Acquisitions (Notes)

9 Months Ended

Sep. 30, 2013

Business Combinations [Abstract]

Acquisitions

Acquisitions

On January 17, 2013, the Company purchased Tower Place 200, a 258,000 square foot office tower located in the Buckhead submarket of Atlanta, Georgia, for a gross purchase price of $56.3 million.  The purchase of Tower Place 200 was financed with borrowings under the Company's senior unsecured revolving credit facility.  The building is unencumbered by debt and the Company does not plan to place secured financing on the property at this time.

On March 7, 2013, the Company purchased two office complexes totaling 1.0 million square feet located in the Deerwood submarket of Jacksonville, Florida (the "Deerwood Portfolio") for a gross purchase price of $130.0 million.  The purchase of these properties was financed with a mortgage loan secured by the properties in the aggregate amount of $84.5 million and borrowings under the Company's senior unsecured revolving credit facility. The mortgage loan has a maturity date of April 1, 2023 and a fixed interest rate of 3.9%.

On March 25, 2013, the Company purchased its co-investor's 70% interest in four office properties totaling 788,000

square feet located in the Westshore submarket of Tampa, Florida ("Tampa Fund II Assets").  The Tampa Fund II Assets were owned by Parkway Properties Office Fund II, L.P. ("Fund II").  The Company's purchase price for its co-investor's 70% interest in the Tampa Fund II Assets was $97.5 million.  Simultaneously with closing, the Company assumed $40.7 million of existing mortgage indebtedness that is secured by the properties, which represents its co-investor's 70% share of the approximately $58.1 million of existing mortgage indebtedness.  The four office properties include Corporate Center IV at International Plaza, Cypress Center I, II and III, Cypress Center garage and The Pointe. The Tampa Fund II Assets' office properties and associated mortgage loans were previously included in the Company's consolidated balance sheets and statements of operations and comprehensive income (loss).  Therefore, the Company's purchase of its co-investor's share in these office properties will not impact the Company's overall financial position.

On June 3, 2013, the Company purchased an approximate 75% interest in the US Airways Building, a 225,000 square foot office property located in the Tempe submarket of Phoenix, Arizona, for a purchase price of $41.8 million. At closing, an affiliate of the Company issued a $3.5 million mortgage loan to an affiliate of US Airways, which is secured by the building. The mortgage loan carries a fixed interest rate of 3.0% and matures in December 2016. This nine-story Class A office building is adjacent to Parkway's Hayden Ferry Lakeside and Tempe Gateway assets and shares a parking garage with Tempe Gateway.  The property is the headquarters for US Airways, which has leased 100% of the building through April 2024.  US Airways has a termination option on December 31, 2016 or December 31, 2021 with 12 months prior notice.  US Airways is also the owner of the remaining approximate 25% in the building. During the third quarter of 2013, the Company reclassified the assets and liabilities attributable to the US Airways Building to investments in unconsolidated joint ventures on the Company's consolidated balance sheets. The Company accounts for its investment in the US Airways Building under the equity method of accounting.

The allocation of purchase price related to intangible assets and liabilities and weighted average amortization period (in years) for each class of asset or liability for Tower Place 200 and the Deerwood Portfolio is as follows (in thousands, except weighted average life, which is in years):

	Amount			Weighted Average Life
Land	$	31,337		N/A
Buildings and garages	121,369			40
Tenant improvements	13,434			5
Lease commissions	6,056			4
Lease in place value	15,862			4
Above market leases	2,936			4
Below market leases	(5,735		)	7

The unaudited pro forma effect on the Company's results of operations for the purchase of Tower Place 200, the Deerwood Portfolio, the Tampa Fund II assets, and its investment in the US Airways Building as if the purchase had occurred on January 1, 2012 is as follows (in thousands, except per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Revenues	$	74,576		$	62,470		$	222,069		$	174,653
Net income (loss) attributable to common stockholders	$	(3,085	)	$	(4	)	$	(21,518	)	$	2,527
Basic net income (loss) attributable to common stockholders	$	(0.04	)	$	(0.01	)	$	(0.34	)	$	0.09
Diluted net income (loss) attributable to common stockholders	$	(0.04	)	$	(0.01	)	$	(0.34	)	$	0.09

On April 26, 2013, the Company entered into a purchase and sale agreement to acquire Lincoln Place, a 140,000 square foot office building located in the South Beach submarket of Miami, Florida.  Lincoln Place is comprised of 111,000 square feet of office space and 29,000 square feet of retail space on the ground floor, with a five-story garage adjacent to the property. The property is currently 100% leased to LNR Corporation through June 2021 with no renewal or early termination option. Parkway is under contract to acquire Lincoln Place in exchange for the assumption of the existing secured first mortgage, which has a current outstanding balance of approximately $49.6 million, a fixed interest rate of 5.9% and a maturity date of June 11, 2016, and the issuance of 900,000 shares of operating partnership units. Based on Parkway's closing stock price of $18.06 per share on November 1, 2013, the implied purchase price would be approximately $65.9 million.  Closing is expected to occur by the end of the fourth quarter 2013, subject to customary closing conditions.

On August 19, 2013, the Company purchased approximately six acres of land available for development located in Tampa, Florida for a purchase price of $2.9 million. The land, which was partially and indirectly owned by certain of the Company's officers, is adjacent to the Company's Cypress Center I, II, and III assets and has surface parking used for tenants of Cypress I, II, and III. On August, 22, 2013, the Company issued (i) 11,966 shares of common stock to James R. Heistand, our President and Chief Executive Officer, (ii) 29,916 shares of common stock to ACP-Laurich Partnership, Ltd. (“ACP”), of which Mr. Heistand is the indirect owner, and (iii) 5,983 shares of common stock to Henry F. Pratt III, our Executive Vice President of Asset Management and Third Party Services, as partial consideration for the land purchase.

On August 28, 2013, the Company purchased approximately one acre of land available for development located in Tempe, Arizona for a purchase price of $1.2 million. This land is adjacent to Parkway's Hayden Ferry Lakeside and Tempe Gateway assets.

On September 4, 2013, the Company, Parkway Properties LP, a Delaware limited partnership (“Parkway LP”), PKY Masters LP, a Delaware limited partnership and a wholly owned subsidiary of Parkway LP (“Merger Sub”), Thomas Properties Group, Inc., a Delaware corporation (“TPGI”), and Thomas Properties Group, L.P. (“TPG LP”), a Maryland limited partnership, entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which TPGI will merge with and into the Company in a stock-for-stock transaction valued at approximately $1.2 billion (the "Mergers"). Under the terms of the Merger Agreement, TPGI's shareholders will receive 0.3822 shares of newly issued common stock of the Company in exchange for each share of common stock of TPGI. The transaction is expected to close by the end of the fourth quarter of 2013, subject to to the approval of stockholders of both companies, receipt of certain third-party consents and other customary closing conditions.

Upon completion of the transaction, the Company will assume TPGI’s ownership interest in two office properties in Houston, Texas and five office properties in Austin, Texas. The Company has separately reached an agreement with Brandywine Realty Trust ("Brandywine") to sell substantially all of TPGI’s ownership interest in two office properties located in Philadelphia, Pennsylvania known as Commerce Square, based on an agreed-upon property value of $332 million, which sale will close concurrent with and be subject to the closing of the merger transaction. Additionally, the Company has agreed to sell TPGI’s Four Points Centre and a contiguous land parcel located in Austin, Texas to Brandywine for $51 million, subject to customary closing conditions.

On September 11, 2013, the Company, through a joint venture, acquired a 40% common equity interest in a mortgage note in the original principal amount of $65 million secured by 7000 Central Park, a 415,000 square foot office property located in the Central Perimeter submarket of Atlanta, Georgia.  The total purchase price for the note, which was previously under special servicer oversight, was $56.6 million plus an additional $318,000 in transaction costs.  The Company's share of such amount was approximately $45.0 million, comprised of an investment of approximately$37.0 million for a preferred equity interest in the joint venture that acquired the note and an investment of approximately $8.0 million for a 40% common equity investment in the joint venture that acquired the note.  The joint venture foreclosed on the property on November 5, 2013 and expects to place secured financing on the asset by the end of the fourth quarter of 2013.  The proceeds from the secured debt will be used to repay in part the Company's preferred equity investment in the joint venture.  The property was 75.2% occupied as of September 16, 2013. 

For details regarding dispositions during the nine months ended September 30, 2013, please see Note H – Discontinued Operations.