HOUSTON, April 20, 2017 /PRNewswire/ -- Parkway, Inc.
(NYSE: PKY) announced today that it completed the previously
announced joint venture of Greenway Plaza and Phoenix Tower
(collectively, the "Greenway Portfolio") by selling a 49.0%
interest in the properties for $512.1
million, or an implied $210
per square foot. The Greenway Portfolio is an approximately
5.0 million square foot campus consisting of 11 office properties
located in the Greenway submarket of Houston, Texas.
Parkway, Inc., through certain of its subsidiaries
(collectively, "Parkway"), formed a joint venture with TH Real
Estate Global Asset Management, the real estate investment
management arm of TIAA ("TH Real Estate"), Silverpeak Real Estate
Partners ("Silverpeak") and Canada Pension Plan Investment Board
("CPPIB"). As part of the joint venture transaction, Parkway
retained a 51% interest in the Greenway Portfolio, a partnership
between TH Real Estate and Silverpeak acquired a 24.5% interest,
and CPPIB acquired a 24.5% interest. Parkway serves as the
general partner and also provides property management and leasing
services for the joint venture. The joint venture assumed the
existing mortgage debt secured by Phoenix Tower, which has an
outstanding balance of approximately $75.9
million and matures on March
1, 2023. Additionally, the joint venture placed a new
mortgage loan from Goldman Sachs totaling $465.0 million secured by the other properties in
the Greenway Portfolio, which has a fixed interest rate of 3.753%
and matures on May 6, 2022.
Parkway also terminated its existing revolver and term loan credit
facility and prepaid the $350.0
million outstanding balance using proceeds from the joint
venture. Parkway expects to record a $7.6 million non-cash loss on extinguishment of
debt in the second quarter of 2017 related to the termination of
the credit facility.
Net proceeds to Parkway were approximately $322.4 million, $37.9
million of which is being held in lender reserves. The
net proceeds amount includes the new debt placement and the payoff
of the $350.0 million term loan
credit facility. Parkway's net proceeds are also 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 totaled approximately
$32.8 million. Additionally,
Parkway recorded an impairment loss of approximately $15.0 million in the first quarter of 2017
related to the joint venture transaction.
Holliday Fenoglio Fowler, L.P.
(HFF) arranged the recapitalization and secured financing for the
Greenway Portfolio.
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 press release, 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 press release 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," "plan," "potential," "should," "will," "result" 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 each 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; risks
associated with joint ventures and 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, including U.S.
monetary policy; 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, including risks related to natural disasters and
illiquidity of real estate; termination or non-renewal 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; defaults or non-renewal of leases; risks associated with
the potential volatility of Parkway's common stock; Parkway's
failure to maintain its status as real estate investment trust
under the Internal Revenue Code of 1986, as amended; 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 over time, and it is not
possible for us to predict the occurrence of those matters or the
manner in which they may affect us. Except as required by law,
Parkway undertakes no 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.
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SOURCE Parkway Properties, Inc.
