Parkway Purchasing Interests in Tampa, Tempe Office Properties

ORLANDO-Parkway Properties is spending more than $139 million to acquire interests in three Tampa office properties and in the US Airways building in Tempe, AZ.

Parkway officials report the Orlando-based firm has entered into a purchase and sale agreement to acquire its co-investor's 70% interest in three office properties in the Westshore submarket of Tampa owned by Parkway Properties Office Fund II, L.P. The company also has entered into a purchase and sale agreement to acquire a 75% interest in the 225,000-square-foot US Airways Building.

The three new Tampa office assets to Parkway's portfolio are: 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 93.5% as of March 1, 2013 and are expected to generate an initial full-year cash net operating income yield of approximately 8.1%, company officials say. Closing is expected to occur by the end of the first quarter 2013.

In terms of its Tempe purchase, US Airways will retain the remaining 25% interest in the property. The US Airways Building was built in 1999 and is LEED® Gold Certified and 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 with a current in place net rent of $17.50 per square foot. 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 at the end of the second quarter of this year.

Parkway President and CEO James R. Heistand states, “Our Fund II assets in Tampa have performed well since they were acquired by Fund II, and we believe there is still plenty of opportunity for upside in these properties through both occupancy gains and rental rate growth. The US Airways Building gives us further scale in the Tempe submarket with a high-quality core asset that we believe will generate stable cash flows for a number of years.”