Parkway Launches 2012 Strategy with a $147M Portfolio under Contract

JACKSON, MS-Parkway Properties Inc. launched a new strategy to exit non-core markets by putting 15 assets under contract for a gross sale price of $147.5 million. Three local buildings, as well as assets in Memphis, TN and Richmond, VA will go to buyer Hertz Investment Group, with closing anticipated to occur during Q1 2012.

The three local assets are the 221,293-square-foot One Jackson Place at 188 E. Capitol St.; the 244,085-square-foot Pinnacle at Jackson Place & Shops at 190 E. Capitol St. and the 187,129-square-foot 111 Capitol Building.  In Memphis, the 155,061-square-foot Falls Building; the 162-556-square-foot Forum I, the 179-930-square-foot Forum II and II and the 174,700-square-foot Toyota Center are in escrow.

Meanwhile, the 140,858-square-foot Boulders Centers; Moorefield I, II and III and the 126,867-square-foot Winchester Building are also under contract. The portfolio’s total square footage is 1.9 million square feet. In addition, Parkway completed the sale of its interest in nine assets owned by Parkway Properties Office Fund LP to its fund partner.

Once the sale closes, Parkway will have exited the Richmond market. The company will still own the 267,000-square-foot City Centre in Jackson and the Memphis-based 334,668-square-foot Morgan Keegan Tower. Both assets are being marketed for sale.

According to Parkway’s president and CEO James R. Heistand, a thorough review of the company’s markets led to the determination that Jackson, Memphis and Richmond were non-core markets. With its exit from the three markets, Parkway will focus on core growth markets, mainly in Florida.

“A portfolio sale of these assets allows us to quickly realign our overall portfolio and focus our resources and capital on building critical mass in our remaining core markets,” Heistand noted in a prepared statement. “Additionally, I am encouraged by the first closing of a major portion of the Fund I assets, which helps advance several key objectives of the company. The sale of these Fund I assets significantly contributes to our exit from Chicago, improves our balance sheet, and reduces the gap between Parkway's projected FFO and FAD, as the Fund I portfolio required significant capital costs to re-lease it to stabilization.”

The REIT has undergone several changes during the last several months.  In October, 2011, long-time CEO Steve Rogers announced his retirement, effective Jan. 1, 2012, and Heistand was appointed to take over the job.  Furthermore, the company relocated its local headquarters to Orlando, FL. The reason for the headquarters relocation was because of Parkway’s merger with Florida-based Eola Capital in early 2011. Heistand founded Eola Capital.