JACKSON, Miss., Dec. 11 /PRNewswire-FirstCall/ -- Parkway Properties, Inc.
(NYSE: PKY) announced today its earnings outlook for the fiscal year ended
December 31, 2009.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030513/PARKLOGO )
Parkway has historically provided an annual earnings outlook for the
following year to its investors, analysts and other public constituencies,
consisting of funds from operations (FFO) per share and net income per share
(EPS) and the major assumptions used in preparing the earnings outlook.
Variance within the outlook range may occur due to variations in the recurring
revenue and expenses of the Company, as well as certain non-recurring items.
Examples of non-recurring items would include prepayment penalties, lease
termination fees, late fees, unexpected bad debt expense and other normal but
difficult to project items. It has been and will continue to be the Company's
policy to not issue quarterly earnings guidance or revise the annual earnings
outlook unless such estimates are outside of the original annual outlook
range. This policy is intended to lessen the emphasis on short-term movements
that do not have a material impact on earnings or long-term value of the
Company.
For 2009, the Company estimates FFO of $3.50 to $3.85 per diluted share
and EPS of ($0.75) to ($0.40) per diluted share.
Guidance for 2009 Range
Fully diluted EPS ($0.75-$0.40)
Plus: Real estate depreciation and amortization $5.36-$5.36
Plus: Depreciation on unconsolidated joint ventures $0.05-$0.05
Less: Minority interest depreciation and amortization ($1.16-$1.16)
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Fully diluted FFO per share $3.50-$3.85
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The 2009 earnings outlook is based on the core operating assumptions and
capital activity assumptions described below. These assumptions reflect the
Company's expectations based on its knowledge of current market conditions and
historical experience.
2009 Core Operating Assumptions
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-- An average annual occupancy range of 88.5% to 89.5%.
-- An average rental rate per square foot of $21.85 to $22.85.
-- Recurring same-store net operating income decrease of (2.0%) to 0.0% on
a GAAP basis. On a recurring cash basis, annual same-store net operating
income is expected to decline by (3.5%) to (1.5%).
-- Net general and administrative expenses are expected to be in the range
of $6.8 to $7.2 million, down approximately $1.5 million or 18%, as compared
to 2008.
2009 Capital Activity Assumptions
---------------------------------
-- For 2009, the Company has $21.8 million in debt maturities related to
three assets in Houston, Texas, which are 97.8% leased at December 1, 2008.
The Company plans to pay this maturity in March 2009 utilizing its line of
credit. For 2010, the Company has $66.0 million of maturing debt, assuming the
exercise of a one-year extension option related to a $60.0 million loan on a
building in Atlanta, Georgia. The Company currently has approximately $130.0
million available under its line of credit for mortgage debt maturities.
-- The Company is estimating its proportionate share of average
outstanding long-term debt to be $835.0 million to $840.0 million, versus
$863.0 million projected in 2008. The average interest rate on total debt is
estimated to average from 5.4% to 5.6%.
-- The Company has entered into a $100.0 million interest rate swap at an
effective interest rate of 4.9%, beginning January 2009.
-- The Company is estimating total capital spending for building
improvements, tenant improvements and leasing commissions in the range of
$20.0 million to $25.0 million, as compared to $25.0 million projected for
2008.
-- The Company's single asset under construction in 2008, the Pinnacle at
Jackson Place in Jackson, Mississippi, opened on December 8, 2008, at a total
projected cost of $48.5 million. The Company previously funded its equity and
has a $37.6 million non-recourse first mortgage provided by U.S. Bank. The
Pinnacle is currently 82.0% pre-leased, and over 90.0% of the customers have
signed leases in excess of 10 years. The Pinnacle also has a 1,734 space
adjacent parking garage on a long-term lease with the City of Jackson, and the
combined cap rate of the project is expected to be approximately 8% once
stabilized.
-- No investments for the discretionary fund with the Teacher Retirement
System of Texas are included in the earnings outlook.
-- No sales or joint ventures of properties are included in the earnings
outlook. However, the Company expects to continue to pursue its ongoing
disposition strategy that has been outlined previously under the GEAR UP plan
and will provide further information at such time as a sale or joint venture
is completed as to the impact on its earnings outlook.
-- Quarterly dividends to Parkway's shareholders of common stock are
included in the earnings outlook at an annualized dividend rate of $1.30 per
diluted share.
-- No additional issuance or buyback of Company stock or redemption of
preferred stock are included in the earnings outlook.
At December 5, 2008, 23 new leases were signed on 49,000 square feet in
addition to 47 renewals and expansions of 182,000 square feet subsequent to
September 30, 2008. Portfolio occupancy was 90.4% at December 1, 2008.
Parkway will host a 2009 Earnings Outlook conference call today, Thursday,
December 11, 2008, at 11:00 a.m. Eastern Time. The number for the conference
call is 888-632-5004. A taped replay of the 2009 earnings outlook conference
call can be accessed 24 hours a day through December 20, 2008, at 8:00 p.m.
EST by dialing 888-203-1112 and using the pass code of 4614123.
On January 1, 2006, the Company initiated an operating plan that is
referred to as the "GEAR UP" Plan. At the heart of the GEAR UP Plan are Great
People transforming Parkway through Equity Opportunities and Asset Recycling
from an owner-operator to an operator-owner. Our long-standing commitment to
Retain our Customers and provide an Uncompromising Focus on Operations remains
steadfast. We believe that by accomplishing these goals we can deliver
excellent Performance to our shareholders. Performance for the GEAR UP Plan
will be measured as the sum of adjusted funds available for distribution, as
defined by the Company, cumulative over the three years of the plan. The goal
for cumulative adjusted funds available for distribution is $7.18 per diluted
share.
Parkway Properties, Inc., a member of the S&P Small Cap 600 Index, is a
self-administered real estate investment trust specializing in the operation,
leasing, acquisition, and ownership of office properties. The Company is
geographically focused on the Southeastern and Southwestern United States and
Chicago. Parkway owns or has an interest in 66 office properties located in 11
states with an aggregate of approximately 13.4 million square feet of leasable
space as of December 11, 2008. Included in the portfolio are 21 properties
totaling 3.8 million square feet that are owned jointly with other investors,
representing 28.8% of the portfolio. Under the Company's GEAR UP Plan, which
started January 1, 2006 and ends December 31, 2008, it is the Company's
strategy to transform from an owner-operator to an operator-owner. The
strategy highlights the Company's strength in providing excellent service in
the operation of office properties in addition to its direct ownership of real
estate assets. Fee-based real estate services are offered through the
Company's wholly owned subsidiary, Parkway Realty Services, which also manages
and/or leases approximately 1.8 million square feet for third party owners as
of December 11, 2008.
Parkway Properties, Inc.'s press releases and additional information about
the Company are available on the World Wide Web at www.pky.com.
Certain statements in this release that are not in the present tense or
discuss the Company's expectations (including the use of the words anticipate,
forecast or project) are forward-looking statements within the meaning of the
federal securities laws and as such are based upon the Company's current
belief as to the outcome and timing of future events. There can be no
assurance that future developments affecting the Company will be those
anticipated by the Company. These forward-looking statements involve risks and
uncertainties (some of which are beyond the control of the Company) and are
subject to change based upon various factors, including but not limited to the
following risks and uncertainties: changes in the real estate industry and in
performance of the financial markets; the demand for and market acceptance of
the Company's properties for rental purposes; the amount and growth of the
Company's expenses; tenant financial difficulties and general economic
conditions, including interest rates, as well as economic conditions in those
areas where the Company owns properties; the risks associated with the
ownership and development of real property; the failure to acquire or sell
properties as and when anticipated; and other risks and uncertainties detailed
from time to time on the Company's SEC filings. Should one or more of these
risks or uncertainties occur, or should underlying assumptions prove
incorrect, the Company's results could differ materially from those expressed
in the forward-looking statements. The Company does not undertake to update
forward-looking statements.
CONTACT: STEVEN G. ROGERS
PRESIDENT & CHIEF EXECUTIVE OFFICER
J. MITCHELL COLLINS
CHIEF FINANCIAL OFFICER
(601) 948-4091
