Investment in Office Properties and Parking Properties

6 Months Ended

Jun. 30, 2014

Business Combinations [Abstract]

Investment in Office Properties

Investment in Office and Parking Properties

Included in investment in office and parking properties at June 30, 2014 are 44 office and parking properties located in eight states. These office and parking properties include two buildings acquired through the December 2013 merger transactions (the "Mergers") with Thomas Properties Group, Inc. ("TPGI").

On January 30, 2014, the Company completed the acquisition of the JTB Center, a complex of three office buildings located in the Deerwood submarket of Jacksonville, Florida, for a gross purchase price of $33.3 million. The JTB Center was unencumbered by secured indebtedness and financed through available cash.

On April 10, 2014, the Company completed the acquisition of Courvoisier Centre, a complex of two office buildings located in the Brickell submarket of Miami, Florida, for a gross purchase price of $145.8 million. The acquisition was financed through available cash and borrowings under the Company's new term loans.

On April 14, 2014, the Company commenced construction of Hayden Ferry Lakeside III, a planned office development in the Tempe submarket of Phoenix, Arizona. The Company's operating partnership, Parkway Properties LP (the "operating partnership"), entered into an amendment to the partnership agreement of Parkway Properties Office Fund II L.P. ("Fund II") to, among other things, authorize the Hayden Ferry Lakeside III development and authorize the general partner of Fund II to transfer an interest in the ownership of Hayden Ferry Lakeside III, a subsidiary of Fund II, to the operating partnership. The Company now owns a 70% indirect interest in Hayden Ferry Lakeside III. Costs related to planning, developing, leasing and constructing the property, including costs of development personnel working directly on projects under development, are capitalized. For the six months ended June 30, 2014, development costs incurred totaled $4.7 million.

On April 14, 2014, the Company completed the acquisition of One Orlando Center, an office building located in the central business district of Orlando, Florida, for a gross purchase price of $55.1 million. The Company made an $8.0 million equity investment that will be held in lender reserve accounts to fund the leasing and repositioning of the asset. As part of the purchase price, the Company paid $1.1 million to acquire its 100% interest in the borrower and simultaneously with the equity investment, the existing $68.3 million first mortgage note secured by the property was restructured into a new $54.0 million first mortgage and a $15.3 million subordinated note.

The allocation of purchase price related to tangible and intangible assets and liabilities based on Level 2 and Level 3 inputs for the JTB Center, Courvoisier Centre (1) and One Orlando Center is as follows (in thousands):

	Amount
Land	$	63,611
Office and parking properties	133,508
Tenant improvements	15,030
Lease commissions	5,515
Lease in place value	12,923
Above market leases	3,365
Below market leases	(3,130		)
Mortgage debt premium (2)	(1,967		)

(1) The purchase price of Courvoisier Center was reduced by $5.3 million of credits from the seller.

(2) Mortgage debt assumed with the purchase of One Orlando Center was $54.0 million. The fair value of the mortgage assumed was $56.0 million.

The allocation of the purchase price was based on preliminary estimates and is subject to change within the measurement period as valuations are finalized.

The unaudited pro forma effect on the Company's results of operations for the purchase of the JTB Center, Courvoisier Centre and One Orlando Center as if the purchase had occurred on January 1, 2013 is as follows (in thousands, except per share data):

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014		2013
Revenues	$	109,534		$	106,248		$	218,373	$	211,822
Net income (loss) attributable to common stockholders	$	(9,845	)	$	(9,549	)	$	451	$	437
Basic net income (loss) attributable to common stockholders per share	$	(0.10	)	$	(0.14	)	$	—	$	0.01
Diluted net income (loss) attributable to common stockholders per share	$	(0.10	)	$	(0.14	)	$	—	$	0.01

For details regarding dispositions during the six months ended June 30, 2014, please see Note 11 – Discontinued Operations.