Parkway Properties Inc. is under contract to sell a portfolio of 15 non-core assets in Jackson, Miss., Memphis, Tenn., and Richmond, Va., for a gross sale price of $147.5 million. The company has also completed the sale of its interest in nine assets owned by Parkway Properties Office Fund L.P. to its existing partner in the fund.
"Part of Parkway's new strategy, which will be outlined in its entirety during our fourth quarter earnings conference call, is to pursue an efficient exit from certain non-core markets,” Parkway President and CEO James R. Heistand said in a statement. “As a result of the thorough review of all of our markets, we determined that Jackson, Memphis and Richmond were non-core markets. A portfolio sale of these assets allows us to quickly realign our overall portfolio and focus our resources and capital on building critical mass in our remaining core markets.”
The non-core portfolio consists of approximately 1.9 million square feet located in Jackson, Memphis and Richmond. The sale is expected to close during the first quarter of 2012, subject to the buyer's successful assumption of certain existing mortgage loans and customary closing conditions.
Upon the completion of the sale of the non-core Portfolio and other announced pending sales, Parkway would have one remaining asset located in Jackson totaling 267,000 sq. ft., one remaining asset located in Memphis totaling 337,000 sq. ft., and completed its exit from Richmond. The remaining assets in Jackson and Memphis will continue to be marketed for sale.
The portfolio was 75.8 percent occupied as of September 30, 2011. The estimated 2011 recurring cash net operating income for the portfolio was approximately $13.5 million, of which $12.4 million was Parkway's share. The properties have a total of approximately $41.7 million in mortgage loans, of which $32.0 million represents Parkway's share. These mortgage loans have a weighted average interest rate of 5.4%.
The company estimates that for financial reporting purposes it will recognize a non-cash impairment loss of approximately $58 to $60 million in the fourth quarter of 2011 related to the portfolio as well as the two remaining assets in Jackson and Memphis; however.
Details on the portfolio can be found here.