CHARLOTTE, NC—Parkway Properties is knee deep in strategy execution. The company just received a $200 million equity investment from private investment firm TPG and closed on the Hearst Tower acquisition for $250 million. Parkway also disposed of the Pinnacle at Jackson Place and Parking at Jackson Place in Jackson, MS. for a combined $29.5 million.

Parkway’s stated goal is to position itself for long-term growth. The firm is committed to improving operations and cash flow, and on pursuing new acquisitions to grow. Parkway’s target is the Sunbelt region and the Hearst Tower fits smack dab in the middle of that strategy.

The $250 million, or $257 per square foot, purchase price of Hearst Tower represents a significant discount to replacement cost. The building is currently 94% leased with no material expirations until 2017.  The 47-story tower offers 972,000 square feet of space.

“You could argue that they overbuilt Hearst Tower,” David O’Reilly, executive vice president and chief investment offer at Parkway Properties, tells GlobeSt.com. “Bank of America has a 10-year lease. They have a redundant trading floor and run all of their Cat backup through there. So this is a mission critical facility for them.”

Parkway’s purchase of Hearst Tower was financed with the cash received from TPG combined with borrowings on the company's credit facility. The asset is expected to generate cash net operating income of approximately $17.5 million during the first year Parkway owns it. While the property is currently unencumbered, the company expects to obtain financing on the property to provide capital for future investment opportunities.

“Hearst Tower is in a market and submarket we’ve been targeting for a long time,” O’Reilly says. “There have not been a lot of transactions in Charlotte. Charlotte is market that at one point in time was at one point in time about 3% percent vacant and got about three million square feet of new supply and has recovered back to 18%, which is pretty phenomenal.”