Parkway to Pay $130M for 1M SF Portfolio in Jacksonville, FL Submarket
Capital Plaza - Buildings I & II
Parkway Properties, Inc. (NYSE: PKY) has entered into an agreement to acquire a portfolio of eight office properties totaling 1.0 million square feet in the Deerwood submarket of Jacksonville, FL for $130 million.
The properties were developed in phases from 1996 through 2005 and are currently a combined 93.7% occupied with an average in place gross rent per square foot of $19.11.
Parkway will now have a critical mass in this submarket, owning approximately 29 percent of the total office inventory, according to James R. Heistand, Parkway's President and Chief Executive Officer, who said the "cost basis of $128 per square foot represents a significant discount to estimated replacement cost."
The Deerwood submarket is comprised of approximately 3.5 million square feet and has a direct vacancy rate of 9.7% as of December 31, 2012, according to CBRE.
The Deerwood Portfolio is expected to generate an initial full-year cash net operating income yield of approximately 9%. Parkway will own 100% of the portfolio and plans to place secured financing on the properties simultaneous with closing totaling up to 65% of the purchase price.
Parkway intends to fund the remaining equity using borrowings from its revolving credit facility. Closing is expected to occur by the end of the first quarter 2013 and is subject to customary closing conditions, including completion of satisfactory due diligence.