JACKSON, Miss., July 11 /PRNewswire-FirstCall/ -- Parkway Properties,
Inc. (NYSE: PKY) today announced the closing of the previously announced
fee simple purchase of One Illinois Center, a 1,003,000 square-foot office
building with an attached four-level structured parking garage located at
111 East Wacker Drive in the East Loop sub-market of Chicago. The property
was acquired for $198 million plus closing costs and transfer taxes of
approximately $1.6 million, anticipated building improvements of $3.7
million and projected leasing costs of $12.1 million during the first two
years of ownership, for a total purchase price of $215.4 million, or $215
per rentable square foot ("RSF"). The purchase price represents an
estimated 23% discount to current estimated replacement cost of $280 RSF.
The property is expected to produce an initial unleveraged yield or
going-in cash capitalization rate of approximately 6.3% in the first twelve
months of operations, calculated using first year estimated net operating
income of $13.5 million and the total purchase price of $215.4 million.
The purchase was funded by a $148.5 million non-recourse first mortgage
at a fixed interest rate of 6.29% with interest only payments for five
years and a 10-year maturity. Additional purchase funding was provided by a
$33.7 million mezzanine loan with a six-month term at an interest rate of
LIBOR plus 130 basis points (current rate set at 6.65%), proceeds from the
recent sale of Viad Corporate Center in Phoenix and amounts drawn under
existing lines of credit.
The Company has engaged Wachovia Securities to market the property,
combined with the Company's Two Illinois Center property located at 233
North Michigan Avenue, as a single joint venture. Parkway expects to retain
an ownership interest of approximately 25% and to close the joint venture
in late 2006. Proceeds from the formation of the joint venture will be used
to reduce amounts outstanding under bank lines of credit.
Additional information about One Illinois Center is available in the
Company's April 28, 2006 press release of the signing of an agreement to
acquire the property. The Company included this anticipated purchase in
earnings guidance given in May 2006.
Steven G. Rogers, President and Chief Executive Officer, stated, "We
are pleased to join 111 East Wacker with its adjacent partner building, 233
North Michigan Avenue. These assets total over 2 million square feet in a
great location in the improving Chicago CBD. The combined cash NOI for
these two properties of approximately $32 million represents a diverse rent
roll of long term credit customers, making this investment a very
attractive opportunity for Parkway and potential co-investors. I am happy
to announce that Jay Buckley, Senior Vice President, recently relocated to
Chicago to lead our well-established operating team at 233 North Michigan
and our new team at 111 East Wacker."
Parkway Properties, Inc., a member of the S&P Small Cap 600 Index, is a
self-administered real estate investment trust specializing in the
operation, acquisition, ownership, management, and leasing of office
properties. The Company is geographically focused on the Southeastern and
Southwestern United States and Chicago. Parkway owns or has an interest in
68 office properties located in 11 states with an aggregate of
approximately 12,937,000 square feet of leasable space as of July 11, 2006.
The Company also offers fee-based real estate services through its wholly
owned subsidiary, Parkway Realty Services, to its owned properties and to
its third party and minority interest properties.
NOTICE OF ONE ILLINOIS CENTER BUILDING TOUR
Parkway will conduct a Chicago building tour and information exchange
for analysts and investors on September 14, 2006. Please contact Will Flatt
at (800) 748-1667 for more information.
Parkway Properties, Inc.'s press releases and additional information
about the Company are available at http://www.pky.com.
Certain statements in this release that are not in the present tense or
discuss the Company's expectations (including the use of the words
anticipate, forecast or project) are forward-looking statements within the
meaning of the federal securities laws and as such are based upon the
Company's current belief as to the outcome and timing of future events.
There can be no assurance that future developments affecting the Company
will be those anticipated by the Company. These forward-looking statements
involve risks and uncertainties (some of which are beyond the control of
the Company) and are subject to change based upon various factors,
including but not limited to the following risks and uncertainties: changes
in the real estate industry and in performance of the financial markets;
the demand for and market acceptance of the Company's properties for rental
purposes; the amount and growth of the Company's expenses; tenant financial
difficulties and general economic conditions, including interest rates, as
well as economic conditions in those areas where the Company owns
properties; the risks associated with the ownership of real property; and
other risks and uncertainties detailed from time to time on the Company's
SEC filings. Should one or more of these risks or uncertainties occur, or
should underlying assumptions prove incorrect, the Company's results could
differ materially from those expressed in the forward-looking statements.
SOURCE Parkway Properties, Inc.
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Related links:
http://www.pky.com/
CONTACT:
STEVEN G. ROGERS
PRESIDENT & CHIEF EXECUTIVE OFFICER
WILLIAM R. FLATT
CHIEF FINANCIAL OFFICER
(601) 948-4091
CONTACT:
Steven G. Rogers, President & Chief Executive
Officer, or William R. Flatt, Chief Financial Officer, both of
Parkway Properties, Inc., +1-601-948-4091
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