ORLANDO, Fla., Jan. 6, 2014 /PRNewswire/ -- Parkway Properties, Inc. (NYSE: PKY) announced today that it has acquired its co-investor's 70% interest in the Bank of America Center, located in Orlando, Florida, that was previously owned by Parkway Properties Office Fund II, L.P. ("Fund II"). Parkway has also reached agreement to acquire the JTB Center, an office complex located in Jacksonville, Florida. Additionally, Parkway announced that it is under contract to sell two properties located in Houston, Texas and Phoenix, Arizona.
James R. Heistand, Parkway's President and Chief Executive Officer, stated, "We remain committed to building a high-quality portfolio of assets located in targeted submarkets throughout the Sunbelt. The Bank of America Center is our headquarters location and is a landmark asset in the Orlando CBD. It is a core-plus investment that has a solid base of high-quality, credit tenants with the opportunity to add value through leasing the remaining vacancy at the building. JTB Center will allow Parkway to gain additional scale in the highly-desirable Deerwood submarket of Jacksonville. We believe that each of these off-market transactions will allow Parkway to leverage economies of scale and increase exposure to two of our targeted submarkets. Furthermore, we continue to be proactive and look for opportunities to divest non-core assets that will generate strong returns and strengthen our balance sheet."
On December 23, 2013, Parkway acquired its co-investor's 70% interest in the Bank of America Center, giving Parkway 100% ownership of the asset. The Bank of America Center is an approximately 421,000 square foot, Class A office tower, located in in the central business district of Orlando, Florida. Parkway's purchase price for its co-investor's 70% interest in Bank of America Center was $52.5 million, based on an agreed-upon gross valuation of $75.0 million, which was funded using approximately $28.8 million of cash and the assumption of $23.7 million of in-place mortgage indebtedness that is secured by the property. Bank of America Center was 87.4% occupied as of October 1, 2013, and expected to generate an initial full-year cash net operating income yield of approximately 6.3%.
On December 20, 2013, Parkway entered into a definitive purchase agreement to acquire the JTB Center for an aggregate purchase price of $33.3 million. JTB Center consists of three, Class A office buildings totaling approximately 248,000 square feet located in the Deerwood submarket of Jacksonville, Florida. The properties are currently unencumbered with debt. As of January 1, 2014, the three properties have a combined occupancy of 94.4% and are expected to generate an initial full-year cash net operating income yield of approximately 8.3%. Closing is expected to occur by the end of the first quarter of 2014, subject to customary closing conditions.
Parkway also has entered into separate agreements to sell two properties, located in Houston, Texas and Phoenix, Arizona, for an aggregate gross sale price of approximately $28.2 million. Each of these sale transactions is expected to close in January 2014.
About Parkway Properties
Parkway Properties, Inc. is a fully integrated, self-administered and self-managed real estate investment trust specializing in the acquisition, ownership and management of quality office properties in higher growth submarkets in the Sunbelt region of the United States. Parkway owns or has an interest in 50 office properties located in eight states with an aggregate of approximately 17.6 million square feet at January 1, 2014. Parkway also offers fee-based real estate services which manage and/or lease approximately 12.2 million square feet for third parties as of January 1, 2014. Additional information about Parkway is available on the company's website at www.pky.com.
Forward Looking Statement
Certain statements in this release that are not in the present or past tense or discuss Parkway's expectations (including the use of the words anticipate, believe, forecast, intends, expects, project, or similar expressions) are forward-looking statements within the meaning of the federal securities laws and as such are based upon Parkway's current belief as to the outcome and timing of future events. Examples of forward-looking statements include projected net operating income, cap rates, internal rates of return, future dividend payment rates, forecasts of FFO accretion, projected capital improvements, expected sources of financing, expectations as to the timing of closing of acquisitions, dispositions, or other transactions, and descriptions relating to these expectations. There can be no assurance that future developments affecting Parkway will be those anticipated by Parkway. These forward-looking statements involve risks and uncertainties (some of which are beyond the control of Parkway) 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 actual or perceived impact of U.S. monetary policy; the demand for and market acceptance of Parkway's properties for rental purposes; the ability of Parkway to enter into new leases or renewal leases on favorable terms; the amount and growth of Parkway's expenses; tenant financial difficulties and general economic conditions, including interest rates, as well as economic conditions in those areas where Parkway owns properties; risks associated with joint venture partners; the risks associated with the ownership and development of real property; the failure to acquire or sell properties as and when anticipated; termination of property management contracts; the bankruptcy or insolvency of companies for which Parkway provides property management services or the sale of these properties; the outcome of claims and litigation involving or affecting Parkway; the ability to satisfy conditions necessary to close pending transactions and the ability to successfully integrate pending transactions; risks associated with acquisitions, including the integration of Thomas Properties Group, Inc.'s businesses; risks associated with achieving expected synergies or cost savings; and other risks and uncertainties detailed from time to time in Parkway's Securities and Exchange Commission filings. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Parkway's business, financial condition, liquidity, cash flows and results could differ materially from those expressed in the forward-looking statements. Any forward looking statements speaks only as of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for us to predict the occurrence of those matters or the manner in which they may affect us. Parkway does not undertake to update forward-looking statements except as may be required by law.
Director of Investor Relations
SOURCE Parkway Properties, Inc.