JACKSON, Miss., June 27 /PRNewswire-FirstCall/ -- Parkway Properties, Inc. today announced the closing of the previously announced fee simple sale of the Viad Corporate Center in Phoenix, Arizona for $105.5 million. Parkway owned a 30% interest in the Viad Corporate Center, a 478,000 square- foot office building, with Investcorp International owning the other 70% since March, 2003. The $50,000,000 interest-only loan on the property was assumed by the buyer as part of the sale. Parkway received net cash proceeds from the sale of approximately $15.5 million, and will recognize a gain on the sale of approximately $13.1 million in the second quarter. In addition to the sale proceeds, the Company received additional management fees of approximately $355,000 and an incentive fee of approximately $3.9 million as a result of the economic returns generated above an internal rate of return hurdle rate achieved over the life of the Viad joint venture. The Company incurred costs associated with the loan transfer of approximately $225,000. The loan transfer fee and unamortized loan costs of $100,000 will be expensed in the second quarter. The incentive and management fees, net of the loan transfer fees and loan costs, totaling $0.26 per diluted share will be included in funds from operations in the second quarter. Proceeds from the sale will be used to repay amounts outstanding under the Company's lines of credit.
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Steven G. Rogers, President and Chief Executive Officer stated, "We have enjoyed a very beneficial relationship with Investcorp as our partner on this property and previously on the 233 North Michigan Building and look forward to entering into more investments with them. This sale is demonstrative of the value creation contemplated in the Asset Recycling assumptions of the GEAR UP Plan. We remain committed to Phoenix as one of our core markets based on many factors, including the strength of the job growth projected for this area, the favorable business climate and the strength of our in place leadership team in Phoenix."
Parkway and Investcorp International were represented by Cushman Wakefield of Arizona.
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, acquisition, ownership, management, and leasing of office properties. The Company is geographically focused on the Southeastern and Southwestern United States and Chicago. Parkway owns or has an interest in 67 office properties located in 11 states with an aggregate of approximately 11,936,000 square feet of leasable space as of June 27, 2006. The Company also offers fee-based real estate services through its wholly owned subsidiary, Parkway Realty Services, to its owned properties and to its third party and minority interest properties.
Parkway Properties, Inc.'s press releases and additional information about the Company are available at http://www.pky.com/.
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