5847 San Felipe Street, Suite 2200 | Houston, TX 77057
p. 832.308.6055 | www.pky.com
FOR IMMEDIATE RELEASE
PARKWAY AGREES TO SELL 49% INTEREST IN HOUSTON GREENWAY
PORTFOLIO
HOUSTON, TEXAS – February 17, 2017 – Parkway, Inc. (NYSE:PKY) announced today that
it has reached an agreement to sell a 49.0% interest in Greenway Plaza and Phoenix Tower
(collectively, the “Greenway Portfolio”) for $512.1 million, or an implied $210 per square
foot. Parkway’s Greenway Portfolio is an approximately 5.0 million square foot campus
consisting of 11 office properties located in the Greenway submarket of Houston, Texas.
"The recapitalization of our Greenway Portfolio accomplishes several objectives for
Parkway,” stated James R. Heistand, President and Chief Executive Officer of Parkway, Inc.
(“Parkway”). “First, we have established a great partnership with three well-capitalized
and highly regarded institutional investors that share our view of the long-term resiliency
of the Houston market and the expectation of an eventual recovery in Houston office
fundamentals. Second, this transaction helps to mitigate risk in a single office campus that
represents 57% of our Company’s overall square footage. And finally, with approximately
$315.8 million of expected net proceeds to Parkway, this joint venture will supply us with
additional capital to immediately strengthen our balance sheet while providing us the
flexibility to further diversify the portfolio through future acquisitions as the Houston
market recovers.”
Parkway has agreed to form a joint venture with affiliates of TH Real Estate, Silverpeak
Real Estate Partners (“Silverpeak”) and Canada Pension Plan Investment Board (“CPPIB”),
with Parkway retaining a 51% interest, a partnership between TH Real Estate and
Silverpeak acquiring a 24.5% interest, and CPPIB acquiring a 24.5% interest in the
Greenway Portfolio. Parkway will serve as general partner and also will provide property
management and leasing services for the joint venture. The joint venture expects to
assume the existing mortgage debt secured by Phoenix Tower, which has an outstanding
balance of approximately $76.2 million and matures on March 1, 2023. Additionally, the
joint venture received a signed commitment letter from Goldman Sachs for a new 5-year
mortgage loan totaling $465.0 million secured by the other properties in the Greenway
Portfolio, which is expected to close concurrently with the closing of the joint venture,
subject to customary closing conditions and contingent on satisfying the conditions set
forth in the commitment. At closing, Parkway intends to terminate its existing revolver
and term loan credit facility and prepay the $350.0 million outstanding balance using
proceeds from the joint venture.
Net proceeds to Parkway are expected to be approximately $315.8 million, which includes
the new debt placement and the assumed payoff of Parkway’s $350.0 million existing term
loan at closing. Parkway’s net proceeds also will be net of credits to the other joint venture
partners related to outstanding contractual lease obligations for tenant improvements
and rent concessions as well as certain capital expenditures for projects that are in
process, all of which totals approximately $38.0 million as of the date of execution of the
agreement. Additionally, Parkway expects to record an impairment loss of approximately
$25.0 million in the first quarter of 2017 related to the joint venture transaction. Parkway
expects the closing of the joint venture and associated financing to occur in the second
quarter of 2017, subject to customary closing conditions.
About Parkway
Parkway is an independent, publicly traded, self-managed real estate investment trust
that owns and operates high-quality office properties located in attractive submarkets in
Houston, Texas. As of December 31, 2016, our portfolio consisted of five Class A assets
comprising 19 buildings and totaling approximately 8.7 million rentable square feet in the
Greenway, Galleria and Westchase submarkets of Houston.
Contact:
Thomas Blalock
Vice President, Finance & Capital Markets
(407) 581-2915
Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in this communication, including those that express a belief,
expectation or intention, as well as those that are not statements of historical fact, are
forward-looking statements within the meaning of the federal securities laws and as such
are based upon Parkway’s current beliefs as to the outcome and timing of future events.
There can be no assurance that actual future developments affecting Parkway will be
those anticipated by Parkway. Examples of forward-looking statements include projected
capital resources, projected profitability and portfolio performance, estimates of market
rental rates, projected capital improvements, expected sources of financing, expectations
as to the timing of closing of acquisitions, dispositions, or other transactions, the expected
operating performance of anticipated near-term acquisitions and descriptions relating to
these expectations, including without limitation, the anticipated net operating income
yield. Parkway cautions investors that any forward-looking statements presented in this
presentation are based on management’s beliefs and assumptions made by, and
information currently available to, management. When used, the words “anticipate,”
“assume,” “believe,” “estimate,” “expect,” “forecast,” “guidance,” “intend,” “may,” “might,”
“outlook,” “project,” “should” or similar expressions that do not relate solely to historical
matters are intended to identify forward-looking statements. You can also identify
forward-looking statements by discussions of strategy, plans or intentions. Forward-
looking statements involve risks and uncertainties (some of which are beyond Parkway’s
control) and are subject to change based upon various factors, including but not limited
to the following risks and uncertainties: Parkway’s lack of operating history as an
independent company; conditions associated with Parkway’s primary market, including
an oversupply of office space, customer financial difficulties and general economic
conditions; that certain of Parkway’s properties represent a significant portion of
Parkway’s revenues and costs; that the spin-off from Cousins Properties Incorporated
(“Cousins”) will not qualify for tax-free treatment; Parkway’s ability to meet mortgage
debt obligations on certain of Parkway’s properties; the availability of refinancing current
debt obligations; potential co-investments with third-parties; changes in any credit rating
Parkway may obtain; changes in the real estate industry and in performance of the
financial markets and interest rates and Parkway’s ability to effectively hedge against
interest rate changes; the actual or perceived impact of global and economic conditions;
declines in commodity prices, which may negatively impact the Houston, Texas market;
the concentration of Parkway’s customers in the energy sector; the demand for and
market acceptance of Parkway’s properties for rental purposes; Parkway’s ability to enter
into new leases or renewal leases on favorable terms; the potential for termination of
existing leases pursuant to customer termination rights; the amount, growth and relative
inelasticity of Parkway’s expenses; risks associated with the ownership and development
of real property; 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 the assets and related operations acquired in such
transactions after closing; applicable regulatory changes; risks associated with
acquisitions, including the integration of the portion of the combined business of Parkway
Properties, Inc. (“Legacy Parkway”) and Cousins relating to the ownership of real
properties in Houston and Legacy Parkway’s fee-based real estate business; risks
associated with the fact that Parkway’s historical and predecessors’ financial information
may not be a reliable indicator of Parkway’s future results; risks associated with achieving
expected synergies or cost savings; risks associated with the potential volatility of
Parkway’s common stock; and other risks and uncertainties detailed from time to time in
the Company’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 any forward-looking
statement. While forward-looking statements reflect Parkway’s good faith beliefs, they are
not guarantees of future performance. Any forward-looking statement speaks only as of
the date on which it is made. New risks and uncertainties arise overtime, and it is not
possible for us to predict the occurrence of those matters or the manner in which they
may affect us. Parkway disclaims any obligation to publicly update or revise any forward-
looking statement to reflect changes in underlying assumptions or factors, of new
information, data or methods, future events or other changes. Accordingly, investors
should use caution in relying on past forward-looking statements, which were based on
results and trends at the time they were made, to anticipate future results or trends.