JACKSON — Parkway Properties is about to nearly double in size and acquire a half-dozen new office buildings in Philadelphia and throughout the South, company executives said yesterday in announcing a definitive agreement to acquire privately owned Eola Capital, LLC.
In the move, chairman Leland Speed will cede the executive chairmanship to James “Jim” Heistand, Eola’s current chairman.
Speed, who will remain as a board director, said the arrangement has the potential to significantly increase Parkway’s income and strengthen its asset base.
Under terms of the deal, Eola will contribute its property management business to Parkway and Parkway will acquire six office properties currently owned and operated by Eola. The buildings will be acquired by Parkway Properties Office Fund II, a fund established by the Jackson-based real estate investment trust, or REIT.
The combination of building management contracts and office properties is valued at about $462 million, including costs, and publicly held Parkway expects the combination on a stand-alone basis to be 16 cents to 22 cents per share accretive to funds from operations based on a full-year run rate. The combination is expected to close during the second quarter of 2011.
Parkway will acquire an interest in office buildings totaling 2.5 million square feet in Philadelphia, Orlando, Jacksonville, Tampa and Atlanta.
With acquisition of Eola’s management business, Parkway’s total square footage under management will increase 89 percent — from 15.2 million square feet to 28.9 million square feet. Further, the company will grow from 260 employees to 400 employees
Henry F. Pratt III, current COO of Eola, will join Parkway as executive vice president and head of asset management and third party services. All Parkway executive officers will remain in their current positions.
Parkway president and CEO Steven G. Rogers said the arrangement furthers the strategic objectives of the company and accelerates the accomplishment of several key goals.
It increases the scale of the company by significantly expanding assets under management and advances its full transition to an operator/owner.
The company will put “proven, best-in-class operating resources to work in some of the most attractive markets in the Southeast and Mid-Atlantic,” Rogers said.
Heistand, founder of Eola, said he sees strong growth ahead. “Together, our investors, customers and operators will benefit from a more diverse portfolio and enhanced platform to capitalize on market opportunities and improve operating performance.”
Speed said the deal presents an opportunity for further growth through the option rights Parkway will receive to purchase certain additional properties.
Source: Mississippi Business Journal