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Parkway Properties Overview
February 2014
2
Forward-Looking Statements
Certain statements contained in this presentation, 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 the
Company’s current beliefs as to the outcome and timing of future events. There can be no assurance that actual future developments affecting
the Company will be those anticipated by the Company. 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.
We caution 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,” “believe,” “expect,” “intend,” “may,” “might,”
“plan,” “estimate,” “project,” “should,” “will,” “result” and 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 the Company’s control) 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; competition in the leasing market; the demand for and market acceptance of our properties for rental purposes; the amount and
growth of our expenses; tenant financial difficulties and general economic conditions, including interest rates, as well as economic conditions in
our geographic markets; defaults or non-renewal of leases; risks associated with joint venture partners; the risks associated with the ownership
and development of real property, including risks related to natural disasters; risks associated with property acquisitions, including the recent
acquisition of Thomas Properties Group, Inc.; the failure to acquire or sell properties as and when anticipated; 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 the Company; the ability to satisfy conditions necessary to
close pending transactions; our failure to maintain our status as real estate investment trust, or REIT; 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
any forward-looking statement. While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance.
Any forward-looking statements speak 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. We disclaim 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.
Disclaimer
3
This presentation (the "Presentation") is provided for informational purposes and reference only.
By acceptance hereof, you agree that (i) the information contained herein may not be used,
reproduced or distributed to others, in whole or in part, for any other purpose without the prior
written consent of Parkway Properties, Inc. (“Parkway”) and (ii) you will keep confidential all
information contained herein not already in the public domain.
No representation or warranty is given in respect of the information contained herein and Parkway
is under no obligation to (and expressly disclaims any obligation to) update any of the information
provided in this Presentation. Market and industry information throughout the Presentation have
been provided by sources other than Parkway that are believed to be reliable. However, this
information has not been independently verified and no assurances can be given by Parkway
regarding the accuracy or completeness of this information.
This Presentation does not constitute an offer to sell or a solicitation of an offer to buy any
securities and may not be used or relied upon in evaluating the merit of investing in Parkway.
Deerwood North
4
Parkway Strategic Objectives
Strategic Objective
Increase cash flow and unlock embedded value within existing portfolio
Realize leasing and operational efficiencies and gain local advantage
Create long-term value for shareholders as the leading owner of high-quality assets in higher growth submarkets
in the Sunbelt
Maintain a conservative balance sheet with sufficient flexibility for growth
Tactics
• Efficiently exit non-core markets
• Reinvest funds over time in quality assets in higher-growth
submarkets
• Pursue primarily wholly owned investments and select joint ventures
when appropriate
• Achieve critical mass in target submarkets
• Maintain highly experienced local leadership
• New asset level ownership plans given new investment strategy
• Customized leasing strategies by submarket
• More judicious prioritization of capital expenditures
• Focus on high-quality, differentiated assets
• Maintain between 5.5x to 6.5x net debt to EBITDA over long term
• Focus on debt composition and maintain quality unencumbered pool
• Use credit facility as short-term financing source
Since the new management team was put in place in the fourth quarter of 2011, Parkway has
executed on its strategic plan
5
Track Record of Solid
Achievements
Management Team / TPG
Sponsorship
Enhanced Operational
Results
Fortified Balance Sheet and
Improved Cash Flow
• Management team with proven value creation expertise and strong regional management platform
• TPG, a leading global private investment firm, holds an approximately 22.5% ownership interest in PKY
• Substantial operational improvement throughout 2012 and 2013
– Occupancy increased 540 basis points to 89.3%1 from January 1, 2012 to January 1, 2014
– Weighted average gross rents per NRSF increased 23% from $22.25 (January 1, 2012) to $27.65
(January 1, 2014)
– FAD / FFO ratio significantly improved
– Strong leasing activity, with 2.4 million sq. ft. of leases signed during 2013, representing 17% of the
average portfolio size during the year
• Parkway has maintained a strong and conservative balance sheet as it has continued to grow
• Improved liquidity and access to capital - Parkway has raised $1.0 billion of capital:
– Raised $776 million in private and public equity in 2012, 2013, and 2014
– Closed $125 million and $120 million unsecured term loans
• Amended its credit facility to extend term, increase the size of the accordion and lower fees
• Reduced overall cost of capital by redeeming 8.0% preferred equity
• Improved operating cash flow performance, which resulted in a 150% increase in dividend
Strategy & Portfolio
Transformation
• Portfolio repositioning substantially completed and acquisition pipeline remains healthy
• Exited majority of non-core assets and completed sale of Fund I portfolio
• Purchased or under contract to purchase $3.0 billion of high quality assets since January 2012
• Strategic acquisition of TPGI: ability to execute complex transaction with significant strategic benefits
1. Excludes recently acquired 7000 Central Park in Atlanta, Georgia and the Houston and Austin assets acquired in the merger with Thomas Properties Group, Inc.
• TPG sponsorship provides access to extensive relationships, deep analytical real estate expertise and other
sources of capital
• Relationship with TPG also enhances platform to source attractive investments in core markets
Regional Management Team Executive Management Team
Market Leader Market Industry / Market
Experience (Yrs.)
Shipley Hall Orlando 11/11
Mike Fransen Houston 7 / 7
John Barton Atlanta 18 / 6
Bryan Howell Charlotte 24 / 16
Matt Mooney Phoenix 8 / 8
Victor Hughes Jacksonville 15 / 7
Kyle Burd Tampa 26 / 26
Executive Position Industry Experience
(Yrs.)
James R. Heistand President, CEO &
Director 30
David R. O’Reilly EVP, CFO & CIO 14
M. Jayson Lipsey EVP & COO 11
Jeremy Dorsett EVP & General
Counsel 2
Henry Pratt EVP – Third Party
Services 33
Parkway has an experienced management team and access to additional capital /
expertise through its relationship with TPG
Management Team / TPG
Sponsorship
6
7
Transaction Summary
• Parkway Properties, Inc. (“PKY”) successfully completed its merger with Thomas Properties
Group, Inc. (“TPGI”)
• Announced on September 5, 2013. Completed on December 19, 2013
• 100% stock-for-stock merger
• Each former share of TPGI converted into 0.3822 of a newly issued share of PKY
• Transaction valued at approximately $1.2 billion at announcement
• Corresponds to an implied cap rate on retained office assets of approximately 6.0% 1 at announcement
• Expected to be accretive to 2014 estimated FFO per Share
Management and
Board
• PKY's current executive officers continue as the executive officers of the combined company
• PKY’s Board of Directors expanded from 9 to 10 members
• James A. Thomas has been named Chairman of the Board of Directors of the combined company
Ownership • ~75% continuing PKY stockholders 2
• ~25% former TPGI stockholders 2
Concurrent Asset Sales
• Interests in two office properties (Commerce Square) in Philadelphia, PA sold to Brandywine Realty Trust
for a gross property value of $331.8 million
• Property in Austin, TX (Four Points Centre) and contiguous land parcel sold to Brandywine Realty Trust
for a gross sale price of $47.3 million
• Net proceeds to PKY of approximately $93.5 million
Completed Acquisition of Thomas Properties Group, Inc.
1. Please refer to the Definitions page of this investor presentation for definition of implied cap rate. 2. Based on outstanding shares of common stock and common units.
8
Acquired TPGI Properties (Cont’d)
High Quality Office Properties in Desirable Markets
Frost Bank Tower
Austin, TX
One Congress Plaza
Austin, TX
San Jacinto Center
Austin, TX
300 West 6th Street
Austin, TX
One American Center
Austin, TX
San Felipe Plaza
Houston, TX
CityWestPlace
Houston, TX
“Texas Sized” Value Creation
9
Parkway’s recent Texas acquisitions are well positioned to make a meaningful impact on Parkway’s long-term value creation:
Tempe Gateway
Tempe Gateway
PKY Core Texas Portfolio
PKY Texas Portfolio Annualized Rental Revenue 1
1. Based upon 100% ownership
2. Represents purchase price at merger close on December 19, 2013.
3. Based upon PKY market assessment and quoted rates as of December 31, 2013..
1
Other Houston Portfolio, 16%
San Felipe Plaza, 14%
CityWestPlace, 21% Phoenix Tower, 8%
Austin JV, 41%
San Felipe Plaza CityWestPlace Phoenix Tower Austin Joint Venture
Square Footage 980,000 1,473,000 629,000 2,422,000
Purchase Price per Square Foot $246 $250 $199 $313
% Occupied 86% 97% 88% 86%
In-Place Gross Rents Above / (Below) Market Rate (13%) (35%) (21%) (11%)3
2
10
Significant Portfolio Repositioning
Property Acquisitions and Dispositions (1)
Parkway implemented a meaningful capital recycling plan in 2011, which improved its portfolio
quality and strengthened its balance sheet and financial flexibility
• Exited majority of non-core assets and completed sale of Fund I portfolio
• Purchased or under contract to purchase over $3.0 billion of high-quality assets in targeted Sunbelt markets and
submarkets since January 2011
Note: $ in millions. 1. Represents the gross purchase / sales price only and does not include closing costs or improvements made subsequent to purchase. All acquisitions and dispositions shown at 100% share. Therefore,
1H ‘2013 and 2H’ 2013 exclude the purchases of the remaining 70% interest in four existing Fund II assets. Includes year-to-date acquisitions and dispositions that have been previously disclosed.
$586
$0
$383 $378
$242
$1,321
$75 $162
$326 $354
$50 $3
$101 $28
1H'11 2H'11 1H'12 2H'12 1H'13 2H'13 1H'14
Acquisitions Dispositions
11
Geographic Transformation
PKY As of Today
Note: Based on sq. ft. 1. Includes announced year-to-date asset purchases and dispositions
PKY As of January 1, 2011
Phoenix, 8%
Ft. Lauderdale,
1%
Jacksonville, 10%
Orlando, 4%
Tampa, 5%
Miami, 1%
Atlanta, 13%
Charlotte, 10%
Philadelphia, 5%
Austin, 14%
Houston, 26%
Other, 3%
Hampton Road, 2%
Columbia, 4%
Richmond, 5%
Jackson, 9%
Memphis, 10%
Chicago, 23%
Nashville, 4%
Phoenix, 4%
Atlanta, 11% Charlotte, 1%
Ft. Lauderdale, 2%
Jacksonville, 3%
Orlando, 4% Houston, 18%
New Orleans, 0.0%
1
12
Portfolio Quality Transformation
Select Recent Acquisitions
Phoenix Tower
Houston, TX
626,000 SF
Bank of America Center
Orlando, FL
421,000 SF
Hearst Tower
Charlotte, NC
973,000 SF
525 North Tryon
Charlotte, NC
405,000 SF
3344 Peachtree
Atlanta, GA
485,000 SF
NASCAR Plaza
Charlotte, NC
394,000 SF
Tower Place 200
Atlanta, GA
258,000 SF
Hayden Ferry Lakeside I
Tempe, AZ
203,000 SF
Hayden Ferry Lakeside II
Tempe, AZ
300,000 SF
Invest In Great Office Real Estate
13
Investment strategy focuses on driving long-term value creation, which is achieved with assets that are:
• Strategically differentiated – Invest in irreplaceable
buildings in irreplaceable locations
• CBD and urban infill locations – These submarkets
have consistently outperformed suburban submarkets
• Newer construction – New assets typically provide
more functionally relevant floor plates, lower capital
expenditure requirements, and better energy efficiency
• Value-add opportunities as a complement – Focus
on finding some value-add assets to complement the
balance of the core portfolio
Tempe Gateway
Tempe Gateway CityWestPlace
Achieve Critical Mass in Select Submarkets
14
Parkway seeks to achieve scale in select submarkets, enabling the Company to:
• Leverage pricing power in lease and vendor
negotiations
• Hire and retain superior market leadership and
maintain the best leasing teams
• Enhance ability to identify and capitalize on
emerging investment opportunities and identify
challenges
• Create flexibility to meet changing tenant
demands
Hayden Ferry
Hayden Ferry Lakeside Development
15
Hayden Ferry III is expected to be a 261,000 sq foot Class A+ office tower that will represent the final phase of Parkway’s 780,000 sq foot master planned office community
*Hayden Ferry R2 includes a 21K sq ft retail complex and a 2,500 space structured parking garage
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
Hayden Ferry I Hayden Ferry II Hayden Ferry R2 Tempe Gateway US Airways
February 2012: HF II
acquired at 92.0%
occupancy
August 2012: HF R2*
acquired at 38.1%
occupancy
December 2012:
Tempe Gateway
acquired at 77.0%
occupancy
HF II is currently
89.5% occupied
and 100% leased
HF I is currently
94.9% occupied
HF R2 is currently
90.5% occupied
Tempe Gateway is
currently 93.0%
occupied
June 2011: HF I
acquired at 50.9%
occupancy
US Airways is
currently 100.0%
occupied
June 2013: US
Airways acquired at
100.0% occupancy
Hayden Ferry Lakeside Development
16
Since Parkway’s initial investment into the Tempe submarket in June of 2011, Class A office fundamentals have witnessed a healthy recovery from post recessions lows
$20.00
$22.50
$25.00
$27.50
$30.00
$32.50
$35.00
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Tempe Class A Office - Historical Occupancy vs Rental Rates
% Occupancy AVERAGE RENTAL RATE ($)
96.2%
$30.68
$27.49
90.8%
79.7%
$28.16
Source: CBRE, Q4 2013
17
Enhancing Property Operations: Selected Recent Acquisitions
Tempe Gateway
Phoenix, AZ
Phoenix Tower
Houston, TX
NASCAR Plaza
Charlotte, NC
Deerwood
Jacksonville, FL
Westshore
Corporate Center
Tampa, FL
Tower Place 200
Atlanta, GA
1. Change based on percent leased at December 31, 2013 versus percent occupied at acquisition. 2. Based on Company estimates of weighted average market rent for net rentable square feet (NRSF) from time of acquisition to December 31, 2013.
% Change
in Est.
Date % Occupied at: % Leased at: Market Rent
Market Acquired Acquisition 12/31/2013 Change 12/31/2013 Change 1 per NRSF 2
NASCAR Plaza Charlotte 12/31/12 87.5% 88.0% +44bps 88.0% +44bps +0.0%
Deerwood South Jacksonville 3/7/13 94.0% 92.5% (153bps ) 94.9% +87bps +0.0%
Deerwood North Jacksonville 3/7/13 93.3% 95.7% +236bps 95.7% +236bps +2.6%
Westshore Corporate Center Tampa 11/15/12 77.7% 80.3% +263bps 80.3% +263bps +5.0%
Phoenix Tower Houston 12/20/12 83.6% 87.5% +389bps 87.5% +389bps +11.1%
Tower Place 200 Atlanta 1/17/13 82.7% 89.6% +690bps 91.9% +920bps +7.7%
Tempe Gateway Phoenix 12/21/12 77.0% 93.0% +1604bps 93.0% +1604bps +5.5%
Average 85.1% 89.5% +439bps 90.2% +506bps +4.5%
18
Operational Performance
Objective: Increase cash flow and unlock embedded value within the portfolio
Portfolio Leased
NOI Margin (Total Portfolio) Average In-Place Rents
1. 4Q’13 occupancy includes recently acquired 7000 Central Park in Atlanta, Georgia and the Houston and Austin assets acquired in the merger with Thomas Properties Group, Inc. Excluding those assets,
the portfolio leased percentage at year-end was 90.9%.
2. 3Q’13 retention was impacted by management’s decision to grant early termination to two major tenants, representing approximately 1% of the portfolio. Excluding the two move-outs, 3Q’13 customer
retention was 75.2%.
Customer Retention
85.7%
87.6%
89.4% 90.4%
89.3% 89.7% 90.6%
91.1% 90.2%
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13
47.1% 46.8%
63.2%
76.0%
68.9%
78.2% 84.7%
59.4%
76.7%
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13
59.0%
60.0%
60.8%
61.4% 61.3% 62.2%
60.5%
60.9%
61.5%
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13
1 2
$22.25
$22.94
$23.81
$23.96
$24.15
$24.05 $24.13
$24.38
$27.65
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13
19
Committed to Conservative Balance Sheet Strategy
Objective: Maintain a conservative balance sheet with sufficient flexibility for growth
1. 4Q 2013 Adjusted EBITDA reflects the implied annualized impact of any acquisition or disposition activity for the period, the annualized impact of the loan to TPGI, and realignment expenses associated with closing the Jackson, MS office.
2. Figure in $ millions, based on balloon payment schedule at PKY share
Fixed Charge Coverage Net Debt / Adjusted EBITDA1
1.8x 2.0x 2.0x
2.3x 2.2x
2.5x
3.1x
2.8x
3.2x
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13
6.2x
4.7x 4.6x 4.5x
5.3x
4.8x
6.2x 6.6x 6.6x
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13
Debt Maturity Schedule
$14
$245
$31
$134 $54
$245
$58
$125 $120
$26
$18
$25
$12
$209
$0
$100
$200
$300
$400
$500
2014 2015 2016 2017 2018 2019 Thereafter
Secured (Wholly-Owned) Revolving Credit Facility Term Loan Secured (JV) Unconsolidated (JV)
$245
$79
$272
$447
$257
Total Debt (At Share):
$1,315mm
20
Highlights
1. Based off of 100% of gross value for the acquisitions and includes purchases of the remaining 70% interest in four existing Fund II assets.
• Unique, sizeable and scalable platform
• High quality properties in CBD, urban in-fill and targeted suburban markets in the
Sunbelt region
• Significant presence in markets (e.g. Houston, Charlotte, Atlanta, Jacksonville and
Tampa) with strong employment bases, above average job growth, talented and
educated workforce and increasing populations
• Ability to capitalize on unique acquisition opportunities
• $1.2 billion strategic acquisition of Thomas Properties Group
• Closed on $581 million of additional property acquisitions in 2013 1
• Demonstrated track record
• Ability to transform portfolio and create value through active recycling of assets
• Demonstrated enhancement to portfolio operations through active management
• Ability to increase cash flow and unlock embedded value within existing portfolio
• Demonstrated ability to acquire under-leased assets at attractive purchase prices
and increase occupancy over time
• Sector-leading total returns in 2013
• Conservative balance sheet strategy
• Focus on maintaining conservative leverage levels and a flexible balance sheet
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