Parkway Properties’ headquarters will remain in Jackson at least for now, and a new Orlando, Fla.-based CEO will take the company reins Jan. 1.
About 100 days after its combination with Eola Capital LLC, Parkway Properties Inc. announced CEO Steve Rogers’ retirement and succession by Eola chairman and Parkway board chairman Jim Heistand, who will remain in Orlando.
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, leasing, acquisition, and ownership of office properties.
Parkway owns or has an interest in 67 office properties located in 12 states with an aggregate of approximately 14.5 million square feet of leasable space as of Sept. 14.
Prior to the Labor Day weekend, Rogers, a Jackson native, announced his retirement from the company he led for 18 years. He will not stay as a board member.
Heistand replaced Leland Speed as executive chairman of Parkway’s board when the combination of the companies was completed May 18.
Regarding the possible contraction of the Jackson operation, Rogers said, “Nothing has been discussed on that at this stage. I can’t really comment on it.”
Rogers said the company headquarters is in Jackson today, but he “can’t make an assessment in perpetuity as to where we will be (in the future),” adding that technology today makes the company kind of virtual.
“You get to be a nationwide company and you have people in a lot of different cities,” Rogers said. Specifically, Jackson has 89 Parkway employees; Atlanta has 76; Jacksonville, Florida has 39; Orlando, Florida has 41; and Houston has 30.
Rogers has said he plans to spend more time with family and begin commercial real estate consulting next year. He is 57 and in good health. His 2010 compensation, including bonuses and stock awards, was $1.3 million, according to an SEC filing.
Rogers said the Parkway-Eola deal is legally a purchase and not an acquisition or merger.
The deal is called a “combination because we did purchase the management contracts of Eola, and we did purchase six assets from them. The correct legal word is purchase but because we brought over some of their key people … and we hired so many of their people — 135 of their employees came to Parkway. … The word combination seemed to capture the spirit (of the transaction),” Rogers said.
Parkway paid $32.4 million in cash for Eola, and Eola’s principals have the opportunity to earn up to almost $1.6 million in shares by the end of this year. Additionally, they have an earn-up arrangement with the potential for another 226,000 shares in 2012.
Currently, the largest individual shareholder in Parkway is Rogers, with 259,838 shares. Heistand has 143, 802 shares and could possibly become the largest individual shareholder by year end.
Parkway Properties Inc. is a real estate investment trust (REIT) specializing in office properties. Parkway owns or has an interest in 67 office properties located in 12 states with an aggregate of approximately 14.5 million square feet of leasable space. Parkway owns more than 1 million square feet of office space in Jackson, including One Jackson Place.
REIT is a tax designation for a corporate entity investing in real estate. A REIT’s structure is similar to that of a mutual fund. REITs are required to distribute 90 percent of taxable income to investors.
Eola Capital is one of the largest privately held commercial rest estate firms in the Eastern United States. Eola and its affiliates own, manage or have an interest in 90 office properties in six states with an aggregate of approximately 14.7 million feet of leasable space.
Stock has declined
Although the size of the company has grown, Parkway’s shares have gone down considerably in recent years. At press time, a five-year comparison showed the Dow was down 4.19 percent, while Parkway was down 74.39 percent.
After the announced CEO transition a Wells Fargo analyst said, “(Parkway) shares have struggled in recent years …. Part of the weak performance is attributable to sluggish property fundamentals in the wake of the past recession and a ‘re-set’ of the earnings level following sizeable de-leveraging.”
Parkway missed its earnings projections at the end of 2010 and again after the finalization of the purchase of Eola.
Parkway fired its former CFO Mitch Collins in February, accusing him of being a “workplace bully.” Collins, who says he resigned from the company in January, has sued Parkway in Hinds County Circuit Court for wrongful termination, defamation and fraud, claiming there were issues with forward-looking guidance and liquidity. Parkway denies the accusations.
Parkway had expensed $1.3 million in its defense by the end of 2010, according to the company’s Form 10-K.