Noncontrolling Interests

The Company has an interest in three joint ventures that are included in its consolidated financial statements: Fund II assets, the Murano condo project, and the Investment in PKY/CalSTRS Austin, LLC.

The following represents the detailed information on the Fund II assets as of December 31, 2013:



		Parkway's		Square Feet
Joint Venture Entity and Property Name	Location	Ownership %		(In thousands)
Fund II
Hayden Ferry Lakeside I	Phoenix, AZ	30.0	%	203
Hayden Ferry Lakeside II	Phoenix, AZ	30.0	%	300
Hayden Ferry Lakeside III, IV and V	Phoenix, AZ	30.0	%	21
245 Riverside	Jacksonville, FL	30.0	%	136
3344 Peachtree	Atlanta, GA	33.0	%	485
Two Ravinia	Atlanta, GA	30.0	%	438
Two Liberty Place	Philadelphia, PA	19.0	%	941
Total Fund II		27.9	%	2,524

Fund II, a $750.0 million discretionary fund, was formed on May 14, 2008 and was fully invested at February 10, 2012. Fund II was structured such that TRST as a 70% investor and Parkway as a 30% investor in the fund, with an original target capital structure of approximately $375.0 million of equity capital and $375.0 million of non-recourse, fixed-rate first mortgage debt. Fund II acquired 13 properties totaling 4.2 million square feet in Atlanta, Georgia; Charlotte, North Carolina; Phoenix, Arizona; Jacksonville, Orlando, and Tampa, Florida; and Philadelphia, Pennsylvania. In August 2012, Fund II increased its investment capacity by $20.0 million to purchase Hayden Ferry III, IV and V, a 2,500 space parking garage, a 21,000 square foot office property and a vacant parcel of development land, all adjacent to Hayden Ferry I and Hayden Ferry II in Phoenix, Arizona. In August 2013, Fund II expanded its investment guidelines solely for the purpose of authorizing the purchase of a parcel of land available for development in Tempe, Arizona.

The Company serves as the general partner of Fund II and provides asset management, property management, leasing and construction management services to the fund, for which it is paid market-based fees. Cash is distributed by Fund II pro rata to each partner until a 9% annual cumulative preferred return is received and invested capital is returned. Thereafter, 56% will be distributed to TRST and 44% to Parkway. The term of Fund II is seven years from the date the fund was fully invested, or until February 2019, with provisions to extend the term for two additional one-year periods at the Company's discretion.

The Company entered into an agreement to sell 13 office properties, totaling 2.7 million square feet, owned by Fund I to its existing partner in the fund for a gross sales price of $344.3 million, of which $97.4 million was Parkway's share. As of December 31, 2011, the Company had completed the sale of nine of these 13 assets. As of July 1, 2012, the Company had completed the sale of the remaining four Fund I assets. The Company received approximately $14.2 million in net proceeds from the sales of the Fund I assets, and the proceeds were used to reduce amounts outstanding under its credit facilities. Upon sale, the buyer assumed a total of $292.0 million in mortgage loans, of which $82.4 million was Parkway's share.

On March 25, 2013, the Company purchased TRST"s 70% interest in the Tampa Fund II Assets, three office properties totaling 788,000 square feet located in the Westshore submarket of Tampa, Florida, giving us a 100% ownership of the property. The Company's purchase price for TRST's 70% interest in the Tampa Fund II Assets was $97.5 million, based on an agreed-upon gross valuation of $139.3 million. Simultaneously with closing, the Company assumed $40.7 million of existing mortgage indebtedness that is secured by the properties, which represents TRST's 70% share of the approximately $58.1 million of existing mortgage indebtedness. The four office properties include Corporate Center IV at International Plaza, Cypress Center I, II and III, Cypress Center garage and The Pointe. The Tampa Fund II Assets' office properties and associated mortgage loans were previously included in the Company's consolidated balance sheets and statements of operations and comprehensive income (loss). Therefore, the Company's purchase of TRST's share in these office properties will not impact the Company's overall financial position.

On December 19, 2013, the Company acquired TPGI's interest in the Austin joint venture in connection with the Mergers. The Company and Madison owned a 50% interest in the joint venture with CalSTRS. 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.

On December 23, 2013, the Company acquired TRST's 70% interest in the Bank of America Center, an approximately 421,000 square foot office building located in the central business district of Orlando, Florida, giving us 100% ownership of the property. The purchase price for TRST's 70% interest in the Bank of America Center was $52.5 million, based on an agreed-upon gross valuation of $75.0 million, including the assumption of approximately $23.7 million of existing mortgage indebtedness. The existing mortgage loan secured by the Bank of America Center has a current outstanding balance of approximately $33.9 million, a fixed interest rate of 4.74% and a maturity date of May 2018. The Bank of America Center and its associated mortgage loan were previously included in our consolidated balance sheets and statements of operations and comprehensive income (loss). Therefore, the purchase of TRST's share in these office properties does not impact our overall financial position.

The Company also consolidates its Murano residential condominium project which it controls. The Company's unaffiliated partner's interest is reflected on the Company's consolidated balance sheets under the "Noncontrolling Interests" caption. The Company's partner has an ownership interest of 27%. Net proceeds from the project will be distributed, to the extent available, based on an order of preferences described in the partnership agreement. The Company may receive distributions, if any, in excess of its 73% ownership interest if certain return thresholds are met.

Noncontrolling interest also includes (a) 900,000 issued and outstanding common units in our operating partnership that were issued in connection with our acquisition of Lincoln Place and (b) approximately 4.4 million issued and 4.2 million outstanding common units in our operating partnership that were issued in exchange for outstanding limited partnership interests in Thomas Properties Group, L.P. in connection with the mergers.