JACKSON, Miss., May 6, 2011 /PRNewswire/ -- Parkway Properties, Inc. (NYSE: PKY) announced today that it has entered into a contract to sell 233 North Michigan for a gross sale price of $162.2 million and has received a $17.0 million non-refundable earnest deposit. 233 North Michigan is a 1.1 million square foot office property located in the central business district of Chicago, Illinois. The property was 83.8% occupied as of May 1, 2011. Closing is expected to occur later this month and is subject to customary closing conditions. The gross sale price represents a capitalization rate of approximately 6.9%, which is based on projected in-place cash net operating income for the 12 month period following the anticipated closing date, and includes the impact of contractual rent abatements. The Company plans to repay the $84.6 million first mortgage that is secured by the property upon closing. Parkway expects to receive net cash proceeds from the sale after the repayment of the first mortgage of approximately $75.5 million, which the Company expects to use to reduce amounts outstanding under the Company's revolving credit facility. The Company estimates that it will recognize a gain on the sale of approximately $2.6 million in the second quarter of 2011.
Steven G. Rogers, President and Chief Executive Officer stated, "The sale of 233 North Michigan is a strategic decision by Parkway to reduce our exposure in one city block of the Chicago CBD while also using the expected significant proceeds to improve our balance sheet. We like the Chicago market and will continue to manage and own assets in the area, but the sale of this particular asset enables us to accelerate the achievement of the capital allocation objectives of our FOCUS Plan."
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, leasing, acquisition, and ownership of office properties. The Company is geographically focused on the Southeastern and Southwestern United States and Chicago. Parkway owns or has an interest in 67 office properties located in 11 states with an aggregate of approximately 14.1 million square feet of leasable space as of May 6, 2011. Included in the portfolio are 22 properties totaling 4.5 million square feet that are owned jointly with other investors, representing 32.2% of the portfolio. Fee-based real estate services are offered through the Company's wholly-owned subsidiary, Parkway Realty Services, which also manages and/or leases approximately 1.6 million square feet for third-party owners at May 6, 2011.
Parkway Properties, Inc.'s press releases and additional information about the Company are available on the Company's website at www.pky.com.
Forward Looking Statements
Certain statements in this press release relating to the Company's expectations as to the timing of the disposition and descriptions relating to these expectations 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; tenant financial difficulties and general economic conditions, including interest rates, as well as economic conditions in those areas where the Company owns properties; the failure to sell properties as and when anticipated; the risk that a condition to closing of these transactions may not be satisfied; and other risks and uncertainties detailed from time to time in 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. The Company does not undertake to update forward-looking statements.
STEVEN G. ROGERS
PRESIDENT & CHIEF EXECUTIVE OFFICER
RICHARD G. HICKSON IV
CHIEF FINANCIAL OFFICER
SOURCE Parkway Properties, Inc.