ORLANDO, FL /PRNewswire/ -- Parkway Properties, Inc. (NYSE: PKY) announced the purchase of The Pointe (top left photo) in Tampa on behalf of Parkway Properties Office Fund II, L.P. ("Fund II"), the completion of the previously announced sale of 111 East Wacker Drive (middle right photo) ("111 East Wacker") in Chicago, and the sale of Falls Pointe (lower left photo)in Atlanta on behalf of Fund II.
James R. Heistand (middle left photo), President and Chief Executive Officer of Parkway stated, "The Pointe is a landmark asset in the Westshore submarket and includes a strong tenant base consisting of high-quality national and regional credit customers.
“With this purchase, Parkway now owns an interest in over 788,000 square feet and manages an additional 299,000 square feet for third-party owners in the Westshore submarket, which provides Parkway with important critical mass in this primarily urban infill area.
“The sale of 111 East Wacker accelerates Parkway's portfolio repositioning as well as positions our balance sheet for future growth. Additionally, the sale of 111 East Wacker completes Parkway's exit from Chicago, which we have identified as a non-core market.
“With the removal of this highly leveraged asset from our balance sheet, Parkway's leverage will be materially reduced, which should provide better financial flexibility. Also, Parkway will realize significant savings in projected leasing capital costs as a result of the sale given the amount of leasing required at the property to reach stabilization."
Purchase of The Pointe by Fund II
The Pointe is a 252,000 square foot office building and has an irreplaceable waterfront location on the tip of Rocky Pointe Island within the Westshore submarket of Tampa, Florida. The Property is currently 88.4% leased to 28 customers. The gross purchase price for The Pointe was $46.9 million and Parkway's ownership share is 30%.
Simultaneous with the purchase, Fund II closed a $23.5 million first mortgage with a fixed interest rate of 4.0%, an initial 42-month interest only period, and a maturity date of February 2019. Parkway's equity contribution of $7.0 million was initially funded through availability under the Company's existing revolving credit facility.
Sale of 111 East Wacker
111 East Wacker is a 1.0 million square foot office property located in the central business district of Chicago and was 80.5% occupied as of December 1, 2011. The gross sale price for 111 East Wacker was $150.6 million.
The buyer assumed the $147.9 million non-recourse mortgage loan, which has a fixed interest rate of 6.3% and maturity date in July 2016. In connection with the sale, the Company recorded a non-cash impairment loss in the third quarter of 2011 totaling $18.8 million. Parkway expects to record a gain on the sale of 111 East Wacker of approximately $500,000 in the first quarter of 2012. Parkway received approximately $2.8 million in net proceeds at closing, which were used to reduce amounts outstanding under the Company's credit facility.
Sale of Falls Pointe
Falls Pointe is a 107,000 square foot office property located in the Central Perimeter submarket of Atlanta, Georgia. The building was 100.0% occupied by one customer as of December 1, 2011. The gross sale price for Falls Pointe was $6.0 million and Parkway's ownership share was 30%.
Fund II acquired Falls Pointe in October 2010 as part of a three-asset portfolio, with an original investment strategy to sell the asset after a short-term hold period. The sale of this asset provides Fund II with capital to reinvest into assets more consistent with Fund II's strategy, specifically multi-tenant office properties.
The Company expects to record a gain on the sale of Falls Pointe for financial reporting purposes of approximately $1.3 million, of which approximately $400,000 is Parkway's share, in the first quarter of 2012.
The property was unencumbered with debt at the time of the sale. Fund II received approximately $4.3 million in net proceeds at closing, of which approximately $1.3 million was Parkway's share.
Contact:
Parkway Properties Inc.
James R. Heistand
President and Chief Executive Officer
Richard G. Hickson IV
Chief Financial Officer
(407) 650-0593
