Parkway Agrees To Sell 80% Interest In Courvoisier Centre; Updates 2016 Outlook
ORLANDO, Fla., Nov. 16, 2015 /PRNewswire/ -- Parkway Properties, Inc. (NYSE: PKY) announced today that it has reached an agreement to sell an 80% interest in Courvoisier Centre, a 346,000 square foot, two-building office complex located in the Brickell submarket of Miami, Florida, at a gross asset value of $175 million. In connection with this agreement, Parkway has also updated its 2016 Funds from Operations ("FFO") outlook range.
"The recapitalization of Courvoisier Centre will enable Parkway to realize significant value appreciation in the asset, meaningfully participate in its future growth and create a partnership that could be used to accelerate our growth in Miami and other markets," stated James R. Heistand, President and Chief Executive Officer of Parkway. "This transaction represents another significant step in Parkway's continued capital recycling strategy."
Courvoisier Centre Joint Venture
Parkway has agreed to form a joint venture with a foreign capital source, with Parkway retaining a 20% interest in Courvoisier Centre, as well as property management and leasing for the joint venture. While Courvoisier Centre is currently unencumbered by debt, the joint venture expects to encumber the asset with mortgage debt, estimated at 60% loan-to-value, at closing.
Courvoisier Centre is a Class A office complex located on the upscale island community of Brickell Key. The properties offer panoramic water and skyline views from nearly every leasable space, and have a comprehensive, high-end amenity base both at the properties and nearby. Parkway acquired the asset in April 2014 for a gross purchase price of $145.8 million. Courvoisier Centre was 80.5% occupied and 84.1% leased as of October 1, 2015.
Parkway expects the closing of the Courvoisier Centre joint venture and associated financing to occur in the first quarter of 2016, subject to customary closing conditions, including the placement of secured debt. There can be no assurance that the sale and associated financing will be completed on the terms currently contemplated or at all.
2016 Revised Outlook
After considering the Courvoisier Centre recapitalization, Parkway is adjusting its 2016 FFO outlook to a range of $1.28 to $1.38 per diluted share for Parkway Properties LP's real estate portfolio, in which Parkway owns an interest (the "Parkway Portfolio") and adjusting its earnings per diluted share ("EPS") outlook to a range of $0.29 to $0.39 for the Parkway Portfolio.
The reconciliation of projected EPS to projected FFO per diluted share is as follows:
Outlook for 2016
Fully diluted EPS
$0.29 - $0.39
Parkway's share of depreciation and amortization
$1.30 - $1.30
Gain on sale of real estate
($0.31 - $0.31)
Reported FFO per diluted share
$1.28 - $1.38
2016 Core Operating Assumptions
Recurring cash NOI
$210,500 - $ 215,500
$216,000 - $ 221,000
Straight-line rent and amortization of above market rent
$ 33,500 - $ 34,500
$ 34,000 - $ 35,000
Management fee after-tax net income
$ 3,000 - $ 4,000
$ 3,000 - $ 4,000
General and administrative expense
$ 35,000 - $ 38,000
$ 35,000- $ 38,000
Share based compensation expense included in G&A above
$ 5,000 - $ 6,000
$ 5,000 - $ 6,000
Mortgage and credit facilities interest expense
$ 58,000 - $ 60,000
$ 59,000 - $ 61,000
Non-cash loan cost amortization included in interest expense above
$ 2,000 - $ 2,500
$ 2,000 - $ 2,500
Amortization of mortgage interest premium included in interest expense above
$ 11,000 - $ 12,000
$ 11,000 -$ 12,000
Recurring capital expenditures for building improvements, tenant improvements and leasing commissions
$ 44,000 - $ 49,000
$ 45,000 - $ 50,000
Recurring same-store GAAP NOI
(2.0)% - 0.0%
(2.0)% - 0.0%
Recurring same-store Cash NOI
Portfolio ending occupancy
89.5% - 90.5%
89.5% - 90.5%
Weighted average annual diluted common shares/units
116,800 – 116,800
116,800 - 116,800
Variance within the outlook range may occur due to variations in the recurring revenue and expenses of the Company, as well as certain non-recurring items. The earnings outlook does not include the impact of possible future gains or losses on early extinguishment of debt, possible future acquisitions or dispositions and related costs other than those currently under contract, possible future capital markets activity, the impact of fluctuations in the Company's stock price on share-based compensation, possible future impairment charges or other unusual charges that may occur during the year, except as noted. It has been and will continue to be the Company's policy not to issue quarterly earnings guidance or revise the annual earnings outlook unless a material event occurs that impacts the Company's reported FFO outlook range. This policy is intended to lessen the emphasis on short-term movements that do not have a material impact on earnings or long-term value of the Company.
About Parkway Properties
Parkway Properties, Inc. is a fully integrated, self-administered and self-managed real estate investment trust specializing in the acquisition, ownership, development and management of quality office properties in higher growth submarkets in the Sunbelt region of the United States. Parkway owns or has an interest in 38 office properties located in six states with an aggregate of approximately 14.9 million square feet of leasable space at October 1, 2015. Fee-based real estate services are offered through wholly owned subsidiaries of the Company, which in total manage and/or lease approximately 4.2 million square feet for third-party owners at October 1, 2015.
Forward Looking Statements
Certain statements in this press release that are not in the present or past tense or that discuss the Company's expectations (including any use of the words "anticipate," "assume," "believe," "estimate," "expect," "forecast," "guidance," "intend," "may," "might," "outlook," "plan," "potential," "project," "should," "will" 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 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 projections relating to fully diluted EPS, share of depreciation and amortization, net gains on sales of real estate, reported FFO per share, recurring FFO per share, nonrecurring items, net operating income, cap rates, internal rates of return, dividend payment rates, FFO accretion, capital improvements, expected sources of financing, the timing of closing of acquisitions, dispositions or other transactions and descriptions relating to these expectations. 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 actual or perceived impact of U.S. monetary policy; competition in the leasing market; the demand for and market acceptance of the Company's properties for rental purposes; oversupply of office properties in the Company's geographic markets; the amount and growth of the Company's expenses; customer financial difficulties and general economic conditions, including increasing interest rates and changes in the prices of commodities, as well as economic conditions in the Company's geographic markets; defaults or non-renewal of leases; risks associated with joint venture partners; risks associated with the ownership and development of real property, including risks related to natural disasters; risks associated with property acquisitions; the failure to acquire or sell properties as and when anticipated; illiquidity of real estate; termination or non-renewal of property management contracts; the bankruptcy or insolvency of companies for which the Company 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 and the ability to successfully integrate businesses; compliance with environmental and other regulations, including real estate and zoning laws; the Company's inability to obtain financing; the Company's inability to use net operating loss carry forwards; the Company's failure to maintain its status as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended; 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 financial results could differ materially from those expressed in the Company's forward-looking statements. Any forward-looking statement speaks 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. The Company does not undertake to update forward-looking statements except as may be required by law.
Contact: Parkway Properties, Inc. David R. O'Reilly Executive Vice President and Chief Financial Officer Bank of America Center
390 N. Orange Ave., Suite 2400 Orlando, FL 32801 (407) 650-0593www.pky.com
Source: Parkway Properties, Inc.