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Parkway Properties, Inc. (NYSE: PKY) announced today that TPG, a leading global private investment firm, has agreed to make a $200 million equity investment in Parkway at a price of $11.25 per share, which represents a 12% premium to the 30-day trailing average closing price of Parkway's common stock. The Company intends to use the proceeds raised from this investment to pursue acquisitions based on the Company's new investment strategy.

As an immediate realization of that plan, the Company announced that it has entered into a purchase and sale agreement to acquire Hearst Tower, a 972,000 square foot trophy office tower located in the central business district in Charlotte, North Carolina. The purchase price of $250 million, or $257 per square foot, represents a significant discount to replacement cost. The building is currently 94% leased with no material expirations until 2017. Bank of America, N.A. will enter into a new lease as part of the transaction to occupy 322,000 square feet in the base of the building with a lease term through March 2022. The purchase of Hearst Tower will initially be financed using the cash received from TPG combined with borrowings on the Company's credit facility. While the property will be unencumbered at closing, Parkway expects to obtain financing on the property to provide capital for future investment opportunities. The property is expected to generate cash net operating income of approximately $17.5 million during the first year of Parkway's ownership period.

After evaluating the earnings impact resulting from the Company's recent acquisition and disposition activity, the Company's first quarter financial results, and the pending purchase of Hearst Tower, the Board of Directors currently anticipates effecting a 33% increase in the common stock dividend, which would result in an annual dividend amount of $0.40 per share, assuming the completion of the pending TPG and Hearst Tower transactions and subject to formal approval by the Board at that time.

Jim Heistand, Parkway's President and Chief Executive Officer, said, "TPG's investment enables Parkway to meaningfully increase our capacity to make long-term value accretive acquisitions while establishing a strategic relationship with a well-connected and insightful partner. We are seeing a number of opportunities to acquire attractive assets at a good basis in our target submarkets. This investment in Parkway by TPG allows us to take advantage of these prospects."

Mr. Heistand continued, "The pending acquisition of Hearst Tower is a significant positive step as we continue to transform the Company. It is a compelling real estate opportunity – a trophy building, with a stable tenant base, in a submarket with improving fundamentals, at an attractive basis. It also further diversifies our asset base and builds our scale. While initially all of the proceeds received from TPG will be used to purchase Hearst Tower, we expect to eventually finance this property, providing future capacity to pursue other investment opportunities while maintaining our target debt metrics. We will continue to execute on the strategy we have outlined which is to build critical mass in key higher growth submarkets that are capable of producing strong cash flow yields and growth."

Kelvin Davis, senior partner at TPG, said, "We welcome the opportunity to become a strategic partner with Parkway, supporting its experienced management team in developing opportunities to increase value for all shareholders. We believe that the Company's target markets and assets are in the early stages of recovery. Over time, we believe Parkway is well positioned for long-term growth in earnings especially given its increasing scale."

Key Investment Terms

The investment by TPG has been approved by Parkway's Board of Directors, and closing is expected to occur before the end of the second quarter. The closing is subject to satisfaction of certain customary closing conditions, including obtaining certain third-party consents. The key terms of the investment are as follows:

• TPG will make a $200 million direct equity investment in Parkway at $11.25 per share, a 12% premium to the 30-day trailing average closing price of Parkway's common stock.
• At the closing of the transaction, the Company will issue 4.3 million shares, or approximately $48.4 million, of common stock, representing approximately 19.6% of the Company's outstanding common stock, and approximately 13.5 million shares, with an initial liquidation value of $151.6 million, of newly-created, non-voting Series E Cumulative Redeemable Convertible Preferred Stock (the "Series E Convertible Preferred Stock").
• TPG's ownership in the Company will be approximately 43% on an as-converted basis at the closing of the transaction.
• The Series E Convertible Preferred Stock is convertible on a one-for-one basis upon shareholder approval, in accordance with NYSE rules. Parkway has agreed to hold a meeting of its stockholders within 180 days following the closing date for stockholders to vote on the conversion of the preferred stock into common stock.
• The dividend on the Series E Convertible Preferred Stock will be equivalent to the Company's common stock dividend for 6 months, and will increase over time if the preferred shares remain outstanding.
• TPG will have four of nine Board seats, with two directors appointed to each board committee, based on TPG's as-converted ownership percentage at closing. TPG's board and committee representation will decrease in the event its ownership percentage decreases below certain specified levels.
• TPG will have consent rights for certain major decisions of the Company as long as it maintains at least a 22.5% ownership of the Company's common stock on an as-converted basis.

Barclays is acting as financial advisor to Parkway, and Jaeckle Fleischmann & Mugel LLP, Hogan Lovells US LLP, and Forman Perry Watkins Krutz & Tardy LLP are acting as legal counsel for Parkway in connection with the TPG and Hearst transactions. Credit Suisse Securities (USA) LLC is acting as financial advisor to TPG, and Ropes & Gray LLP is acting as TPG's legal counsel.