UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------------------------------
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): June 27, 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)
One Jackson Place Suite 1000
188 East Capitol Street
P. O. Box 24647
Jackson, Mississippi 39225-
4647
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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 5. Other Events.
On March 31, 1997, a limited partnership in which Parkway
Properties, Inc. is a 99% limited partner and a wholly-owned
subsidiary is a 1% general partner purchased the Meridian
Building in Atlanta, Georgia. The Meridian Building is a five-
story office building consisting of approximately 100,932 net
rentable square feet with an attached 330 space three-level
parking deck. It is located in the Northwest submarket of
Atlanta near the intersection of I-75 and I-285. The purchase
price of $10,500,000 was funded with existing cash reserves.
On April 4, 1997, a limited partnership in which Parkway
Properties, Inc. is a 99% limited partner and a wholly-owned
subsidiary is a 1% general partner purchased the Vestavia Centre
in Birmingham, Alabama. The Vestavia Centre office building is a
four-story office building consisting of approximately 75,880 net
rentable square feet. The purchase price of $4,650,000 was
funded with existing cash reserves.
On May 1, 1997, a limited partnership in which Parkway
Properties, Inc. is a 99% limited partner and a wholly-owned
subsidiary is a 1% general partner purchased the Sugar Grove
office building in the Sugar Land/Southwest Houston, Texas
submarket. The Sugar Grove office building is a six-story
building with approximately 122,682 net rentable square feet. The
purchase price of $7,730,000 was funded with existing cash
reserves and bank borrowings of $7,445,000 on a line of credit
with Deposit Guaranty National Bank at a rate equal to the 90-day
LIBOR rate plus 1.75%, currently 7.5625%.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements
The following audited financial statement of the Meridian
Building for the year ended December 31, 1996 is attached hereto.
Also included is the unaudited financial statement for the three
months ended March 31, 1997.
Page
----
Report of Independent Auditors 4
Statement of Rental Revenue and
Direct Operating Expenses 5
Notes to Statement of Rental Revenue
and Direct Operating Expenses 6
The following audited financial statement of Vestavia Centre
for the year ended December 31, 1996 is attached hereto. Also
included is the unaudited financial statement for the three
months ended March 31, 1997.
Page
----
Report of Independent Auditors 8
Statement of Rental Revenue and
Direct Operating Expenses 9
Notes to Statement of Rental Revenue
and Direct Operating Expenses 10
The following audited financial statement of Sugar Grove for
the year ended December 31, 1996 is attached hereto. Also
included is the unaudited financial statement for the three
months ended March 31, 1997.
Page
----
Report of Independent Auditors 12
Statement of Rental Revenue and
Direct Operating Expenses 13
Notes to Statement of Rental Revenue
and Direct Operating Expenses 14
(b) Pro Forma Consolidated Financial Statements
The following unaudited Pro Forma Consolidated Financial
Statements are attached hereto.
PARKWAY PROPERTIES, INC.
Page
----
Pro Forma Consolidated Financial Statements (Unaudited) 16
Pro Forma Consolidated Balance Sheet (Unaudited) -
As of March 31, 1997 18
Pro Forma Consolidated Statement of Income (Unaudited) -
For the Year Ended December 31, 1996 19
Pro Forma Consolidated Statement of Income (Unaudited) -
For the Three Months Ended March 31, 1997 20
Notes to Pro Forma Consolidated Financial
Statements (Unaudited) 21
Report of Independent Auditors
The Board of Directors
Parkway Properties, Inc.
We have audited the accompanying statement of rental revenue and
direct operating expenses of the Meridian Building for the year
ended December 31, 1996. This statement is the responsibility of
management. Our responsibility is to express an opinion on this
statement based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the statement of rental revenue and direct operating expenses is
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the statement. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall statement presentation. We
believe that our audit provides a reasonable basis for our
opinion.
The accompanying statement was prepared for the purpose of
complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in Form 8-K of Parkway
Properties, Inc. as described in Note 2, and is not intended to
be a complete presentation of the Meridian Building's revenue and
expenses.
In our opinion, the statement of rental revenue and direct
operating expenses referred to above presents fairly, in all
material respects, the rental revenue and direct operating
expenses described in Note 2 of the Meridian Building for the
year ended December 31, 1996, in conformity with generally
accepted accounting principles.
We have compiled the accompanying statement of rental revenue and
direct operating expenses of the Meridian Building for the three
months ended March 31, 1997 in accordance with the Statement on
Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants. A compilation
is limited to presenting in the form of financial statement
information that is the representation of management. We have
not audited or reviewed the statement of rental revenue and
direct operating expenses of the Meridian Building for the three
months ended March 31, 1997 and, accordingly, do not express an
opinion or any other form of assurance on the statement.
Jackson, Mississippi /s/ Ernst & Young LLP
June 25, 1997
Meridian Building
Statement of Rental Revenue
and Direct Operating Expenses
Year Ended Three months Ended
December 31, 1996 March 31, 1997
----------------- ------------------
(unaudited)
Rental revenue:
Minimum rents ............... $823,449 $353,852
Reimbursed charges and
other income............... 19,899 -
-------- --------
843,348 353,852
-------- --------
Direct operating expenses
(Note 2):
Utilities................... 135,913 39,629
Real estate taxes........... 71,830 17,515
Maintenance services
and supplies............... 95,338 19,244
Janitorial services
and supplies............... 37,445 15,115
Management fees (Note 3).... 46,885 14,786
Landscape maintenance....... 26,272 4,418
Security services........... 23,023 6,309
Administrative and
miscellaneous expenses.... 66,414 5,923
---------- ----------
503,120 122,939
---------- ----------
Excess of rental revenue over
direct operating expenses.... $340,228 $230,913
========== ==========
See accompanying notes.
Meridian Building
Notes to Statement of Rental Revenue
and Direct Operating Expenses
1. Organization and Significant Accounting Policies
Description of Property
On March 31, 1997, a limited partnership in which Parkway
Properties, Inc. is a 99% limited partner and a wholly-owned
subsidiary is a 1% general partner purchased the Meridian
Building (the "Building") in Atlanta, Georgia from an unrelated
party. The Building contains approximately 101,000 (unaudited)
square feet of rentable area.
Rental Income
Minimum rents from leases are accounted for ratably over the term
of each lease. Tenant reimbursements are recognized as income as
the applicable services are rendered or expenses incurred.
The future minimum rents on non-cancelable operating leases at
December 31, 1996 are as follows:
Year Amount
--------------------------------
1997 $ 1,676,000
1998 1,630,000
1999 1,624,000
2000 1,624,000
2001 757,000
-----------
$ 7,311,000
===========
The above amounts do not include tenant reimbursements for
utilities, insurance and common area maintenance.
Two tenants' leases accounted for approximately 92% of the
Building's 1996 rental revenue. These tenants' leases expire
January 31, 2001 and June 30, 2001.
Meridian Building
Notes to Statement of Rental Revenue
and Direct Operating Expenses (continued)
2. Basis of Accounting
The accompanying statement of rental revenue and direct operating
expenses is presented on the accrual basis. The statement has
been prepared in accordance with the applicable rules and
regulations of the Securities and Exchange Commission for real
estate properties acquired. Accordingly, the statement excludes
certain expenses, such as depreciation and mortgage interest
expense, which would not be comparable to the proposed future
operations of the Building. Management is not aware of any
material factors relating to the Building that would cause the
reported financial information not to be necessarily indicative
of future operating results.
3. Management Fees
Monthly management fees of the greater of $2,500 or 4% of
revenues received from the operations of the Building were paid
to an unrelated management company.
Report of Independent Auditors
The Board of Directors
Parkway Properties, Inc.
We have audited the accompanying statement of rental revenue and
direct operating expenses of Vestavia Centre for the year ended
December 31, 1996. This statement is the responsibility of
management. Our responsibility is to express an opinion on this
statement based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the statement of rental revenue and direct operating expenses is
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the statement. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall statement presentation. We
believe that our audit provides a reasonable basis for our
opinion.
The accompanying statement was prepared for the purpose of
complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in Form 8-K of Parkway
Properties, Inc., as described in Note 2, and is not intended to
be a complete presentation of Vestavia Centre's revenue and
expenses.
In our opinion, the statement of rental revenue and direct
operating expenses referred to above presents fairly, in all
material respects, the rental revenue and direct operating
expenses described in Note 2 of Vestavia Centre for the year
ended December 31, 1996, in conformity with generally accepted
accounting principles.
We have compiled the accompanying statement of rental revenue and
direct operating expenses of Vestavia Centre for the three months
ended March 31, 1997 in accordance with the Statement on
Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants. A compilation
is limited to presenting in the form of a financial statement
information that is the representation of management. We have
not audited or reviewed the statement of rental revenue and
direct operating expenses of Vestavia Centre for the three months
ended March 31, 1997 and, accordingly, do not express an opinion
or any other form of assurance on the statement.
Jackson, Mississippi /s/ Ernst & Young LLP
June 20, 1997
Vestavia Centre
Statement of Rental Revenue
and Direct Operating Expenses
Year Ended Three Months Ended
December 31, 1996 March 31, 1997
----------------- ------------------
(unaudited)
Rental revenue:
Minimum rents ............... $864,267 $238,222
Reimbursed charges and
other income............... 13,928 1,399
-------- --------
878,195 239,621
-------- --------
Direct operating expenses
(Note 2):
Utilities................... 130,138 26,725
Real estate taxes........... 33,230 8,308
Maintenance services and
and supplies.............. 81,775 19,069
Janitorial services
and supplies.............. 49,754 13,802
Management fees (Note 3).... 51,055 12,087
Insurance................... 14,703 5,314
Security service............ 12,766 3,003
Administrative and
miscellaneous expenses..... 20,812 2,510
-------- --------
394,233 90,818
-------- --------
Excess of rental revenue over
direct operating expenses... $483,962 $148,803
======== ========
See accompanying notes.
Vestavia Centre
Notes to Statement of Rental Revenue
and Direct Operating Expenses
1. Organization and Significant Accounting Policies
Description of Property
On April 4, 1997, a limited partnership in which Parkway
Properties, Inc. is a 99% limited partner and a wholly-owned
subsidiary is a 1% general partner purchased Vestavia Centre (the
"Building") in Birmingham, Alabama from an unrelated party. The
four-story building contains approximately 76,000 (unaudited)
square feet of rentable area.
Rental Income
Minimum rents from leases are accounted for ratably over the term
of each lease. Tenant reimbursements are recognized as income as
the applicable services are rendered or expenses incurred.
The future minimum rents and noncancelable operating leases at
December 31, 1996 as follows:
Year Amount
--------------------------------
1997 $ 794,000
1998 805,000
1999 671,000
2000 532,000
2001 213,000
-----------
$ 3,015,000
===========
The above amounts do not include tenant reimbursements for
utilities, taxes, insurance and common area maintenance.
Three tenants' leases accounted for approximately 47% of the
Building's 1996 rental revenue. These tenants' leases expire
March 31, 1998, September 30, 1999 and December 31, 2000.
Vestavia Centre
Notes to Statement of Rental Revenue
and Direct Operating Expenses (continued)
2. Basis of Accounting
The accompanying statement of rental revenue and direct operating
expenses is presented on the accrual basis. The statement has
been prepared in accordance with the applicable rules and
regulations of the Securities and Exchange Commission for real
estate properties acquired. Accordingly, the statement excludes
certain expenses not comparable to the proposed future operations
of the Building such as depreciation and mortgage interest
expense. Management is not aware of any material factors
relating to the Building that would cause the reported financial
information not to be necessarily indicative of future operating
results.
3. Management Fees
Management fees of approximately 3% of revenues received from the
operations of the Building plus $2,000 per month were paid to an
unrelated management company.
Report of Independent Auditors
The Board of Directors
Parkway Properties, Inc.
We have audited the accompanying statement of rental revenue and
direct operating expenses of Sugar Grove for the year ended
December 31, 1996. This statement is the responsibility of
management. Our responsibility is to express an opinion on this
statement based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the statement of rental revenue and direct operating expenses is
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the statement. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall statement presentation. We
believe that our audit provides a reasonable basis for our
opinion.
The accompanying statement was prepared for the purpose of
complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in Form 8-K of Parkway
Properties, Inc., as described in Note 2, and is not intended to
be a complete presentation of Sugar Grove's revenue and expenses.
In our opinion, the statement of rental revenue and direct
operating expenses referred to above presents fairly, in all
material respects, the rental revenue and direct operating
expenses described in Note 2 of Sugar Grove for the year ended
December 31, 1996, in conformity with generally accepted
accounting principles.
We have compiled the accompanying statement of rental revenue and
direct operating expenses of Sugar Grove for the three months
ended March 31, 1997 in accordance with the Statement on
Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants. A compilation
is limited to presenting in the form of a financial statement
information that is the representation of management. We have
not audited or reviewed the statement of rental revenue and
direct operating expenses of Sugar Grove for the three months
ended March 31, 1997 and, accordingly, do not express an opinion
or any other form of assurance on the statement.
Jackson, Mississippi /s/ Ernst & Young LLP
May 29, 1997
Sugar Grove
Statement of Rental Revenue
and Direct Operating Expenses
Year ended Three Months Ended
December 31, 1996 March 31, 1997
----------------- ------------------
(unaudited)
Rental revenue:
Minimum rents ............... $1,064,336 $ 304,719
Reimbursed charges
and other income........... 17,814 4,478
---------- ----------
1,082,150 309,197
---------- ----------
Direct operating expenses
(Note 2):
Utilities................... 158,000 39,325
Real estate taxes........... 107,256 27,314
Maintenance services
and supplies.............. 63,017 11,857
Janitorial services
and supplies.............. 82,486 22,472
Management fees (Note 3).... 34,231 8,477
Salaries.................... 101,078 27,750
Security service............ 24,399 5,650
Administrative and
miscellaneous expenses.... 72,563 22,526
---------- ----------
643,030 165,371
---------- ----------
Excess of rental revenue over
direct operating expenses.... $ 439,120 $ 143,826
========== ==========
See accompanying notes.
Sugar Grove
Notes to Statement of Rental Revenue
and Direct Operating Expenses
1. Organization and Significant Accounting Policies
Description of Property
On May 1, 1997, a limited partnership in which Parkway
Properties, Inc. is a 99% limited partner and a wholly-owned
subsidiary is a 1% general partner purchased Sugar Grove (the
"Building") in Houston, Texas from an unrelated party. The six-
story building contains approximately 123,000 (unaudited) square
feet of rentable area.
Rental Income
Minimum rents from leases are accounted for ratably over the term
of each lease. Tenant reimbursements are recognized as income as
the applicable services are rendered or expenses incurred.
The future minimum rents on non-cancelable operating leases at
December 31, 1996 are as follows:
Year Amount
--------------------------------
1997 $ 1,317,000
1998 1,262,000
1999 1,170,000
2000 614,000
2001 401,000
Thereafter 237,000
-----------
$ 5,001,000
===========
The above amounts do not include tenant reimbursements for
utilities, insurance and common area maintenance.
One tenant, whose lease expires December 31, 1999, accounted for
approximately 19% of the Building's 1996 rental revenue.
Sugar Grove
Notes to Statement of Rental Revenue
and Direct Operating Expenses (continued)
2. Basis of Accounting
The accompanying statement of rental revenue and direct operating
expenses is presented on the accrual basis. The statement has
been prepared in accordance with the applicable rules and
regulations of the Securities and Exchange Commission for real
estate properties acquired. Accordingly, the statement excludes
certain expenses not comparable to the proposed future operations
of the Building such as depreciation and mortgage interest
expense. Management is not aware of any material factors
relating to the Building that would cause the reported financial
information not to be necessarily indicative of future operating
results.
3. Management Fees
Management fees of approximately 3% of revenues received from the
operations of the Building were paid to an unrelated management
company.
PARKWAY PROPERTIES, INC.
Pro Forma Consolidated Financial Statements
(Unaudited)
The following unaudited pro forma consolidated balance sheet as
of March 31, 1997 and pro forma consolidated statements of income
of Parkway Properties, Inc. ("Parkway") for the year ended
December 31, 1996 and three months ended March 31, 1997 give
effect to the recent purchases of Parkway for the periods stated.
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 Vestavia Centre and Sugar Grove as if they
had been consummated on March 31, 1997.
The pro forma consolidated statements of income sets forth the
effects of Parkway's purchases of the following buildings as if
they had been consummated on January 1, 1996.
BUILDING DATE OF PURCHASE
Sugar Grove 05/01/97
Vestavia Centre 04/04/97
Meridian 03/31/97
Charlotte Park Executive Center 03/18/97
Courtyard at Arapaho 03/06/97
Ashford II 01/28/97
Forum II & III 01/07/97
Tensor 10/31/96
BB&T Financial Center 09/30/96
Falls Pointe 08/09/96
Roswell North 08/09/96
Cherokee 07/09/96
Courthouse 07/09/96
400 Northbelt 04/15/96
Woodbranch 04/15/96
One Park 10 Plaza 03/07/96
PARKWAY PROPERTIES, INC.
Pro Forma Consolidated Financial Statements (continued)
(Unaudited)
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 certain properties acquired during 1995 and
1996, the December 24, 1996 sale of the Virginia Beach mortgage
loan and the sale of 2,012,500 shares of common stock subsequent
to December 31, 1996 as if the transactions occurred January 1,
1996.
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 consolidated financial statements and notes
of Parkway included in its annual report on Form 1O-KSB for the
year ended December 31, 1996.
PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
(Unaudited)
Parkway Pro Forma Parkway
Historical Adjustments Pro Forma
---------- ----------- ---------
(In thousands)
Assets
Real estate related investments
Office buildings.............$191,220 $ 12,380(2,3)$203,600
Land held for development.... 1,721 - 1,721
Accumulated depreciation..... (10,441) - (10,441)
-------- -------- --------
182,500 12,380 194,880
Real estate held for sale
Land....................... 5,187 - 5,187
Operating properties....... 1,492 - 1,492
Other non-core
real estate assets......... 295 - 295
Mortgage loans............... 348 - 348
Real estate partnership...... 313 - 313
-------- -------- --------
190,135 12,380 202,515
Interest, rents receivable
and other assets............. 5,182 - 5,182
Cash and cash equivalents...... 4,686 (4,686) -
-------- -------- --------
$200,003 $ 7,694 $207,697
======== ======== ========
Liabilities
Mortgage notes payable
without recourse..............$ 62,260 $ - $ 62,260
Notes payable to banks.......... - 7,694 7,694
Accounts payable and other
liabilities................... 6,552 - 6,552
-------- -------- --------
68,812 7,694 76,506
-------- -------- --------
Shareholders' Equity
Common stock, $.001 par value,
69,424,000 shares authorized,
6,287,130 shares issued in
1997.......................... 6 - 6
Additional paid-in capital...... 103,665 - 103,665
Retained earnings............... 27,520 - 27,520
-------- -------- --------
131,191 - 131,191
-------- -------- --------
$200,003 $ 7,694 $207,697
======== ======== ========
See accompanying notes.
PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED 12/31/96
(Unaudited)
Parkway Pro Forma Parkway
Historical Adjustments(6) Pro Forma
---------- -------------- ---------
(In thousands, except per share
data)
Revenues
Income from office properties...$18,840 $18,308 (a) $37,148
Income from other real estate
properties.................... 1,773 - 1,773
Interest on mortgage loans...... 1,740 (1,384)(d) 356
Management company income....... 784 - 784
Interest on investments......... 500 - 500
Dividend income................. 118 - 118
Deferred gains and other income. 324 - 324
Gains on real estate held
for sale and mortgage loans... 9,909 - 9,909
Gain on securities.............. 549 - 549
------- ------- -------
34,537 16,924 51,461
------- ------- -------
Expenses
Office properties
Operating expense............. 8,466 8,655 (a) 17,121
Interest expense.............. 3,526 1,600 (c) 5,126
Depreciation and amortization. 2,444 2,517 (a) 4,961
Minority interest............. (28) - (28)
Other real estate properties
Operating expense............. 1,379 - 1,379
Interest expense
Notes payable to banks........ 281 582 (e) 863
Notes payable on wrap
mortgages................... 340 (340)(f) -
Management company expense...... 673 - 673
General and administrative...... 2,982 - 2,982
------- ------- -------
20,063 13,014 33,077
------- ------- -------
Income before income taxes...... 14,474 3,910 18,384
Income tax expense.............. 103 - 103
------- ------- -------
Net income......................$14,371 $ 3,910 $18,281
======= ======= =======
Net income per share............$ 3.92 $3.22(7)
======= =======
Weighted average shares
outstanding................... 3,662 5,674
======= =======
See accompanying notes.
PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED 3/31/97
(Unaudited)
Parkway Pro Forma Parkway
Historical Adjustments(6) Pro Forma
---------- -------------- ---------
(In thousands, except per share
data)
Revenues
Income from office properties...$ 8,030 $ 1,828 (b) $ 9,858
Income from other real estate
properties.................... 306 - 306
Interest on mortgage loans...... 16 - 16
Management company income....... 134 - 134
Interest on investments......... 301 - 301
Dividend income................. 86 - 86
Deferred gains and other income. 33 - 33
------- ------- -------
8,906 1,828 10,734
------- ------- -------
Expenses
Office properties
Operating expense............. 3,420 788 (b) 4,208
Interest expense:
Contractual................. 1,255 - 1,255
Amortization of loan cost... 17 - 17
Depreciation and amortization. 925 259 (b) 1,184
Minority interest............. 27 - 27
Other real estate properties
Operating expense............. 217 - 217
Interest expense on bank notes:
Contractual................... 24 145 (e) 169
Amortization of loan costs.... 36 - 36
Management company expense...... 87 - 87
General and administrative...... 860 - 860
------- ------- -------
6,868 1,192 8,060
------- ------- -------
Income before gains (losses).... 2,038 636 2,674
------- ------- -------
Gain (loss) on sales
Gain on real estate held for
sale and mortgage loans....... 1,506 - 1,506
------- ------- -------
Net income......................$ 3,544 $ 636 $ 4,180
======= ======= =======
Net income per share............$ .62 $ .73
======= =======
Weighted average shares
outstanding................... 5,718 5,718
======= =======
See accompanying notes.
PARKWAY PROPERTIES, INC.
Notes to Pro Forma Consolidated Financial Statements
(Unaudited)
1. On March 31, 1997, the Company purchased the Meridian
Building in Atlanta, Georgia. The Meridian Building is a
five-story office building consisting of approximately
100,932 net rentable square feet with an attached 330 space
three-level parking deck. It is located in the Northwest
submarket of Atlanta near the intersection of I-75 and I-
285. The purchase price of $10,500,000 was funded with
existing cash reserves. No pro forma adjustments were
needed to the balance sheet due to the March 31, 1997
purchase date.
2. On April 4, 1997, the Company purchased the Vestavia Centre
in Birmingham, Alabama. The Vestavia Centre' office
building is approximately 75,880 net rentable square feet.
The purchase price of $4,650,000 was funded with existing
cash reserves.
3. On May 1, 1997, the Company purchased the Sugar Grove office
building in the Sugar Land/Southwest Houston, Texas
submarket. The Sugar Grove office building is a six-story
building with approximately 122,682 net rentable square
feet. The purchase price of $7,730,000 was funded with
existing cash reserves and bank borrowings of $7,445,000 on
a line of credit with Deposit Guaranty National Bank at a
rate equal to the 90-day LIBOR rate plus 1.75%, currently
7.5625%.
4. The pro forma adjustments to the Consolidated Statement of
Income for the year ended December 31, 1996 and three months
ended March 31, 1997 set forth the effects of Parkway's
purchases of the following buildings as if they had been
consummated on January 1, 1996.
BUILDING DATE OF PURCHASE
Sugar Grove 05/01/97
Vestavia Centre 04/04/97
Meridian 03/31/97
Charlotte Park Executive Center 03/18/97
Courtyard at Arapaho 03/06/97
Ashford II 01/28/97
Forum II & III 01/07/97
Tensor 10/31/96
BB&T Financial Center 09/30/96
Falls Pointe 08/09/96
Roswell North 08/09/96
Cherokee 07/09/96
Courthouse 07/09/96
400 Northbelt 04/15/96
Woodbranch 04/15/96
One Park 10 Plaza 03/07/96
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
certain properties acquired during 1995 and 1996 as if the
transactions occurred January 1, 1996. These pro forma
adjustments are detailed below by property for the year
ended December 31, 1996 and three months ended March 31,
1997.
The effect on income and expenses from real estate
properties due to the above purchases are as follows:
(a) For the year ended December 31, 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 810,000 530,000 64,000
Forum II & III 2,749,000 1,331,000 370,000
Charlotte Park 2,616,000 1,180,000 333,000
Ashford II 649,000 441,000 50,000
Courtyard at
Arapaho 2,196,000 948,000 340,000
Meridian 843,000 503,000 236,000
Vestavia 878,000 394,000 105,000
Sugar Grove 1,082,000 643,000 174,000
----------- ---------- ----------
$18,308,000 $8,655,000 $2,517,000
=========== ========== ==========
Depreciation is provided by the straight-line method over
the estimated useful lives of the buildings (40 years).
(b) For the three months ended March 31, 1997:
Revenue Expenses
----------- ---------------------------
Income From Real Estate Owned
Real Estate Operating Depreciation
Properties Expense Expense
----------- ------------ ------------
Charlotte Park $ 505,000 $ 208,000 $ 69,000
Ashford II 54,000 37,000 4,000
Courtyard at
Arapaho 366,000 164,000 58,000
Meridian 354,000 123,000 59,000
Vestavia 240,000 91,000 26,000
Sugar Grove 309,000 165,000 43,000
----------- ----------- -----------
$ 1,828,000 $ 788,000 $ 259,000
=========== =========== ===========
Depreciation is provided by the straight-line method over
the estimated useful lives of the buildings (40 years).
(c) Pro forma interest expense on real estate owned
reflects the non-recourse debt placed on certain
buildings acquired during 1995 and 1996 at the actual
amounts and rates by property as if placed January 1,
1996 and is detailed below.
Property/Placement Year Ended
Date/Rate Debt 12/31/96
------------------ ----------- ----------
IBM Building
2/96 7.78% $ 4,800,000 $ 41,000
Waterstone
6/96 8.00% 5,620,000 185,000
One Park 10
7/96 8.35% 4,700,000 196,000
400 North Belt &
Woodbranch
7/96 8.25% 10,000,000 412,000
Falls Pointe &
Roswell North
12/96 8.375% 9,850,000 766,000
----------
$1,600,000
==========
No additional debt has been placed on
properties in 1997 and no pro forma adjustments are
needed for the three months ended March 31, 1997.
(d) The January 1, 1996 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:
Year Ended
12/31/96
------------
Interest Income:
Mortgage loans $(1,384,000)
(e) The pro forma effect of the purchases of Forum II &
III, Ashford II, Courtyard at Arapaho, Charlotte Park
Executive Center, Meridian, Vestavia and Sugar Grove as
well as the stock offering of 2,012,500 shares on
interest expense on notes payable to banks for the year
ended December 31, 1996 and three months ended March
31, 1997 is an increase of $582,000 and $145,000,
respectively.
(f) The pro forma effect of the sale of the Virginia Beach
mortgage loan on interest expense on notes payable on
wrap mortgages for the year ended December 31, 1996 is
a decrease of $340,000.
7. The pro forma earnings per share for the year ended December
31, 1996 reflect the sale of 2,012,500 shares of common
stock under its existing shelf registration subsequent to
December 31, 1996.
8. No additional income tax expenses were provided because of
the Company's net operating loss carryover.
9. All per share information for the year ended December 31,
1996 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, 1996.
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: June 27, 1997
PARKWAY PROPERTIES, INC.
BY: /s/Sarah P. Clark
Sarah P. Clark
Vice President, Chief Financial
Officer, Treasurer and Secretary
