Parkway (PKY) Reorganizes Ownership Interests in Austin JVs
Keeping in line with its business plan, Parkway Properties Inc. (PKY), the Orlando, FL-based equity real estate investment trust (“REIT”), has embarked on restructuring its joint venture (:JV) assets in Austin, TX. The company reached an agreement on Nov 17 with the public pension fund, The California State Teachers’ Retirement System (“CalSTRS”), to acquire 60% ownership interest in San Jacinto Center and One Congress Plaza.
The acquisition will grant Parkway a 100% ownership in these two properties. The agreement also involves the transfer of 40% ownership in Frost Bank Tower, 300 West 6th Street and One American Center to the public pension fund.
Notably, by transferring ownership interests in three Austin properties, Parkway received around $43.6 million. The amount was utilized for acquiring ownership interests in San Jacinto Center and One Congress Plaza.
Parkway is an Equity-REIT which is engaged in acquisition, ownership, development, management and leasing of quality office properties in high-growth submarkets in the Sunbelt region. The latest reorganization is in sync with the company’s strategy of empowering itself so as to more effectively conduct its lease-up and value-added plans.
Acquisition of both properties will likely be accretive to Parkway going forward. San Jacinto Center comprises 412,000 square foot Class A office asset whereas One Congress Plaza includes 514,000 square foot Class A asset and both properties are situated close by.
As per the release, as of Oct 1, 2014, San Jacinto Center was 86.6% occupied whereas One Congress Plaza was 77.1% occupied. Further, San Jacinto Center is expected to fetch an initial annual cash net operating income yield of 5.6% whereas One Congress Plaza is expected to fetch annual cash net operating income yield of 6%.
Currently, Parkway carries a Zacks Rank #3 (Hold). Better-ranked Equity-REITs include Alexandria Real Estate Equities, Inc. (ARE), Ashford Hospitality Trust, Inc. (AHT) and Chatham Lodging Trust (CLDT). All these stocks hold a Zacks Rank #2 (Buy).
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