Orlando-based Eola Capital Inks $462 Million Deal with Parkway Properties

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According to a news release by Parkway Properties, Inc (NYSE:PKY) stating that they have just entered into definitive agreement with privately-owned Eola Capital LLC ("Eola") in which Eola will contribute its property management business to Parkway and Parkway will acquire six office properties currently owned and operated by Eola and its affiliates on behalf of Parkway Properties Office Fund II, LP ("Fund II"), two of which Fund II has already purchased. 

The combination is valued at approximately $462 million, including costs, and Parkway expects the combination on a stand-alone basis to be $0.16 to $0.22 per share accretive to funds from operations ("FFO") based on a full-year run rate.  The combination is expected to close during the second quarter of 2011.

Following closing of the combination, James "Jim" Heistand, current Chairman of Eola, will be named as Executive Chairman of the Board of Directors of Parkway, succeeding Leland Speed, who will remain a member of the Board.  Henry F. Pratt III, currently Chief Operating Officer of Eola, will join Parkway as Executive Vice President and Head of Asset Management and Third Party Services.  All Parkway executive officers will remain in their current positions. 

Steven G. Rogers, President and Chief Executive Officer of Parkway, stated, "We believe this combination with Eola furthers the strategic objectives outlined in the Company's FOCUS Plan and accelerates the accomplishment of several key goals.  It increases the scale of the Company by significantly expanding assets under management and advances its full transition to an operator/owner.  The Company will put proven, best-in-class operating resources to work in some of the most attractive markets in the Southeast and Mid-Atlantic.  We will also benefit from the addition of highly-experienced Eola executives to our Company.  These executives are thoroughly invested in the success of Parkway by virtue of their opportunity to receive a significant equity ownership stake in Parkway through an earn-out provision."

Jim Heistand, Founder and Chairman of Eola, commented, "We are excited about the opportunity to partner with Parkway.  Eola's high quality assets, operational expertise and experienced management team married with a complementary Parkway platform should result in strong growth and value creation for Parkway's shareholders.  Together, our investors, customers and operators will benefit from a more diverse portfolio and enhanced platform to capitalize on market opportunities and improve operating performance.  We selected Parkway as a partner because of our similar corporate cultures and focus on growing the business.  I am personally looking forward to closing and starting a new chapter at the combined company."

Leland Speed, current Chairman of Parkway, said, "I am very pleased with the structured combination of Parkway and Eola and the potential benefit to our shareholders resulting from this important investment.  The combination will significantly increase Parkway's fee income, substantially complete the investment of Fund II with high quality assets, and present an opportunity for further growth through the option rights Parkway will receive to purchase certain additional properties.  I look forward to working with Steve and Jim as we continue to improve Parkway."

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