Parkway Properties Announces Creation of $750 Million Discretionary Fund With the Teacher Retirement System of Texas

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Parkway will serve as the general partner of Fund II and will provide asset management, property management, and leasing and construction management services to Fund II for which it will be paid market-based fees. Parkway will have four years to identify and acquire properties (the "Investment Period"), with funds contributed as needed to complete acquisitions, and anticipates a ten-year life for Fund II. Parkway will exclusively represent Fund II in making acquisitions within the target markets and within certain predefined criteria. Parkway may continue to make fee-simple acquisitions in markets outside of the target markets, acquire properties within the target markets that do not meet Fund II's specific criteria or sell any currently owned properties.

In addition to the increased current return on investment due to the fees earned, the benefits to Parkway include full investment discretion which allows Parkway to be more competitive in the acquisition market, full operating discretion, longer holding periods for the assets than the typical joint venture which provides stability and durability in these enhanced cash flows, and increased efficiency by focusing on core growth markets. The Company's current guidance for 2008 does not include additional acquisitions this year. As the timing of acquisitions for Fund II becomes more certain, the Company will reevaluate the need to update its earnings outlook. The Company intends to fund its equity contribution primarily through borrowings under its line of credit and proceeds from asset sales under its asset recycling program.

Steven G. Rogers, President and Chief Executive Officer stated, "Parkway is pleased to announce its partnership with the Teacher Retirement System of Texas to form a $750 million discretionary fund. The Teacher Retirement System ofTexas is well-known and greatly respected for its real estate investment acumen. Fund II combines the financial capital of TRS with the operating strength of Parkway to create new investment opportunities for both entities. This relationship furthers Parkway's strategy and strengthens our position as a well-established operator of office assets, not just an investor in such assets. We believe that this allows Parkway to be the REIT office asset manager and operator of choice to institutional investors in the private marketplace. Additionally, it provides us another flexible tool in our tool kit as a public company to access capital to enhance our balance sheet and shareholder returns."

Eric Lang, Director of Real Assets for the Teacher Retirement System of Texas stated, "We are also pleased to announce our partnership with Parkway Properties. Parkway has a proven track record of creating value through disciplined investments and strong operations. We look forward to expanding our core office portfolio and receiving solid returns for our beneficiaries through this long-term relationship."

Parkway Properties, Inc., a member of the S&P Small Cap 600 Index, is a self-administered real estate investment trust specializing in the operation, leasing, acquisition, and ownership of office properties. The Company is geographically focused on the Southeastern andSouthwestern United States and Chicago. Parkway owns or has an interest in 69 office properties located in 11 states with an aggregate of approximately 14.1 million square feet of leasable space as of May 16, 2008. Included in the portfolio are 21 properties totaling 3.8 million square feet that are owned jointly with other investors, representing 27.2% of the portfolio. Under the Company's GEAR UP plan, which started January 1, 2006, and ends December 31, 2008, it is the Company's strategy to transform from an owner-operator to an operator-owner. The strategy highlights the Company's strength in providing excellent service in the operation of office properties in addition to its direct ownership of real estate assets. Fee-based real estate services are offered through the Company's wholly owned subsidiary, Parkway Realty Services, which also manages and/or leases approximately 1.8 million square feet for third-party owners as of May 16, 2008.

Celebrating their 70th year of operation, Teacher Retirement System of Texas has total assets of approximately $110 billion and 1.2 million participants. TRS is one of the largest retirement systems inthe United States. Additional information about TRS can be found at http://www.trs.state.tx.us.

Parkway Properties, Inc.'s press releases and additional information about the Company are available on the Company's web site at www.pky.com.

Forward Looking Statement

Certain statements in this release that are not in the present or past tense or discuss the Company's expectations (including the use of the words anticipate, forecast or project) are forward-looking statements within the meaning of the federal securities laws and as such are based upon the Company's current belief as to the outcome and timing of future events. There can be no assurance that future developments affecting the Company will be those anticipated by the Company. These forward-looking statements involve risks and uncertainties (some of which are beyond the control of the Company) and are subject to change based upon various factors, including but not limited to the following risks and uncertainties: changes in the real estate industry and in performance of the financial markets; the demand for and market acceptance of the Company's properties for rental purposes; the amount and growth of the Company's expenses; tenant financial difficulties and general economic conditions, including interest rates, as well as economic conditions in those areas where the Company owns properties; the risks associated with the ownership and development of real property; the failure to acquire or sell properties as and when anticipated; and other risks and uncertainties detailed from time to time on the Company's SEC filings. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, the Company's results could differ materially from those expressed in the forward-looking statements. The Company does not undertake to update forward-looking statements.

    CONTACT:  STEVEN G. ROGERS
               PRESIDENT & CHIEF EXECUTIVE OFFICER
              J. MITCHELL COLLINS
               CHIEF FINANCIAL OFFICER
              JAMES M. INGRAM
               CHIEF INVESTMENT OFFICER
              (601) 948-4091

SOURCE Parkway Properties, Inc.

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Copyright © 2008, NewsBlaze, Daily News

Tags: Banking and Finance, Real Estate, Education and schools, mississippi, texas

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