Capital and Financing Transactions

3 Months Ended

Mar. 31, 2012

Capital And Financing Transactions [Abstract]

Capital and Financing Transactions

Note H - Capital and Financing Transactions

On March 30, 2012, the Company entered into an Amended and Restated Credit Agreement with a consortium of eight banks for its $190.0 million senior unsecured revolving credit facility.  Additionally, the Company amended its $10.0 million working capital revolving credit facility under substantially the same terms and conditions, with the combined size of the facilities remaining at $200.0 million (collectively, the "New Facilities").  The New Facilities provide for modifications to the existing facilities by, among other things, extending the maturity date from January 31, 2014 to March 29, 2016, with an additional one-year extension option with the payment of a fee, increasing the size of the accordion feature from $50 million to as much as $160 million, lowering applicable interest rate spreads and unused fees, and modifying certain other terms and financial covenants.  The interest rate on the New Facilities is based on LIBOR plus 160 to 235 basis points, depending on overall Company leverage (with the current rate set at 210 basis points).  Additionally, the Company pays fees on the unused portion of the New Facilities ranging between 25 and 35 basis points based  upon usage of the aggregate commitment (with the current rate set at 35 basis points).  Wells Fargo Securities, LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated acted as Joint Lead Arrangers and Joint Book Runners on the senior facility.  In addition, Wells Fargo Bank, N.A. acted as Administrative Agent and Bank of America, N.A. acted as Syndication Agent.  KeyBank, N.A., PNC Bank, N.A. and Royal Bank of Canada all acted as Documentation Agents.  Other participating lenders include JPMorgan Chase Bank, Trustmark National Bank, and Seaside National Bank and Trust.  The working capital revolving credit facility was provided solely by PNC Bank, N.A.  At March 31, 2012, the Company had a total of $48.0 million outstanding under its credit facilities (collectively, the "Credit Facility") and was in compliance with all loan covenants under each credit facility.

Mortgage notes payable at March 31, 2012 totaled $644.4 million, of which $90.7 million was classified as liabilities related to assets held for sale, with an average interest rate of 5.5% and were secured by office properties.

On January 9, 2012, in connection with the sale of 111 East Wacker for a gross sale price of $150.6 million, the buyer assumed the existing $147.9 million non-recourse mortgage loan secured by the property which had a fixed interest rate of 6.3% and maturity date of July 2016.

On January 11, 2012, in connection with the purchase of The Pointe in Tampa, Florida, Fund II obtained a $23.5 million non-recourse first mortgage loan, which matures in February 2019.  The mortgage has a fixed rate of 4.0% and is interest only for the first 42 months of the term.

On February 10, 2012, Fund II obtained a $50.0 million non-recourse mortgage loan, of which $15.0 million is Parkway's share, secured by Hayden Ferry II, a 300,000 square foot office property located in the Tempe submarket of Phoenix, Arizona.  The mortgage loan matures in July 2018 and bears interest at LIBOR plus the applicable spread which ranges from 250 to 350 basis points over the term of the year loan.  In connection with this mortgage, Fund II entered into an interest rate swap that fixes LIBOR at 1.5% through January 25, 2018, which equates to a total interest rate ranging from 4.0% to 5.0%.  The mortgage loan is cross-collateralized, cross-defaulted, and coterminous with the mortgage loan secured by Hayden Ferry I.

On March 9, 2012, the Company repaid a $16.3 million non-recourse mortgage loan secured by Bank of America Plaza, a 337,000 square foot office property in Nashville, Tennessee.  The mortgage loan had a fixed rate of 7.1% and was scheduled to mature in May 2012.  The Company repaid the mortgage loan using available proceeds under the senior unsecured revolving credit facilities.

During 2012, in conjunction with the sale of two Fund I assets, the buyer assumed $47.1 million of non-recourse first mortgage loans, of which $11.8 million was Parkway's share.  The remaining two assets in the Fund I portfolio serve as collateral for a $29.7 million non-recourse mortgage loan, of which $7.4 million is Parkway's share.  This loan will be assumed by the buyer upon closing during the second quarter of 2012, subject to obtaining necessary lender consents and customary closing conditions.

The Company has entered into interest rate swap agreements.  The Company designated the swaps as cash flow hedges of the variable interest rates on a portion of the debt secured by the Pinnacle at Jackson Place and the debt secured by 245 Riverside, Corporate Center Four, Cypress Center, Bank of America Center, Two Ravinia, Hayden Ferry I, and Hayden Ferry II. These swaps, excluding the swap secured by the Pinnacle at Jackson Place, are considered to be fully effective and changes in the fair value of the swaps are recognized in accumulated other comprehensive loss.

On February 10, 2012, Fund II entered into an interest rate swap with the lender of the loan secured by Hayden Ferry II in Phoenix, Arizona, for a $50 million notional amount that fixes LIBOR at 1.5% through January 25, 2018, which when combined with the applicable spread ranging from 250 to 350 basis points equates to a total interest rate ranging from 4.0% to 5.0% over the term of the loan..  The Company designated the swap as a cash flow hedge of the variable interest payments associated with the mortgage loan.

The Company's interest rate hedge contracts at March 31, 2012, and 2011 are summarized as follows (in thousands):

								Fair Market Value
								Liability
Type of	Balance Sheet		Notional	Maturity		Fixed		March 31
Hedge	Location		Amount	Date	Reference Rate	Rate		2012		2011
Swap	Accounts payable and other liabilities	$	23,500	12/01/14	1-month LIBOR	5.8%	$	-	$	(1,914)
Swap	Accounts payable and other liabilities	$	12,088	11/18/15	1-month LIBOR	4.1%		(575)		-
Swap	Accounts payable and other liabilities	$	33,875	11/18/17	1-month LIBOR	4.7%		(2,715)		-
Swap	Accounts payable and other liabilities	$	22,000	01/25/18	1-month LIBOR	4.5%		(1,454)		-
Swap	Accounts payable and other liabilities	$	50,000	01/25/18	1-month LIBOR	5.0%		(403)		-
Swap	Accounts payable and other liabilities	$	9,250	09/30/18	1-month LIBOR	5.2%		(1,010)		-
Swap	Accounts payable and other liabilities	$	22,500	10/08/18	1-month LIBOR	5.4%		(2,641)		-
Swap	Accounts payable and other liabilities	$	22,100	11/18/18	1-month LIBOR	5.0%		(2,062)		-
							$	(10,860)	$	(1,914)