UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 18, 1997
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PARKWAY PROPERTIES, INC.
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(Exact name of Registrant as specified in its charter)
Maryland 1-11533 74-2123597
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification
incorporation) Number)
300 One Jackson Place, 188 E. Capitol St., Jackson, MS 39201
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (601) 948-4091
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(Former name or former address, if changed since last report)
FORM 8-K
PARKWAY PROPERTIES, INC.
Item 2. Acquisition or Disposition of Assets.
On March 18, 1997, Parkway Properties LP, a
limited partnership in which Parkway Properties, Inc.
is a 99% limited partner and a wholly-owned subsidiary
is a 1% general partner, purchased Charlotte Park
Executive Center in Charlotte, North Carolina.
Charlotte Park Executive Center is a 30 acre master-
planned office park consisting of three office
buildings built in 1982, 1984 and 1986 with
approximately 187,207 square feet of net rentable area.
It is located in the I-77/Southwest corridor,
Charlotte's largest office submarket. The Company also
purchased 17.64 acres of development land in the office
park for $1,721,000. The three buildings are currently
92% leased with Premier Health Systems (59% of total
net rentable square feet) and BellSouth (23% of total
net rentable square feet) as the principal tenants.
The purchase price of $16,071,000 was funded with
existing cash reserves.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements
The audited combined financial statement of Charlotte
Park Executive Center for the twelve months ended
December 31, 1995 is incorporated by reference to the
Registrant's Form 8-K dated January 7, 1997 filed on
January 10, 1997. Also incorporated is the unaudited
combined financial statement of Charlotte Park
Executive Center for the nine months ended September
30, 1996.
(b) Pro Forma Consolidated Financial Statements
The following unaudited Pro Forma Consolidated
Financial Statements are attached hereto.
PARKWAY PROPERTIES, INC.
Page
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Pro Forma Consolidated Financial Statements (Unaudited) 4
Pro Forma Consolidated Balance Sheet (Unaudited) -
As of September 30, 1996 6
Pro Forma Consolidated Statement of Income (Unaudited) -
For the Twelve Months Ended December 31, 1995 8
Pro Forma Consolidated Statement of Income (Unaudited) -
For the Nine Months Ended September 30, 1996 9
Notes to Pro Forma Consolidated Financial
Statements (Unaudited) 10
(c) Exhibits
(10) The Purchase and Sale Agreement among Charlotte
Park Limited Partnership, CEP Investors Limited
Partnership and Parkway Carolina, Inc. dated November
4, 1996 is incorporated by reference to the
Registrant's Form 8-K dated January 7, 1997 filed on
January 10, 1997. Parkway agrees to furnish
supplementally to the Securities and Exchange
Commission on request a copy of any omitted schedule or
exhibit to this agreement.
PARKWAY PROPERTIES, INC.
Pro Forma Consolidated Financial Statements
(Unaudited)
The following unaudited pro forma consolidated balance sheet as
of September 30, 1996 and pro forma consolidated statements of
income of Parkway Properties, Inc. ("Parkway") for the twelve
months ended December 31, 1995 and nine months ended September
30, 1996 give effect to the September 30, 1996 purchase of the
BB&T Financial Center ,the October 31, 1996 purchase of the
Tensor Building, the January 7, 1997 purchase of Forum II & III,
the January 28, 1997 purchase of Ashford II and the
March 18, 1997 purchase of Charlotte Park Executive Center as well
as the December 24, 1996 sale of the Virginia Beach mortgage loan.
The pro forma consolidated financial statements have been prepared by
management of Parkway based upon the historical financial
statements of Parkway and the adjustments and assumptions in the
accompanying notes to the pro forma consolidated financial
statements.
The pro forma consolidated balance sheet sets forth the effect of
Parkway's purchases of the Tensor Building, Forum II & III,
Charlotte Park Executive Center and Ashford II and the effect of
the sale of the mortgage loan. No pro forma adjustments were
needed for the purchase of the BB&T Financial Center due its
September 30th purchase date.
The pro forma consolidated statements of income set forth the
effects of Parkway's purchases of the following buildings as if
they had been consummated on January 1, 1995.
BUILDING DATE OF PURCHASE
Charlotte Park Executive Center 3/18/97
Ashford II 1/28/97
Forum II & III 1/07/97
Tensor 10/31/96
BB&T Financial Center 9/30/96
Falls Pointe 8/09/96
Roswell North 8/09/96
Cherokee 7/09/96
Courthouse 7/09/96
400 Northbelt 4/15/96
Woodbranch 4/15/96
One Park 10 Plaza 3/07/96
Waterstone 12/18/95
IBM Building 10/02/95
MTEL Centre' 7/31/95
In addition to the purchases listed above, the pro forma
consolidated statements of income set forth the effect of the May
31, 1996 sale of 157 mortgage loans, the placement of non-recourse
mortgage debt on recently acquired properties and the December
24, 1996 sale of the Virginia Beach mortgage loan as if the
transactions occurred January 1, 1995.
These pro forma consolidated financial statements may not be
indicative of the results that actually would have occurred if
the purchase, sale and/or financings had been in effect on the
dates indicated or which may be obtained in the future. The pro
forma consolidated financial statements should be read in
conjunction with the financial statements and notes of Parkway
included in its annual report on Form 1O-KSB for the period ended
December 31, 1995.
PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
(Unaudited)
Parkway Pro Forma Parkway
Historical Adjustments Pro Forma
---------- ----------- ---------
(In thousands)
Assets
Real estate related investments
Office buildings.............$129,507 $ 37,523 $167,030
Accumulated depreciation..... (8,671) - (8,671)
-------- -------- --------
120,836 37,523 158,359
Real estate held for sale
Land....................... 8,206 - 8,206
Operating properties....... 3,928 - 3,928
Mortgage loans............... 6,173 (5,784) 389
Real estate securities....... 507 - 507
Real estate partnerships and
corporate joint venture.... 312 - 312
-------- -------- --------
139,962 31,739 171,701
Interest and rents receivable
and other assets............. 3,865 (227) 3,638
Cash and cash equivalents...... 134 (134) -
-------- -------- --------
$143,961 $ 31,378 $175,339
======== ======== ========
Liabilities
Notes payable to banks.........$ 6,836 $ 22,438 $ 29,274
Mortgage notes payable without
recourse..................... 53,452 9,850 63,302
Mortgage notes payable on wrap
mortgages.................... 4,470 (4,470) -
Accounts payable and other
liabilities.................. 5,999 - 5,999
-------- -------- --------
70,757 27,818 98,575
-------- -------- --------
Shareholders' Equity
Preferred stock, $.001 par
value, 576,000 shares
authorized, 576,000 shares
issued in 1996............... 1 1
Common stock, $.001 par value,
69,424,000 shares authorized,
3,636,421 shares issued...... 3 - 3
Additional paid-in capital..... 51,924 - 51,924
Retained earnings.............. 21,061 3,560 24,621
-------- -------- --------
72,989 3,560 76,549
Unrealized gain on securities.. 215 - 215
-------- -------- --------
73,204 3,560 76,764
-------- -------- --------
$143,961 $ 31,378 $175,339
======== ======== ========
PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED 12/31/95
(Unaudited)
Parkway Pro Forma Parkway
Historical Adjustments Pro Forma
---------- ----------- ---------
(In thousands, except per share data)
Revenues
Income from real estate
properties.......................$ 8,941 $25,140 (a)$34,081
Interest on mortgage loans......... 1,421 (1,265)(e) 156
Management company income.......... 1,041 - 1,041
Equity in earnings
Real estate companies............ 135 - 135
Real estate partnerships and
corporate joint venture........ 116 - 116
Interest on investments............ 167 - 167
Dividend income.................... 601 - 601
Deferred gains and other income.... 345 - 345
Gain on real estate
and mortgage loans............... 6,552 - 6,552
Gain on securities................. 4,314 - 4,314
------- ------- -------
23,633 23,875 47,508
------- ------- -------
Expenses
Real estate owned
Operating expense................ 4,876 12,000 (a) 16,876
Interest expense................. 2,230 3,457 (c) 5,687
Depreciation and amortization.... 1,331 2,855 (a) 4,186
Minority interest................ (100) - (100)
Interest expense
Notes payable to banks........... 156 2,360 (e) 2,516
Notes payable on wrap mortgages.. 135 (135) -
Management company expenses........ 804 - 804
Other expenses..................... 2,299 - 2,299
------- ------- -------
11,731 20,537 32,268
------- ------- -------
Income before taxes................ 11,902 3,338 15,240
Income tax provision............... 82 - (8) 82
------- ------- -------
Net income.........................$11,820 $ 3,338 $15,158
======= ======= =======
Net income per share...............$ 4.24 $ 3.86
======= =======
Weighted average shares
outstanding...................... 2,787 3,927
======= =======
PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED 9/30/96
(Unaudited)
Parkway Pro Forma Parkway
Historical Adjustments Pro Forma
---------- ----------- ---------
(In thousands, except per share data)
Revenues
Income from real estate
properties...................... $13,559 $11,725 (b) $25,284
Management company income......... 537 - 537
Interest on mortgage loans........ 1,435 (1,384)(f) 51
Equity in earnings:
Real estate partnerships and
corporate joint venture....... 121 - 121
Gain on securities................ 304 - 304
Interest on investments........... 471 - 471
Deferred gains and other income... 91 - 91
Dividend income................... 118 - 118
Gain on real estate and mortgage
loans........................... 5,863 - 5,863
------- ------- -------
22,499 10,341 32,840
------- ------- -------
Expenses
Real estate owned:
Operating expense............... 6,570 5,376 (b) 11,946
Interest expense................ 2,390 1,452 (d) 3,842
Depreciation and amortization... 1,591 1,457 (b) 3,048
Minority interest............... (12) - (12)
Interest expense:
Notes payable to banks.......... 95 1,770 (f) 1,865
Notes payable on wrap mortgages. 340 (340) -
Management company expenses....... 483 - 483
Other expenses.................... 2,198 - 2,198
------- ------- -------
13,655 9,715 23,370
------- ------- -------
Income before taxes............... 8,844 626 9,470
Income tax provision.............. 23 - (8) 23
------- ------- -------
Net income........................ $ 8,821 $ 626 $ 9,447
======= ======= =======
Net income per share.............. $ 2.54 $ 2.27
======= =======
Weighted average shares
outstanding 3,474 4,169
======= =======
PARKWAY PROPERTIES, INC.
Notes to Pro Forma Consolidated Financial Statements
(Unaudited)
1. On September 30, 1996, Parkway Carolina, Inc., a wholly-
owned subsidiary of Parkway Properties, Inc. ("Parkway" or
the "Company"), purchased the BB&T Financial Center for
$24,500,000 from an unrelated party. This building consists
of approximately 239,000 net rentable square feet. No pro
forma adjustments were needed to the Consolidated Balance
Sheet as of September 30, 1996 due to the September 30th
purchase date.
2. On October 31, 1996, Parkway Houston, Inc., a wholly-owned
subsidiary of Parkway Properties, Inc. ("Parkway"),
purchased the Tensor Building in Houston, Texas from a major
property company. The Tensor Building consists of
approximately 92,000 square feet of rentable square feet.
The purchase price of $2,820,000 was funded with existing
cash reserves.
3. On December 24, 1996, Parkway Properties, Inc. ("Parkway" or
the "Company") sold the Virginia Beach mortgage loan to an
unrelated party for $9,700,000 in cash. A portion of the
proceeds from the sale were used to repay the underlying
first mortgages on the buildings totaling $4,415,000.
4. On January 7, 1997, Parkway Properties LP purchased Forum II
& III for $16,425,000 from an unrelated party. The
buildings consist of approximately 173,000 net rentable
square feet. The purchase was funded with existing cash
reserves and borrowings of $7,440,000 on a line of credit
with Deposit Guaranty National Bank, Jackson, Mississippi,
at a rate equal to 8.0062%.
5. On March 18, 1997, Parkway Properties LP purchased Charlotte
Park Executive Center for $16,071,000. The 30 acre master-
planned office park consists of three buildings with
approximately 187,207 square feet of net rentable area. The
Company also purchased 17.64 acres of development land in
the office park for $1,721,000. The purchases were funded
with existing cash reserves.
6. The pro forma adjustments to the Consolidated Balance Sheet
as of September 30, 1996 include the January 28, 1997
purchase of Ashford II for $2,207,000.
7. The pro forma adjustments to the Consolidated Statements of
Income for the twelve months ended December 31, 1995 and the
nine months ended September 30, 1996 set forth the effects
of Parkway's purchases of the following buildings as if they
had been consummated on January 1, 1995.
BUILDING DATE OF PURCHASE
Charlotte Park Executive Center 3/18/97
Ashford II 1/28/97
Forum II & III 1/07/97
Tensor 10/31/96
BB&T Financial Center 9/30/96
Falls Pointe 8/09/96
Roswell North 8/09/96
Cherokee 7/09/96
Courthouse 7/09/96
400 Northbelt 4/15/96
Woodbranch 4/15/96
One Park 10 Plaza 3/07/96
Waterstone 12/18/95
IBM Building 10/02/95
MTEL Centre' 7/31/95
In addition to the purchases listed above, the adjustments
on the pro forma consolidated statements of income set forth
the effect of the May 31, 1996 sale of 157 mortgage loans,
the December 24, 1996 sale of the Virginia Beach mortgage
loan and the placement of non-recourse mortgage debt on
recently acquired properties as if the transactions occurred
January 1, 1995. These pro forma adjustments are detailed
below by property for the twelve months ended December 31,
1995 and nine months ended September 30, 1996.
The effect on income and expenses from real estate
properties due to the above purchases are as follows:
(a) For the twelve months ended December 31, 1995:
Revenue Expenses
----------- ---------------------------
Income From Real Estate Owned
Real Estate Operating Depreciation
Properties Expense Expense
----------- ------------ ------------
MTEL Centre' $ 2,420,000 $ 1,442,000 $ 177,000
IBM Building 959,000 449,000 102,000
Waterstone 1,183,000 499,000 181,000
One Park 10 Plaza 1,731,000 1,006,000 151,000
400 North Belt
& Woodbranch 3,470,000 1,970,000 313,000
Cherokee &
Courthouse
Road Bldgs. 1,848,000 841,000 249,000
Falls Pointe &
Roswell North 2,270,000 929,000 315,000
BB&T Financial
Center 3,999,000 1,378,000 551,000
Tensor 1,001,000 618,000 63,000
Forum II & III 2,858,000 1,289,000 370,000
Charlotte Ex.Park 2,732,000 1,172,000 333,000
Ashford II 669,000 407,000 50,000
----------- ----------- -----------
$25,140,000 $12,000,000 $ 2,855,000
=========== =========== ===========
(b) For the nine months ended September 30, 1996:
Revenue Expenses
----------- ---------------------------
Income From Real Estate Owned
Real Estate Operating Depreciation
Properties Expense Expense
----------- ------------ ------------
One Park 10 $ 299,000 $ 160,000 $ 25,000
400 North Belt
& Woodbranch 1,036,000 551,000 92,000
Cherokee &
Courthouse
Road Bldgs. 917,000 480,000 124,000
Falls Pointe &
Roswell North 1,161,000 439,000 191,000
BB&T Financial
Center 3,072,000 1,055,000 413,000
Tensor 729,000 477,000 48,000
Forum II & III 2,062,000 998,000 277,000
Charlotte Park 1,962,000 885,000 250,000
Ashford II 487,000 331,000 37,000
----------- ----------- -----------
$11,725,000 $ 5,376,000 $ 1,457,000
=========== =========== ===========
Depreciation is provided by the straight-line method over
the estimated useful lives of the buildings (40 years).
Pro forma interest expense on real estate owned reflects the
non-recourse debt placed on the buildings at the actual
amounts and rates by property as if placed January 1, 1995
is as follows:
Property/Placement Twelve Months Nine Months
Date/Rate Debt 12/31/95 (c) 9/30/96 (d)
------------------ ----------- ------------- -----------
MTEL Centre
12/95 7.75% $11,000,000 $ 595,000 $ -
IBM Building
2/96 7.78% 4,800,000 370,000 41,000
Waterstone
6/96 8.00% 5,620,000 450,000 185,000
One Park 10
7/96 8.35% 4,700,000 392,000 196,000
400 North Belt &
Woodbranch
7/96 8.25% 10,000,000 825,000 412,000
Falls Pointe &
Roswell North
12/96 8.375% 9,850,000 825,000 618,000
---------- ----------
$3,457,000 $1,452,000
========== ==========
The January 1, 1995 pro forma effect of the sale of 157
mortgage loans on May 31, 1996 and the December 24, 1996
sale of the Virginia Beach mortgage loan is as follows:
Twelve Months Nine Months
12/31/95 (e) 9/30/96 (f)
------------- -----------
Interest Income:
Mortgage loans $(1,265,000) $(1,384,000)
The pro forma effect of the purchases of BB&T, Tensor, Forum
II & III, Charlotte Park Executive Center and Ashford II on
interest expense on notes payable to banks for the twelve
months ended December 31, 1995 and the nine months ended
September 30, 1996 is $2,360,000 and $1,770,000,
respectively.
The pro forma effect of the sale of the Virginia Beach
mortgage loan on interest expense on notes payable on wrap
mortgages for the twelve months ended December 31, 1995 and
the nine months ended September 30, 1996 is a decrease of
$135,000 and $340,000, respectively.
8. No additional income tax expenses were provided because of
the Company's net operating loss carryover.
9. All per share information for the twelve months ended
December 31, 1995 has been restated to reflect a 3 for 2
common stock split effected as a dividend of one share for
every two shares outstanding on April 30, 1996 as well as
the June 14, 1996 private placement of 1,140,000 shares as
if both transactions had occurred January 1, 1995.
FORM 8-K
PARKWAY PROPERTIES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
DATE: March 28, 1997
PARKWAY PROPERTIES, INC.
BY: /s/Sarah P. Clark
Sarah P. Clark
Vice President,
Chief Financial Officer
Treasurer and Secretary
