Notes Payable (Tables)

12 Months Ended

Dec. 31, 2012

Summary of outstanding credit facilities

At December 31, 2012, the Company had a total of $262.0 million outstanding under the following credit facilities (in thousands):

		Interest			Outstanding
Credit Facilities	Lender	Rate		Maturity	Balance
$10.0 Million Unsecured Working Capital Revolving Credit Facility (1)	PNC Bank		-%	03/29/16	$	-
$215.0 Million Unsecured Revolving Credit Facility (1)	Wells-Fargo		1.8%	03/29/16		137,000
$125.0 Million Unsecured Term Loan (2)	Key Bank		2.2%	09/27/17		125,000
			2.0%		$	262,000

(1)

The interest rate on the credit facilities is based on LIBOR plus 160 to 235 basis points, depending upon overall Company leverage as defined in the loan agreements for the Company's credit facility, with the current rate set at 160 basis points. Additionally, the Company pays fees on the unused portion of the credit facilities ranging between 25 and 35 basis points based upon usage of the aggregate commitment, with the current rate set at 25 basis points.

(2)

The interest rate on the term loan is based on LIBOR plus an applicable margin of 1.5% to 2.3% depending on overall Company leverage (with the current rate set at 1.5%). On September 28, 2012, the Company executed two floating-to-fixed interest rate swaps totaling $125 million, locking LIBOR at 0.7% for five years which is effective October 1, 2012.

Summary of mortgage notes payable

A summary of mortgage notes payable at December 31, 2012 and 2011 is as follows (in thousands):


						Note Balance
	Fixed		Maturity	Monthly		December 31
Office Property	Rate		Date	Payment		2012		2011
Wholly-Owned
Bank of America Plaza		7.1%	05/10/12	$	-	$	-	$	16,373
Westshore Corporate Center (4)		2.5%	05/01/15		88		15,646		-
Teachers Insurance and Annuity Associations (5 properties)		6.2%	01/01/16		565		73,584		75,724
NASCAR Plaza (1)(2)(3)		3.4%	03/30/16		121		42,977		-
John Hancock Facility (2 properties)		7.6%	06/01/16		130		17,852		18,055
111 East Wacker, LLC (6)		6.3%	07/11/16		-		-		147,873
Capital City Plaza		7.3%	03/05/17		253		33,489		34,073
Morgan Keegan Tower		7.6%	10/01/19		163		10,419		11,539
Citrus Center		6.3%	06/01/20		153		22,034		22,438
Stein Mart		6.5%	08/01/20		81		11,517		11,733
Pinnacle at Jackson Place – Subordinate NMTC Loan (6)		3.0%	12/27/47		-		-		6,000
Pinnacle at Jackson Place – Sr NMTC Loan (6)		5.8%	12/27/47		-		-		23,501
Total Wholly-Owned					1,554		227,518		367,309

Consolidated Joint Ventures

Parkway Properties Office Fund, LP:
Renaissance Center (6)		5.5%	06/01/12		-		-		15,704
100 Ashford Center/Peachtree Ridge (6)		5.6%	01/08/16		-		-		29,824
Overlook II (6)		5.6%	03/01/17		-		-		31,500
Total Fund I					-		-		77,028

Parkway Properties Office Fund II, LP
Cypress Center I-III (1)		4.1%	05/18/16		42		12,088		12,088
3344 Peachtree		5.3%	10/01/17		485		84,733		86,064
Bank of America Center (1)		4.7%	05/18/18		138		33,875		33,875
Hayden Ferry Lakeside I (1)		4.5%	07/25/18		85		22,000		22,000
Hayden Ferry Lakeside II (1)(5)		5.0%	07/25/18		421		48,125		-
The Pointe		4.0%	02/10/19		79		23,500		-
245 Riverside (1)		5.2%	03/31/19		42		9,250		9,250
Corporate Center Four at International Plaza (1)		5.4%	04/08/19		104		22,500		22,500
Two Ravinia (1)		5.0%	05/20/19		95		22,100		22,100
Two Liberty Place		5.2%	06/10/19		391		90,200		90,200
Carmel Crossing		5.5%	03/10/20		46		10,000		10,000
Total Fund II					1,928		378,371		308,077

Total Mortgage Notes Payable				$	3,482	$	605,889	$	752,414

(1)	The mortgage loans secured by these properties have variable interest rates that have been fixed by interest rate swap agreements.

(2)

Effective December 31, 2012 the Company assumed the mortgage secured by NASCAR Plaza and also the swap associated with this mortgage. The notional amount of the swap is $30 million which fixes LIBOR at 2.3%, which resulted in an all-in interest rate of 3.4%. The interest rate swap matures on February 1, 2016.

(3)	The Company assumed the existing loan on NASCAR Plaza upon acquisition in December 2012. The note bears interest at a stated interest rate of 4.7% and has been marked-to-market for GAAP purposes.

(4)	The Company assumed the existing loan on the Westshore Corporate Center upon acquisition in November 2012. The note bears interest at a stated rate of 5.8% and has been marked-to-market for GAAP purposes.

(5)

The Hayden Ferry II mortgage provides for quarterly payments of $625,000 through February 2015 with payments based on a 25 year amortization thereafter until maturity. Additionally, the mortgage bears interest at LIBOR plus the applicable spread which ranges between 250 and 350 basis points. Fund II entered into an interest rate swap that fixed the LIBOR rate associated with this loan at 1.5% through January 25, 2018. This loan is cross-defaulted with Hayden Ferry I.

(6)	For balance sheet purposes, the Company has reclassified these mortgages totaling $254.4 million to Liabilities Related to Assets Held for Sale at December 31, 2011.

Aggregate annual maturities of mortgage notes payable

The aggregate annual maturities of mortgage notes payable at December 31, 2012 are as follows (in thousands):

	Total		Debt		Debt
	Mortgage		Balloon		Principal
	Maturities		Payments		Amortization
2013	$	9,674	$	-	$	9,674
2014		10,848		-		10,848
2015		25,407		14,051		11,356
2016		147,097		137,776		9,321
2017		116,439		107,907		8,532
2018		98,052		91,550		6,502
Thereafter		198,372		194,317		4,055
	$	605,889	$	545,601	$	60,288

Summary of interest rate hedge contracts

The Company's interest rate hedge contracts at December 31, 2012 and 2011 are summarized as follows (in thousands):

								Fair Value
								Liability
Type of	Balance Sheet	Notional		Maturity		Fixed		December 31
Hedge	Location	Amount		Date	Reference Rate	Rate		2012		2011
Swap	Accounts payable and other liabilities	$	12,088	11/18/15	1-month LIBOR		4.1%	$	(582)	$	(581)
Swap	Accounts payable and other liabilities	$	30,000	02/01/16	1-month LIBOR		2.3%		(1,787)		-
Swap	Accounts payable and other liabilities	$	50,000	09/28/17	1-month LIBOR		2.2%		(43)		-
Swap	Accounts payable and other liabilities	$	75,000	09/28/17	1-month LIBOR		2.2%		(65)		-
Swap	Accounts payable and other liabilities	$	33,875	11/18/17	1-month LIBOR		4.7%		(3,312)		(2,862)
Swap	Accounts payable and other liabilities	$	22,000	01/25/18	1-month LIBOR		4.5%		(1,923)		(1,548)
Swap	Accounts payable and other liabilities	$	48,125	01/25/18	1-month LIBOR		5.0%		(1,581)		-
Swap	Accounts payable and other liabilities	$	9,250	09/30/18	1-month LIBOR		5.3%		(1,218)		(1,083)
Swap	Accounts payable and other liabilities	$	22,500	10/08/18	1-month LIBOR		5.4%		(3,135)		(2,826)
Swap	Accounts payable and other liabilities	$	22,100	11/18/18	1-month LIBOR		5.0%		(2,639)		(2,234)
								$	(16,285)	$	(11,134)