Parkway Properties, a member of the New York Stock Exchange,
specializes in the operation, leasing, acquisition, and ownership
of quality office properties. We have been a steward of capital in
the public arena since 1971 and have been solely dedicated to the
office industry since the mid‐1990's. Parkway team members apply an
uncompromising focus on operations, the cornerstone of our business
strategy, to create a solid dividend and long-term returns to our
shareholders and investment partners.
Investment Strategy
Geographically, the Company seeks to invest in top tier
metropolitan statistical areas, which represent high population and
job growth areas in core markets located in the Southeastern and
Southwestern United States and Chicago. Our customer base is
comprised of approximately 1,400 customers from diverse industry
sectors. With our transformation to an operator‐owner of real
estate, Parkway is able to grow its business through smaller
ownership interests, typically 20% to 30%, by jointly investing
with venture and discretionary fund partners. Current and past
investment partners include the Ohio Public Employee Retirement
System, the Teacher Retirement System of Texas, Investcorp, and
Rothschild Realty. Our transformation has enabled us to strengthen
the steady financial returns from our properties with a fast
growing stream of recurring fee income and to reduce risk of fee
simple ownership.
Allocating Capital
The methodology for allocating capital speaks to our
long‐standing approach to this very important matter. Capital
allocation is reviewed by our board, investment team, and senior
officer group based on many factors, including the overall capital
markets, our weighted average cost of capital, our buying criteria
(link to acquisition criteria), the real estate market and the risk
associated with the return. We examine all aspects of each type of
investment opportunity whether it is the purchase of a fund asset,
a value‐add initiative, or a fee simple asset. Each opportunity has
a current yield and a leveraged and unleveraged rate of return that
can be measured on a relative and absolute basis. Each carries a
relationship to replacement cost which is still an important
underwriting discipline for us.
Creating Value for Stakeholders
In an industry which has historically sold properties for quick
financial gain, Parkway has remained committed to excellence
(hyperlink to commitment to excellence pdf) and has maintained its
disciplined approach to buying buildings with potential for lease
up and improving them to generate and maintain long‐term value. We
call "tenants" our "customers", and we believe our programs, such
the 4F program (Flags, Flowers, Fixtures and Fellowship), and the
customer advocate program help to deliver a superior experience for
our customers and ultimately results in greater customer retention.
Our customer retention rate was 71% in 2008 and averaged 72.5% from
1999 through 2008. Over time, greater customer retention
reduces transactional costs, the costs and significant waste
associated with renovating customer space, and overhead
expenditures. Our investment strategy, commitment to excellence and
exceptional customer service simultaneously help to reinforce our
financial returns and create long-term value for stakeholders.