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Parkway Purchases Phoenix Asset

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Steven G. Rogers, President and Chief Executive Officer at Parkway, stated "The purchase of Hayden Ferry is consistent with our FOCUS Plan strategy of investing in newer, high-quality assets that have greater potential for future growth. Tempe is a highly desirable submarket in Phoenix because of its central location and access to mass transportation. The lower occupancy of Hayden Ferry provides an attractive opportunity to add value and it complements the core assets we already own in Phoenix and in the balance of our Fund II portfolio. Additionally, Parkway's selection by the seller was based in large part on our ability to perform within a short period and close with all cash."

Parkway estimates that the Hayden Ferry investment represents a stabilized capitalization rate ("cap rate") of approximately 8.2%, which assumes the full-year net operating income impact of a lease-up to stabilized occupancy at current market rates, with the purchase price burdened by the estimated capital costs required to reach stabilization. The property is expected to yield a leveraged internal rate of return ("IRR") of approximately 12.9%. Parkway's ownership share in Hayden Ferry is 30.0%, and Parkway's annual return is comprised of its pro-rata ownership share of property income as well as market-based fees for asset and property management, leasing, and construction supervision services to be provided by Parkway Realty Services. Adding these fees to the property level economics results in expected returns to Parkway of a stabilized cap rate of approximately 10.5% and a leveraged IRR of approximately 18.2%.

In addition to the $39.4 million purchase price, Fund II expects to spend approximately $4.3 million for closing costs, building improvements, leasing costs and tenant improvements during the first two years of ownership. The Company estimates that when including these initial closing and leasing costs in the purchase price the investment still represents a discount to replacement cost. Fund II has received a commitment for a $22.0 million fixed rate, first mortgage which is expected to close in July 2011. Parkway's equity contribution in the investment once the first mortgage is in place is expected to be $5.2 million. Parkway's share of the purchase price was initially funded through availability under the Company's existing revolving credit facility. The supplemental information table at the end of the press release further outlines the property information, returns, and fee structure as it relates to this investment.

Fund II is a $750 million discretionary fund formed in May 2008 for the purpose of acquiring high-quality, multi-tenant office properties. Parkway is a 30% investor in Fund II, which, when fully invested, is expected to be capitalized with non-recourse, fixed rate mortgage debt at an initial 50% debt to total capitalization. Fund II targets investments in office buildings in Houston, Austin, San Antonio, Chicago, Atlanta, Phoenix, Charlotte, Memphis, Nashville, Jacksonville, Orlando, Tampa/St. Petersburg, and Ft. Lauderdale, as well as other growth markets to be determined at Parkway's discretion. As of June 30, 2011, Fund II owns 11 assets with a combined total of 3.7 million square feet.

About Parkway Properties

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 and Southwestern United States and Chicago. Parkway owns or has an interest in 71 office properties located in 12 states with an aggregate of approximately 15.3 million square feet of leasable space as of June 30, 2011. Included in the portfolio are 27 properties totaling 6.8 million square feet that are owned jointly with other investors, representing 44.6% of the portfolio. Fee-based real estate services are offered through wholly-owned subsidiaries of the Company, which in total manage and/or lease approximately 12.7 million square feet for third-party owners at June 30, 2011.

Parkway Properties, Inc.'s press releases and additional information about the Company are available on the Company's website 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, will, believe, forecast, intends, expects, estimates, projects, or similar expressions) 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; risks associated with joint venture partners; the risks associated with the ownership and development of real property; the failure to acquire or sell properties as and when anticipated; 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 the Company; and other risks and uncertainties detailed from time to time in the Company's SEC filings. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, the Company's business, financial condition, liquidity, cash flows, and results could differ materially from those expressed in the forward-looking statements. The Company does not undertake to update forward-looking statements, except as may be required by law.

                        Hayden Ferry Lakeside I
                       Supplemental Information

                                                           Hayden Ferry
    Property Information                                 Lakeside I (1)
    --------------------                                 --------------
    Location                                              Phoenix, AZ
    Square Footage                                            203,000
    % Leased as of June 30, 2011                                 52.3%
    Year built                                                   2002
    Purchase price                                        $39,400,000
    Estimated initial improvements during first two
     years & closing costs                                   $4,365,000

    Property Level Return Information
    ---------------------------------
    Initial cap rate (2)                                          N/M
    Estimated stabilized cap rate (3)                             8.2%
    Leveraged internal rate of return                            12.9%

    Parkway Return Information
    --------------------------
    Parkway's share of projected net operating
     income (initial 12 months)                              $221,000
    Projected management, leasing, and services fee
     income (4) (initial 12 months)                          $454,000
    Parkway's projected initial cap rate (including
     fee income) (2)                                              N/M
    Parkway's projected stabilized cap rate
     (including fee income) (3)                                  10.5%
    Parkway's projected leveraged internal rate of
     return                                                      18.2%

    Financial Information
    ---------------------
    Purchase price paid to seller                         $39,400,000
    Expected proceeds from first mortgage (July
     2011)                                                $22,000,000
    Estimated total equity investment                     $17,400,000
    30.0% equity investment by Parkway                     $5,220,000

    Notes:
    ------
    1. In accordance with generally accepted accounting
     principles, Hayden Ferry will be included in Parkway's
     consolidated financial statements.  Each quarter the Company
     will provide information about debt, results of operations
     and FFO related to fund properties in the Company's
     Supplemental Financial and Property Information Package.
    2. Given low in-place occupancy at the property, the initial
     cap rate data is deemed not meaningful.
    3. The estimated stabilized cap rate assumes the full-year
     net operating income impact of a lease-up to stabilized
     occupancy at current market rates, with the purchase price
     burdened by the estimated capital costs required to reach
     stabilization.
    4. Asset management fees are calculated annually based on
     1.25% of Fund II's invested equity capital.  Property
     management fees are calculated based on 3.0% of gross
     revenue.  Leasing fees are included at market-based rates on
     projected renewal and expansion leases.  Construction
     management fees are calculated as 4.0% of Fund II's projected
     capital expenditures.

    CONTACT:          STEVEN G. ROGERS
                       PRESIDENT & CHIEF EXECUTIVE
                       OFFICER
                      RICHARD G. HICKSON IV
                      CHIEF FINANCIAL OFFICER
                      (601) 948-4091

SOURCE Parkway Properties, Inc.