HOUSTON, Feb. 17, 2017 /PRNewswire/ -- Parkway, Inc.
(NYSE: PKY) announced today that it has reached an agreement to
sell a 49.0% interest in Greenway Plaza and Phoenix Tower
(collectively, the "Greenway Portfolio") for $512.1 million, or an implied $210 per square foot. Parkway's Greenway
Portfolio is an approximately 5.0 million square foot campus
consisting of 11 office properties located in the Greenway
submarket of Houston, Texas.
"The recapitalization of our Greenway Portfolio accomplishes
several objectives for Parkway," stated James R. Heistand, President and Chief Executive
Officer of Parkway, Inc. ("Parkway"). "First, we have
established a great partnership with three well-capitalized and
highly regarded institutional investors that share our view of the
long-term resiliency of the Houston market and the expectation of an
eventual recovery in Houston
office fundamentals. Second, this transaction helps to
mitigate risk in a single office campus that represents 57% of our
Company's overall square footage. And finally, with
approximately $315.8 million of
expected net proceeds to Parkway, this joint venture will supply us
with additional capital to immediately strengthen our balance sheet
while providing us the flexibility to further diversify the
portfolio through future acquisitions as the Houston market recovers."
Parkway has agreed to form a joint venture with affiliates of TH
Real Estate, Silverpeak Real Estate Partners ("Silverpeak") and
Canada Pension Plan Investment Board ("CPPIB"), with Parkway
retaining a 51% interest, a partnership between TH Real Estate and
Silverpeak acquiring a 24.5% interest, and CPPIB acquiring a 24.5%
interest in the Greenway Portfolio. Parkway will serve as
general partner and also will provide property management and
leasing services for the joint venture. The joint venture
expects to assume the existing mortgage debt secured by Phoenix
Tower, which has an outstanding balance of approximately
$76.2 million and matures on
March 1, 2023. Additionally,
the joint venture received a signed commitment letter from Goldman
Sachs for a new 5-year mortgage loan totaling $465.0 million secured by the other properties in
the Greenway Portfolio, which is expected to close concurrently
with the closing of the joint venture, subject to customary closing
conditions and contingent on satisfying the conditions set forth in
the commitment. At closing, Parkway intends to terminate its
existing revolver and term loan credit facility and prepay the
$350.0 million outstanding balance
using proceeds from the joint venture.
Net proceeds to Parkway are expected to be approximately
$315.8 million, which includes the
new debt placement and the assumed payoff of Parkway's $350.0 million existing term loan at
closing. Parkway's net proceeds also will be net of credits
to the other joint venture partners related to outstanding
contractual lease obligations for tenant improvements and rent
concessions as well as certain capital expenditures for projects
that are in process, all of which totals approximately $38.0 million as of the date of execution of the
agreement. Additionally, Parkway expects to record an
impairment loss of approximately $25.0
million in the first quarter of 2017 related to the joint
venture transaction. Parkway expects the closing of the joint
venture and associated financing to occur in the second quarter of
2017, subject to customary closing conditions.
About Parkway
Parkway is an independent, publicly traded, self-managed real
estate investment trust that owns and operates high-quality office
properties located in attractive submarkets in Houston, Texas. As of December 31, 2016, our portfolio consisted of
five Class A assets comprising 19 buildings and totaling
approximately 8.7 million rentable square feet in the Greenway,
Galleria and Westchase submarkets of Houston.
Contact:
Thomas Blalock
Vice President, Finance & Capital Markets
(407) 581-2915
Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in this communication, including
those that express a belief, expectation or intention, as well as
those that are not statements of historical fact, are
forward-looking statements within the meaning of the federal
securities laws and as such are based upon Parkway's current
beliefs as to the outcome and timing of future events. There can be
no assurance that actual future developments affecting Parkway will
be those anticipated by Parkway. Examples of forward-looking
statements include projected capital resources, projected
profitability and portfolio performance, estimates of market rental
rates, projected capital improvements, expected sources of
financing, expectations as to the timing of closing of
acquisitions, dispositions, or other transactions, the expected
operating performance of anticipated near-term acquisitions and
descriptions relating to these expectations, including without
limitation, the anticipated net operating income yield. Parkway
cautions investors that any forward-looking statements presented in
this presentation are based on management's beliefs and assumptions
made by, and information currently available to, management. When
used, the words "anticipate," "assume," "believe," "estimate,"
"expect," "forecast," "guidance," "intend," "may," "might,"
"outlook," "project," "should" or similar expressions that do not
relate solely to historical matters are intended to identify
forward-looking statements. You can also identify forward-looking
statements by discussions of strategy, plans or intentions.
Forward-looking statements involve risks and uncertainties (some of
which are beyond Parkway's control) and are subject to change based
upon various factors, including but not limited to the following
risks and uncertainties: Parkway's lack of operating history as an
independent company; conditions associated with Parkway's primary
market, including an oversupply of office space, customer financial
difficulties and general economic conditions; that certain of
Parkway's properties represent a significant portion of Parkway's
revenues and costs; that the spin-off from Cousins Properties
Incorporated ("Cousins") will not qualify for tax-free treatment;
Parkway's ability to meet mortgage debt obligations on certain of
Parkway's properties; the availability of refinancing current debt
obligations; potential co-investments with third-parties; changes
in any credit rating Parkway may obtain; changes in the real estate
industry and in performance of the financial markets and interest
rates and Parkway's ability to effectively hedge against interest
rate changes; the actual or perceived impact of global and economic
conditions; declines in commodity prices, which may negatively
impact the Houston, Texas market;
the concentration of Parkway's customers in the energy sector; the
demand for and market acceptance of Parkway's properties for rental
purposes; Parkway's ability to enter into new leases or renewal
leases on favorable terms; the potential for termination of
existing leases pursuant to customer termination rights; the
amount, growth and relative inelasticity of Parkway's expenses;
risks associated with the ownership and development of real
property; termination of property management contracts; the
bankruptcy or insolvency of companies for which Parkway provides
property management services or the sale of these properties; the
outcome of claims and litigation involving or affecting Parkway;
the ability to satisfy conditions necessary to close pending
transactions and the ability to successfully integrate the assets
and related operations acquired in such transactions after closing;
applicable regulatory changes; risks associated with acquisitions,
including the integration of the portion of the combined business
of Parkway Properties, Inc. ("Legacy Parkway") and Cousins relating
to the ownership of real properties in Houston and Legacy Parkway's fee-based real
estate business; risks associated with the fact that Parkway's
historical and predecessors' financial information may not be a
reliable indicator of Parkway's future results; risks associated
with achieving expected synergies or cost savings; risks associated
with the potential volatility of Parkway's common stock; and other
risks and uncertainties detailed from time to time in the Company's
Securities and Exchange Commission filings.
Should one or more of these risks or uncertainties occur, or
should underlying assumptions prove incorrect, Parkway's business,
financial condition, liquidity, cash flows and results could differ
materially from those expressed in any forward-looking statement.
While forward-looking statements reflect Parkway's good faith
beliefs, they are not guarantees of future performance. Any
forward-looking statement speaks only as of the date on which it is
made. New risks and uncertainties arise overtime, and it is not
possible for us to predict the occurrence of those matters or the
manner in which they may affect us. Parkway disclaims any
obligation to publicly update or revise any forward-looking
statement to reflect changes in underlying assumptions or factors,
of new information, data or methods, future events or other
changes. Accordingly, investors should use caution in relying on
past forward-looking statements, which were based on results and
trends at the time they were made, to anticipate future results or
trends.
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SOURCE Parkway, Inc.
