity.

NOI, Recurring NOI, Same-Store NOI and Recurring Same-Store NOI – NOI includes
income from real estate operations less property operating expenses (before
interest expense and depreciation and amortization). In addition to NOI,
Parkway discloses recurring NOI, which considers adjustments for non-recurring
lease termination fees or other unusual items. The Company's disclosure of
same-store NOI and recurring same-store NOI includes those properties that
were owned during the entire current and prior year reporting periods and
excludes properties classified as discontinued operations.

Contact:

Parkway Properties, Inc.
Thomas E. Blalock
Vice President of Investor Relations
Bank of America Center
390 N. Orange Ave., Suite 2400
Orlando, FL 32801
(407) 650-0593
www.pky.com





PARKWAY PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
                                                     September 30  December 31
                                                     2012          2011
                                                     (Unaudited)
Assets
Real estate related investments:
Office and parking properties                        $         $    
                                                     1,442,759     1,084,060
Accumulated depreciation                             (190,154)     (162,123)
                                                     1,252,605     921,937
Land available for sale     250           250
Mortgage loans                                       -             1,500
                                                     1,252,855     923,687
Receivables and other assets:
Rents and fees receivable, net                       3,357         3,189
Straight line rents receivable                       31,585        19,183
Other receivables                                    2,886         14,905
Unamortized lease costs                              50,027        41,518
Unamortized loan costs                               7,175         5,160
Escrows and other deposits                           7,450         16,975
Prepaid assets                                       3,297         4,581
Investment in preferred interest                     3,500         3,500
Other assets                                         597           416
Intangible assets, net                               114,018       95,628
Assets held for sale                                 7,031         382,789
Management contracts, net                            47,010        49,597
Cash and cash equivalents                            53,556        75,183
Total assets                                         $         $    
                                                     1,584,344     1,636,311
Liabilities
Notes payable to banks                               $        $     
                                                     125,000      132,322
Mortgage notes payable                      549,429       498,012
Accounts payable and other liabilities:
Corporate payables                                   1,507         1,136
Contingent consideration                             -             18,000
Deferred tax liability - non-current                 13,627        14,344
Dividends payable                                    -             2,711
Accrued payroll                                      2,276         1,985
Valuation allowance on interest rate swaps           15,348        11,134
Interest payable                                     2,431         2,593
Property payables:
Accrued expenses and accounts payable                11,752        14,241
Accrued property taxes                               12,878        6,465
Prepaid rents                                        7,486         8,393
Deferred revenue                                     588           447
Security deposits                                    4,064         3,515
Unamortized below market leases                      7,612         5,043
Other liabilities                                    299           334
Mortgage and other liabilities related to assets     361           285,599
held for sale
Total liabilities                                    754,658       1,006,274
Equity
Parkway Properties, Inc. stockholders' equity:
8.00% Series D Preferred stock, $.001 par value,
5,421,296
shares authorized, issued and outstanding in 2012    128,942       128,942
and 2011
Common stock, $.001 par value, 98,578,704 and
64,578,704 shares
authorized in 2012 and 2011, respectively, and
41,191,461
and 21,995,536 shares issued and outstanding in 2012
and
2011, respectively                                   41            22
Common stock held in trust, at cost, 9,964 and 8,368
shares
in 2012 and 2011, respectively                       (186)         (220)
Additional paid-in capital            719,031       517,309
Accumulated other comprehensive loss                 (4,711)       (3,340)
Accumulated deficit                     (278,923)     (271,104)
 Total Parkway Properties, Inc. stockholders'     564,194       371,609
equity
Noncontrolling interests                             265,492       258,428
 Total equity                                     829,686       630,037
Total liabilities and equity                         $         $    
                                                     1,584,344     1,636,311



PARKWAY PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
                        Three Months Ended          Nine Months Ended
                        September 30                September 30
                        2012         2011           2012          2011
                        (Unaudited)                 (Unaudited)
Revenues
Income from office and  $       $        $        $     
parking properties        54,998    42,245        149,995      104,739
Management company      4,591        6,120          14,996        9,990
income
Total revenues          59,589       48,365         164,991       114,729
Expenses and other
Property operating      21,257       18,471         58,803        43,285
expense
Depreciation and        21,766       17,471         59,046        38,342
amortization
Impairment loss on
mortgage loan           -            9,235          -             9,235
receivable
Change in fair value of
contingent              -            (12,000)       216           (12,000)
consideration
Management company      4,205        4,242          12,966        8,196
expenses
General and             3,749        4,104          11,266        11,569
administrative
Acquisition costs       159          25             1,491         16,754
Total expenses and      51,136       41,548         143,788       115,381
other
Operating income (loss) 8,453        6,817          21,203        (652)
Other income and
expenses
Interest and other      64           87             205           849
income
Equity in earnings of
unconsolidated joint    -            5              -             101
ventures
Gain on sale of real    48           743            48            743
estate
Recovery of losses on
mortgage loan           500          -              500           -
receivable
Interest expense        (8,521)      (8,876)        (26,301)      (22,953)
Income (loss) before    544          (1,224)        (4,345)       (21,912)
income taxes
Income tax benefit      7            174            (143)         (50)
(expense)
Income (loss) from      551          (1,050)        (4,488)       (21,962)
continuing operations
Discontinued
operations:
Income (loss) from      (330)        (131,800)      2,538         (138,571)
discontinued operations
Gain on sale of real
estate from             995          2,275          9,767         6,567
discontinued operations
Total discontinued      665          (129,525)      12,305        (132,004)
operations
Net income (loss)       1,216        (130,575)      7,817         (153,966)
Net loss attributable
to noncontrolling       896          77,546         1,789         84,112
interests - real estate
partnerships
Net loss attributable
to noncontrolling       17           1              1             2
interests - unit
holders
Net income (loss) for
Parkway Properties,     2,129        (53,028)       9,607         (69,852)
Inc.
Dividends on preferred  (2,711)      (2,710)        (8,132)       (7,341)
stock
Dividends on
convertible preferred   -            -              (1,011)       -
stock
Net income (loss)       $       $        $        $     
attributable to common            (55,738)          464    (77,193)
stockholders            (582)
Net income (loss) per
common share
attributable to Parkway
Properties, Inc.:
Basic:
Loss from continuing    $     
operations attributable           $        $        $     
to Parkway Properties,  (0.02)         (0.02)        (0.28)     (1.07)
Inc.
Discontinued operations -            (2.57)         0.30          (2.52)
Basic net income (loss) $       $        $        $     
attributable to Parkway             (2.59)        0.02      (3.59)
Properties, Inc.        (0.02)
Diluted:
Loss from continuing    $     
operations attributable           $        $        $     
to Parkway Properties,  (0.02)         (0.02)        (0.28)     (1.07)
Inc.
Discontinued operations -            (2.57)         0.30          (2.52)
Diluted net income      $     
(loss) attributable to            $        $        $     
Parkway Properties,     (0.02)         (2.59)        0.02      (3.59)
Inc.
Weighted average shares
outstanding:
Basic                   36,487       21,502         27,199        21,489
Diluted                 36,487       21,502         27,199        21,489
Amounts attributable to
Parkway Properties,
Inc. common
stockholders:
Loss from continuing    $     
operations attributable           $        $        $     
to Parkway Properties,  (702)         (523)       (7,622)    (23,029)
Inc.
Discontinued operations 120          (55,215)       8,086         (54,164)
Net income (loss)       $       $        $        $     
attributable to common            (55,738)          464    (77,193)
stockholders            (582)



PARKWAY PROPERTIES, INC.
RECONCILIATION OF FUNDS FROM OPERATIONS AND FUNDS AVAILABLE
FOR DISTRIBUTION TO NET INCOME AT PARKWAY'S SHARE
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 31, 2012
(In thousands, except per share data)
                          Three Months Ended          Nine Months Ended
                          September 30                September 30
                          2012         2011           2012         2011
                          (Unaudited)                 (Unaudited)
Net Income (Loss) for     $       $          $       $    
Parkway Properties, Inc.  2,129       (53,028)      9,607       (69,852)
Adjustments to Net Income
(Loss) for Parkway
Properties, Inc.:
Preferred Dividends       (2,711)      (2,710)        (8,132)      (7,341)
Convertible Preferred     -            -              (1,011)      -
Dividends
Depreciation and          13,783       20,754         35,734       59,153
Amortization
Noncontrolling Interest - (17)         (1)            (1)          (2)
Unit Holders
Impairment Loss on Real   -            54,767         -            56,467
Estate
(Gain) Loss on Sale of    20           (3,018)        (4,914)      (7,310)
Real Estate
FFO Available to Common   $       $         $       $     
Stockholders              13,204       16,764         31,283       31,115
Adjustments to Derive
Recurring FFO:
(Gain) Loss on            (548)        9,235          (548)        9,235
Non-Depreciable Assets
Change in Fair Value of   -            (12,000)       216          (12,000)
Contingent Consideration
Non-Recurring Lease       (716)        (1,796)        (1,947)      (5,554)
Termination Fee Income
(Gain) Loss on Early      117          -              896          (302)
Extinguishment of Debt
Non-Cash Adjustment for   -            -              (215)        -
Interest Rate Swap
Acquisition Costs         88           (29)           846          15,060
Expenses Related to       -            75             -            119
Litigation
Realignment Expenses      1,075        -              2,278        -
Recurring FFO             $       $         $       $     
                          13,220       12,249         32,809       37,673
Funds Available for
Distribution
FFO Available to Common   $       $         $       $     
Stockholders             13,204       16,764         31,283       31,115
Add (Deduct) :
Straight-line Rents       (1,290)      (1,189)        (7,168)      (4,212)
Amortization of           486          (82)           1,136        (674)
Above/Below Market Leases
Amortization of           167          501            371          1,389
Share-Based Compensation
Acquisition Costs         88           (29)           846          15,060
Amortization of Loan      347          435            1,191        1,267
Costs
Non-Cash Adjustment for   -            -              (215)        -
Interest Rate Swap
(Gain) Loss on Early      117          -              896          (302)
Extinguishment of Debt
(Gain) Loss on            (548)        9,235          (548)        9,235
Non-Depreciable Assets
Change in Fair Value of   -            (12,000)       216          (12,000)
Contingent Consideration
Recurring Capital
Expenditures:
Building Improvements     (665)        (2,428)        (1,678)      (6,064)
Tenant Improvements - New (1,111)      (2,778)        (4,994)      (8,243)
Leases
Tenant Improvements -     (438)        (1,319)        (1,951)      (4,153)
Renewal Leases
Leasing Costs - New       (85)         (934)          (1,444)      (4,154)
Leases
Leasing Costs - Renewal   (382)        (469)          (1,772)      (3,142)
Leases
Total Recurring Capital   (2,681)      (7,928)        (11,839)     (25,756)
Expenditures
Funds Available for       $       $         $       $     
Distribution              9,890       5,707         16,169       15,122
Diluted Per Common
Share/Unit Information
(**)
FFO Per Share            $       $        $       $     
                           0.36      0.78           1.11       1.44
Recurring FFO Per Share   $       $        $       $     
                           0.36      0.57           1.16       1.75
FAD Per Share             $       $        $       $     
                           0.27      0.26           0.57       0.70
Dividends Paid            $       $         $       $     
                          0.1125       0.075         0.2625       0.225
Dividend Payout Ratio for 31.4%        9.7%           23.8%        15.6%
FFO
Dividend Payout Ratio for 31.3%        13.2%          22.6%        12.9%
Recurring FFO
Dividend Payout Ratio for 41.9%        28.3%          46.0%        32.1%
FAD
Other Supplemental
Information
Recurring Capital         $       $         $       $     
Expenditures             2,681       7,928         11,839       25,756
Upgrades on Acquisitions  1,828        804            4,815        2,598
Major Renovations         -            348            -            461
Total Real Estate         $       $         $       $     
Improvements and Leasing  4,509       9,080         16,654       28,815
Costs
Gain (Loss) on            $       $         $       $     
Non-Depreciable Assets -    500      (9,235)          500      (9,235)
Mortgage Loan
Gain on Non-Depreciable   48           -              48           -
Assets - Land
Gain (Loss) on            $       $         $       $     
Non-Depreciable Assets      548      (9,235)          548      (9,235)
Included in FFO
**Information for Diluted
Computations:
Basic Common Shares/Units 36,795       21,504         27,909       21,491
Outstanding
Dilutive Effect of Other  19           79             396          81
Share Equivalents
Diluted Weighted Average  36,814       21,583         28,305       21,572
Shares/Units Outstanding





PARKWAY PROPERTIES, INC.
EBITDA, COVERAGE RATIOS AND CAPITALIZATION INFORMATION
(In thousands, except per share, percentage and muliple data)
                  09/30/12     06/30/12     03/31/12    12/31/11    09/30/11
Net income (loss)                                                   $
for Parkway       $ 2,129      $ 2,773      $ 4,705     $ (57,052)  (53,028)
Properties, Inc.
Adjustments at
Parkway's share
to net income
(loss) for
Parkway
Properties, Inc.:
Interest expense  4,661        5,035        6,206       9,396       9,525
Amortization of   347          402          442         444         435
financing costs
Non-cash
adjustment for    -            (77)         (138)       2,338       -
interest rate
swap
(Gain) loss on
early             117          491          288         (8,325)     -
extinguishment of
debt
Acquisition costs 88           510          248         387         (29)
Depreciation and  13,783       11,566       10,385      16,136      20,754
amortization
Amortization of
share-based       167          47           157         (48)        501
compensation
Gain on sale of
real estate and   (528)        (2,601)      (2,333)     (3,200)     (3,018)
other assets
Non-cash losses   -            -            -           63,779      64,002
Change in fair
value of          -            -            216         (1,000)     (12,000)
contingent
consideration
Tax expense       (7)          (11)         161         6           (174)
(benefit)
EBITDA            $ 20,757     $ 18,135     $ 20,337    $ 22,861    $ 26,968
Interest Coverage 4.5          3.6          3.3         2.4         2.8
Ratio
Fixed Charge
Coverage Ratio    2.3          2.0          2.0         1.6         1.9
(1)
Modified Fixed
Charge Coverage   2.8          2.3          2.3         1.9         2.2
Ratio (1)
Capitalization
information
Mortgage notes    $ 549,429    $ 551,564    $ 553,674   $ 498,012   $ 978,981
payable
Mortgage notes
payable-held for  -            29,597       90,710      254,401     -
sale
Notes payable to  125,000      111,267      48,000      132,322     113,852
banks
Adjustments for
unconsolidated
joint ventures:
Mortgage notes    -            -            -           2,440       2,449
payable
Adjustments for
noncontrolling
interest in real
estate
partnerships:
Mortgage notes    (272,880)    (295,740)    (320,107)   (280,739)   (433,592)
payable
Parkway's share   401,549      396,688      372,277     606,436     661,690
of total debt
Less: Parkway's   (30,096)     (12,669)     (12,522)    (25,848)    (14,165)
share of cash
Parkway's share   371,453      384,019      359,755     580,588     647,525
of net debt
Series D
Preferred stock   135,532      135,532      135,532     135,532     135,532
(liquidation
value)
Parkway's share
of net debt plus  $ 506,985    $ 519,551    $ 495,287   $ 716,120   $ 783,057
preferred stock
(1)
Shares of common
stock and         41,499       28,037       23,758      21,997      22,120
operating units
outstanding
Stock price per
share at period   $ 13.37      $ 11.44      $ 10.48     $ 9.86      $ 11.01
end
Market value of   $ 554,842    $ 320,743    $ 248,984   $ 216,890   $ 243,541
common equity
Series D
preferred stock   135,532      135,532      135,532     135,532     135,532
(liquidation
value)
Series E
convertible
preferred stock   -            151,700      -           -           -
(liquidation
value)
Total market
capitalization    $            $ 991,994    $ 744,271   $ 933,010   $
(including net    1,061,827                                         1,026,598
debt)
Net debt as a %
of market         35.0%        38.7%        48.3%       62.2%       63.1%
capitalization
EBITDA -          $ 83,028     $ 72,540     $ 81,348    $ 91,444    $ 107,872
annualized
Adjustment to
annualize         (141)        11,824       (5,132)     2,592       (1,050)
investment
activities (2)
EBITDA - adjusted $ 82,887     $ 84,364     $ 76,216    $ 94,036    $ 106,822
annualized
Net debt to       4.5          4.6          4.7         6.2         6.1
EBITDA multiple
Net debt plus
preferred to      6.1          6.2          6.5         7.6         7.3
EBITDA multiple
(1) Impact of Series E Cumulative Convertible Preferred Stock is not included
in the fixed charge coverage ratio, modified fixed charge coverage ratio or
Parkway's share of net debt plus preferred at June 30, 2012, as the shares
were converted to common stock on July 31, 2012. Had the Series E Cumulative
Convertible Preferred Stock been included in these ratios then the fixed
charge coverage ratio, modified fixed charge coverage ratio and Parkway's
share of net debt plus preferred for the second quarter of 2012 would have
been 1.8, 2.1 and 8.3 times, respectively.
(2) Adjustment to annualized EBITDA represents the implied annualized impact
of any acquisition or disposition activity for the period.





PARKWAY PROPERTIES, INC.
NET OPERATING INCOME FROM OFFICE AND PARKING PROPERTIES
THREE MONTHS ENDED SEPTEMBER 30, 2012
(In thousands, except number of properties)
                                                                   Average
                                                  Net Operating    Occupancy
                                                  Income
                          Number of  Percentage
                   Square Properties of Portfolio 2012    2011     2012  2011
                   Feet              (1)
Same-store
properties:
Wholly-owned      4,851  24         37.00%       $    $     87.2% 86.0%
                                                  12,485  11,604
Fund II            3,610  10         39.39%       13,291  12,182   88.7% 86.0%
Total same-store   8,461  34         76.39%       $    $     87.8% 86.0%
properties                                        25,776  23,786
Net operating
income from all
office and parking 10,131 39         100.00%      $    $   
properties                                        33,741  23,823
(1) Percentage of portfolio based on 2012 net operating income.



The following table is a reconciliation of net income (loss) to SSNOI and
Recurring SSNOI:
                                      Three Months Ended   Nine Months Ended
                                      September 30         September 30
                                      2012      2011       2012      2011
Net income (loss) for Parkway         $     $        $     $  
Properties, Inc.                      2,129     (53,028)  9,607     (69,852)
Add (deduct):
Interest expense                      8,521     8,876      26,301    22,953
Depreciation and amortization         21,766    17,471     59,046    38,342
Management company expenses           4,205     4,242      12,966    8,196
Income tax (benefit) expense          (7)       (174)      143       50
General and administrative expenses   3,749     4,104      11,266    11,569
Acquisition costs                     159       25         1,491     16,754
Equity in earnings of unconsolidated  -         (5)        -         (101)
joint ventures
Gain on sale of real estate and
recovery of losses on mortgage loan   (548)     (743)      (548)     (743)
receivable
Non-cash impairment loss on mortgage  -         9,235      -         9,235
loan receivable
Change in fair value of contingent    -         (12,000)   216       (12,000)
consideration
Net loss attributable to
noncontrolling interests - real       (896)     (77,546)   (1,789)   (84,112)
estate partnerships
Net loss attributable to
noncontrolling interests - unit      (17)      (1)        (1)       (2)
holders
(Income) loss from discontinued       330       131,800    (2,538)   138,571
operations
Gain on sale of real estate from      (995)     (2,275)    (9,767)   (6,567)
discontinued operations
Management company income             (4,591)   (6,120)    (14,996)  (9,990)
Interest and other income            (64)      (87)       (205)     (849)
Net operating income from
consolidated office and parking       33,741    23,774     91,192    61,454
properties
Net operating income from             -         49         -         1,076
unconsolidated joint ventures
Less: Net operating income from non  (7,965)   (37)       (33,192)  (8,081)
same-store properties
Same-store net operating income       25,776    23,786     58,000    54,449
(SSNOI)
Less: non-recurring lease termination (1,317)   (387)      (2,386)   (725)
fee income
Recurring SSNOI                       $      $       $      $   
                                      24,459    23,399     55,614    53,724
Parkway's share of SSNOI              $      $       $      $   
                                      16,159    14,915     44,200    42,066
Parkway's share of recurring SSNOI    $      $       $      $   
                                      15,443    14,674     42,433    41,487





SOURCE Parkway Properties, Inc.

Website: http://www.pky.com