Investment in Unconsolidated Joint Ventures

In addition to the 43 office and parking properties included in the consolidated financial statements, the Company was also invested in three unconsolidated joint ventures with unrelated investors as of December 31, 2013. Accordingly, the assets and liabilities of the joint ventures are not included on the Company's consolidated balance sheet at December 31, 2013. Information relating to these unconsolidated joint ventures is summarized below (in thousands, except ownership %):



			December 31,
Joint Venture Entity	Location	Parkway's Ownership%	2013		2012
PKY/CalSTRS Austin, LLC	Austin, TX	50.00%	$	93,171	$	—
US Airways Building Tenancy in Common	Phoenix, AZ	74.58%	42,501		—
7000 Central Park JV LLC ("7000 Central Park")	Atlanta, GA	40.00%	15,490		—
			$	151,162	$	—

On June 3, 2013, the Company purchased an approximate 75% interest in the US Airways Building, a 225,000 square foot office property located in the Tempe submarket of Phoenix, Arizona, for a purchase price of $41.8 million. At closing, a subsidiary of the Company issued a $3.5 million mortgage loan to an affiliate of US Airways, which is secured by the building. The mortgage loan carries a fixed interest rate of 3.0% and matures in December 2016. This nine-story Class A office building is adjacent to Parkway's Hayden Ferry Lakeside and Tempe Gateway assets and shares a parking garage with Tempe Gateway. The property is the headquarters for US Airways, which has leased 100% of the building through April 2024. US Airways has a termination option on December 31, 2016 or December 31, 2021 with 12 months prior notice. US Airways is also the owner of the remaining approximate 25% in the building.

On November 5, 2013, Parkway and its joint venture partner foreclosed and took ownership of 7000 Central Park, a 415,000 square foot office building located in the Central Perimeter of Atlanta, Georgia. Parkway previously acquired a 40% common equity interest in a mortgage note secured by the asset for approximately $45.0 million, comprised of an investment of approximately $37.0 million for a preferred equity interest in the joint venture that acquired the note and an investment of approximately $8.0 million for a 40% common equity interest. On December 13, 2013, Parkway and its joint venture partner placed secured financing on the asset in the amount of $30.0 million, the net proceeds of which were used to repay a portion of Parkway’s initial preferred equity investment, reducing the preferred equity interest to approximately $7.6 million. The loan has a floating interest rate based on the one-month LIBOR rate plus a spread of 180 basis points, which represents an initial aggregate interest rate of 1.97%. The joint venture also purchased an interest rate hedge that caps LIBOR at 1.75% through December 2016 for the full amount of the loan. The loan has a maturity date of December 2016.

On December 19, 2013, the Company acquired TPGI's interest in the Austin joint venture in connection with the Mergers. The Company and Madison International Realty ("Madison") owned a 50% interest in the joint venture with CalSTRS, of which the Company's ownership interest is 33%. The Austin joint venture owns the following properties: San Jacinto Center; Frost Bank Tower; One Congress Plaza; One American Center; and 300 West 6th Street. The cost of the Austin joint ventures is adjusted to recognize the Company’s interest in the Austin Joint Venture’s earnings or losses. The difference between a) The company’s ownership percentage in the Austin Joint Venture multiplied by its earnings and b) the amount of the Company’s equity in earnings of the Austin Joint Venture as reflected in the financial statements relates to the amortization or accretion of purchase accounting adjustments made at the time of the merger.

The following table summarizes the balance sheet of the unconsolidated joint ventures at December 31, 2013 (in thousands):



	US Airways		7000 Central Park		PKY/ CalSTRS Austin, LLC		Total

Cash	$	2,471	$	179	$	9,432	$	12,082
Restricted cash	—		—		5,846		5,846
Real estate, net	49,176		49,852		723,563		822,591
Intangible assets, net	2,809		4,832		55,593		63,234
Other assets	3,145		4,147		14,638		21,930
Total assets	$	57,601	$	59,010	$	809,072	$	925,683

Mortgage debt	$	13,777	$	30,000	$	628,066	$	671,843
Other liabilities	1,143		1,687		34,365		37,195
Below Market Rents	—		—		21,187		21,187
Partners' equity	42,681		27,323		125,454		195,458
Total liabilities & partners' equity	$	57,601	$	59,010	$	809,072	$	925,683

The following table summarizes the income statements of the unconsolidated joint ventures from acquisition date through December 31, 2013 (in thousands):



	US Airways		7000 Central Park			PKY CalSTRS Austin, LLC			Total
Revenues	$	2,560	$	1,136		$	3,595		$	7,291
Operating Expenses	—		778			1,661			2,439
Net Operating Income	2,560		358			1,934			4,852
Interest Expense	209		270			1,335			1,814
Depreciation and Amortization	1,219		836			1,577			3,632
Net Income (Loss)	$	1,132	$	(748	)	$	(978	)	$	(594	)

In the Austin joint venture, the Company's share of the Partner's equity is $62.7 million and the excess investment is $30.5 million at December 31, 2013. "Excess Investment" represents the unamortized difference of our investment over our share of the equity in the underlying net assets of the joint venture acquired and is allocated on a fair value basis primarily to investment property, lease related intangibles, and debt premiums. We amortize excess investment over the life of the related depreciable components of investment property, typically no greater than 40 years, the terms of the applicable leases and the applicable debt maturity, respectively. The amortization is included in the reported amount of income from unconsolidated entities.

On January 24, 2014, pursuant to a put right held by Madison, the Company purchased Madison’s approximately 17% interest in the CalSTRS joint venture for a purchase price of approximately $41.5 million. On February 10, 2014, pursuant to an agreement entered into between CalSTRS and the Company, CalSTRS exercised an option to purchase 60% of Madison's former interest on the same terms as the Company for approximately $24.9 million. After giving effect to these transactions, the Company has a 40% interest in the CalSTRS joint venture and the Austin properties, with CalSTRS owning the remaining 60%.