Discontinued Operations

3 Months Ended

Mar. 31, 2012

Discontinued Operations [Abstract]

Discontinued Operations

Note E - Discontinued Operations

All current and prior period income from the following office property dispositions and properties held for sale is included in discontinued operations for the three months ended March 31, 2012 and 2011 (in thousands).

Office Property	Location	Square Feet	Date of Sale		Net Sales Price		Net Book Value of Real Estate		Gain (Loss) on Sale
233 North Michigan	Chicago, IL	1,070	05/11/2011	$	156,546	$	152,254	$	4,292
Greenbrier I & II	Hampton Roads, VA	172	07/19/2011		16,275		15,070		1,205
Glen Forest	Richmond, VA	81	08/16/2011		8,950		7,880		1,070
Tower at Gervais	Columbia, SC	298	09/08/2011		18,421		18,421		-
Wells Fargo	Houston, TX	134	12/09/2011		-		-		-
Fund I Assets	Various	1,956	12/31/2011		256,823		250,699		11,258
2011 Dispositions(2)		3,711		$	457,015	$	444,324	$	17,825
Falls Pointe	Atlanta, GA	107	01/06/2012	$	5,824	$	4,467	$	1,357
111 East Wacker	Chicago, IL	1,013	01/09/2012		153,240		153,287		(47)
Renaissance Center - Fund I	Memphis, TN	190	03/01/2012		27,661		24,629		3,032
Non-Core Assets	Various	1,474	1Q2012		90,040		88,807		1,233
2012 Dispositions (3)		2,784		$	276,765	$	271,190	$	5,575
Office Property	Location	Square Feet	Date of Sale		Gross Sales Price		Net Book Value of Real Estate		Gain (Loss) On Sale
Properties Held For Sale and Expected to Close During Second Quarter 2012(1)
Fund I Assets	Atlanta, GA	581	2Q2012	$	59,200	$	-	$	-
The Pinnacle at Jackson Place and Parking at Jackson Place (4)	Jackson, MS	271	2Q2012		29,500		-		-
		852			88,700		-		-
Remaining Property Held for Sale
111 Capitol Building (4)	Jackson, MS	187			-		-		-
Total Properties Held for Sale		1,039		$	88,700	$	-	$	-

(1) Gains on assets held for sale are expected to be finalized upon sale and reflected in 2Q2012 financial statements.

(2) Total gain on the sale of real estate in discontinued operations recognized for the year ended December 31, 2011 was $17.8 million, of which $9.8 million was Parkway's proportionate share.

(3) Total gain on the sale of real estate in discontinued operations recognized during the three months ended March 31, 2012 was $5.6 million, of which $2.3 million was Parkway's proportionate share.

(4) During the first quarter of 2012 the Company sold 12 of 15 non-core assets.  The 12 assets sold include five assets in Richmond, four assets in Memphis and three assets in Jackson.  The three remaining assets that have not yet closed are The Pinnacle, Parking at Jackson Place and 111 Capitol Building, all in Jackson, Mississippi.  The Pinnacle and Parking at Jackson Place are expected to close during the second quarter of 2012, subject to buyer's successful assumption of the existing mortgage and customary closing conditions.  The contract to sell 111 Capitol Building has expired without sale.

During the first quarter, the Company completed a significant portion of its previously disclosed dispositions as part of its strategic objective of becoming a leading owner of high quality office assets in higher growth markets in the Sunbelt.  As previously disclosed, the Company entered into an agreement to sell its interest in 13 office properties totaling 2.7 million square feet owned by Parkway Properties Office Fund, L.P. ("Fund I") to its existing partner in the fund for a gross sales price of $344.3 million.  As of December 31, 2011, Parkway had completed the sale of 9 of these 13 assets.  These Fund I assets had a total $292.3 million in mortgage loans, of which $82.5 million was Parkway's share, with a weighted average interest rate of 5.6% that were assumed by the buyer upon closing.

During the first quarter and through April 30, 2012, the Company completed the sale of two additional Fund I assets totaling 450,000 square feet, for net proceeds to Parkway of $2.7 million.  The sale of the two remaining assets in the Fund I portfolio is currently expected to close by the end of the second quarter of 2012, subject to obtaining necessary lender consents and customary closing conditions.  Accordingly, income from the remaining Fund I properties has been classified as discontinued operations for all current and prior periods.

Additionally, during the first quarter, the Company completed the sale of 12 of the 15 properties included in its strategic sale of a portfolio of non-core assets, generating net proceeds to Parkway of approximately $89.0 million.  The 12 assets that were sold during the quarter include five assets in Richmond, four assets in Memphis, and three assets in Jackson.

The two remaining non-core assets pending sale are The Pinnacle at Jackson Place and Parking at Jackson Place, and the sale is expected to close during the second quarter of 2012, subject to the buyer's successful assumption of the existing mortgage loan and customary closing conditions.  The Company does not anticipate receiving any material net proceeds from these sales still under contract.  The Pinnacle at Jackson Place currently serves as collateral for a $29.5 million mortgage loan.  The contract to sell a third non-core asset, 111 Capitol Building in Jackson, has expired without a sale.  Income for this non-core portfolio has been classified as discontinued operations for all current and prior periods.

The Company completed the sale of two additional assets in the first quarter, including the sale of 111 East Wacker, a 1.0 million square foot office property located in Chicago and Falls Pointe, a 107,000 square foot office property located in Atlanta and owned by Parkway Properties Office Fund II, L.P. ("Fund II").  Parkway received approximately $4.0 million in net proceeds from both sales, which were used to reduce amounts outstanding under the Company's credit facility and fund its proportionate share of equity interests in additional purchases by Fund II.  Income from 111 East Wacker and Falls Pointe has been classified as discontinued operations for all current and prior periods.

In connection with the dispositions completed in the first quarter of 2012, and to date as of April 30, 2012, the buyers of the related office properties assumed $195.0 million in mortgage loans, of which $159.7 million was Parkway's share.

At March 31, 2012, assets and liabilities related to assets held for sale represented six properties totaling 1.0 million square feet.  The major classes of assets and liabilities classified as held for sale at March 31, 2012 are as follows (in thousands):

	March 31
	2012
Balance Sheet:
Investment property	$	96,582
Accumulated depreciation		(8,904)
Office property held for sale		87,678
Rents receivable and other assets		10,337
Intangible assets, net		829
Other assets held for sale		11,166
Total assets held for sale	$	98,844
Mortgage notes payable	$	90,710
Accounts payable and other liabilities		9,666
Total liabilities related to assets held for sale	$	100,376

The amount of revenues and expenses for these office properties reported in discontinued operations for the three months ended March 31, 2012 and 2011 is as follows (in thousands):

	Three Months Ended
	March 31
	2012		2011
Statement of Operations:
Revenues
Income from office and parking properties	$	9,366	$	39,545
		9,366		39,545
Expenses
Office and parking properties
Operating expenses		3,853		18,180
Management company expense		152		74
Interest expense		1,791		8,352
Non-cash adjustment for interest rate swap		(138)		-
Depreciation and amortization		436		15,849
		6,094		42,455
Income (loss) from discontinued operations		3,272		(2,910)
Gain on sale of real estate from discontinued operations		5,575		-
Total discontinued operations per Statement of Operations		8,847		(2,910)
Net (income) loss attributable to noncontrolling interest from discontinued operations		(3,354)		1,775
Total discontinued operations - Parkway's Share	$	5,493	$	(1,135)