JACKSON, Miss., Nov. 26 /PRNewswire-FirstCall/ — Parkway Properties, Inc. (NYSE: PKY) announced today its earnings outlook for 2008.
Parkway has historically provided an annual earnings outlook for the following year to its investors, analysts and other public constituencies in November, consisting of funds from operations (FFO) per share and net income per share and the major assumptions used in preparing the earnings outlook. Variance within the outlook range may occur due to variations in the recurring revenue and expenses of the Company as well as certain non-recurring items. Examples of non-recurring items would include prepayment penalties, lease termination fees, late fees, unexpected bankruptcies and other normal but difficult to project items. It has been and will continue to be the Company's policy to not issue quarterly earnings guidance or revise the annual earnings outlook unless such estimates are outside of the original annual outlook range. This policy is intended to lessen the emphasis on short term movements that do not have a material impact on earnings or value of the Company.
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The Company is forecasting FFO per diluted share of $4.00 to $4.20 and EPS of $0.00 to $0.10 for 2008.
Guidance for 2008 Range
Fully diluted EPS $0.00-$0.10
Plus: Real estate depreciation and amortization $4.75-$4.87
Plus: Depreciation on unconsolidated joint ventures $0.03-$0.04
Less: Minority interest depreciation and amortization ($0.78-$0.81)
Fully diluted FFO per share $4.00-$4.20
The 2008 earnings outlook is based on the core operating assumptions and capital activity assumptions described below. These assumptions reflect the Company's expectations based on its knowledge of current market conditions and its experience.
Core Operating Assumptions
— An average occupancy for the first and second half of the year of 92.3%
and 93.5%, respectively, with average annual occupancy of 92.9%.
— Same store net operating income growth of 2% to 4% on a GAAP basis. On
a cash basis, annual same store net operating income is expected to
increase by 3% to 5%.
— Average interest rate on non-hedged floating rate debt of 6.2%.
Average interest rate of 5.6% on $60 million in hedged debt through
December 31, 2008, and 6.2% on $30 million in hedged debt through
August 31, 2008.
— Net general and administrative expenses are expected to be in the range
of $7.4 to $7.8 million.
2008 Capital Activity Assumptions
— No fee simple acquisitions are included in the earnings outlook for
2008.
— Construction for The Pinnacle at Jackson Place is scheduled to be
completed in December 2008. No incremental FFO has been included in
the earnings outlook from this asset.
— No sales or joint ventures of wholly-owned properties are included in
the earnings outlook for 2008. However, the Company expects to
continue to pursue the GEAR UP disposition strategy that has been
outlined previously and will provide further information at such time
as a sale or joint venture is closed as to the impact on the earnings
outlook.
— The sale or joint venture of One and Two Illinois Center in Chicago,
Illinois, is not included in the earnings outlook for 2008. Parkway
engaged Holliday Fenoglio Fowler, L.P. to market the Chicago assets,
which is expected to officially launch in January 2008.
— No additional purchases of Company stock are included in the earnings
outlook for 2008.
— New investments for the discretionary fund totaling $214 million to be
completed by July 2008, all at an average acquisition capitalization
rate of 7% on the assets and 9% to Parkway when including various
recurring fees.
— Based on the 11/23/2007 closing stock price of $39.27, the Company's
debt to total market capitalization is expected to range from 55% to
57% throughout 2008.
Subsequent to September 30, 2007, the Company has purchased 176,997 shares of its outstanding common stock for $7.0 million, which equates to an average price of $39.50 per share. During 2007, a total of 631,035 shares have been purchased at a total price of $26.9 million, which equates to an average price of $42.67 per share under the 1.7 million share authorization approved by the Board of Directors on August 3, 2007.
Subsequent to September 30, 2007, 10 new leases were signed on 27,000 square feet in addition to renewals and expansions of 231,000 square feet. These renewals include three leases totaling 98,500 square feet which were due to expire in 2008 including 43,700 square feet in Memphis, Tennessee and 54,800 in Houston, Texas.
Parkway will host a 2008 Earnings Outlook conference call on Monday, November 26, 2007, at 3:00 p.m. Eastern Time. The number for the conference call is 888-819-8015. A taped replay of the 2008 earnings guidance conference call can be accessed 24 hours a day through December 3, 2007 by dialing 888-203-1112 and using the pass code of 9968643.
On January 1, 2006, the Company initiated a new operating plan that will be referred to as the “GEAR UP” Plan. At the heart of the GEAR UP Plan are Great People transforming Parkway through Equity Opportunities and Asset Recycling from an owner-operator to an operator-owner. Our long-standing commitment to Retain our Customers and provide an Uncompromising Focus on Operations remains steadfast. We believe that by accomplishing these goals we can deliver excellent Performance to our shareholders. Performance for the GEAR UP Plan will be measured as the sum of adjusted funds available for distribution, as defined by the Company, cumulative over the three years of the plan. The goal for cumulative adjusted funds available for distribution is $7.18 per diluted share.
Parkway Properties, Inc., a member of the S&P Small Cap 600 Index, is a self-administered real estate investment trust specializing in the operation, leasing, acquisition, and ownership of office properties. The Company is geographically focused on the Southeastern and Southwestern United States and Chicago. Parkway owns or has an interest in 66 office properties located in 11 states with an aggregate of approximately 13.0 million square feet of leasable space as of November 26, 2007. Included in the portfolio are 18 properties totaling 2.7 million square feet that are owned jointly with other investors, representing 21% of the portfolio. Under the Company's GEAR UP Plan, which started January 1, 2006 and ends December 31, 2008, it is the Company's strategy to transform from an owner-operator to an operator-owner. The strategy highlights the Company's strength in providing excellent service in the operation of office properties in addition to its direct ownership of real estate assets. Fee-based real estate services are offered through the Company's wholly owned subsidiary, Parkway Realty Services, which also manages and/or leases approximately 1.8 million square feet for third party owners as of November 26, 2007.
Parkway Properties, Inc.'s press releases and additional information about the Company are available on the World Wide Web at www.pky.com.
Certain statements in this release that are not in the present tense or discuss the Company's expectations (including the use of the words anticipate, forecast or project) are forward-looking statements within the meaning of the federal securities laws and as such are based upon the Company's current belief as to the outcome and timing of future events. There can be no assurance that future developments affecting the Company will be those anticipated by the Company. These forward-looking statements involve risks and uncertainties (some of which are beyond the control of the Company) and are subject to change based upon various factors, including but not limited to the following risks and uncertainties: changes in the real estate industry and in performance of the financial markets; the demand for and market acceptance of the Company's properties for rental purposes; the amount and growth of the Company's expenses; tenant financial difficulties and general economic conditions, including interest rates, as well as economic conditions in those areas where the Company owns properties; the risks associated with the ownership and development of real property; the failure to acquire or sell properties as and when anticipated; and other risks and uncertainties detailed from time to time on the Company's SEC filings. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, the Company's results could differ materially from those expressed in the forward-looking statements. The Company does not undertake to update forward-looking statements.
CONTACT: STEVEN G. ROGERS
PRESIDENT & CHIEF EXECUTIVE OFFICER
WILLIAM R. FLATT
CHIEF FINANCIAL OFFICER
(601) 948-4091
SOURCE Parkway Properties, Inc.
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