Parkway Announces Update on GSA Renewal in Chicago

Dec 13, 2010, 17:53 ET from Parkway Properties, Inc.

JACKSON, Miss., Dec. 13, 2010 /PRNewswire/ -- Parkway Properties, Inc. (NYSE: PKY) announced the commencement of the 10-year lease with the General Services Administration ("GSA") for 184,000 square feet at 233 North Michigan in Chicago effective December 1, 2010.  As previously announced on November 23, 2009, the GSA's renewal consisted of an initial 12-month renewal on an "as-is" basis which expired on November 30, 2010, followed by a 10-year lease extension which expires on November 30, 2020.  The 10-year extension includes contractual rent concessions totaling $5.3 million over the period December 2010 through February 2012, of which $4.5 million occurs during 2011. The extension includes a tenant improvement allowance of approximately $7.8 million, and any unused portion after construction is completed can be applied as a rent concession on a straight-line basis over the remaining term.  The GSA has estimated it will incur approximately $1.5 million in tenant improvements, which would leave $6.3 million to be applied as a rent concession ratably over the remaining term.  Parkway anticipates all improvements could be completed as early as the second quarter of 2011.  After the application of rent concessions, the Company expects to receive approximately $1.1 million in cash rental revenue for the period December 2010 through February 2012, of which $720,000 occurs during 2011.

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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 64 office properties located in 11 states with an aggregate of approximately 13.2 million square feet of leasable space as of December 13, 2010.  Included in the portfolio are 20 properties totaling 3.7 million square feet that are owned jointly with other investors, representing 28.0% 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 2.5 million square feet for third-party owners at December 13, 2010.

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