Parkway Agrees to Pay $130M for Flagler’s Deerwood Office Portfolio
By Georgiana Mihaila, Associate Editor
Continuing its recent buying spree, Orlando-based Parkway Properties is now moving to purchase a one million-square-foot office portfolio in the Deerwood submarket of Jacksonville, Fla. The company has entered into a purchase and sale agreement to acquire eight office properties from Flagler for $130 million or $128 per square foot.
The eight properties are located in Flagler’s Deerwood North and Deerwood South office parks and have a combined occupancy rate of 93.7 percent with an average in place gross rent of $19.11 per square foot.
Deerwood South contains four Class A buildings totaling 519,221 square feet of office space and ample parking. Its Southside address—10151 Deerwood Park Boulevard—places it 12 miles from the beaches and from downtown Jacksonville. Deerwood South is a two-time TOBY winner for Best Suburban Office Park.
Deerwood North is located in Jacksonville’s corporate growth corridor of Southside Boulevard and J. Turner Butler Boulevard, at 4600 Touchton Road. A winner of NAIOP’s Best Office Development, the office park is comprised of four office buildings totaling nearly 500,000 rentable square feet.
“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,” said James R. Heistand, Parkway’s president and CEO. ”Parkway will have a critical mass in this submarket, owning approximately 29 percent of the total office inventory, which should provide us with operational efficiencies and leasing advantages,” he added.
Parkway expects the portfolio to generate an initial full-year cash net operating income yield of approximately 9 percent. According to an official company release, Parkway will own 100 percent of the portfolio and plans to place secured financing on the properties totaling up to 65 percent of the purchase price simultaneous with closing. 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.