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LOS ANGELES AND ORLANDO, FLA. — Parkway Properties (NYSE: PKY) and Thomas Properties Group Inc. (NYSE: TPGI) have signed a definitive merger agreement whereby Thomas Properties will merge into Parkway in a stock-for-stock transaction valued at $1.2 billion. The board of directors of each company unanimously approved the merger, which is expected to close by the end of the fourth quarter.
Upon completion of the transaction, Parkway will assume Thomas Properties’ ownership interest in two office properties in Houston and five office properties in Austin. In addition, Parkway may take ownership of three assets in Northern Virginia that secure debt.
“Parkway will be adding a portfolio of seven, high-quality assets totaling 4.9 million square feet, each located in one of Parkway’s targeted submarkets. This transaction will significantly expand and upgrade our presence in Houston and simultaneously will allow us to fulfill our stated strategy of expanding into the Austin market,” says James Heistand, president and CEO of Orlando-based Parkway. “We continue to believe that our markets are in the early stages of recovery, and this transaction will give us an attractive basis with potential opportunity to create additional value through occupancy gains and rental rate growth.”
Upon consummation of the merger, James Thomas, president and CEO of Thomas Properties, will become chairman of Parkway’s board of directors, and Parkway’s board of directors will expand to 10 members.
Under terms of the agreement, Thomas Properties’ shareholders will receive 0.3822 shares of newly issued Parkway common stock in exchange for each share of Thomas Properties common stock.
Parkway intends to assume approximately $752 million of Thomas Properties’ pro rata share of in-place secured debt, which will be reduced to approximately $530 million following the completion of planned asset sales in connection with the merger.
Parkway Properties is a self-administered and self-managed real estate investment trust that specializes in the acquisition, ownership and management of office properties in higher growth submarkets in the Sunbelt region. Parkway owns or has interest in 46 office properties totaling 13.3 million square feet as of July 1, 2013. The REIT’s stock price closed at $16.39 per share on Friday, up from trading at $11.27 per share this time last year.
Thomas Properties, based in Los Angeles, is a real estate company that owns, acquires, develops and manages primarily office, as well as mixed-use assets, across the country. The company’s stock price closed at $6.09 per share on Friday. In April, Thomas Properties announced that it was transferring the listing of its common stock from NASDAQ to the NYSE. The company’s stock price on NASDAQ closed at $5.61 per share one year ago.
— Brittany Biddy