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Parkway Reports First Quarter 2013 Results



                  Parkway Reports First Quarter 2013 Results

PR Newswire

ORLANDO, Fla., May 6, 2013

ORLANDO, Fla., May 6, 2013 /PRNewswire/ -- Parkway Properties, Inc. (NYSE:PKY)
today announced results for its first quarter ended March 31, 2013. 

  o Highlights for First Quarter 2013 and Recent Events
  o FFO of $0.30 per share and recurring FFO of $0.33 per share
  o FAD of $0.22 per share
  o Occupancy of 88.7%, with portfolio 89.7% leased
  o Completed a public offering of 12.65 million shares of common stock
    resulting in $209.1 million of net proceeds
  o Completed or under contract to purchase $391.5 million, at share, of
    office properties in targeted submarkets
  o Revised outlook for 2013 to reflect investment and capital market
    activities

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

"As we continue to achieve critical mass in our target markets and drive
leasing gains, we are beginning to realize the value inherent in our
portfolio, as evidenced by our strong first quarter results," stated James R.
Heistand, President and Chief Executive Officer of Parkway. "Occupancy is now
at 88.7% and improvements in operating efficiencies led to a 200 basis point
increase in our NOI margin over the first quarter of last year.  Our portfolio
of well-located assets is strongly positioned in key submarkets within some of
the country's fastest growing cities, which should continue to drive value and
improved cash flow for the remainder of 2013."

For the first quarter 2013, funds from operations ("FFO") available to common
shareholders was $17.3 million, or $0.30 per diluted share.  Recurring FFO was
$18.7 million, or $0.33 per diluted share, and funds available for
distribution ("FAD") was $12.5 million, or $0.22 per diluted share.  A
reconciliation of FFO, recurring FFO and FAD to net income is included on page
12.  Net income, FFO, recurring FFO, and FAD for the first quarter 2013, as
well as a comparison to the prior year period, are as follows:

(Amounts in thousands, except per share)
                                 Three Months Ended March 31
                                 2013                2012
                                           Per                 Per
                                 Amount              Amount
                                           Share               Share
Net Income (Loss)                $ (3,879) $ (0.07)  $  1,994  $ 0.09
Funds From Operations            $ 17,282  $ 0.30    $  10,135 $ 0.43
Recurring Funds From Operations  $ 18,726  $ 0.33    $  10,333 $ 0.44
Funds Available for Distribution $ 12,461  $ 0.22     $ 3,712  $ 0.16
Wtd. Avg. Diluted Shares/Units   56,880               23,378

On a year-over-year basis, FFO increased materially on a gross basis but
decreased on a per share basis. This is primarily the result of: (i) a
repositioning of the portfolio, with $1.0 billion in asset acquisitions and
$663.8 million of asset dispositions since the end of 2011; (ii) significant
capital markets activities, including the issuance of 45.1 million shares of
common stock in public and private offerings since the beginning of 2012 for
gross proceeds of $608.7 million; and (iii) significant deleveraging of the
Company, reducing net debt to EBITDA from 6.2x at December 31, 2011 to 4.8x at
March 31, 2013.  Parkway's repositioned portfolio has resulted in improved
asset quality and location, which in turn has led to greater average gross
rent per square foot, less capital expenditures per square foot per lease
year, higher operating margins and higher customer retention rates. 

Operational Results

Occupancy at the end of the first quarter 2013 was 88.7%, compared to 88.0% 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 first
quarter 2013 was 89.7%.

Parkway's share of recurring same-store net operating income ("NOI") was $16.1
million on a GAAP basis during the first quarter 2013, which was an increase
of $259,000, or 1.6%, as compared to the same period of the prior year.  On a
cash basis, the Company's share of recurring same-store NOI increased 14.4% to
$16.0 million as compared to the same period of the prior year.

The Company's portfolio GAAP NOI margin was 62.2% during the first quarter
2013, as compared to 60.2% during the same period of the prior year. 

Leasing Activity

During the first quarter 2013, Parkway signed a total of 501,000 square feet
of leases at an average rent per square foot of $25.03 and an average cost of
$3.42 per square foot per year.

New & Expansion Leasing – During the first quarter 2013, the Company signed
61,000 square feet of new leases at an average rent per square foot of $22.18
and at an average cost of $6.41 per square foot per year.  Expansion leases
during the quarter totaled 86,000 square feet at an average rent per square
foot of $25.48 and at an average cost of $5.37 per square foot per year.

Renewal Leasing – Customer retention during the first quarter 2013 was 78.2%. 
The Company signed 354,000 square feet of renewal leases at an average rent
per square foot of $25.42, representing a 1.2% rate decrease from the expiring
rate.  The average cost of renewal leases was $2.31 per square foot per year.

The Company's leasing activity for the first quarter 2013 has led to greater
revenue per square foot of total leases signed and greater customer
retention.  Customer retention is an important metric for the Company as
renewal leases generally require less capital expenditure per square foot per
year than new leases and no downtime to release a vacated space.

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

                              For the Three Months Ended
                              03/31/13  12/31/12  09/30/12  06/30/12  03/31/12
Ending Occupancy              88.7%     88.0%     89.6%     87.4%     85.9%
Customer Retention            78.2%     68.9%     76.0%     63.2%     46.8%
Square Footage of Total       501       413       439       394       368
Leases Signed (in thousands)
Average Revenue Per Square    $25.03    $25.35    $21.78    $19.60    $22.55
Foot of Total Leases Signed
Average Cost Per Square Foot
Per Year of Total Leases      $3.42     $4.74     $3.68     $2.93     $4.72
Signed

Acquisition and Disposition Activity

On January 17, 2013, Parkway completed the purchase of Tower Place 200, a
258,000 square foot office tower located in the Buckhead submarket of Atlanta,
Georgia, for a gross purchase price of $56.3 million.  Tower Place 200 was
built in 1998 and is a 13-story, Class A office tower that shares a parking
garage with Parkway's neighboring 3344 Peachtree asset.  The building was
82.7% occupied at April 1, 2013 and is unencumbered by debt. 

On March 7, 2013, Parkway completed the purchase of eight office properties
totaling 1.0 million square feet located in the Deerwood submarket of
Jacksonville, Florida for a gross purchase price of $130.0 million.  The
properties were developed in phases from 1996 through 2005 and were a combined
93.7% occupied at April 1, 2013.  Parkway placed secured financing on the
properties simultaneous with closing totaling $84.5 million that has a
maturity date of April 1, 2023 and a fixed interest rate of 3.9%.

On March 15, 2013, the Company entered into a purchase and sale agreement to
acquire an approximately 75% interest in the US Airways Building, a 225,000
square foot office property located in the Tempe submarket of Phoenix, Arizona
for a purchase price of $41.8 million.  US Airways will retain the remaining
approximately 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.  US Airways has the option to terminate its lease on December 31, 2016
or December 31, 2021 with 12 months prior written notice.  Closing is expected
to occur by the end of the second quarter 2013, subject to customary closing
conditions.

On March 20, 2013, the Company sold Atrium at Stoneridge, a 108,000 square
foot office property located in Columbia, South Carolina, for a gross sales
prices of $3.1 million and recorded a gain of $542,000 during first quarter
2013.  The Company received $3.0 million in net proceeds from the sale, which
was used to reduce amounts outstanding under the Company's revolving credit
facility.

On March 25, 2013, the Company purchased its co-investor's 70% interest in
three office properties totaling 788,000 square feet located in the Westshore
submarket of Tampa, Florida owned by Parkway Properties Office Fund II, L.P.
(the "Tampa Fund II Assets").  The agreed-upon gross valuation of the Tampa
Fund II Assets was $139.3 million.  Parkway's purchase price for its
co-investor's 70% interest in the Tampa Fund II Assets was $97.5 million. 
Simultaneous with closing, the Company assumed $40.7 million of existing
mortgage indebtedness that is secured by the properties, which represents its
co-investor's 70% share of the approximately $58.1 million of existing
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 93.1% as of April 1, 2013.

On April 26, 2013, the Company entered into a purchase and sale agreement to
acquire Lincoln Place, a 140,000 square foot office building located in the
South Beach submarket of Miami, Florida.  Lincoln Place was built in 2002 and
is comprised of 111,000 square feet of office space and 29,000 square feet of
retail space on the ground floor.  There is a five-story garage with 534
parking spaces adjacent to the property that provides parking for daytime
office tenants as well as hourly parking on nights and weekends.  The property
is currently 100% leased to LNR Corporation through June 2021 with no renewal
or early termination option.  Parkway is under contract to acquire Lincoln
Place in exchange for the assumption of the existing secured first mortgage,
which has a current outstanding balance of approximately $49.6 million, a
fixed interest rate of 5.9% and a maturity date of June 11, 2016, and the
issuance of 900,000 shares of operating partnership units.  Based on Parkway's
closing stock price of $18.20 on May 3, 2013, the implied purchase price is
approximately $66.0 million, or $472 per square foot.  Based on this implied
purchase price, the property is expected to generate an initial full-year cash
net operating income yield of approximately 6.7%.  Closing is expected to
occur by the end of the third quarter 2013, subject to customary closing
conditions, the successful assumption of the existing first mortgage and
Parkway's satisfactory completion of due diligence.

Capital Structure

At March 31, 2013, the Company did not have any amounts outstanding under its
revolving credit facility, had $125.0 million outstanding under its unsecured
term loan and held $74.6 million in cash and cash equivalents, of which $46.2
million of cash and cash equivalents was Parkway's share.  Parkway's share of
secured debt totaled $537.1 million at March 31, 2013.

On February 21, 2013, Parkway closed on an $80 million first mortgage secured
by Phoenix Tower in Houston, Texas.  Phoenix Tower is a 626,000 square foot
office tower located in the Greenway Plaza submarket of Houston that was 83.9%
occupied as of April 1, 2013.  The mortgage has a maturity date of March 1,
2023 and a fixed interest rate of 3.9%.

At March 31, 2013, the Company's net debt to EBITDA multiple was 4.8x, using
the quarter's annualized EBITDA after adjusting for the impact of acquisitions
and dispositions completed during the period, as compared to 5.3x at December
31, 2012, and 4.7x at March 31, 2012.  At March 31, 2013, the Company's net
debt plus preferred to EBITDA multiple was 5.9x, as compared to 6.7x at
December 31, 2012, and 6.5x at March 31, 2012.

On March 25, 2013, the Company completed an underwritten public offering of
12.65 million shares of its common stock for net proceeds of approximately
$209.0 million.  The Company used the net proceeds to redeem in full all of
its outstanding 8.00% Series D Cumulative Redeemable Preferred Stock, to fund
acquisitions, to repay amounts outstanding from time to time under its senior
unsecured revolving credit facility and for general corporate purposes.

On April 25, 2013, the Company redeemed all of its outstanding 8.00% Series D
Cumulative Redeemable Preferred Stock (the "Series D Preferred") using
proceeds from its underwritten public offering of common stock.  The Company
paid $136.3 million to redeem these shares, which includes a $135.5 million
liquidation value and accrued dividends of $723,000.  The Company expects to
record a $6.6 million non-cash charge during the second quarter of 2013, which
represents the difference between the costs associated with the issuance,
including the price at which such shares were paid, and the redemption price.

The redemption of the Series D Preferred will have a material impact on the
Company's financial metrics beginning in the second quarter of 2013.  As a
result of this redemption, the Company will have a lower net debt plus
preferred to EBITDA ratio, a greater fixed charge coverage ratio and fixed
cash payment savings of approximately $10.8 million on an annual basis.

Common Dividend

The Company's previously announced first quarter cash dividend of $0.15 per
share, which represents an annualized dividend of $0.60 per share, was paid on
March 27, 2013 to shareholders of record as of March 13, 2013. 

2013 Revised Outlook

After considering the Company's March 2013 underwritten public common stock
offering, April 2013 Series D Preferred redemption and recent and pending
investment activity, Parkway is revising its 2013 FFO outlook from $1.17 to
$1.27 per share to $1.10 to $1.20 and adjusting its earnings (loss) per share
("EPS") to ($0.29) to ($0.19).  The Company's revised 2013 FFO outlook
includes the negative impact of a one-time, non-cash charge related to the
redemption of the Series D Preferred, totaling approximately $6.6 million, or
$0.10 per share, which will be recognized during second quarter 2013.
 Excluding this one-time, non-cash charge, the Company's FFO outlook range
would increase to $1.20 to $1.30 per share.  The reconciliation of projected
EPS to projected FFO per diluted share is as follows:  

Outlook for 2013                                  Range
Fully diluted EPS                                  ($0.29-$0.19)
Parkway's share of depreciation and amortization   $1.40-$1.40
Gain on sale of real estate                        ($0.01-$0.01)
Reported FFO per diluted share                     $1.10-$1.20

The revised 2013 outlook is based on the core operating, financial and
investment assumptions described below.  These assumptions reflect the
Company's expectations based on its knowledge of current market conditions and
historical experience.  All dollar amounts presented for the revised 2013
outlook and the original 2013 outlook are at Parkway's share and dollars and
shares are in thousands.

                                      Revised            Original

2013 Core Operating Assumptions       2013               2013

                                      Outlook            Outlook
Recurring cash NOI                    $121,500 -         $115,500 - $117,500
                                      $123,500
Straight-line rent and amortization   $  10,500 - $      $    7,500 - $   
of above market rent                  11,500             8,500
Lease termination fee income          $       300 -      $       300 - $      
                                      $       300        300
Management fee after-tax net income   $    7,500 - $     $    7,000 - $   
                                      8,500              8,000
Recurring capital expenditures for
building improvements, tenant         $  18,000 - $      $  17,800 - $  18,000
  improvements and leasing            19,000
commissions
Total general and administrative      $  19,000 - $      $  18,500 - $  20,000
("G&A") expense                       20,500
Share based compensation included in  $    4,500 - $     $    4,500 - $   
G&A expense                           5,500              5,500
Mortgage and credit facilities        $  33,500 - $      $  32,000 - $  32,500
interest expense                      34,000
Original issue costs – redemption of  $    6,600 - $     Not Provided
preferred stock                       6,600
Portfolio ending occupancy            87.5% - 88.5%      87.5% - 88.5%
Weighted average annual diluted       66,200 - 66,200    56,000 - 56,000
common shares/units

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, the impact of fluctuations in the Company's
stock price on share-based compensation, 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.

In particular, we have assumed a non-cash share-based compensation charge in
G&A of $5 to $6 million.  This assumed charge relates to recent grants under
our 2013 Omnibus Equity Incentive Plan (the "Plan"), which will be voted on at
our annual meeting of stockholders to be held on May 16, 2013.  However,
please note that we will begin to expense these grants only if and when we
receive stockholder approval of the Plan.  The actual expense associated with
these grants is dependent on the public price for our common stock on the date
of adoption of the Plan by our stockholders, which could exceed our assumed
price and result in a share-based compensation charge that is greater than we
have assumed above.

Webcast and Conference Call

The Company will conduct its first quarter earnings conference call on
Tuesday, May 7, 2013 at 11:00 a.m. Eastern Time.  To participate in the
conference call, please dial 877-407-3982, or 1-201-493-6780 for international
participants, at least five minutes prior to the scheduled start time.  A live
audio webcast will also be available on the Company's website (www.pky.com). 
A taped replay of the call can be accessed 24 hours a day through May 14,
2013, by dialing 877-870-5176, or 1-858-384-5517 for international callers,
and using the passcode 411934.  An audio replay will also be archived and
indexed on the Company's website. 

Annual Meeting

Parkway Properties, Inc. will host its 2013 Annual Meeting of Shareholders on
May 16, 2013, at 2:00 p.m. Central Time.  The meeting will be held on the
ninth floor of Phoenix Tower located at 3200 Southwest Freeway in Houston,
Texas.

About Parkway Properties

Parkway Properties, Inc. is a fully integrated, self-administered and
self-managed real estate investment trust ("REIT") specializing in the
acquisition, ownership and management of quality office properties in higher
growth submarkets in the Sunbelt region of the United States.  Parkway owns or
has an interest in 45 office properties located in eight states with an
aggregate of approximately 13.0 million square feet at April 1, 2013.  Parkway
also offers fee-based real estate services which manage and/or lease
approximately 11.8 million square feet for third parties as of April 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," "outlook," "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 2013 fully diluted EPS, share of depreciation and amortization,
reported FFO per share, 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 renewal 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)
                                                      March 31     December 31
                                                      2013         2012
                                                      (Unaudited)
Assets
Real estate related investments:
  Office and parking properties                       $            $        
                                                      1,934,000    1,762,566
  Accumulated depreciation                            (215,777)    (199,849)
                                                      1,718,223    1,562,717
  Land available for sale                             250          250
                                                      1,718,473    1,562,967
Receivables and other assets:
  Rents and fees receivable, net                      4,094        2,309
  Straight line rents receivable                      38,131       34,205
  Other receivables                                   3,391        2,755
  Unamortized lease costs                             67,824       62,978
  Unamortized loan costs                              7,740        7,183
  Escrows and other deposits                          10,062       7,606
  Prepaid assets                                      3,969        3,612
  Investment in preferred interest                    3,500        3,500
  Other assets                                        710          543
Intangible assets, net                                127,961      118,097
Management contracts, net                             17,219       19,000
Cash and cash equivalents                             74,560       81,856
  Total assets                                        $            $        
                                                      2,077,634    1,906,611
Liabilities
Notes payable to banks                                $            $          
                                                       125,000      262,000
Mortgage notes payable                                768,005      605,889
Accounts payable and other liabilities:
  Corporate payables                                  2,254        1,930
  Deferred tax liability - non-current                1,392        1,959
  Accrued payroll                                     1,533        2,980
  Fair value of interest rate swaps                   15,039       16,285
  Interest payable                                    3,253        2,653
  Property payables:
 Accrued expenses and accounts payable                13,538       13,111
 Accrued property taxes                               8,611        6,868
 Prepaid rents                                        11,031       9,488
 Deferred revenue                                     150          315
 Security deposits                                    4,976        4,680
 Unamortized below market leases                      27,403       22,390
  Other liabilities                                   -            57
 Total liabilities                                    982,185      950,605
Equity
Parkway Properties, Inc. stockholders' equity:
8.00% Series D preferred stock, $.001 par value,
5,421,296 
shares authorized, issued and outstanding in 2013 and 128,942      128,942
2012
Common stock, $.001 par value, 114,578,704 shares
authorized
in 2013 and 2012, 68,765,182 and 56,138,209 shares
issued
 and outstanding in 2013 and 2012, respectively       69           56
Additional paid-in capital                            1,096,423    907,254
Accumulated other comprehensive loss                  (6,279)      (4,425)
Accumulated deficit                                   (350,089)    (337,813)
    Total Parkway Properties, Inc. stockholders'      869,066      694,014
equity
Noncontrolling interests                              226,383      261,992
    Total equity                                      1,095,449    956,006
Total liabilities and equity                          $            $        
                                                      2,077,634    1,906,611

 

PARKWAY PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
                                          Three Months Ended
                                          March 31
                                          2013               2012
                                          (Unaudited)
Revenues
Income from office and parking properties $                  $              
                                          67,760             45,157
Management company income                 4,352              5,432
Total revenues                            72,112             50,589
Expenses and other
Property operating expense                25,617             17,955
Depreciation and amortization             29,515             17,690
Change in fair value of contingent        -                  216
consideration
Management company expenses               4,390              4,534
General and administrative                4,215              3,599
Acquisition costs                         1,135              826
Total expenses and other                  64,872             44,820
Operating income                          7,240              5,769
Other income and expenses
Interest and other income                 103                97
Interest expense                          (10,470)           (9,244)
Loss before income taxes                  (3,127)            (3,378)
Income tax benefit (expense)              507                (161)
Loss from continuing operations           (2,620)            (3,539)
Discontinued operations:
Income (loss) from discontinued           (347)              3,291
operations
Gain on sale of real estate from          542                5,575
discontinued operations
Total discontinued operations             195                8,866
Net income (loss)                         (2,425)            5,327
Net (income) loss attributable to         2                  (89)
noncontrolling interests - unit holders
Net (income) loss attributable to
noncontrolling interests - real estate    1,255              (533)
partnerships
Net income (loss) for Parkway Properties, (1,168)            4,705
Inc.
Dividends on preferred stock              (2,711)            (2,711)
Net income (loss) attributable to common  $                  $              
stockholders                              (3,879)             1,994
Net income (loss) per common share
attributable to Parkway Properties, Inc.:
Basic:
Loss from continuing operations           $                  $                
attributable to Parkway Properties, Inc.  (0.07)             (0.16)
Discontinued operations                   -                  0.25
Basic net income (loss) attributable to   $                  $                
Parkway Properties, Inc.                  (0.07)              0.09
Diluted:
Loss from continuing operations           $                  $                
attributable to Parkway Properties, Inc.  (0.07)             (0.16)
Discontinued operations                   -                  0.25
Diluted net income (loss) attributable to $                  $                
Parkway Properties, Inc.                  (0.07)              0.09
Weighted average shares outstanding:
Basic                                     56,849             21,568
Diluted                                   56,849             21,568
Amounts attributable to Parkway
Properties, Inc. common stockholders:
Loss from continuing operations           $                  $              
attributable to Parkway Properties, Inc.  (4,087)            (3,517)
Discontinued operations                   208                5,511
Net income (loss) attributable to common  $                  $              
stockholders                              (3,879)             1,994

 

 

PARKWAY PROPERTIES, INC.
RECONCILIATION OF FUNDS FROM OPERATIONS AND FUNDS AVAILABLE
FOR DISTRIBUTION TO NET INCOME AT PARKWAY'S SHARE
(In thousands, except per share data)
                                      Three Months Ended
                                      March 31
                                      2013                 2012
                                      (Unaudited)
Net income (loss) for Parkway         $           (1,168)  $            4,705
Properties, Inc.
Adjustments to net income (loss) for
Parkway Properties, Inc.:
Preferred dividends                   (2,711)              (2,711)
Depreciation and amortization         21,705               10,385
Noncontrolling interest - unit        (2)                  89
holders
Gain on sale of real estate           (542)                (2,333)
FFO available to common stockholders  $           17,282   $           10,135
Adjustments to derive recurring FFO:
Change in fair value of contingent    -                    216
consideration
Non-recurring lease termination fee   (146)                (596)
income 
Gain on early extinguishment of debt  -                    288
Non-cash adjustment for interest rate -                    (138)
swap
Acquisition costs                     1,130                248
Realignment expenses                  460                  180
Recurring FFO                         $           18,726   $           10,333
Funds available for distribution 
FFO available to common stockholders  $           17,282   $           10,135
Add (Deduct) :
Straight-line rents                   (2,718)              (2,616)
Amortization of above market leases   40                   296
Amortization of share-based           89                   157
compensation
Acquisition costs                     1,130                248
Amortization of loan costs            399                  442
Non-cash adjustment for interest rate -                    (138)
swap
Gain on early extinguishment of debt  -                    288
Change in fair value of contingent    -                    216
consideration
Recurring capital expenditures:
Building improvements                 (1,511)              (457)
Tenant improvements - new leases      (192)                (2,900)
Tenant improvements - renewal leases  (1,340)              (1,219)
Leasing costs - new leases            (56)                 (505)
Leasing costs - renewal leases        (662)                (235)
Total recurring capital expenditures  (3,761)              (5,316)
Funds available for distribution      $           12,461   $            3,712
Diluted per common share/unit
information (**)
FFO per share                         $              0.30  $              0.43
Recurring FFO per share               $              0.33  $              0.44
FAD per share                         $              0.22  $              0.16
Dividends paid                        $              0.15  $            0.075
Dividend payout ratio for FFO         50.0%                17.4%
Dividend payout ratio for recurring   45.5%                17.0%
FFO
Dividend payout ratio for FAD         68.2%                46.9%
Other supplemental information
Recurring capital expenditures        $            3,761   $            5,316
Upgrades on acquisitions              3,626                1,332
Total real estate improvements and    $            7,387   $            6,648
leasing costs 
**Information for diluted
computations:
Basic common shares/units outstanding 56,851               22,222
Dilutive effect of other share        29                   1,156
equivalents
Diluted weighted average shares/units 56,880               23,378
outstanding

 

PARKWAY PROPERTIES, INC.
EBITDA, COVERAGE RATIOS AND CAPITALIZATION INFORMATION
(In thousands, except per share, percentage and multiple data)
                  03/31/13       12/31/12      09/30/12   06/30/12   03/31/12
Net income (loss) $              $             $          $          $      
for Parkway       (1,168)         (49,002)     2,129      2,773      4,705
Properties, Inc.
Adjustments at
Parkway's share
to net income
(loss) for
Parkway
Properties, Inc.:
Interest expense  6,638          4,830         4,661      5,035      6,206
Amortization of   399            523           347        402        442
financing costs
Non-cash
adjustment for    -              -             -          (77)       (138)
interest rate
swap
Loss on early
extinguishment of -              -             117        491        288
debt
Acquisition costs 1,130          1,281         88         510        248
Depreciation and  21,705         14,625        13,783     11,566     10,385
amortization
Amortization of
share-based       89             61            167        47         157
compensation
Gain on sale of
real estate and   (542)          (3,172)       (528)      (2,601)    (2,333)
other assets
Non-cash losses   -              51,167        -          -          -
Change in fair
value of          -              -             -          -          216
contingent
consideration
Tax expense       (507)          118           (7)        (11)       161
(benefit)
EBITDA            $              $             $          $          $    
                   27,744        20,431         20,757    18,135     20,337
Interest coverage 4.2            4.2           4.5        3.6        3.3
ratio
Fixed charge
coverage ratio    2.5            2.2           2.3        2.0        2.0
(1)
Modified fixed
charge coverage   3.0            2.7           2.8        2.3        2.3
ratio (1)
Capitalization
information
Mortgage notes    $              $             $          $          $  
payable            768,005       605,889        549,429   551,564    553,674
Mortgage notes
payable-held for  -              -             -          29,597     90,710
sale
Notes payable to  125,000        262,000       125,000    111,267    48,000
banks
Adjustments for
noncontrolling
interest in real
estate
partnerships:
     Mortgage     (230,885)      (272,215)     (272,880)  (295,740)  (320,107)
notes payable
Parkway's share   662,120        595,674       401,549    396,688    372,277
of total debt
Less:  Parkway's  (46,235)       (55,968)      (30,096)   (12,669)   (12,522)
share of cash
Parkway's share   615,885        539,706       371,453    384,019    359,755
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  $              $             $          $          $  
preferred stock    751,417       675,238        506,985   519,551    495,287
(1)
Shares of common
stock and         68,767         56,140        41,499     28,037     23,758
operating units
outstanding
Stock price per   $              $             $          $          $      
share at period    18.55         13.99         13.37      11.44      10.48
end
Market value of   $              $             $          $          $  
common equity     1,275,628      785,399        554,842   320,743    248,984
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    $              $             $          $          $  
(including net    2,027,045       1,460,637    1,061,827  991,994    744,271
debt)
Net debt as a %
of market         30.4%          37.0%         35.0%      38.7%      48.3%
capitalization
EBITDA -          $              $             $          $          $    
annualized         110,976       81,724         83,028    72,540     81,348
Adjustment to
annualize         16,490         19,368        (141)      11,824     (5,132)
investment
activities (2)
EBITDA - adjusted $              $             $          $          $    
annualized         127,466       101,092        82,887    84,364     76,216
Net debt to       4.8            5.3           4.5        4.6        4.7
EBITDA multiple
Net debt plus
preferred to      5.9            6.7           6.1        6.2        6.5
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.
SAME-STORE NET OPERATING INCOME
THREE MONTHS ENDED MARCH 31, 2013 AND 2012
(In thousands, except number of properties)
                                                              Average
                                               Net Operating  Occupancy
                                               Income
                        Number of   Percentage
                Square              of
                Feet    Properties  Portfolio  2013   2012    2013     2012
                                    (1)
Same-store
properties:
  Wholly-owned  5,280   25          30.21%     $      $       87.9%    87.0%
                                               12,732 12,844
  Fund II       3,072   8           31.26%     13,175 12,772  90.4%    87.1%
Total                                          $      $  
same-store      8,352   33          61.47%     25,907 25,616  88.8%    87.0%
properties
Net operating
income from all
  office and                                   $      $  
parking         13,038  45          100.00%    42,143 27,202
properties
(1)  Percentage of portfolio based on 2013 net
operating income.
The following table is a reconciliation of net income
(loss) to SSNOI and Recurring SSNOI:
                                                              Three Months
                                                              Ended
                                                              March 31
                                                              2013     2012
Net income (loss) for                                         $        $  
Parkway Properties,                                           (1,168)   4,705
Inc.
Add (deduct):
Interest                                                      10,470   9,244
expense
Depreciation
and                                                           29,515   17,690
amortization
Management
company                                                       4,390    4,534
expenses
Income tax
(benefit)                                                     (507)    161
expense
General and                                                   4,215    3,599
administrative expenses
Acquisition                                                   1,135    826
costs
Change in fair value of
contingent                                                    -        216
consideration
Net income (loss) attributable to
noncontrolling interests  - real estate                       (1,255)  533
partnerships
Net income (loss) attributable to                             (2)      89
noncontrolling interests  - unit holders
(Income) loss from                                            347      (3,291)
discontinued operations
Gain on sale of real estate from                              (542)    (5,575)
discontinued operations
Management                                                    (4,352)  (5,432)
company income
Interest and                                                  (103)    (97)
other income 
Net operating income from
consolidated office and parking                               42,143   27,202
properties
Less:  Net operating income from                              (16,236) (1,586)
non same-store properties
Same-store net
operating income                                              25,907   25,616
(SSNOI)
Less: non-recurring
lease termination fee                                         (199)    (644)
income
Recurring SSNOI                                               $        $
                                                               25,708   24,972
Parkway's share                                               $        $
of SSNOI                                                       16,242   16,363
Parkway's share of                                            $        $
recurring SSNOI                                                16,122   15,863

SOURCE Parkway Properties, Inc.

Website: http://www.pky.com
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