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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Parkway, Inc. (delisted) | NYSE:PKY | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 19.04 | 0 | 01:00:00 |
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FORM 10-Q
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þ
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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For the Quarterly Period Ended March 31, 2017
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or
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¨
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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For the Transition Period from
_______
to
_______
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Maryland
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61-1796261
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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Page
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Forward-Looking Statements
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Part I. Financial Information
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Part II. Other Information
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Signatures
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•
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our short operating history as an independent company;
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•
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conditions associated with our primary market, including an oversupply of office space, customer financial difficulties and general economic conditions;
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•
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that each of our properties represent a significant portion of our revenues and costs;
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•
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that our Spin-Off from Cousins will not qualify for tax-free treatment;
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•
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our ability to meet mortgage debt obligations on certain of our properties;
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•
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the availability of refinancing current debt obligations;
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•
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risks associated with joint ventures and potential co-investments with third-parties;
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•
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changes in any credit rating we may subsequently obtain;
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•
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changes in the real estate industry and in performance of the financial markets and interest rates and our ability to effectively hedge against interest rate changes;
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•
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the actual or perceived impact of global and economic conditions, including U.S. monetary policy;
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•
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declines in commodity prices, which may negatively impact the Houston, Texas market;
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•
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the concentration of our customers in the energy sector;
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•
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that a significant portion of our revenues comes from our top 20 customers;
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•
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the demand for and market acceptance of our properties for rental purposes;
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•
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our ability to enter into new leases or renewal leases on favorable terms;
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•
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the potential for termination of existing leases pursuant to customer termination rights;
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•
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the amount, growth and relative inelasticity of our expenses;
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•
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the bankruptcy or insolvency of companies for which we provide property management services or the sale of these properties;
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•
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the outcome of claims and litigation involving or affecting the company;
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•
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the ability to satisfy conditions necessary to close pending transactions and the ability to successfully integrate the assets and related operations acquired in such transactions after the closing;
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•
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applicable regulatory changes;
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•
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risks associated with the ownership and development of real property, including risks related to natural disasters and illiquidity of real estate;
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•
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risks associated with acquisitions, including the integration of the combined Houston Business;
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•
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risks associated with the fact that our historical and pro forma financial information may not be a reliable indicator of our future results;
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•
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risks associated with achieving expected synergies or cost savings;
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•
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defaults or non-renewal of leases;
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•
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termination or non-renewal of property management contracts;
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•
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our failure to maintain our status as real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”);
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•
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risks associated with the potential volatility of our common stock; and
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•
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other risks and uncertainties detailed from time to time in our Securities and Exchange Commission (“SEC”) filings.
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March 31, 2017
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December 31, 2016
|
||||
Assets
|
|
|
|
||||
Real estate related investments:
|
|
|
|
||||
Office properties
|
$
|
775,546
|
|
|
$
|
1,864,668
|
|
Accumulated depreciation
|
(45,526
|
)
|
|
(159,057
|
)
|
||
Total real estate related investments, net
|
730,020
|
|
|
1,705,611
|
|
||
|
|
|
|
||||
Cash and cash equivalents
|
174,432
|
|
|
230,333
|
|
||
Receivables and other assets
|
53,775
|
|
|
92,257
|
|
||
In-place lease intangibles, net of accumulated amortization of $23,964 and $76,137, respectively
|
58,454
|
|
|
117,243
|
|
||
Other intangible assets, net of accumulated amortization of $1,782 and $4,202, respectively
|
13,738
|
|
|
18,451
|
|
||
Assets held for sale
|
1,087,120
|
|
|
—
|
|
||
Total assets
|
$
|
2,117,539
|
|
|
$
|
2,163,895
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Notes payable to banks, net
|
$
|
342,324
|
|
|
$
|
341,602
|
|
Mortgage notes payable, net
|
378,042
|
|
|
451,577
|
|
||
Accounts payable and other liabilities
|
29,288
|
|
|
47,219
|
|
||
Accrued tenant improvements
|
7,767
|
|
|
66,104
|
|
||
Accrued property taxes
|
6,219
|
|
|
53,659
|
|
||
Below market leases, net of accumulated amortization of $10,632 and $26,958, respectively
|
20,254
|
|
|
51,812
|
|
||
Liabilities related to assets held for sale
|
199,856
|
|
|
—
|
|
||
Total liabilities
|
983,750
|
|
|
1,011,973
|
|
||
|
|
|
|
||||
Equity
|
|
|
|
||||
Parkway, Inc. stockholders’ equity
|
|
|
|
||||
Common stock, $0.001 par value, 200,000,000 shares authorized and 49,195,214 and 49,110,645 shares issued and outstanding on March 31, 2017 and December 31, 2016, respectively
|
49
|
|
|
49
|
|
||
Limited voting stock, $0.001 par value, 1,000,000 shares authorized and 858,417 shares issued and outstanding
|
1
|
|
|
1
|
|
||
8.00% Series A non-voting preferred stock, $100,000 liquidation preference per share, 50 shares authorized, issued and outstanding, and preferred stock, $0.001 par value, 48,999,950 shares authorized, zero issued and outstanding
|
5,000
|
|
|
5,000
|
|
||
Additional paid-in capital
|
1,137,980
|
|
|
1,138,151
|
|
||
Accumulated deficit
|
(31,806
|
)
|
|
(14,316
|
)
|
||
Total Parkway, Inc. stockholders’ equity
|
1,111,224
|
|
|
1,128,885
|
|
||
Noncontrolling interest - unitholders
|
22,565
|
|
|
23,037
|
|
||
Total equity
|
1,133,789
|
|
|
1,151,922
|
|
||
Total liabilities and equity
|
$
|
2,117,539
|
|
|
$
|
2,163,895
|
|
|
Three Months Ended March 31, 2017
|
||
Revenues
|
|
||
Income from office properties
|
$
|
70,117
|
|
Management company income
|
1,248
|
|
|
Total revenues
|
71,365
|
|
|
Expenses
|
|
||
Property operating expenses
|
30,444
|
|
|
Management company expenses
|
1,746
|
|
|
Depreciation and amortization
|
23,768
|
|
|
Impairment loss on real estate
|
15,000
|
|
|
General and administrative
|
4,148
|
|
|
Total expenses
|
75,106
|
|
|
Operating loss
|
(3,741
|
)
|
|
Other income and expenses
|
|
||
Interest income
|
208
|
|
|
Interest expense
|
(8,686
|
)
|
|
Loss before income taxes
|
(12,219
|
)
|
|
Income tax expense
|
(490
|
)
|
|
Net loss
|
(12,709
|
)
|
|
Net loss attributable to noncontrolling interest - unitholders
|
260
|
|
|
Net loss attributable to Parkway, Inc.
|
(12,449
|
)
|
|
Dividends on preferred stock
|
(100
|
)
|
|
Net loss attributable to common stockholders
|
$
|
(12,549
|
)
|
|
|
||
Net loss per common share attributable to Parkway, Inc.:
|
|
||
Basic net loss per common share attributable to Parkway, Inc.
|
$
|
(0.26
|
)
|
Diluted net loss per common share attributable to Parkway, Inc.
|
$
|
(0.26
|
)
|
Weighted average shares outstanding:
|
|
||
Basic
|
49,193
|
|
|
Diluted
|
49,193
|
|
|
Parkway, Inc. Stockholders’ Equity
|
|
|
|
|
||||||||||||||||||||||
|
Common Stock
|
|
Limited Voting Stock
|
|
Preferred Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Deficit
|
|
Noncontrolling Interest - Unitholders
|
|
Total Equity
|
||||||||||||||
Balance at December 31, 2016
|
$
|
49
|
|
|
$
|
1
|
|
|
$
|
5,000
|
|
|
$
|
1,138,151
|
|
|
$
|
(14,316
|
)
|
|
$
|
23,037
|
|
|
$
|
1,151,922
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,449
|
)
|
|
(260
|
)
|
|
(12,709
|
)
|
|||||||
Common dividends declared - $0.10 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,941
|
)
|
|
(102
|
)
|
|
(5,043
|
)
|
|||||||
Preferred dividends declared - $2,000 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(100
|
)
|
|
—
|
|
|
(100
|
)
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
488
|
|
|
—
|
|
|
—
|
|
|
488
|
|
|||||||
Purchase of 29,921 shares to satisfy tax withholding obligation in connection with the vesting of restricted stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(665
|
)
|
|
—
|
|
|
—
|
|
|
(665
|
)
|
|||||||
Redemption of operating partnership units
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
(110
|
)
|
|
(104
|
)
|
|||||||
Balance at March 31, 2017
|
$
|
49
|
|
|
$
|
1
|
|
|
$
|
5,000
|
|
|
$
|
1,137,980
|
|
|
$
|
(31,806
|
)
|
|
$
|
22,565
|
|
|
$
|
1,133,789
|
|
|
Three Months Ended March 31, 2017
|
||
Operating activities
|
|
||
Net loss
|
$
|
(12,709
|
)
|
Adjustments to reconcile net loss to cash used in operating activities:
|
|
||
Depreciation and amortization
|
23,768
|
|
|
Amortization of above/below market leases, net
|
(1,227
|
)
|
|
Amortization of financing costs
|
810
|
|
|
Amortization of debt premium
|
(548
|
)
|
|
Share-based compensation expense
|
488
|
|
|
Deferred income tax expense
|
91
|
|
|
Impairment loss on real estate
|
15,000
|
|
|
Increase in deferred leasing costs
|
(3,442
|
)
|
|
Changes in operating assets and liabilities:
|
|
||
Change in receivables and other assets
|
(14,610
|
)
|
|
Change in accounts payable and other accrued expenses
|
(46,427
|
)
|
|
Cash used in operating activities
|
(38,806
|
)
|
|
Investing activities
|
|
||
Improvements to real estate
|
(8,872
|
)
|
|
Cash used in investing activities
|
(8,872
|
)
|
|
Financing activities
|
|
||
Principal payments on mortgage notes payable
|
(2,288
|
)
|
|
Deferred financing costs
|
(44
|
)
|
|
Purchase of common stock
|
(665
|
)
|
|
Dividends paid on common stock
|
(4,920
|
)
|
|
Dividends paid on common units of the operating partnership
|
(102
|
)
|
|
Dividends paid on non-voting preferred stock
|
(100
|
)
|
|
Redemption of operating partnership units
|
(104
|
)
|
|
Cash used in financing activities
|
(8,223
|
)
|
|
Change in cash and cash equivalents
|
(55,901
|
)
|
|
Cash and cash equivalents at beginning of period
|
230,333
|
|
|
Cash and cash equivalents at end of period
|
$
|
174,432
|
|
|
Three Months Ended March 31, 2017
|
||
Supplemental cash flow information:
|
|
||
Cash paid for interest
|
$
|
8,358
|
|
Cash paid for income taxes
|
—
|
|
|
Supplemental schedule of non-cash investing and financing activity:
|
|
||
Transfer of assets held for sale
|
$
|
1,087,120
|
|
Transfer of liabilities related to assets held for sale
|
199,856
|
|
|
Accrued capital expenditures
|
20,881
|
|
Asset Category
|
|
Useful Life
|
|
March 31,
2017 |
|
December 31,
2016 |
||||
Land
|
|
Non-depreciable
|
|
$
|
134,978
|
|
|
$
|
417,315
|
|
Buildings and garages
|
|
7 to 40 years
|
|
529,640
|
|
|
1,095,815
|
|
||
Building improvements
|
|
5 to 40 years
|
|
17,769
|
|
|
55,093
|
|
||
Tenant improvements
|
|
Lesser of useful life or term of lease
|
|
93,159
|
|
|
296,445
|
|
||
|
|
|
|
$
|
775,546
|
|
|
$
|
1,864,668
|
|
Assets Held for Sale
|
|
||
Real estate related investments:
|
|
||
Office properties
|
$
|
1,103,601
|
|
Accumulated depreciation
|
(129,282
|
)
|
|
Total real estate related investments, net
|
974,319
|
|
|
|
|
||
Receivables and other assets
|
56,752
|
|
|
In-place lease intangibles, net of accumulated amortization of $58,596
|
52,234
|
|
|
Other intangible assets, net of accumulated amortization of $3,188
|
3,815
|
|
|
Total assets held for sale
|
$
|
1,087,120
|
|
|
|
||
Liabilities Held for Sale
|
|
||
Mortgage notes payable, net
|
$
|
70,743
|
|
Accounts payable and other liabilities
|
23,740
|
|
|
Accrued tenant improvements
|
68,847
|
|
|
Accrued property taxes
|
7,024
|
|
|
Below market leases, net of accumulated amortization of $18,384
|
29,502
|
|
|
Total liabilities related to assets held for sale
|
$
|
199,856
|
|
|
|
Interest Rate
|
|
Initial Maturity
|
|
Outstanding Balance at March 31, 2017
|
|
Outstanding Balance at December 31, 2016
|
||||
$100.0 Million Revolving Credit Facility
|
|
4.0%
|
|
10/06/2019
|
|
$
|
—
|
|
|
$
|
—
|
|
$350.0 Million Three-Year Term Loan
|
|
3.9%
|
|
10/06/2019
|
|
350,000
|
|
|
350,000
|
|
||
Notes payable to banks outstanding
|
|
|
|
|
|
350,000
|
|
|
350,000
|
|
||
Unamortized debt issuance costs, net
|
|
|
|
|
|
(7,676
|
)
|
|
(8,398
|
)
|
||
Total notes payable to banks, net
|
|
|
|
|
|
$
|
342,324
|
|
|
$
|
341,602
|
|
Office Properties
|
Fixed Rate
|
|
Maturity Date
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
San Felipe Plaza
|
4.8%
|
|
12/01/2018
|
|
$
|
105,623
|
|
|
$
|
106,085
|
|
CityWestPlace III and IV
|
5.0%
|
|
03/05/2020
|
|
88,279
|
|
|
88,700
|
|
||
Post Oak Central
|
4.3%
|
|
10/01/2020
|
|
177,391
|
|
|
178,285
|
|
||
Phoenix Tower
|
3.9%
|
|
03/01/2023
|
|
—
|
|
|
76,561
|
|
||
Unamortized premium, net
|
|
|
|
|
7,359
|
|
|
2,600
|
|
||
Unamortized debt issuance costs, net
|
|
|
|
|
(610
|
)
|
|
(654
|
)
|
||
Total mortgage notes payable, net
|
|
|
|
|
$
|
378,042
|
|
|
$
|
451,577
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||
Financial Assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
174,432
|
|
|
$
|
174,432
|
|
|
$
|
230,333
|
|
|
$
|
230,333
|
|
Financial Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||
Notes payable to banks
(1)
|
$
|
350,000
|
|
|
$
|
351,073
|
|
|
$
|
350,000
|
|
|
$
|
349,372
|
|
Mortgage notes payable
(1)
|
371,293
|
|
|
383,241
|
|
|
449,631
|
|
|
452,753
|
|
||||
Mortgage notes payable - held for sale
(1) (2)
|
76,050
|
|
|
72,790
|
|
|
76,561
|
|
|
69,389
|
|
|
Amount
|
||
2017
|
$
|
38,333
|
|
2018
|
12,759
|
|
|
2019
|
23,581
|
|
|
2020
|
11,436
|
|
|
2021
|
98
|
|
|
Thereafter
|
173
|
|
|
Total
|
$
|
86,380
|
|
|
Options
|
|
Time-Vesting RSUs
|
|
Performance-Vesting RSUs
|
||||||||||||
|
# of Options
|
Weighted Average Grant-Date Fair Value
|
|
# of Stock Units
|
Weighted Average Grant-Date Fair Value
|
|
# of Stock Units
|
Weighted Average Grant-Date Fair Value
|
|||||||||
Balance at 12/31/2016
|
33,011
|
|
$
|
1.57
|
|
|
270,815
|
|
$
|
20.85
|
|
|
159,899
|
|
$
|
11.82
|
|
Granted
|
—
|
|
—
|
|
|
52,800
|
|
19.60
|
|
|
123,200
|
|
4.41
|
|
|||
Vested
|
(33,011
|
)
|
1.57
|
|
|
(114,490
|
)
|
20.81
|
|
|
—
|
|
—
|
|
|||
Balance at 3/31/2017
|
—
|
|
$
|
—
|
|
|
209,125
|
|
$
|
20.55
|
|
|
283,099
|
|
$
|
8.60
|
|
|
Three Months Ended March 31, 2017
|
||
Numerator:
|
|
||
Basic and diluted net loss attributable to common stockholders
|
$
|
(12,549
|
)
|
Denominator:
|
|
||
Basic and diluted weighted average shares outstanding
|
49,193
|
|
|
|
|
||
Basic net loss per common share attributable to common stockholders
|
$
|
(0.26
|
)
|
Diluted net loss per common share attributable to common stockholders
|
$
|
(0.26
|
)
|
|
Three Months Ended March 31, 2016
|
||
|
|
||
Revenues
|
|
||
Income from office properties
|
$
|
29,129
|
|
Management company income
|
1,305
|
|
|
Total revenues
|
30,434
|
|
|
|
|
||
Expenses
|
|
||
Property operating expenses
|
13,539
|
|
|
Management company expenses
|
781
|
|
|
Depreciation and amortization
|
11,365
|
|
|
General and administrative
|
1,632
|
|
|
Total expenses
|
27,317
|
|
|
Operating income
|
3,117
|
|
|
Other income and expenses
|
|
||
Interest and other income
|
61
|
|
|
Interest expense
|
(3,953
|
)
|
|
Loss before income taxes
|
(775
|
)
|
|
Income tax expense
|
(493
|
)
|
|
Net loss
|
$
|
(1,268
|
)
|
|
Three Months Ended March 31, 2016
|
||
Operating activities
|
|
||
Net loss
|
$
|
(1,268
|
)
|
Adjustments to reconcile net loss to cash used in operating activities:
|
|
||
Depreciation and amortization of office properties
|
11,365
|
|
|
Amortization of management contracts, net
|
189
|
|
|
Amortization of below market leases, net
|
(2,341
|
)
|
|
Amortization of financing costs
|
11
|
|
|
Amortization of debt premium, net
|
(1,009
|
)
|
|
Deferred income tax expense
|
149
|
|
|
Increase in deferred leasing costs
|
(2,869
|
)
|
|
Changes in operating assets and liabilities:
|
|
||
Change in receivables and other assets
|
459
|
|
|
Change in accounts payable and other liabilities
|
(10,214
|
)
|
|
Cash used in operating activities
|
(5,528
|
)
|
|
Investing activities
|
|
|
|
Improvements to real estate
|
(3,621
|
)
|
|
Cash used in investing activities
|
(3,621
|
)
|
|
Financing activities
|
|
|
|
Principal payments on mortgage notes payable
|
(1,766
|
)
|
|
Change in Parkway investment, net
|
10,892
|
|
|
Cash provided by financing activities
|
9,126
|
|
|
Change in cash and cash equivalents
|
(23
|
)
|
|
Cash and cash equivalents at beginning of period
|
11,961
|
|
|
Cash and cash equivalents at end of period
|
$
|
11,938
|
|
|
|
||
Supplemental Cash Flow Information:
|
|
||
Cash paid for interest
|
$
|
4,959
|
|
Cash paid for income taxes
|
158
|
|
|
For the Three Months Ended March 31, 2016
|
||
Charged to property operating expense:
|
|
||
Direct payroll charges
|
$
|
803
|
|
Management fees
|
729
|
|
|
Total
|
$
|
1,532
|
|
|
Three Months Ended March 31, 2016
|
||
Revenues:
|
|
||
Rental property revenues
|
$
|
43,269
|
|
Other
|
186
|
|
|
|
43,455
|
|
|
|
|
||
Costs and Expenses:
|
|
||
Rental property operating expenses
|
17,926
|
|
|
General and administrative expenses
|
3,177
|
|
|
Depreciation and amortization
|
15,428
|
|
|
Interest expense
|
1,974
|
|
|
|
38,505
|
|
|
Net Income
|
$
|
4,950
|
|
|
Three Months Ended March 31, 2016
|
||
Net income
|
$
|
4,950
|
|
Adjustments to reconcile net income to cash used in operating activities:
|
|
||
Depreciation and amortization
|
15,428
|
|
|
Amortization of loan closing costs
|
45
|
|
|
Effect of certain non-cash adjustments to rental revenues
|
(2,831
|
)
|
|
Changes in operating assets and liabilities:
|
|
||
Accounts receivable and assets, net
|
(1,572
|
)
|
|
Operating liabilities
|
(22,261
|
)
|
|
Net cash used in operating activities
|
(6,241
|
)
|
|
Cash Flows from Investing Activities
|
|
|
|
Property improvements and tenant asset expenditures
|
(8,737
|
)
|
|
Net cash used in investing activities
|
(8,737
|
)
|
|
Cash Flows from Financing Activities
|
|
|
|
Change in Cousins' investment, net
|
17,089
|
|
|
Repayment of note payable
|
(858
|
)
|
|
Net cash provided by financing activities
|
16,231
|
|
|
Net Increase in Cash
|
1,253
|
|
|
Cash at Beginning of Period
|
109
|
|
|
Cash at End of Period
|
$
|
1,362
|
|
|
|
||
Supplemental Cash Flow Information
|
|
||
Cash paid for interest
|
$
|
1,933
|
|
Change in accrued property and tenant asset expenditures
|
164
|
|
Year of Expiration
|
|
Occupied Square Footage
(in thousands)
|
|
Percentage of Total Occupied Square Feet
|
|
Annualized Rental Revenue
(1)
(in thousands)
|
|
Number of Leases
|
|
Weighted Average Expiring Net Rental Rate per NRSF
|
|
Weighted Average Estimated Market Rent per NRSF
|
|||||||||
2017
|
|
406
|
|
|
5.4
|
%
|
|
$
|
6,980
|
|
|
103
|
|
|
$
|
17.19
|
|
|
$
|
19.87
|
|
2018
|
|
499
|
|
|
6.7
|
%
|
|
9,668
|
|
|
67
|
|
|
19.37
|
|
|
19.51
|
|
|||
2019
|
|
1,040
|
|
|
14.0
|
%
|
|
20,799
|
|
|
55
|
|
|
20.00
|
|
|
20.47
|
|
|||
2020
|
|
607
|
|
|
8.1
|
%
|
|
12,368
|
|
|
68
|
|
|
20.38
|
|
|
20.09
|
|
|||
2021
|
|
449
|
|
|
6.0
|
%
|
|
8,939
|
|
|
42
|
|
|
19.91
|
|
|
20.38
|
|
|||
2022
|
|
462
|
|
|
6.2
|
%
|
|
8,825
|
|
|
46
|
|
|
19.10
|
|
|
19.25
|
|
|||
2023
|
|
1,239
|
|
|
16.7
|
%
|
|
23,785
|
|
|
22
|
|
|
19.20
|
|
|
19.58
|
|
|||
2024
|
|
337
|
|
|
4.5
|
%
|
|
5,560
|
|
|
20
|
|
|
16.50
|
|
|
19.02
|
|
|||
2025
|
|
460
|
|
|
6.2
|
%
|
|
10,784
|
|
|
8
|
|
|
23.44
|
|
|
21.51
|
|
|||
2026
|
|
1,284
|
|
|
17.2
|
%
|
|
26,672
|
|
|
12
|
|
|
20.77
|
|
|
20.45
|
|
|||
Thereafter
|
|
674
|
|
|
9.0
|
%
|
|
15,721
|
|
|
9
|
|
|
23.32
|
|
|
21.70
|
|
|||
|
|
7,457
|
|
|
100.0
|
%
|
|
$
|
150,101
|
|
|
452
|
|
|
$
|
20.13
|
|
|
$
|
20.22
|
|
•
|
the Merger, the Separation, the UPREIT Reorganization, the Spin-Off and the Distribution Ratio;
|
•
|
our post-Separation capital structure, which includes proceeds from the $350.0 million Term Loan, $150.0 million of which the Operating Partnership has retained; and
|
•
|
Cousins LP’s contribution of $5 million to us in exchange for shares of our non-voting preferred stock, par value $0.001 per share.
|
|
Parkway Inc.
|
|
Cousins Houston Historical
(1)
|
|
Parkway Houston Historical
|
|
Adjustments
|
|
Total
|
||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from office properties
|
$
|
—
|
|
|
$
|
43,269
|
|
|
$
|
29,129
|
|
|
$
|
(1,520
|
)
|
a
|
$
|
70,878
|
|
Management company income
|
—
|
|
|
—
|
|
|
1,305
|
|
|
—
|
|
|
1,305
|
|
|||||
Total revenues
|
—
|
|
|
43,269
|
|
|
30,434
|
|
|
(1,520
|
)
|
|
72,183
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Expenses
|
|
|
|
|
|
|
|
|
—
|
|
|||||||||
Property operating expenses
|
—
|
|
|
17,926
|
|
|
13,539
|
|
|
—
|
|
|
31,465
|
|
|||||
Management company expenses
|
—
|
|
|
—
|
|
|
781
|
|
|
—
|
|
|
781
|
|
|||||
Depreciation and amortization
|
—
|
|
|
15,428
|
|
|
11,365
|
|
|
(5,887
|
)
|
b
|
20,906
|
|
|||||
General and administrative
|
—
|
|
|
3,177
|
|
|
1,632
|
|
|
—
|
|
c
|
4,809
|
|
|||||
Total expenses
|
—
|
|
|
36,531
|
|
|
27,317
|
|
|
(5,887
|
)
|
|
57,961
|
|
|||||
Operating income
|
—
|
|
|
6,738
|
|
|
3,117
|
|
|
4,367
|
|
|
14,222
|
|
|||||
Other income and expenses
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest and other income
|
—
|
|
|
186
|
|
|
61
|
|
|
(61
|
)
|
d
|
186
|
|
|||||
Interest expense
|
—
|
|
|
(1,974
|
)
|
|
(3,953
|
)
|
|
(2,553
|
)
|
e
|
(8,480
|
)
|
|||||
Income (loss) before income taxes
|
—
|
|
|
4,950
|
|
|
(775
|
)
|
|
1,753
|
|
|
5,928
|
|
|||||
Income tax expense
|
—
|
|
|
—
|
|
|
(493
|
)
|
|
—
|
|
|
(493
|
)
|
|||||
Net income (loss)
|
—
|
|
|
4,950
|
|
|
(1,268
|
)
|
|
1,753
|
|
|
5,435
|
|
|||||
Net income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
(107
|
)
|
f
|
(107
|
)
|
|||||
Net income (loss) attributable to controlling interests
|
—
|
|
|
4,950
|
|
|
(1,268
|
)
|
|
1,646
|
|
|
5,328
|
|
|||||
Dividends on preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(100
|
)
|
g
|
(100
|
)
|
|||||
Net income (loss) attributable to common stockholders
|
$
|
—
|
|
|
$
|
4,950
|
|
|
$
|
(1,268
|
)
|
|
$
|
1,546
|
|
|
$
|
5,228
|
|
Weighted average shares outstanding—basic
|
|
|
|
|
|
|
|
h
|
49,111
|
|
|||||||||
Weighted average shares outstanding—diluted
|
|
|
|
|
|
|
|
h
|
50,137
|
|
|||||||||
Basic and diluted earnings per share
|
|
|
|
|
|
|
|
|
$
|
0.11
|
|
Pro forma straight-line rent and amortization of above and below-market rents for Parkway Houston
|
|
$
|
2,249
|
|
Elimination of historical straight-line rents and amortization of above- and below-market rents for Parkway Houston
|
|
(3,769
|
)
|
|
Pro forma adjustment
|
|
$
|
(1,520
|
)
|
Pro forma depreciation and amortization for Parkway Houston
|
|
$
|
5,432
|
|
Elimination of historical depreciation and amortization for Parkway Houston
|
|
(11,319
|
)
|
|
Pro forma adjustment
|
|
$
|
(5,887
|
)
|
Pro forma interest expense on Credit Facility
|
|
$
|
4,183
|
|
Pro forma amortization of above market debt
|
|
(862
|
)
|
|
Elimination of historical amortization of above market debt for Parkway Houston debt
|
|
1,009
|
|
|
Elimination of historical interest expense for the mortgage debt associated with CityWestPlace I and II
|
|
(1,777
|
)
|
|
Pro forma adjustment
|
|
$
|
2,553
|
|
Weighted average shares of common stock-basic
|
|
49,111
|
|
Effect of conversion and exchange of OP units in Parkway LP
|
|
1,026
|
|
Weighted average shares of the Company's common stock-diluted
|
|
50,137
|
|
|
|
Interest Rate
|
|
Initial Maturity
|
|
Outstanding Balance
|
||
$100.0 Million Revolving Credit Facility
|
|
4.0%
|
|
10/06/2019
|
|
$
|
—
|
|
$350.0 Million Three-Year Term Loan
(1)
|
|
3.9%
|
|
10/06/2019
|
|
350,000
|
|
|
Notes payable to banks outstanding
|
|
|
|
|
|
350,000
|
|
|
Unamortized debt issuance costs, net
|
|
|
|
|
|
(7,676
|
)
|
|
Total notes payable to banks, net
|
|
|
|
|
|
$
|
342,324
|
|
|
Weighted
Average
Interest Rate
|
|
Total
Mortgage
Maturities
|
|
Balloon
Payments
|
|
Principal
Amortization
|
||||||
2017
|
4.4%
|
|
$
|
7,018
|
|
|
$
|
—
|
|
|
$
|
7,018
|
|
2018
|
4.8%
|
|
111,960
|
|
|
102,402
|
|
|
9,558
|
|
|||
2019
|
4.3%
|
|
8,097
|
|
|
—
|
|
|
8,097
|
|
|||
2020
|
4.5%
|
|
252,499
|
|
|
246,765
|
|
|
5,734
|
|
|||
2021
|
3.9%
|
|
2,418
|
|
|
—
|
|
|
2,418
|
|
|||
Thereafter
|
3.9%
|
|
65,351
|
|
|
62,193
|
|
|
3,158
|
|
|||
Total principal maturities
|
4.5%
|
|
447,343
|
|
|
$
|
411,360
|
|
|
$
|
35,983
|
|
|
Phoenix Tower mortgage included in liabilities related to assets held for sale
|
|
|
(76,050
|
)
|
|
|
|
|
|||||
Unamortized premium, net
|
|
|
7,359
|
|
|
|
|
|
|||||
Unamortized debt issuance costs, net
|
|
|
(610
|
)
|
|
|
|
|
|||||
Total mortgage notes payable, net
|
|
|
$
|
378,042
|
|
|
|
|
|
|
Payments Due By Period
|
||||||||||||||||||||||||||
Contractual Obligations
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
|
Total
|
||||||||||||||
Long-term debt principal and interest payments
(1) (2)
|
$
|
35,397
|
|
|
$
|
144,934
|
|
|
$
|
382,642
|
|
|
$
|
262,086
|
|
|
$
|
4,999
|
|
|
$
|
68,442
|
|
|
$
|
898,500
|
|
Purchase obligations (tenant improvements, lease commissions and lease incentives)
|
38,333
|
|
|
12,759
|
|
|
23,581
|
|
|
11,436
|
|
|
98
|
|
|
173
|
|
|
86,380
|
|
|||||||
Total
|
$
|
73,730
|
|
|
$
|
157,693
|
|
|
$
|
406,223
|
|
|
$
|
273,522
|
|
|
$
|
5,097
|
|
|
$
|
68,615
|
|
|
$
|
984,880
|
|
|
|
Three Months Ended March 31, 2017
|
||
Net loss
|
|
$
|
(12,709
|
)
|
Adjustments to derive FFO attributable to the Operating Partnership:
|
|
|
||
Dividends on preferred stock
|
|
(100
|
)
|
|
Depreciation and amortization
|
|
23,768
|
|
|
Impairment loss on real estate
|
|
15,000
|
|
|
FFO attributable to the Operating Partnership
|
|
$
|
25,959
|
|
|
|
Three Months Ended March 31, 2017
|
||
FFO attributable to the Operating Partnership
|
|
$
|
25,959
|
|
Add (deduct):
|
|
|
||
Straight-line rents
|
|
(6,316
|
)
|
|
Amortization of below market leases, net
|
|
(1,227
|
)
|
|
Share-based compensation expense
|
|
488
|
|
|
Amortization of loan costs
|
|
810
|
|
|
Amortization of mortgage interest premium
|
|
(548
|
)
|
|
|
|
|
||
Capital expenditures:
|
|
|
||
Building improvements
|
|
(1,216
|
)
|
|
Tenant improvements
|
|
(7,656
|
)
|
|
Leasing costs
|
|
(3,442
|
)
|
|
Total capital expenditures
|
|
(12,314
|
)
|
|
FAD attributable to the Operating Partnership
|
|
$
|
6,852
|
|
|
Three Months Ended March 31, 2017
|
||
Net loss
|
$
|
(12,709
|
)
|
Adjustments to net loss:
|
|
||
Interest expense
|
8,686
|
|
|
Depreciation and amortization
|
23,768
|
|
|
Income tax expense
|
490
|
|
|
EBITDA
|
20,235
|
|
|
Share-based compensation expense
|
488
|
|
|
Impairment loss on real estate
|
15,000
|
|
|
Adjusted EBITDA
|
$
|
35,723
|
|
|
|
||
Interest coverage ratio:
|
|
||
Adjusted EBITDA
|
$
|
35,723
|
|
Interest expense
|
$
|
8,686
|
|
Interest coverage ratio
|
4.1
|
|
|
Fixed charge coverage ratio:
|
|
||
Adjusted EBITDA
|
$
|
35,723
|
|
Fixed charges:
|
|
||
Interest expense
|
$
|
8,686
|
|
Principal payments
|
2,288
|
|
|
Dividends on preferred stock
|
100
|
|
|
Total fixed charges
|
$
|
11,074
|
|
Fixed charge coverage ratio
|
3.2
|
|
|
|
|
||
Net debt plus preferred stock to Adjusted EBITDA - annualized multiple:
|
|
||
Adjusted EBITDA - annualized
(1)
|
$
|
142,892
|
|
Total debt:
|
|
||
Mortgage notes payable, at par
|
$
|
447,343
|
|
Notes payable to banks, at par
|
350,000
|
|
|
Total debt
|
797,343
|
|
|
Less: cash and cash equivalents
|
(174,432
|
)
|
|
Net debt
|
622,911
|
|
|
Series A preferred stock (liquidation value)
|
5,000
|
|
|
Net debt plus preferred stock
|
$
|
627,911
|
|
Net debt plus preferred stock to Adjusted EBITDA - annualized multiple
|
4.4
|
|
|
Three Months Ended March 31, 2017
|
||
Net loss
|
$
|
(12,709
|
)
|
Add (deduct):
|
|
||
Income tax expense
|
490
|
|
|
Interest expense
|
8,686
|
|
|
Interest income
|
(208
|
)
|
|
General and administrative
|
4,148
|
|
|
Impairment loss on real estate
|
15,000
|
|
|
Depreciation and amortization
|
23,768
|
|
|
Management company expenses
|
1,746
|
|
|
Management company income
|
(1,248
|
)
|
|
NOI
|
$
|
39,673
|
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
|
|||||
1/1/2017 to 1/31/2017
|
|
29,921
|
|
(1)
|
$
|
22.27
|
|
|
—
|
|
|
—
|
|
2/1/2017 to 2/28/2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3/1/2017 to 3/31/2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
29,921
|
|
|
$
|
22.27
|
|
|
—
|
|
|
—
|
|
Exhibit No.
|
Exhibit Description
|
2.1
|
Omnibus Contribution and Partial Interest Assignment Agreement, dated February 17, 2017, by and among Parkway Operating Partnership LP, certain subsidiaries thereof, CPPIB US RE-A, Inc., and Permian Investor LP (incorporated by reference to Exhibit 2.1 to the Company's Form 8-K filed on February 22, 2017).
|
2.2
|
Omnibus Direction Agreement, dated as of April 17, 2017, by and among Parkway Operating Partnership LP, each of the entities listed on Exhibit A attached thereto, Permian Investor LP, and CPPIB US RE-A, Inc. (incorporated by reference to Exhibit 2.1 to the Company's Form 8-K filed on April 20, 2017).
|
3.1
|
Articles of Amendment and Restatement of Parkway, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on October 5, 2016).
|
3.2
|
Amended and Restated Bylaws of Parkway, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Form 8-K filed on October 5, 2016).
|
10.1
|
Amended and Restated Limited Partnership Agreement of GWP JV Limited Partnership dated as of April 17, 2017 (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed on April 20, 2017).
|
10.2
|
Loan Agreement dated as of April 17, 2017, between Goldman Sachs Mortgage Company, as Lender, and GWP North Richmond, LLC, GWP Eight Twelve, LLC, GWP West, LLC, GWP Richmond Avenue, LLC, GWP Central Plant, LLC, GWP Nine, LLC, GWP Edloe Parking, LLC, GWP ONE, LLC, GWP TWO, LLC, GWP East, LLC and GWP 3800 Buffalo Speedway, LLC (filed herewith).
|
10.3
|
Guaranty, dated as of April 17, 2017, by Parkway Operating Partnership LP in favor of Goldman Sachs Mortgage Company (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed on April 20, 2017).
|
31.1
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.2
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101**
|
The following materials from Parkway, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) consolidated balance sheets of Parkway, Inc., (ii) consolidated statement of operations of Parkway, Inc., (iii) consolidated statement of changes in equity of Parkway, Inc., (iv) consolidated statement of cash flows of Parkway, Inc., (v) the notes to the consolidated financial statements of Parkway, Inc., (vi) combined statement of operations for each of Parkway Houston and Cousins Houston, (vii) combined statement of cash flows for each of Parkway Houston and Cousins Houston, and (viii) notes to the combined financial statements of each of Parkway Houston and Cousins Houston.
|
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