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.