ORLANDO, Fla., Jan. 22, 2013 /PRNewswire/ -- Parkway Properties, Inc. (NYSE: PKY) announced today that it has entered into a purchase and sale agreement to acquire a portfolio of eight office properties totaling 1.0 million square feet located in the Deerwood submarket of Jacksonville, Florida (the "Deerwood Portfolio") for a purchase price of $130 million. The properties were developed in phases from 1996 through 2005 and are currently a combined 93.7% occupied with an average in place gross rent per square foot of $19.11.
James R. Heistand, Parkway's President and Chief Executive Officer, stated, "We believe the Deerwood portfolio offers a stable, core investment with strong occupancy and a high-quality rent roll. The Deerwood submarket has been a targeted growth area for Parkway given its prime location and the many amenities it offers, attracting a multitude of institutional and strong credit tenants to the area. Parkway will have a critical mass in this submarket, owning approximately 29% of the total office inventory, which should provide us with operational efficiencies and leasing advantages. In addition, our attractive cost basis of $128 per square foot represents a significant discount to estimated replacement cost."
The Deerwood Portfolio is expected to generate an initial full-year cash net operating income yield of approximately 9%. Parkway will own 100% of the portfolio and plans to place secured financing on the properties simultaneous with closing totaling up to 65% of the purchase price. Parkway intends to fund the remaining equity using borrowings from its revolving credit facility. Closing is expected to occur by the end of the first quarter 2013 and is subject to customary closing conditions, including completion of satisfactory due diligence.