Parkway Announces Preliminary Leasing Results, Updates 2012 Outlook and Provides 2013 Outlook

   Parkway Announces Preliminary Leasing Results, Updates 2012 Outlook and
                            Provides 2013 Outlook

Company to Webcast Investor Day Presentation on January 23, 2013

PR Newswire

ORLANDO, Fla., Jan. 22, 2013

ORLANDO, Fla., Jan. 22, 2013 /PRNewswire/ -- Parkway Properties, Inc. (NYSE:
PKY) today announced preliminary leasing results for its fourth quarter ended
December 31, 2012 in advance of its Investor Day on January 23, 2013. In
addition, the Company narrowed its 2012 Funds from Operations (FFO) outlook to
the upper end of the previously provided range and provided a 2013 FFO

James R. Heistand, President and Chief Executive Officer of Parkway commented,
"We continue to make meaningful progress in our strategic objectives and the
transformation of our portfolio. We had another strong leasing quarter, we
further enhanced our financial flexibility with the completion of a public
offering of common stock, and in the fourth quarter and subsequently, have
completed or announced six acquisitions consistent with our strategic
objectives. The acquisitions that we completed during the quarter are
resulting in a short-term negative impact to our occupancy, but we believe
that we can create long-term value as we improve the operational efficiency of
these newly acquired assets. As we achieve those enhancements, combined with
manageable expirations over the next year, we expect to drive occupancy gains
and improve financial performance."

Occupancy and Leasing Activity

Occupancy was 88.0% at the end of the fourth quarter 2012, compared to 89.6%
at the end of the prior quarter. Including leases that have been signed but
have yet to commence, the Company's leased percentage at the end of the fourth
quarter 2012 was 89.0%. The anticipated sequential decline in occupancy was
due to the strategic acquisition of assets with occupancy that is below the
Company average, where it expects to create operational value.

During the fourth quarter 2012, Parkway signed leases totaling 413,000 square
feet at an average rent per square foot of $25.35 and at an average cost of
$4.74 per square foot per year.

New & Expansion Leasing – During the fourth quarter 2012, the Company signed
110,000 square feet of new leases at an average rent per square foot of $21.70
and at an average cost of $4.73 per square foot per year. Expansion leases
during the quarter totaled 45,000 square feet at an average rent per square
foot of $22.38 and at an average cost of $7.14 per square foot per year.

Renewal Leasing – Customer retention during the fourth quarter 2012 was
68.9%. The Company signed 258,000 square feet of renewal leases at an average
rent per square foot of $27.43, representing a 0.2% rate decrease from the
expiring rate. The average cost of renewal leases was $4.41 per square foot
per year.

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

                              For the Three Months Ended
                              12/31/12  09/30/12  06/30/12  03/31/12  12/31/11
Ending Occupancy              88.0%     89.6%     87.4%     85.9%     83.9%
Customer Retention            68.9%     76.0%     63.2%     46.8%     47.1%
Square Footage of Total       413       439       394       368       526
Leases Signed (in thousands)
Average Revenue Per Square    $25.35    $21.78    $19.60    $22.55    $23.04
Foot of Total Leases Signed
Average Cost Per Square Foot
Per Year of Total Leases      $4.74     $3.68     $2.93     $4.72     $4.37

2012 Updated Outlook

The Company is narrowing its 2012 FFO outlook to the upper end of the
previously provided range. The Company expects to report FFO for the fourth
quarter of 2012 between $0.23 and $0.25 and annual FFO between $1.28 and
$1.30. As a result of the Company's previously announced change in business
strategy, the Company believes that it will likely record an impairment charge
on the Company's investment in the management contracts acquired during 2011
and a likely write-off of the associated goodwill of $26.2 million. The
fourth quarter and annual FFO ranges for 2012 do not include the impact of
these likely impairment charges.

The reconciliation of projected EPS to projected FFO per diluted share is as

Outlook for 2012                                  Range
Fully diluted EPS                                 ($0.02)-$0.00
Parkway's share of depreciation and amortization  $1.55-$1.55
Parkway's share of gain on sale of real estate    ($0.25-$0.25)
Reported FFO per diluted share                    $1.28-$1.30

2013 Outlook

The Company is providing a 2013 FFO outlook range of $1.17 to $1.27 per share
and loss per diluted share ("EPS") of ($0.33) to ($0.23).

The reconciliation of projected EPS to projected FFO per diluted share is as

Outlook for 2013                                  Range
Fully diluted EPS                                 ($0.33-$0.23)
Parkway's share of depreciation and amortization  $1.50-$1.50
Reported FFO per diluted share                    $1.17-$1.27

The 2013 outlook is based on the core operating, financial and capital
assumptions set forth below at Parkway's share. These assumptions reflect the
Company's expectations based on its knowledge of current market conditions and
historical experience.

2013 Core Operating Assumptions

  oRecurring cash NOI of $115.5 to $117.5 million,
  oStraight-line rent and amortization of above market rent of $7.5 to $8.5
  oLease termination fee income of $300,000,
  oManagement fee after-tax income of $7.0 to $8.0 million,
  oTotal G&A of $18.5 to $20.0 million, inclusive of those amounts related to
    the Company's expected equity compensation plan and transition or
    severance costs,
  oWeighted average annual diluted common shares and units of 56.0 million,
  oEnding occupancy between 87.5% and 88.5%.

2013 Financial and Capital Assumptions

  oCapital expenditures for building improvements, tenant improvements and
    leasing commissions of $17.0 to $18.0 million,
  oMortgage and credit facilities interest expense and loan cost amortization
    at a range of $32.0 to $32.5 million, which includes loan cost
    amortization of approximately $2.0 to $2.2 million, and
  oAll previously announced acquisitions during the fourth quarter of 2012
    and to date are included in the earnings outlook, regardless of whether
    they have yet to be completed. In connection with the investments
    expected to close during 2013, the Company estimates that it will incur
    approximately $1.6 million in acquisitions expenses.

Variance within the outlook range may occur due to variations in the recurring
revenue and expenses of the Company, as well as certain non-recurring items.
The earnings outlook does not include the impact of possible future gains or
losses on early extinguishment of debt, possible future acquisitions or
dispositions and related costs, possible future impairment charges or other
unusual charges that may occur during the year, except as noted. It has been
and will continue to be the Company's policy to not issue quarterly earnings
guidance or revise the annual earnings outlook unless a material event occurs
that impacts our original reported FFO outlook range. This policy is intended
to lessen the emphasis on short-term movements that do not have a material
impact on earnings or long-term value of the Company.

Investor Presentation Webcast

The Company will conduct an investor presentation as part of its Investor Day
on Wednesday, January 23, 2013 at 9:30 a.m. Eastern Time, lasting
approximately one hour. A live audio and slideshow webcast will also be
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 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.

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 and NOI, 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 and NOI 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 and NOI 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 and NOI
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

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.

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.


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

SOURCE Parkway Properties, Inc.

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