Parkway Properties Announces Major Leasing Update

JACKSON, Miss., Jan. 14 /PRNewswire-FirstCall/ -- Parkway Properties, Inc. (NYSE: PKY) announced today the recent signing of two major new leases and one large lease renewal.  Combined Insurance Company of America ("Combined Insurance") signed an 11-year new lease for approximately 100,000 square feet at 111 East Wacker in Chicago, backfilling nearly 90% of the 113,000 square feet expected to be vacated by the Federal Home Loan Bank of Chicago ("FHLB") at lease expiration in February 2011.  Combined Insurance will take occupancy of the space on July 1, 2010.  The lease economics include a gross effective rental rate of $27.97 per square foot, which includes 19 months of free rent that will be spread throughout the lease term, and approximately $10.0 million in leasing costs.  Lease termination fees of approximately $4.0 million are expected to be recorded on the FHLB space during 2010, with those funds being used to partially offset the leasing costs.  The Company incurred approximately $2.0 million of the lease costs associated with this lease during 2009.

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Parkway also signed an 11-year new lease for 33,000 square feet at 111 East Wacker with Silliker, Inc., in space that was previously leased by Health Care Service Corporation ("Blue Cross Blue Shield" or "BCBS") through 2012.  The lease economics include an effective rental rate of $26.55 per square foot, which includes 21 months of free rent that will be spread throughout the lease term, and approximately $2.2 million in leasing costs.  Parkway structured an early buyout from BCBS related to this 33,000 square feet and expects to receive lease termination fees of approximately $2.3 million that will be recorded during 2010. The remaining BCBS space of nearly 230,000 square feet is subject to lease expiration or a lease termination option in 2012, and Parkway expects that BCBS will exercise its termination option.  If such termination option is exercised, Parkway expects to receive approximately $7.4 million in lease termination fees, which will be received and recorded into income over the remaining lease term.