Company sells all but one Jackson building; exiting ‘non-core’ markets
Parkway Properties is reducing its presence the Jackson market with the sale of all but one of its office properties, but Parkway officials will not make definitive comments regarding personnel reductions.
Thomas Blalock, Parkway vice president of investor relations, said in an e-mail: “Given that the portfolio sale has not been completed yet, we cannot provide any additional information beyond what was included in the release, including questions related to personnel.”
The company said Friday it is selling all but one of its Jackson office properties to Hertz Investment Group, and its remaining building is up for sale. Parkway explained it is exiting “non-core” markets, which include Memphis and Richmond, Virginia, in addition to Jackson. The total non-core assets comprising 15 properties totaling 1.9 million square feet are being sold for $147.5 million. The Company estimates it will take a loss of approximately $58 million.
Charles T. Cannada, new chairman of Parkway’s board of directors, said of Jackson employees: “From the corporate standpoint, we have no intention at this stage of doing anything with corporate employees. Some of the local people who service individual buildings … they would go with the buildings. Maintenance engineers or what have you. … As far as corporate employees, like accounting staff and human resource people, this would not affect them.”
Cannada said he did not know what percentage of Parkway’s Jackson employees are considered corporate.
Former CEO Steve Rogers, who retired from the company effective at the end of 2011, said prior to his departure that only a handful of executives would be moving to the company’s new Orlando, Florida headquarters and stressed that due to technology, modern companies were “virtual” and operated from various locations.
Parkway announced in late 2011 it would be moving its headquarters to Orlando, home of Eola Capital, with which the company combined in May, and Jim Heistand who took over as CEO Jan. 1.
Parkway is selling the following downtown Jackson assets: One Jackson Place, 111 Capitol Building, Pinnacle at Jackson Place, Parking at Jackson Place, and UBS Building / River Oaks Place. The company currently retains the City Centre building at 200 South Lamar Street, which is up for sale.
A member of the S&P Small Cap 600 Index, Parkway is a self-administered real estate investment trust specializing in the ownership of office properties. Parkway owns or has an interest in 58 office properties located in 12 states with an aggregate of approximately 12.6 million square feet of leasable space at January 5, 2012.
The company has suffered from poor stock performance recent years.
Parkway’s new chief investment officer, David O’Reilly, told the Orlando Sentinel: “Generally speaking, it’s not difficult to see that, historically over the last three, five, or 10 years, Parkway has underperformed the market, and we would like to restore Parkway to where it was in the mid-1990s as one of the leading REITs in the industry.”
Heistand told the Sentinel he expected a Parkway expansion to focus on such core “growth” markets like Orlando, Tampa and South Florida.
A lawsuit filed against Parkway in Hinds County Circuit Court by its former CFO Mitch Collins, who alleged wrongful termination and fraud, was settled in December, according to a regulatory filing. Parkway fired Collins, who said he had resigned from the company. Parkway estimated it would record an expense of approximately $500,000 related to the suit.
A joint statement signed by both parties includes: “Mitch Collins and Parkway apologize to the other for all the accusations made. Mitch knows of no SEC filings, budgeting, accounting and financial disclosures which have not complied with applicable laws and professional and ethical standards. … We parted company because we were just not a good fit for each other at that particular time. It’s just that simple. We regret anything and everything that we have done that may have caused others to believe otherwise.”