------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
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. 2
The undersigned registrant hereby amends the following
items, financial statements, exhibits or other portions of its Form 8-K
filed December 10, 1997 as set forth in the pages attached
hereto:
Item 5. Other Events
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: February 6, 1997 PARKWAY PROPERTIES, INC.
By: /s/ Sarah P. Clark
-----------------------
Sarah P. Clark
Senior Vice President,
Chief Financial Officer,
Treasurer and Secretary
FORM 8-K/A #2
PARKWAY PROPERTIES, INC.
Item 5. Other Events.
On November 10, 1997 the Company purchased First Little Rock
Plaza in Little Rock, Arkansas for $10,200,000. First Little
Rock Plaza is a five-story building constructed in 1986
containing approximately 117,000 net rentable square feet. The
building has a 406 space, three-level attached parking garage and
is located at the intersection of I-630 and I-430 in West Little
Rock. The building is 86% leased to tenants such as Fireman's
Fund, American Express, PaineWebber, Liberty Mutual, Riceland
Foods, Prudential, Wausau and many other national and local
tenants. The purchase was funded with advances under existing
bank lines of credit with Deposit Guaranty National Bank at a
rate of 7.53%.
On January 22, 1998, the Company purchased the Veritas
Technology Center in Houston, Texas for $12,200,000. Veritas
Technology Center is a five-story office building comprising
approximately 155,000 square feet located in the Energy Corridor
submarket of West Houston. The building is situated on
approximately 9.4 acres of land and offers 450 surface parking
spaces. The building was constructed in 1983 and is 100% occupied
with Schlumberger GECO-PRAKLA occupying 153,000 square feet under
leases that expire on April 30, 2002. The purchase was funded
with advances under existing bank lines of credit with Deposit
Guaranty National Bank at a rate of 7.53%.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements
(1) The following audited financial statement of Greenbrier
Towers for the year ended December 31, 1996 is attached hereto.
Also included is the unaudited financial statement for the nine
months ended September 30, 1997.
Page
----
Report of Independent Auditors 4
Combined Statement of Rental Revenue and
Direct Operating Expenses 5
Notes to Combined Statement of Rental Revenue
and Direct Operating Expenses 6
(2) The following audited financial statement of First
Little Rock Plaza for the year ended December 31, 1996 is
attached hereto. Also included is the unaudited financial
statement for the nine months ended September 30, 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
(3) The following audited financial statement of the
Veritas Technology Center for the year ended December 31, 1996 is
attached hereto. Also included is the unaudited financial
statement for the nine months ended September 30, 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.
Page
----
Pro Forma Consolidated Financial Statements (Unaudited) 16
Pro Forma Consolidated Balance Sheet (Unaudited) -
As of September 30, 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 Nine Months Ended September 30, 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 combined statement of rental
revenue and direct operating expenses of Greenbrier Towers 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 combined 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/A of Parkway
Properties, Inc., as described in Note 2, and is not intended to
be a complete presentation of Greenbrier Towers' revenue and
expenses.
In our opinion, the combined 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 Greenbrier Towers for the year
ended December 31, 1996, in conformity with generally accepted
accounting principles.
We have compiled the accompanying combined statement of rental
revenue and direct operating expenses of Greenbrier Towers for
the nine months ended September 30, 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 combined statement of rental
revenue and direct operating expenses of Greenbrier Towers for
the nine months ended September 30, 1997 and, accordingly, do not
express an opinion or any other form of assurance on the
statement.
Jackson, Mississippi /s/ Ernst & Young LLP
January 30, 1998
Greenbrier Towers
Combined Statement of Rental Revenue
and Direct Operating Expenses
Year Ended Nine Months Ended
December 31, 1996 September 30, 1997
------------------ ------------------
(unaudited)
Rental revenue (Note 1):
Minimum rents ............... $1,517,487 $1,530,036
Reimbursed charges and
other income............... 56,274 35,485
---------- ----------
1,573,761 1,565,521
Direct operating expenses
(Note 2):
Utilities................... 201,443 161,353
Real estate taxes........... 181,112 135,871
Maintenance services
and supplies.............. 212,846 183,937
Janitorial services
and supplies.............. 141,621 94,373
Management fees (Note 3).... 46,023 41,331
Insurance................... 41,872 15,411
Security service............ 13,172 6,547
Administrative and
miscellaneous expenses.... 45,435 44,537
---------- ----------
883,524 683,360
---------- ----------
Excess of rental revenue over
direct operating expenses... $ 690,237 $ 882,161
========== ==========
See accompanying notes.
Greenbrier Towers
Notes to Combined Statement of Rental Revenue
and Direct Operating Expenses
December 31, 1996
1. Organization and Significant Accounting Policies
Description of Property
On November 25, 1997, Parkway Properties, Inc. (the
"Company") purchased Greenbrier Towers (the "Buildings") in
Chesapeake, Virginia from an unrelated party. These six-story
buildings contain a total of approximately 173,000 (unaudited)
net rentable square feet.
Rental Revenue
Minimum rents from leases are accounted for ratably over the
term of each lease. Tenant reimbursements are recognized as
revenue as the applicable services are rendered or expenses
incurred.
The future minimum rents on noncancelable operating leases at
December 31, 1996 are as follows:
Year Amount
--------------------------------
1997 $ 1,535,000
1998 1,234,000
1999 935,000
2000 749,000
2001 489,000
Thereafter 228,000
-----------
$5,170,000
===========
The above amounts do not include tenant reimbursements for
utilities, taxes, insurance and common area maintenance.
Effective March 15, 1997, a new tenant leased 18,619
(unaudited) square feet of the Buildings with average annual
minimum rents of approximately $308,000 (unaudited) expiring
September 30, 2007.
One tenant, whose lease expired September 30, 1997, accounted
for approximately 18% of the Buildings' rental revenue for the
year ended December 31, 1996 and the nine months ended September
30, 1997 (unaudited). Effective October 24, 1997, a new tenant
leased this vacated rentable area through October 31, 2002.
2. Basis of Accounting
The accompanying combined 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 Buildings such as depreciation and mortgage
interest expense. Management is not aware of any material
factors relating to the Buildings that would cause the reported
financial information not be necessarily indicative of future
operating results.
3. Management Fees
Management fees of approximately 3% of revenues received from
the operations of the Buildings 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 First Little Rock Plaza 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/A of Parkway
Properties, Inc., as described in Note 2, and is not intended to
be a complete presentation of First Little Rock Plaza 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 First Little Rock Plaza 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 First Little Rock Plaza for the nine
months ended September 30, 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 First Little Rock Plaza for the nine
months ended September 30, 1997 and, accordingly, do not express
an opinion or any other form of assurance on the statement.
Jackson, Mississippi /s/ Ernst & Young LLP
January 20, 1998
First Little Rock Plaza
Statement of Rental Revenue
and Direct Operating Expenses
Year Ended Nine Months Ended
December 31, 1996 September 30, 1997
------------------ ------------------
(unaudited)
Rental revenue:
Minimum rents ............... $1,544,118 $1,134,803
Reimbursed charges and
other income............... 74,809 33,101
---------- ----------
1,618,927 1,167,904
---------- ----------
Direct operating expenses
(Note 2):
Utilities................... 277,077 187,844
Real estate taxes........... 112,826 84,619
Maintenance services
and supplies.............. 93,350 63,407
Janitorial services
and supplies.............. 81,312 53,409
Management fees (Note 3).... 63,446 48,110
Insurance................... 20,756 12,301
Administrative and
miscellaneous expenses.... 14,507 15,213
---------- ----------
663,274 464,903
---------- ----------
Excess of rental revenue over
direct operating expenses... $ 955,653 $ 703,001
========== ==========
See accompanying notes.
First Little Rock Plaza
Notes to Statement of Rental Revenue
and Direct Operating Expenses
December 31, 1996
1. Organization and Significant Accounting Policies
Description of Property
On November 7, 1997, Parkway Properties, Inc. (the "Company")
purchased First Little Rock Plaza (the "Building") in Little
Rock, Arkansas from an unrelated party. The five-story building
contains approximately 117,000 (unaudited) square feet of
rentable area.
Rental Revenue
Minimum rents from leases are accounted for ratably over the
term of each lease. Tenant reimbursements are recognized as
revenue as the applicable services are rendered or expenses
incurred.
The future minimum rents on noncancelable operating leases at
December 31, 1996 are as follows:
Year Amount
--------------------------------
1997 $ 1,452,000
1998 1,369,000
1999 1,118,000
2000 840,000
2001 618,000
Thereafter 427,000
-----------
$ 5,824,000
===========
The above amounts do not include tenant reimbursements for
utilities, taxes, insurance and common area maintenance.
Two tenants, whose leases expire December 31, 2001 and June
30, 2002, respectively, accounted for approximately 24% of the
Building'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 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 be necessarily indicative of future
operating results.
3. Management Fees
Management fees of approximately 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 Veritas Technology Center 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/A of Parkway
Properties, Inc., as described in Note 2, and is not intended to
be a complete presentation of Veritas Technology Center's
revenues 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 Veritas Technology Center 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 Veritas Technology Center for the
nine months ended September 30, 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 Veritas Technology Center for
the nine months ended September 30, 1997 and, accordingly, do not
express an opinion or any other form of assurance on the
statement.
Jackson, Mississippi /s/ Ernst & Young LLP
January 29, 1998
Veritas Technology Center
Statement of Rental Revenue
and Direct Operating Expenses
Year Ended Nine Months Ended
December 31, 1996 September 30, 1997
------------------ ------------------
(unaudited)
Rental revenue:
Minimum rents ............... $2,172,038 $1,618,342
Reimbursed charges and
other income............... 108,995 76,327
---------- ----------
2,281,033
1,694,669
---------- ----------
Direct operating expenses
(Note 2):
Utilities................... 200,654 122,856
Real estate taxes........... 211,431 158,573
Maintenance services
and supplies (Note 3)..... 226,460 61,411
Janitorial services
and supplies.............. 137,928 102,678
Management fees (Note 4).... 53,443 41,285
Wages....................... 109,215 78,729
Administrative and
miscellaneous expenses.... 82,062 47,510
---------- ----------
1,021,193 613,042
---------- ----------
Excess of rental revenue over
direct operating expenses... $1,259,840 $1,081,627
========== ==========
See accompanying notes.
Veritas Technology Center
Notes to Statement of Rental Revenue
and Direct Operating Expenses
December 31, 1996
1. Organization and Significant Accounting Policies
Description of Property
On January 21, 1998, Parkway Properties, Inc. (the "Company")
purchased Veritas Technology Center (the "Building") in Houston,
Texas from an unrelated party. The five-story building contains
approximately 155,000 (unaudited) square feet of rentable area.
Rental Revenue
Minimum rents from leases are accounted for ratably over the
term of each lease. Tenant reimbursements are recognized as
revenue as the applicable services are rendered or expenses
incurred.
The future minimum rents on noncancelable operating leases at
December 31, 1996 are as follows:
Year Amount
--------------------------------
1997 $ 2,183,000
1998 2,189,000
1999 2,179,000
2000 2,171,000
2001 2,171,000
Thereafter 724,000
-----------
$11,617,000
===========
The above amounts do not include tenant reimbursements for
utilities, taxes, insurance and common area maintenance.
One tenant, whose lease expires April 30, 2002, accounted for
approximately 99% of the Building's rental revenue for year ended
December 31, 1996 and the nine months ended September 30, 1997
(unaudited).
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 be necessarily indicative of future
operating results.
3. Maintenance Services and Supplies
Included in the Building's 1996 maintenance services and
supplies expense is $115,589 for the replacement and repair of
certain components of the Building's air conditioning system.
4. Management Fees
Management fees of approximately 2.5% 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 September 30, 1997 and pro forma consolidated statements of
income of Parkway Properties, Inc. ("Parkway") for the year ended
December 31, 1996 and nine months ended September 30, 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 Hightower Centre, First Little
Rock Plaza, Raytheon Building, Greenbrier Towers and the Veritas
Technology Center as well as the placement of non-recourse
mortgage debt on BB&T and First Tennessee Plaza, as if they had
been consummated on September 30, 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
Veritas Technology Center 01/21/98
Greenbrier Towers 11/25/97
Raytheon Building 11/17/97
First Little Rock Plaza 11/07/97
Hightower Centre 10/01/97
Morgan Keegan Tower 09/30/97
First Tennessee Plaza 09/18/97
Fairway Plaza 08/12/97
NationsBank Tower 07/31/97
Lakewood II 07/10/97
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
or assumed in the purchases, the December 24, 1996 sale of the
Virginia Beach mortgage loan, the sale of 2,012,500 shares of
common stock on January 22, 1997, the sale of 3,000,000 shares of
common stock on September 24, 1997, and the sale of 450,000
shares of common stock on October 6, 1997 as if all the
transactions had occurred January 1, 1996.
These pro forma consolidated financial statements may not be
indicative of the results that actually would have occurred if
the purchases, sales 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
September 30, 1997
(Unaudited)
Parkway Pro Forma Parkway
Historical Adjustments Pro Forma
---------- ----------- ---------
(In thousands)
Assets (1-7)
Real estate related investments:
Office buildings.............$310,130 $ 61,080 $371,210
Land held for development.... 1,721 - 1,721
Accumulated depreciation..... (12,073) - (12,073)
-------- -------- --------
299,778 61,080 360,858
Real estate held for sale:
Land....................... 4,687 - 4,687
Operating properties....... 1,497 - 1,497
Other non-core
real estate assets......... 58 - 58
Mortgage loans............... 307 - 307
Real estate partnership...... 322 - 322
-------- -------- --------
306,649 61,080 367,729
Interest, rents receivable
and other assets............. 7,365 - 7,365
Cash and cash equivalents...... 486 (486) -
-------- -------- --------
$314,500 $ 60,594 $375,094
======== ======== ========
Liabilities
Notes payable to banks..........$ 8,200 $ 8,273 $ 16,473
Mortgage notes payable
without recourse.............. 67,960 37,958 105,918
Accounts payable and other
liabilities................... 10,692 - 10,692
-------- -------- --------
86,852 46,231 133,083
-------- -------- --------
Stockholders' Equity
Common stock, $.001 par value,
70,000,000 shares authorized,
9,307,988 shares issued in
1997.......................... 9 - 9
Additional paid-in capital...... 199,018 14,363(9) 213,381
Retained earnings............... 28,621 - 28,621
-------- -------- --------
227,648 14,363 242,011
-------- -------- --------
$314,500 $ 60,594 $375,094
======== ======== ========
See accompanying notes.
PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(Unaudited)
Parkway Pro Forma Parkway
Historical Adjustments(8) ProForma
---------- -------------- ---------
(In thousands, except per share data)
Revenues
Income from office properties...$18,840 $45,534 (a) $64,374
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 44,150 78,687
------- ------- -------
Expenses
Office properties
Operating expense............. 8,466 21,408 (a) 29,874
Interest expense.............. 3,526 4,975 (c) 8,501
Depreciation and amortization. 2,444 6,265 (a) 8,709
Minority interest............. (28) - (28)
Other real estate properties
Operating expense............. 1,379 - 1,379
Interest expense
Notes payable to banks........ 281 - 281
Notes payable on wrap
mortgages................... 340 (340)(e) -
Management company expense...... 673 - 673
General and administrative...... 2,982 - 2,982
------- ------- -------
20,063 32,308 52,371
------- ------- -------
Income before income taxes...... 14,474 11,842 26,316
Income tax expense.............. 103 - 103
------- ------- -------
Net income......................$14,371 $11,842 $26,213
======= ======= =======
Net income per share............$ 3.92 $ 2.87(9)
======= =======
Weighted average shares
outstanding................... 3,662 9,124
======= =======
See accompanying notes.
PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(Unaudited)
Parkway Pro Forma Parkway
Historical Adjustments(8) Pro Forma
---------- -------------- ---------
(In thousands, except per share data)
Revenues
Income from office properties...$29,939 $20,969 (b) $50,908
Income from other real estate
properties.................... 564 - 564
Interest on mortgage loans...... 47 - 47
Management company income....... 398 - 398
Interest on investments......... 363 - 363
Dividend income................. 323 - 323
Deferred gains and other income. 100 - 100
------- ------- -------
31,734 20,969 52,703
------- ------- -------
Expenses
Office properties
Operating expense............. 12,678 9,375 (b) 22,053
Interest expense:
Contractual................. 3,856 2,407 (c) 6,263
Amortization of loan cost... 68 - 68
Depreciation and amortization. 3,795 2,879 (b) 6,674
Minority interest............. 59 - 59
Other real estate properties
Operating expense............. 361 - 361
Interest expense on bank notes:
Contractual................... 657 - 657
Amortization of loan costs.... 126 - 126
Interest expense on wrap
mortgages................... - - -
Management company expense...... 260 - 260
General and administrative...... 2,540 - 2,540
------- ------- -------
24,400 14,661 39,061
------- ------- -------
Income before gains............. 7,334 6,308 13,642
------- ------- -------
Gain on sales
Gain on real estate held for
Sale and mortgage loans....... 1,091 - 1,091
------- ------- -------
Net income......................$ 8,425 $ 6,308 $14,733
======= ======= =======
Net income per share............$ 1.36 $ 1.54(9)
======= =======
Weighted average shares
outstanding................... 6,182 9,566
======= =======
See accompanying notes.
PARKWAY PROPERTIES, INC.
Notes to Pro Forma Consolidated Financial Statements
(Unaudited)
1. On October 1, 1997, the Company purchased Hightower Centre
in Atlanta, Georgia for $6,700,000 from an unrelated party.
Hightower Centre consists of two multi-story buildings containing
78,199 rentable square feet with 332 parking spaces.
2. On November 7, 1997, the Company purchased First Little Rock
Plaza in Little Rock, Arkansas for $10,200,000. First Little
Rock is a five-story building containing approximately 117,000
square feet.
3. On November 12, 1997, the Company received funds totaling
$15,000,000 from the placement of non-recourse mortgage debt on
the BB&T office building in Winston-Salem, North Carolina. The
loan fully amortizes over a 15-year period at an interest rate of
7.3%.
4. On November 17, 1997, the Company purchased the Raytheon
Building in Houston, Texas for $15,980,000, which included the
assumption of an existing $7,958,000 first mortgage, from an
unrelated party. Raytheon is an eight-story building constructed
in 1983 containing approximately 148,000 net rentable square feet
with 736 parking spaces with 494 spaces located within a six-
story parking garage.
5. On November 25, 1997, the Company purchased Greenbrier
Towers in Chesapeake, Virginia for $16,000,000. Greenbrier
Towers consist of two six-story buildings containing
approximately 173,000 square feet and encompassing approximately
11.4 acres of Greenbrier Business Park.
6. On December 15, 1997, the Company received funds totaling
$15,000,000 from the placement of non-recourse mortgage debt on
First Tennessee Plaza in Knoxville, Tennessee. The loan fully
amortizes over a 15-year period at an interest rate of 7.17%.
7. On January 21, 1998, the Company purchased the Veritas
Technology Center (Veritas) in Houston, Texas for $12,200,000.
Veritas is a five-story office building comprising approximately
155,000 square feet located in the Energy Corridor submarket of
West Houston.
8. The pro forma adjustments to the Consolidated Statement of
Income for the year ended December 31, 1996 and nine months
ended September 30, 1997 set forth the effects of Parkway's
purchase of the following as if they had been consummated on
January 1, 1996.
BUILDING DATE OF PURCHASE
Veritas Technology Center 01/21/98
Greenbrier Towers 11/25/97
Raytheon Building 11/17/97
First Little Rock Plaza 11/07/97
Hightower Centre 10/01/97
Morgan Keegan Tower 09/30/97
First Tennessee Plaza 09/18/97
Fairway Plaza 08/12/97
NationsBank Tower 07/31/97
Lakewood II 07/10/97
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 or assumed
in the purchases 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 nine
months ended September 30, 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
Lakewood II 1,915,000 839,000 259,000
NationsBank Tower 4,094,000 1,782,000 464,000
Fairway Plaza 1,408,000 682,000 151,000
First Tennessee
Plaza 5,958,000 3,083,000 675,000
Morgan Keegan
Tower 4,633,000 2,093,000 823,000
Hightower Centre 981,000 430,000 151,000
Raytheon Building 2,763,000 1,276,000 360,000
First Little Rock 1,619,000 663,000 230,000
Greenbrier Towers 1,574,000 884,000 360,000
Veritas 2,281,000 1,021,000 275,000
----------- ----------- ----------
$45,534,000 $21,408,000 $6,265,000
=========== =========== ==========
Depreciation is provided by the straight-line method over
the estimated useful lives of the buildings (40 years).
(b) For the nine months ended September 30, 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
Lakewood II 977,000 447,000 129,000
NationsBank Tower 2,392,000 1,003,000 271,000
Fairway Plaza 859,000 379,000 94,000
First Tennessee
Plaza 4,253,000 2,080,000 477,000
Morgan Keegan
Tower 3,327,000 1,665,000 618,000
Hightower Centre 833,000 333,000 113,000
Raytheon Building 2,072,000 919,000 270,000
First Little Rock 1,168,000 465,000 172,000
Greenbrier Towers 1,565,000 683,000 270,000
Veritas 1,695,000 613,000 206,000
----------- ----------- -----------
$20,969,000 $ 9,375,000 $ 2,879,000
=========== =========== ===========
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 and debt assumed upon purchase at
the actual amounts and rates by property as if placed
January 1, 1996 and is detailed below.
Nine
Property/Placement Year Ended Months Ended
Date/Rate Debt 12/31/96 9/30/97
------------------ ----------- ---------- ------------
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 -
Lakewood II*
7/97 8.08% 6,910,000 558,000 294,000
BB&T
11/97 7.3% 15,000,000 1,095,000 821,000
Raytheon Building*
11/97 8.125% 7,958,000 647,000 485,000
First Tennessee
Plaza
12/97 7.17% 15,000,000 1,075,000 807,000
---------- ----------
$4,975,000 2,407,000
========== ==========
*Assumed in purchase.
(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 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.
9. The pro forma earnings per share for the year ended December
31, 1996 and the nine months ended September 30, 1997
reflect the sale of 2,012,500 shares of common stock under
its existing shelf registration on January 22, 1997, the
sale of 3,000,000 shares of common stock on September 24,
1997 and the sale of 450,000 shares of common stock on
October 6, 1997.
10. No additional income tax expenses were provided because of
the Company's net operating loss carryover and status as a
REIT.
11. 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 #2
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: February 6, 1997 PARKWAY PROPERTIES, INC.
BY: /s/Sarah P. Clark
Sarah P. Clark
Senior Vice President,
Chief Financial Officer,
Treasurer and Secretary
