The new owners of the portfolio anticipate spending anadditional $901,000 for closing costs, building improvements,leasing costs and tenant improvements during the first two years ofownership. A $14.4-million, 10-year first mortgage at a rate of5.9% was obtained for the property. During the first five years ofthe loan, the owners will make interest-only payments.

Parkway's initial equity contribution of $2.4 million for thepurchase was provided by advances under the company's existing lineof credit. On a stand-alone basis, the properties are expected toyield the fund a cap rate of 7.1% in the first year of operationsand an IRR of approximately 12%.

The buildings were purchased on behalf of the $500-millionParkway Properties Office Fund, LP, of which Parkway Properties isa 25% investor. As of May 1, $56.6 million of the fund had beeninvested. The fund owns four properties with a combined total of410,000 sf. "This acquisition raises the investment in thediscretionary fund to 11% of the total allocation. Having achievedearly leasing success at our first fund acquisition in Orlando, andwith this addition, we believe we are assembling a portfoliodesigned to deliver the stated return objectives of ourobjectives," says Parkway president and CEO Steven Rogers, in aprepared statement.