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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K/A
AMENDMENT TO FORM 8-K
Filed Pursuant to
THE SECURITIES EXCHANGE ACT OF 1934
PARKWAY PROPERTIES, INC.
-----------------------------------
(Exact name of registrant as specified in its charter)
AMENDMENT NO. 1
The undersigned registrant hereby amends the following
items,
financial statements, exhibits or other portions of its Form 8-K
filed March 21, 1997 as set forth in the pages attached hereto:
Item 7. Financial Statements and Exhibits
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this amendment to be
signed on its behalf by the undersigned, thereunto duly
authorized.
Date: May 14, 1997 PARKWAY PROPERTIES, INC.
By /s/ Sarah P. Clark
--------------------------------
Sarah P. Clark
Vice President, Chief Financial
Officer, Treasurer and Secretary
FORM 8-K/A
PARKWAY PROPERTIES, INC.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements
The following audited financial statement of
Courtyard at Arapaho for the year ended December 31,
1996 is attached hereto.
Page
----
Report of Independent Auditors 3
Statement of Rental Revenue and
Direct Operating Expenses 4
Notes to Statement of Rental Revenue
and Direct Operating Expenses 5
(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) 7
Pro Forma Consolidated Balance Sheet (Unaudited) -
As of December 31, 1996 9
Pro Forma Consolidated Statement of Income (Unaudited) -
For the Year Ended December 31, 1996 10
Notes to Pro Forma Consolidated Financial
Statements (Unaudited) 11
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 Courtyard at Arapaho 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 Courtyard at Arapaho'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 Courtyard at Arapaho for the year
ended December 31, 1996, in conformity with generally accepted
accounting principles.
/S/ Ernst & Young LLP
Jackson, Mississippi
April 17, 1997
Courtyard at Arapaho
Statement of Rental Revenue
and Direct Operating Expenses
Year ended
December 31, 1996
-----------------
Rental revenue (Note 1):
Minimum rents................................... $2,113,070
Reimbursed charges and other income............. 83,211
----------
2,196,281
----------
Direct operating expenses (Note 2):
Utilities...................................... 371,232
Real estate taxes.............................. 226,477
Management fees (Note 3)....................... 67,953
Janitorial services and supplies............... 80,331
Maintenance services and supplies.............. 121,986
Insurance...................................... 27,045
Administrative and miscellaneous expenses...... 52,932
----------
947,956
----------
Excess of rental revenue over
direct operating expenses....................... $1,248,325
==========
See accompanying notes.
Courtyard at Arapaho
Notes to Statement of Rental Revenue
and Direct Operating Expenses
1. Organization and Significant Accounting Policies
Description of Property
On March 6, 1997, a limited partnership in which Parkway
Properties, Inc. is a 99% limited parter and a wholly-owned
subsidiary is a 1% general partner purchased a three-building
development known as Courtyard at Arapaho ("the Building
Complex") in Richardson, Texas for $15,125,000. The development
consists of a two-story atrium office building with 155,974
(unaudited) net rentable square feet and two single-story service
center buildings totaling 44,752 (unaudited) net rentable square
feet.
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 $ 2,083,000
1998 2,037,000
1999 1,874,000
2000 1,058,000
2001 1,058,000
-----------
$ 8,110,000
===========
The above amounts do not include tenant reimbursements for
utilities, taxes, insurance and common area maintenance.
Two tenants, whose leases expire October 31, 1999 and December
31, 2001, accounted for approximately 95% of the Building
Complex's 1996 rental revenue.
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 Complex such as depreciation and mortgage
interest expense. Management is not aware of any material
factors relating to the Building Complex that would cause the
reported financial information not to be necessarily indicative
of future operating results.
3. Management Fees
Management fees of 3% of revenues received from the operations of
the Building Complex 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 December 31, 1996 and pro forma consolidated statement of
income of Parkway Properties, Inc. ("Parkway") for the year ended
December 31, 1996 give effect to the January 7, 1997 purchase of
Forum II & III, the January 28, 1997 purchase of Ashford II, the
March 6, 1997 purchase of the Courtyard at Arapaho and the March
18, 1997 purchase of Charlotte Park Executive Center as well as
the sale of 2,012,500 shares of common stock under its existing
shelf registration statement subsequent to December 31, 1996.
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 Forum II & III, Ashford II, Courtyard at
Arapaho and Charlotte Park Executive Center as well as the sale
of 2,012,500 shares of common stock as if they had been
consumated on December 31, 1996.
The pro forma consolidated statement 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
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 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, 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
DECEMBER 31, 1996
(Unaudited)
Parkway Pro Forma Parkway
Historical Adjustments Pro Forma
---------- ----------- ---------
(In thousands)
Assets
Real estate related investments
Office buildings.............$132,309 $ 49,828 $182,137
Accumulated depreciation..... (9,507) - (9,507)
-------- -------- --------
122,802 49,828 172,630
Real estate held for sale
Land....................... 5,664 - 5,664
Operating properties....... 3,675 - 3,675
Other non-core
real estate assets......... 381 - 381
Mortgage loans............... 350 - 350
Real estate partnership...... 319 - 319
-------- -------- --------
133,191 49,828 183,019
Interest, rents receivable
and other assets............. 5,791 - 5,791
Cash and cash equivalents...... 8,053 1,393 9,446
-------- -------- --------
$147,035 $ 51,221 $198,256
======== ======== ========
Liabilities
Mortgage notes payable
without recourse..............$ 62,828 $ - $ 62,828
Accounts payable and other
liabilities................... 6,299 - 6,299
-------- -------- --------
69,127 - 69,127
-------- -------- --------
Shareholders' Equity
Common stock, $.001 par value,
69,424,000 shares authorized,
4,257,534 shares issued in
1996 (Pro Forma 6,270,034
shares)....................... 4 2 6
Additional paid-in capital...... 52,356 51,219 103,575
Retained earnings............... 25,548 - 25,548
-------- -------- --------
77,908 51,221 129,129
-------- -------- --------
$147,035 $ 51,221 $198,256
======== ======== ========
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 $15,505 (a) $34,345
Income from other real estate
properties.................... 1,773 - 1,773
Interest on mortgage loans...... 1,740 (1,384)(c) 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 14,121 48,658
------- ------- -------
Expenses
Office properties
Operating expense............. 8,466 7,115 (a) 15,581
Interest expense.............. 3,526 1,600 (b) 5,126
Depreciation and amortization. 2,444 2,002 (a) 4,446
Minority interest............. (28) - (28)
Other real estate properties
Operating expense............. 1,379 - 1,379
Interest expense
Notes payable to banks........ 281 (281)(d) -
Notes payable on wrap
mortgages................... 340 (340)(e) -
Management company expense...... 673 - 673
General and administrative...... 2,982 - 2,982
------- ------- -------
20,063 10,096 30,159
------- ------- -------
Income before income taxes...... 14,474 4,025 18,499
Income tax expense.............. 103 - 103
------- ------- -------
Net income......................$14,371 $ 4,025 $18,396
======= ======= =======
Net income per share............$ 3.92 $ 3.24
======= =======
Weighted average shares
outstanding................... 3,662 5,674
======= =======
See accompanying notes.
PARKWAY PROPERTIES, INC.
Notes to Pro Forma Consolidated Financial Statements
(Unaudited)
1. 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%.
2. On March 6, 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 a three
building development known as Courtyard at Arapaho for
$15,125,000. The development consist of a two-story atrium
office building with 155,974 net rentable square feet and
two single-story service center buildings totaling 44,752 net
rentable square feet. The purchase price was funded with
existing cash reserves.
3. 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.
4. The pro forma adjustments to the Consolidated Balance Sheet
as of December 31, 1996 include the January 28, 1997
purchase of Ashford II for $2,207,000.
5. Subsequent to December 31, 1996, the Company completed the
sale of 2,012,500 shares of common stock under its existing
shelf registration statement for net proceeds of
$51,221,000.
6. The pro forma adjustments to the Consolidated Statement of
Income for the year ended December 31, 1996 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
Courtyard at Arapaho 03/18/97
Charlotte Park Executive Center 03/18/97
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
recently acquired properties as if the transactions occurred
January 1, 1996. These pro forma adjustments are detailed
below by property for the year ended December 31, 1996.
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
Courtyad at
Arapaho 2,196,000 948,000 340,000
----------- ----------- -----------
$15,505,000 $ 7,115,000 $ 2,002,000
=========== =========== ===========
Depreciation is provided by the straight-line method over the
estimated useful lives of the buildings (40 years).
(b) 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, 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
==========
(c) 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)
(d) The pro forma effect of the purchases of Forum II &
III, Ashford II, Courtyard at Arapaho and Charlotte
Park Executive Center 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 is a
decrease of $281,000.
(e) 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. No additional income tax expenses were provided because of
the Company's net operating loss carryover.
8 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/A
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: May 14, 1997
PARKWAY PROPERTIES, INC.
BY: /s/Sarah P. Clark
Sarah P. Clark
Vice President, Chief Financial
Officer, Treasurer and Secretary
