Orlando-based real estate investment trust Parkway Properties Inc. announced this week that they had agreed to acquire Los Angeles-based Thomas Properties Group Inc. in a stock-for-stock transaction valued at $1.2 billion. Under the terms of the merger agreement, Thomas Properties' shareholders will receive 0.3822 shares of newly issued Parkway common stock in exchange for each share of Thomas Properties common stock, for an implied price per share of $6.26 based on Parkway's closing stock price of $16.37 on September 4, 2013. Parkway will assume roughly $752 million of Thomas Properties' pro rata share of in-place secured debt, and provide Thomas Properties with a bridge loan totaling up to $80 million.
James A. Thomas, President and Chief Executive Officer of Thomas Properties, commented, "Our board believes that the combination with Parkway, based upon our relative net asset values, will maximize value for our shareholders, both in the near and long term. We are big believers in Parkway's long-term growth strategy of gaining critical mass with high-quality assets in targeted submarkets throughout the Sunbelt. This combination of Thomas Properties and Parkway delivers to our stockholders increased scale, improved liquidity, a strengthened balance sheet and the tax advantages of a REIT structure."
According to a CoStar report, the merger, which is expected to close in the fourth quarter, includes 14 Thomas Properties office assets totaling 9.8 million square feet, including eight in the fast-growing Austin and Houston markets. The portfolio was 89% occupied as of June 30.
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