content: <HTML>
  <HEAD>
  <TITLE>UNITED STATES</TITLE>
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  <B><FONT SIZE=2><P>&nbsp;</P>
  </B></FONT><P ALIGN="CENTER">UNITED STATES<BR>
  <BR>
  SECURITIES AND EXCHANGE COMMISSION<BR>
  <BR>
  WASHINGTON, DC  20549<BR>
  </P>
  <CENTER><TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=318 bordercolor="#FFFFFF">
  <TR><TD VALIGN="TOP">
      <hr>
    </TD>
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  </CENTER>
  
  <P ALIGN="CENTER">FORM 8-K<BR>
  <BR>
  <BR>
  CURRENT REPORT<BR>
  <BR>
  <BR>
  Pursuant to Section 13 or 15(d)</P>
  <P ALIGN="CENTER">of the</P>
  <P ALIGN="CENTER">Securities Exchange Act of 1934<BR>
  <BR>
  </P>
  <TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=638 bordercolor="#FFFFFF">
  <TR><TD WIDTH="65%" VALIGN="TOP" COLSPAN=3><DIR>
  <DIR>
  
  <P ALIGN="CENTER">Date of Report (Date earliest event reported):</DIR>
  </DIR>
  </TD>
  <TD WIDTH="35%" VALIGN="TOP" COLSPAN=2>
  <P ALIGN="CENTER">N/A
  <hr>
    </TD>
  </TR>
  <TR><TD VALIGN="TOP" COLSPAN=5><DIR>
  <DIR>
  
  <P ALIGN="CENTER"><A NAME="Check1"></P></DIR>
  </DIR>
  
  <P ALIGN="CENTER"></A><BR>
  Parkway Properties, Inc.
      <hr>
    </TD>
  </TR>
  <TR><TD VALIGN="TOP" COLSPAN=5>
  <P ALIGN="CENTER">(Exact name of registrant as specified in its charter)<BR>
  <BR>
  <BR>
  </TD>
  </TR>
  <TR><TD WIDTH="47%" VALIGN="TOP">
  <P ALIGN="CENTER">Maryland
  <hr>
    </TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="45%" VALIGN="TOP" COLSPAN=3>
  <P ALIGN="CENTER">74-2123597
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="47%" VALIGN="TOP" HEIGHT=18>
  <P ALIGN="CENTER">(State or other jurisdiction of</TD>
  <TD WIDTH="8%" VALIGN="TOP" HEIGHT=18><P></P></TD>
  <TD WIDTH="45%" VALIGN="TOP" COLSPAN=3 HEIGHT=18>
  <P ALIGN="CENTER">(IRS Employer Identification No.)</TD>
  </TR>
  <TR><TD WIDTH="47%" VALIGN="TOP" HEIGHT=18>
  <P ALIGN="CENTER">incorporation or organization)</TD>
  <TD WIDTH="8%" VALIGN="TOP" HEIGHT=18><P></P></TD>
  <TD WIDTH="45%" VALIGN="TOP" COLSPAN=3 HEIGHT=18><P></P></TD>
  </TR>
  <TR><TD WIDTH="47%" VALIGN="TOP" HEIGHT=18><P></P></TD>
  <TD WIDTH="8%" VALIGN="TOP" HEIGHT=18><P></P></TD>
  <TD WIDTH="45%" VALIGN="TOP" COLSPAN=3 HEIGHT=18><P></P></TD>
  </TR>
  <TR><TD VALIGN="TOP" COLSPAN=5 HEIGHT=18>
  <P ALIGN="CENTER">One Jackson Place Suite 1000<BR>
  188 East Capitol Street<BR>
  P. O. Box 24647<BR>
  Jackson, Mississippi 39225-4647
  <hr>
    </TD>
  </TR>
  <TR><TD VALIGN="TOP" COLSPAN=5 HEIGHT=27>
  <P ALIGN="CENTER">(Address of principal executive offices) (Zip Code)<BR>
  <BR>
  </TD>
  </TR>
  <TR><TD WIDTH="68%" VALIGN="TOP" COLSPAN=4 HEIGHT=19>
  <P ALIGN="RIGHT">Registrant's telephone number, including area code </TD>
  <TD WIDTH="32%" VALIGN="TOP" HEIGHT=19>
  <P align="center">(601) 948-4091
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="68%" VALIGN="TOP" COLSPAN=4 HEIGHT=19><P></P></TD>
  <TD WIDTH="32%" VALIGN="TOP" HEIGHT=19><P></P></TD>
  </TR>
  <TR><TD WIDTH="68%" VALIGN="TOP" COLSPAN=4 HEIGHT=19><P></P></TD>
  <TD WIDTH="32%" VALIGN="TOP" HEIGHT=19><P></P></TD>
  </TR>
  <TR><TD WIDTH="68%" VALIGN="TOP" COLSPAN=4 HEIGHT=19><P></P></TD>
  <TD WIDTH="32%" VALIGN="TOP" HEIGHT=19><P></P></TD>
  </TR>
  <TR><TD VALIGN="TOP" COLSPAN=5 HEIGHT=16>
  <P ALIGN="CENTER">(Former name, former address and former fiscal year, if changed since last report)
  <P ALIGN="CENTER">&nbsp;</TD>
  </TR>
  </TABLE>
  
  <FONT FACE="Courier New">
  <hr>
  </FONT><B><P ALIGN="CENTER">FORM 8-K</P>
  <P ALIGN="CENTER">
  PARKWAY PROPERTIES, INC.</P>
  <P ALIGN="JUSTIFY"><BR>
  Item 5.&nbsp;&nbsp;&nbsp;Other Events.</P>
  </B><P ALIGN="JUSTIFY">
  <B>Proposed Purchase:</P>
  </B><P ALIGN="JUSTIFY">
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Parkway Properties, Inc. ("Parkway") has entered into a contract to acquire the fee simple interest in an office building located at 233 North Michigan Avenue and an adjacent, four-level structured parking garage
  ("Chicago Purchase") in Chicago, Illinois for $173,500,000 in cash.  The total purchase price, including closing costs, anticipated first year capital expenditures and leasing commissions, is expected to be $175,050,000.  The building contains 1,067,000
  net rentable square feet which includes office, retail and storage.  </P>
  <P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Chicago Purchase, which is subject to customary due diligence procedures, is expected to close on or about June 22, 2001.  The Company expects to fund the purchase with short-term bank
  borrowings, long-term financing and the issuance of Series B Cumulative Convertible Preferred Stock.</P>
  <P ALIGN="JUSTIFY">
  <B>Item 7.&nbsp;&nbsp;&nbsp;Financial Statements and Exhibits.</P>
  </B><P>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;Financial Statements</P>
  <P ALIGN="JUSTIFY">
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following audited financial statement of the Chicago Purchase for the year ended December 31, 2000 is attached hereto. Also included is the unaudited financial statement for the three months ended March 31,
  2001.</P>
  <TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=631 bordercolor="#FFFFFF">
  <TR><TD WIDTH="92%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">
  <B><P ALIGN="RIGHT">Page</B>
    <hr>
  </TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Report of Independent Auditors</TD>
  <TD WIDTH="8%" VALIGN="TOP">
  <P ALIGN="RIGHT">4</TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Statements of Rental Revenues and Direct Operating Expenses</TD>
  <TD WIDTH="8%" VALIGN="TOP">
  <P ALIGN="RIGHT">5</TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes to Statements of Rental Revenues and Direct Operating Expenses</TD>
  <TD WIDTH="8%" VALIGN="TOP">
  <P ALIGN="RIGHT">6</TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;Pro Forma Consolidated Financial Statements</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following unaudited Pro Forma Consolidated Financial Statements are </TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">
  <P>attached hereto:</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">
  <B><P ALIGN="RIGHT">Page</B>
    <hr>
  </TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">
  <P>Pro Forma Consolidated Financial Statements (Unaudited)</TD>
  <TD WIDTH="8%" VALIGN="TOP">
  <P ALIGN="RIGHT">8</TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">
  <P>Pro Forma Consolidated Balance Sheet (Unaudited) - As of March 31, 2001</TD>
  <TD WIDTH="8%" VALIGN="TOP">
  <P ALIGN="RIGHT">9</TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">
  <P>Pro Forma Consolidated Statement of Income (Unaudited) -</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the Year Ended December 31, 2000</TD>
  <TD WIDTH="8%" VALIGN="TOP">
  <P ALIGN="RIGHT">10</TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">
  <P>Pro Forma Consolidated Statement of Income (Unaudited) -</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the Three Months Ended March 31, 2001</TD>
  <TD WIDTH="8%" VALIGN="TOP">
  <P ALIGN="RIGHT">11</TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">
  <P>Notes to Pro Forma Consolidated Financial Statements (Unaudited)</TD>
  <TD WIDTH="8%" VALIGN="TOP">
  <P ALIGN="RIGHT">12</TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">
      <p ALIGN="RIGHT">&nbsp;</p>
      <p ALIGN="RIGHT">&nbsp;</p>
      <hr>
    </TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;
    <p>&nbsp;</p>
    <hr>
    &nbsp;</TD>
  </TR>
  </TABLE>
  
  <P>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;Exhibits</P>
  <P ALIGN="JUSTIFY"><BR>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10)&nbsp;&nbsp;&nbsp;Purchase and Sale Agreement between TST 233 N. Michigan, L.L.C., a Delaware limited liability company, and Parkway Properties LP, a Delaware limited partnership. Parkway agrees to furnish
  supplementally to the Securities and Exchange Commission on request a copy of any omitted schedule or exhibit to this agreement.</P>
  <hr>
  <B><P ALIGN="CENTER">Report of Independent Auditors</P>
  </B><P ALIGN="JUSTIFY" style="margin-top: 0; margin-bottom: 0"><BR>
  <BR>
  The Board of Directors</P>
  <P ALIGN="JUSTIFY" style="margin-top: 0; margin-bottom: 0">Parkway Properties, Inc.</P>
  <P ALIGN="JUSTIFY">
  We have audited the accompanying statement of rental revenues and direct operating expenses of the Chicago Purchase for the year ended December 31, 2000.  This statement is the responsibility of management.  Our responsibility is to express an opinion on
  this statement based on our audit.</P>
  <P ALIGN="JUSTIFY">
  We conducted our audit in accordance with auditing standards generally accepted in the United States.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of rental revenues and direct
  operating expenses is free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement.  An audit also includes assessing the accounting principles used and significant
  estimates made by management, as well as evaluating the overall statement presentation.  We believe that our audit provides a reasonable basis for our opinion.</P>
  <P ALIGN="JUSTIFY">
  The accompanying statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in a Form 8-K of Parkway Properties, Inc., as described in Note 2, and is not intended to be a
  complete presentation of the Chicago Purchase revenues and expenses. </P>
  <P ALIGN="JUSTIFY">
  In our opinion, the statement of rental revenue and direct operating expenses referred to above presents fairly, in all material respects, the rental revenues and direct operating expenses described in Note 2 of the Chicago Purchase for the year ended
  December 31, 2000, in conformity with accounting principles generally accepted in the United States.</P>
  <P ALIGN="JUSTIFY">
  We have compiled the accompanying statement of rental revenues and direct operating expenses of the Chicago Purchase for the three months ended March 31, 2001 in accordance with the Statement on Standards for Accounting and Review Services issued by the
  American Institute of Certified Public Accountants. A compilation is limited to presenting in the form of a financial statement information that is the representation of management.  We have not audited or reviewed the statement of rental revenues and
  direct operating expenses of the Chicago Purchase for the three months ended March 31, 2001 and, accordingly, do not express an opinion or any other form of assurance on the statement.</P>
  <P style="margin-top: 0; margin-bottom: 0">
  <BR>
  Jackson, Mississippi&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="EYLLP Signature" SIZE=7>ey</P>
  </FONT><P style="margin-top: 0; margin-bottom: 0">June 15, 2001</P>
  <P style="margin-top: 0; margin-bottom: 0">&nbsp;</P>
  <P style="margin-top: 0; margin-bottom: 0">&nbsp;</P>
  <hr>
  <B><P ALIGN="CENTER">The Chicago Purchase<BR>
  <BR>
  Statements of Rental Revenues<BR>
  and Direct Operating Expenses</P>
  </B>
  <CENTER><TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=679 bordercolor="#FFFFFF">
  <TR><TD WIDTH="350" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="129" VALIGN="TOP">
  <B><P ALIGN="CENTER">Year Ended</B></TD>
  <TD WIDTH="142" VALIGN="TOP">
  <B><P ALIGN="CENTER">Three Months Ended</B></TD>
  </TR>
  <TR><TD WIDTH="350" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="129" VALIGN="TOP">
  <B><P ALIGN="CENTER">December 31, 2000</B></TD>
  <TD WIDTH="142" VALIGN="TOP">
  <B><P ALIGN="CENTER">March 31, 2001</B></TD>
  </TR>
  <TR><TD WIDTH="350" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="129" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="142" VALIGN="TOP">
  <P ALIGN="CENTER">(unaudited)</TD>
  </TR>
  <TR><TD WIDTH="350" VALIGN="TOP">
      <hr>
    </TD>
  <TD WIDTH="129" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="142" VALIGN="TOP">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="350" VALIGN="TOP">
  <P>Rental revenue (Note 1):</TD>
  <TD WIDTH="129" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="142" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="350" VALIGN="TOP">
  <P>Minimum rents </TD>
  <TD WIDTH="129" VALIGN="TOP">
  <P ALIGN="RIGHT">$15,958,572</TD>
  <TD WIDTH="142" VALIGN="TOP">
  <P ALIGN="RIGHT">$4,682,647</TD>
  </TR>
  <TR><TD WIDTH="350" VALIGN="TOP">
  <P>Reimbursed charges </TD>
  <TD WIDTH="129" VALIGN="TOP">
  <P ALIGN="RIGHT">4,742,782</TD>
  <TD WIDTH="142" VALIGN="TOP">
  <P ALIGN="RIGHT">2,093,269</TD>
  </TR>
  <TR><TD WIDTH="350" VALIGN="TOP">
  <P>Other income</TD>
  <TD WIDTH="129" VALIGN="TOP">
  <P ALIGN="RIGHT">1,190,387</TD>
  <TD WIDTH="142" VALIGN="TOP">
  <P ALIGN="RIGHT">321,113</TD>
  </TR>
  <tr>
    <TD WIDTH="350" VALIGN="TOP">
      <hr>
    </TD>
  <TD WIDTH="129" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="142" VALIGN="TOP">
  <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="350" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="129" VALIGN="TOP">
  <P ALIGN="RIGHT">21,891,741</TD>
  <TD WIDTH="142" VALIGN="TOP">
  <P ALIGN="RIGHT">7,097,029</TD>
  </TR>
  <TR><TD WIDTH="350" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="129" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="142" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="350" VALIGN="TOP">
  <P>Direct operating expenses (Note 2):</TD>
  <TD WIDTH="129" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="142" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="350" VALIGN="TOP">
  <P>Utilities</TD>
  <TD WIDTH="129" VALIGN="TOP">
  <P ALIGN="RIGHT">1,786,493</TD>
  <TD WIDTH="142" VALIGN="TOP">
  <P ALIGN="RIGHT">486,451</TD>
  </TR>
  <TR><TD WIDTH="350" VALIGN="TOP">
  <P>Real estate taxes</TD>
  <TD WIDTH="129" VALIGN="TOP">
  <P ALIGN="RIGHT">3,566,037</TD>
  <TD WIDTH="142" VALIGN="TOP">
  <P ALIGN="RIGHT">1,507,500</TD>
  </TR>
  <TR><TD WIDTH="350" VALIGN="TOP">
  <P>Maintenance services and supplies</TD>
  <TD WIDTH="129" VALIGN="TOP">
  <P ALIGN="RIGHT">881,381</TD>
  <TD WIDTH="142" VALIGN="TOP">
  <P ALIGN="RIGHT">210,144</TD>
  </TR>
  <TR><TD WIDTH="350" VALIGN="TOP">
  <P>Janitorial services and supplies</TD>
  <TD WIDTH="129" VALIGN="TOP">
  <P ALIGN="RIGHT">1,160,369</TD>
  <TD WIDTH="142" VALIGN="TOP">
  <P ALIGN="RIGHT">346,998</TD>
  </TR>
  <TR><TD WIDTH="350" VALIGN="TOP">
  <P>Management fees</TD>
  <TD WIDTH="129" VALIGN="TOP">
  <P ALIGN="RIGHT">460,666</TD>
  <TD WIDTH="142" VALIGN="TOP">
  <P ALIGN="RIGHT">161,269</TD>
  </TR>
  <TR><TD WIDTH="350" VALIGN="TOP">
  <P>Salaries and wages</TD>
  <TD WIDTH="129" VALIGN="TOP">
  <P ALIGN="RIGHT">1,855,734</TD>
  <TD WIDTH="142" VALIGN="TOP">
  <P ALIGN="RIGHT">468,366</TD>
  </TR>
  <TR><TD WIDTH="350" VALIGN="TOP">
  <P>Administrative and miscellaneous expenses</TD>
  <TD WIDTH="129" VALIGN="TOP">
  <P ALIGN="RIGHT">587,181</TD>
  <TD WIDTH="142" VALIGN="TOP">
  <P ALIGN="RIGHT">156,241</TD>
  </TR>
  <tr>
    <TD WIDTH="350" VALIGN="TOP">
      <hr>
    </TD>
  <TD WIDTH="129" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="142" VALIGN="TOP">
  <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="350" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="129" VALIGN="TOP">
  <P ALIGN="RIGHT">10,297,861</TD>
  <TD WIDTH="142" VALIGN="TOP">
  <P ALIGN="RIGHT">3,336,969</TD>
  </TR>
  <tr>
    <TD WIDTH="350" VALIGN="TOP">
      <hr>
    </TD>
  <TD WIDTH="129" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="142" VALIGN="TOP">
  <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="350" VALIGN="TOP">
  <P>Excess of rental revenue over direct operating expenses</TD>
  <TD WIDTH="129" VALIGN="TOP">
  <P ALIGN="RIGHT">$11,593,880</TD>
  <TD WIDTH="142" VALIGN="TOP">
  <P ALIGN="RIGHT">$3,760,060</TD>
  </TR>
  <tr>
    <TD WIDTH="350" VALIGN="TOP">
      <hr>
    </TD>
  <TD WIDTH="129" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="142" VALIGN="TOP">
  <hr>
    </TD>
  </tr>
  </TABLE>
  </CENTER>
  
  <P>&nbsp;
  </P>
  <P ALIGN="CENTER">See accompanying notes.</P>
  <hr>
  <B><P ALIGN="CENTER">The Chicago Purchase<BR>
  </P>
  <P ALIGN="CENTER">Notes to Statements of Rental Revenues<BR>
  and Direct Operating Expenses<BR>
  </B><BR>
  <B>December 31, 2000</P>
  </B><P><BR>
  <BR>
  <B>1.&nbsp;&nbsp;&nbsp;&nbsp;Organization and Significant Accounting Policies</P>
  </B><P>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Description of Property</P>
  </B><P>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Parkway Properties, Inc. (the "Company") has entered into a contract to acquire the fee simple interest in an office building located at 233 North Michigan Avenue and an adjacent, four-level structured parking
  garage (the "Chicago Purchase") in Chicago, Illinois from an unrelated party.  The Chicago Purchase contains approximately 1,067,000 (unaudited) net rentable square feet which includes office, retail and storage. </P>
  <P ALIGN="JUSTIFY">
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Rental Revenue</P>
  </B><P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Minimum rents from leases are accounted for ratably over the term of each lease.  Tenant reimbursements are recognized as revenue as the applicable services are rendered or expenses incurred.
  </P>
  <P>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The future minimum rents on the Chicago Purchase's non-cancelable operating leases at December 31, 2000 are as follows:<BR>
  </P>
  <CENTER><TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=191 bordercolor="#FFFFFF">
  <TR><TD WIDTH="45%" VALIGN="TOP">
  <B><P ALIGN="CENTER">Year</B></TD>
  <TD WIDTH="55%" VALIGN="TOP">
  <B><P ALIGN="CENTER">Amount</B></TD>
  </TR>
  <TR><TD WIDTH="45%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="55%" VALIGN="TOP">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="45%" VALIGN="TOP">
  <P ALIGN="CENTER">2001</TD>
  <TD WIDTH="55%" VALIGN="TOP">
  <P ALIGN="RIGHT">$&nbsp;&nbsp;18,189,485</TD>
  </TR>
  <TR><TD WIDTH="45%" VALIGN="TOP">
  <P ALIGN="CENTER">2002</TD>
  <TD WIDTH="55%" VALIGN="TOP">
  <P ALIGN="RIGHT">18,703,299</TD>
  </TR>
  <TR><TD WIDTH="45%" VALIGN="TOP">
  <P ALIGN="CENTER">2003</TD>
  <TD WIDTH="55%" VALIGN="TOP">
  <P ALIGN="RIGHT">18,921,767</TD>
  </TR>
  <TR><TD WIDTH="45%" VALIGN="TOP">
  <P ALIGN="CENTER">2004</TD>
  <TD WIDTH="55%" VALIGN="TOP">
  <P ALIGN="RIGHT">18,434,130</TD>
  </TR>
  <TR><TD WIDTH="45%" VALIGN="TOP">
  <P ALIGN="CENTER">2005</TD>
  <TD WIDTH="55%" VALIGN="TOP">
  <P ALIGN="RIGHT">16,245,524</TD>
  </TR>
  <TR><TD WIDTH="45%" VALIGN="TOP">
  <P ALIGN="CENTER">Thereafter</TD>
  <TD WIDTH="55%" VALIGN="TOP">
  <P ALIGN="RIGHT">70,976,217</TD>
  </TR>
  <tr>
    <TD WIDTH="45%" VALIGN="TOP">
  &nbsp;</TD>
  <TD WIDTH="55%" VALIGN="TOP">
  <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="45%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="55%" VALIGN="TOP">
  <P ALIGN="RIGHT">$161,470,422</TD>
  </TR>
  <tr>
    <TD WIDTH="45%" VALIGN="TOP">
  &nbsp;</TD>
  <TD WIDTH="55%" VALIGN="TOP">
  <hr>
    </TD>
  </tr>
  </TABLE>
  </CENTER>
  
  <P ALIGN="JUSTIFY">
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The above amounts do not include tenant reimbursements for utilities, taxes, insurance and common area maintenance.</P>
  <P ALIGN="JUSTIFY">
  <B>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basis of Accounting</P>
  </B><P ALIGN="JUSTIFY">
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accompanying statement of rental revenues and direct operating expenses is presented on the accrual basis.  The statement has been prepared in accordance with the applicable rules and regulations of the
  Securities and Exchange Commission for real estate properties acquired.  Accordingly, the statement excludes certain expenses not comparable to the proposed future operations of the Chicago Purchase such as depreciation and mortgage interest expense.</P>
  <hr>
  <P ALIGN="JUSTIFY">&nbsp;Management is not aware of any material factors relating to the Chicago Purchase that would cause the reported financial information not to be necessarily indicative of future operating results.</P>
  <B><P ALIGN="JUSTIFY">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management Fees</P>
  </B><P ALIGN="JUSTIFY">
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management fees of approximately 2.25% of revenues received from the operations of the Chicago Purchase were paid to an unrelated management company.</P>
  <hr>
  <B><P ALIGN="CENTER">PARKWAY PROPERTIES, INC.</P>
  
  <P ALIGN="CENTER">Pro Forma Consolidated Financial Statements</P>
  </B><P ALIGN="CENTER">(Unaudited)</P>
  <P ALIGN="JUSTIFY"><BR>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following unaudited pro forma consolidated balance sheet as of March 31, 2001 and pro forma consolidated statements of income of Parkway Properties, Inc. ("Parkway") for the year ended December 31, 2000 and
  three months ended March 31, 2001 give effect to the proposed Chicago Purchase. The pro forma consolidated financial statements have been prepared by management of Parkway based upon the historical financial statements of Parkway and the adjustments and
  assumptions in the accompanying notes to the pro forma consolidated financial statements.</P>
  <P ALIGN="JUSTIFY">
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The pro forma consolidated balance sheet sets forth the effect of Parkway's proposed Chicago Purchase including the short-term bank borrowings, placement of non-recourse mortgage debt and the issuance of Series B
  Cumulative Convertible Preferred stock ("Related Financing") as if they had been consummated on March 31, 2001.</P>
  <P ALIGN="JUSTIFY">
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The pro forma consolidated statements of income sets forth the effects of the proposed Chicago Purchase and Related Financing as if each had been consummated on January 1, 2000.  </P>
  <P ALIGN="JUSTIFY">
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These pro forma consolidated financial statements may not be indicative of the results that actually would have occurred if the Chicago Purchase and Related Financing had occurred on the date indicated or which
  may be obtained in the future.  The pro forma consolidated financial statements should be read in conjunction with the consolidated financial statements and notes of Parkway included in its annual report on Form 10-K for the year ended December 31, 2000.</P>
  <FONT FACE="Courier New">
  <hr>
  </FONT><B><P ALIGN="CENTER">PARKWAY PROPERTIES, INC. AND SUBSIDIARIES<BR>
  PRO FORMA CONSOLIDATED BALANCE SHEET<BR>
  March 31, 2001<BR>
  </B>(Unaudited)<B><BR>
  <BR>
  </P></B>
  <P ALIGN="CENTER"><CENTER><TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=650 bordercolor="#FFFFFF">
  <TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <B><P ALIGN="CENTER" style="margin-top: 0; margin-bottom: 0">Parkway</P>
  <P ALIGN="CENTER" style="margin-top: 0; margin-bottom: 0"> Historical</B></TD>
  <TD WIDTH="18%" VALIGN="TOP">
  <B><P ALIGN="CENTER" style="margin-top: 0; margin-bottom: 0">Pro Forma</P>
  <P ALIGN="CENTER" style="margin-top: 0; margin-bottom: 0">Adjustments (1)</B></TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <B><P ALIGN="CENTER" style="margin-top: 0; margin-bottom: 0">Parkway</P>
  <P ALIGN="CENTER" style="margin-top: 0; margin-bottom: 0">Pro Forma</B></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">
  <P ALIGN="CENTER">(In thousands)</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="18%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><P>Assets</B></TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <P>Real estate related investments:</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Office and parking properties</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">$650,787&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">
  <P ALIGN="RIGHT">$175,050&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">$825,837&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated depreciation</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">(62,852)</TD>
  <TD WIDTH="18%" VALIGN="TOP">
  <P ALIGN="RIGHT">-&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">(62,852)</TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="18%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">587,935&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">
  <P ALIGN="RIGHT">175,050&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">762,985&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Land held for sale</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">3,733&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">
  <P ALIGN="RIGHT">-&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">3,733&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Note receivable from Moore Building Associates LP</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">5,458&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">
  <P ALIGN="RIGHT">-&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">5,458&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgage loans</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">882&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">
  <P ALIGN="RIGHT">-&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">882&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Real estate partnership</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">399&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">
  <P ALIGN="RIGHT">-&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">399&nbsp;</TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="18%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">598,407&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">
  <P ALIGN="RIGHT">175,050&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">773,457&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <P>Interest, rents receivable and other assets</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">16,526&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">
  <P ALIGN="RIGHT">-&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">16,526&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <P>Cash and cash equivalents</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">1,719&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">
  <P ALIGN="RIGHT">-&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">1,719&nbsp;</TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="18%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">$616,652&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">
  <P ALIGN="RIGHT">$175,050&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">$791,702&nbsp;</TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="18%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><P>Liabilities</B></TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <P>Notes payable to banks</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">$&nbsp;&nbsp;66,709&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">
  <P ALIGN="RIGHT">$&nbsp;&nbsp;14,050&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">$&nbsp;&nbsp;80,759&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <P>Mortgage notes payable without recourse</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">222,739&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">
  <P ALIGN="RIGHT">106,000&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">328,739&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <P>Accounts payable and other liabilities</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">15,499&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">
  <P ALIGN="RIGHT">-&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">15,499&nbsp;</TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="18%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">304,947&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">
  <P ALIGN="RIGHT">120,050&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">424,997&nbsp;</TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="18%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><P>Stockholders' Equity</B></TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <P>8.75% Series A Preferred stock, $.001 par value,</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,750,000 shares authorized and 2,650,000 shares</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;issued and outstanding </TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">66,250&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">
  <P ALIGN="RIGHT">-&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">66,250&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <P>8.34% Series B Cumulative Convertible Preferred</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;stock, $.001 par value, 2,142,857 shares</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;authorized and 1,603,499 shares issued and</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;outstanding (pro forma)</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">-&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">
  <P ALIGN="RIGHT">56,122&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">56,122&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <P>Common stock, $.001 par value, 67,250,000 shares</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;authorized, 9,312,002 shares issued and outstanding</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">9&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">
  <P ALIGN="RIGHT">-&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">9&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <P>Additional paid-in capital</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">200,615&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">
  <P ALIGN="RIGHT">(1,122)</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">199,493&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <P>Unearned compensation</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">(3,164)</TD>
  <TD WIDTH="18%" VALIGN="TOP">
  <P ALIGN="RIGHT">-&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">(3,164)</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <P>Accumulated other comprehensive loss</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">(709)</TD>
  <TD WIDTH="18%" VALIGN="TOP">
  <P ALIGN="RIGHT">-&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">(709)</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <P>Retained earnings</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">48,704&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">
  <P ALIGN="RIGHT">-&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">48,704&nbsp;</TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="18%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">311,705&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">
  <P ALIGN="RIGHT">55,000&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">366,705&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">$616,652&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP">
  <P ALIGN="RIGHT">$175,050&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <P ALIGN="RIGHT">$791,702&nbsp;</TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="18%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  </TABLE>
  </CENTER>
  
  <P ALIGN="CENTER"><BR>
  <BR>
  See accompanying notes </P>
    <hr>
  <B><FONT SIZE=2><P ALIGN="CENTER">PARKWAY PROPERTIES, INC. AND SUBSIDIARIES<BR>
  PRO FORMA CONSOLIDATED STATEMENT OF INCOME<BR>
  FOR THE YEAR ENDED DECEMBER 31, 2000<BR>
  </FONT>
  </B><FONT SIZE=2>(Unaudited)<BR>
  </P></FONT>
  <P ALIGN="CENTER"><CENTER><TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=613 bordercolor="#FFFFFF">
  <TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <B><FONT SIZE=2><P ALIGN="CENTER" style="margin-top: 0; margin-bottom: 0">Parkway </P>
  <P ALIGN="CENTER" style="margin-top: 0; margin-bottom: 0">Historical</B></FONT></TD>
  <TD WIDTH="18%" VALIGN="TOP" COLSPAN=2>
  <B><FONT SIZE=2><P ALIGN="CENTER" style="margin-top: 0; margin-bottom: 0">Pro Forma</P>
  <P ALIGN="CENTER" style="margin-top: 0; margin-bottom: 0">Adjustments (2)</B></FONT></TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <B><FONT SIZE=2><P ALIGN="CENTER" style="margin-top: 0; margin-bottom: 0">Parkway</P>
  <P ALIGN="CENTER" style="margin-top: 0; margin-bottom: 0">Pro Forma</B></FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="43%" VALIGN="TOP" COLSPAN=4>
  <FONT SIZE=2><P ALIGN="CENTER">(In thousands, except per share data)</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Revenues</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Income from office and parking  properties</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$118,970&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$  21,892&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">
  <FONT SIZE=2><P>(a)</FONT></TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$140,862&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Dividend income</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">1,205&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">1,205&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Management company income</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">922&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">922&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Interest on note receivable from Moore Building Associates LP</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">805&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">805&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Incentive management fee from Moore Building Associates LP</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">191&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">191&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Interest on investments</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">216&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">216&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Interest on mortgage loans</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">90&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">90&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Deferred gains and other income</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">125&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">125&nbsp;</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">122,524&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">21,892&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">144,416&nbsp;</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Expenses</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Office and parking properties:</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating expense</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">49,397&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">10,298&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">
  <FONT SIZE=2><P>(a)</FONT></TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">59,695&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense:</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contractual</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">16,195&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">7,802&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">
  <FONT SIZE=2><P>(c)</FONT></TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">23,997&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of loan costs</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">176&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">176&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">19,651&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">3,939&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">
  <FONT SIZE=2><P>(a)</FONT></TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">23,590&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Operating expense for other real estate properties</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">60&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">60&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Interest expense on bank notes:</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contractual</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">6,389&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">913&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">
  <FONT SIZE=2><P>(d)</FONT></TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">7,302&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of loan costs</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">538&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">538&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Management company expenses</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">738&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">738&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>General and administrative</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">3,951&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">3,951&nbsp;</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">97,095&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">22,952&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">120,047&nbsp;</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Income before gains and minority interest</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">25,429&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">(1,060)</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">24,369&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Gains on sales of real estate held for sale and </FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;real estate equity securities</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">9,471&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">9,471&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Minority interest - unit holders</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">(4)</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">(4)</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Net income</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">34,896&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">(1,060)</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">33,836&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Dividends on preferred stock</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">5,797&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">4,681&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">
  <FONT SIZE=2><P>(e)</FONT></TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">10,478&nbsp;</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Net income available to common stockholders</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">29,099&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">(5,741)</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">23,358&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Other comprehensive income - change in unrealized</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;gain on real estate equity securities</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">821&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">821&nbsp;</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Comprehensive income</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;29,920&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$ (5,741)</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;24,179&nbsp;</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Net income per common share:</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.96&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$     (.58)</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.38&nbsp;</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>Diluted</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.93&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">   $     (.58)</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.35&nbsp;</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Dividends per common share:</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.12&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.12&nbsp;</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>Diluted</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.12&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.12&nbsp;</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Weighted average shares outstanding:</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">9,825&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">9,825&nbsp;</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>Diluted</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">9,926&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">9,926&nbsp;</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  </TABLE>
  </CENTER>
  
  <P ALIGN="CENTER"><BR>
  See accompanying notes.</P>
  <hr>
  <B><FONT SIZE=2><P ALIGN="CENTER">PARKWAY PROPERTIES, INC. AND SUBSIDIARIES<BR>
  PRO FORMA CONSOLIDATED STATEMENT OF INCOME<BR>
  FOR THE THREE MONTHS ENDED MARCH 31, 2001<BR>
  </FONT>
  </B><FONT SIZE=2>(Unaudited)</P></FONT>
  <P ALIGN="CENTER"><CENTER><TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=613 bordercolor="#FFFFFF">
  <TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <B><FONT SIZE=2><P ALIGN="CENTER" style="margin-top: 0; margin-bottom: 0">Parkway </P>
  <P ALIGN="CENTER" style="margin-top: 0; margin-bottom: 0">Historical</B></FONT></TD>
  <TD WIDTH="18%" VALIGN="TOP" COLSPAN=2>
  <B><FONT SIZE=2><P ALIGN="CENTER" style="margin-top: 0; margin-bottom: 0">Pro Forma</P>
  <P ALIGN="CENTER" style="margin-top: 0; margin-bottom: 0">Adjustments (2)</B></FONT></TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <B><FONT SIZE=2><P ALIGN="CENTER" style="margin-top: 0; margin-bottom: 0">Parkway</P>
  <P ALIGN="CENTER" style="margin-top: 0; margin-bottom: 0">Pro Forma</B></FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="43%" VALIGN="TOP" COLSPAN=4>
  <FONT SIZE=2><P ALIGN="CENTER">(In thousands, except per share data)</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Revenues</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Income from office and parking  properties</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$29,859&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;7,097&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">
  <FONT SIZE=2><P>(b)</FONT></TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$36,956&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Dividend income</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">495&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">495&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Management company income</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">186&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">186&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Interest on note receivable from Moore Building Associates LP</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">230&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">230&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Incentive management fee from Moore Building Associates LP</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">61&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">61&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Interest on investments</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">25&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">25&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Interest on mortgage loans</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">23&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">23&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Deferred gains and other income</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">30&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">30&nbsp;</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">30,909&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">7,097&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">38,006&nbsp;</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Expenses</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Office and parking properties:</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating expense</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">12,518&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">3,337</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">
  <FONT SIZE=2><P>(b)</FONT></TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">15,855&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense:</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contractual</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">4,192&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">1,950</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">
  <FONT SIZE=2><P>(c)</FONT></TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">6,142&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of loan costs</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">50&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">50&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">5,184&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">985</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">
  <FONT SIZE=2><P>(b)</FONT></TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">6,169&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Operating expense for other real estate properties</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">9&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">9&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Interest expense on bank notes:</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contractual</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">1,396&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">228</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">
  <FONT SIZE=2><P>(d)</FONT></TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">1,624&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of loan costs</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">155&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">155&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Management company expenses</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">31&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">31&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>General and administrative</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">1,118&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">1,118&nbsp;</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">24,653&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">6,500&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">31,153&nbsp;</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Income before gains and minority interest</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">6,256&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">597&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">6,853&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Net gains real estate held for sale, office property</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and real estate equity securities</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">1,611&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">1,611&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Minority interest - unit holders</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">(1)</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">(1)</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Net income</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">7,866&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">597&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">8,463&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Dividends on preferred stock</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">1,449&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">1,170&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">
  <FONT SIZE=2><P>(e)</FONT></TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">2,619&nbsp;</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Net income available to common stockholders</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">6,417&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">(573)</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">5,844&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Other comprehensive income</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Change in unrealized gain on real estate equity securities</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">(821)</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">(821)</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Change in market value of interest rate swap</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">(709)</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">(709)</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Comprehensive income</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;4,887&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;(573)</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;4,314&nbsp;</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Net income per common share:</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;0.68&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;0.06&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;0.62&nbsp;</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>Diluted</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;0.67&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;0.06&nbsp;</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;0.61&nbsp;</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Dividends per common share:</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;0.56&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;0.56&nbsp;</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>Diluted</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;0.56&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;0.56&nbsp;</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Weighted average shares outstanding:</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">9,425&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">9,425&nbsp;</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>Diluted</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">9,521&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">9,521&nbsp;</FONT></TD>
  </TR>
  <tr>
    <TD WIDTH="57%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="5%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP">
    <hr>
    </TD>
  </tr>
  </TABLE>
  </CENTER>
  
  <FONT SIZE=2><P ALIGN="CENTER"><BR>
  See accompanying notes.</P>
  <hr>
  <P ALIGN="CENTER">&nbsp;</P>
  </FONT><B><P ALIGN="CENTER">PARKWAY PROPERTIES, INC.<BR>
  Notes to Pro Forma Consolidated Financial Statements<BR>
  </B>(Unaudited)<B><BR>
  <BR>
  </P>
  </B><P ALIGN="JUSTIFY">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company announced  it has entered into a contract to acquire the fee simple interest in an office building located at 233 North Michigan Avenue and an adjacent, four-level structured
  parking garage (the "Chicago Purchase") in Chicago, Illinois for $173,500,000.  The total purchase price, including closing costs, anticipated first year capital expenditures and leasing commissions, is expected to be approximately $175,050,000.</P>
  <P ALIGN="JUSTIFY">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The pro forma adjustments to the Consolidated Statement of Income for the year ended December 31, 2000 and three months ended March 31, 2001 set forth the effects of the proposed Chicago
  Purchase as if it had been consummated on January 1, 2000.  </P>
  <P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These pro forma adjustments are detailed below for the year ended December 31, 2000 and three months ended March 31, 2001.</P>
  <P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The effect on income and expenses from real estate properties due to the above purchase is as follows:</P>
  
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (a)&nbsp;&nbsp;&nbsp;For the year ended December 31, 2000:</P>
  
  <TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=638 bordercolor="#FFFFFF">
  <TR><TD WIDTH="27%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="23%" VALIGN="TOP">
  <B><P ALIGN="CENTER">Revenue</B></TD>
  <TD WIDTH="50%" VALIGN="TOP" COLSPAN=2>
  <B><P ALIGN="CENTER">Expenses</B></TD>
  </TR>
  <TR><TD WIDTH="27%" VALIGN="TOP">
      <hr>
    </TD>
  <TD WIDTH="23%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="50%" VALIGN="TOP" COLSPAN=2>
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="27%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="23%" VALIGN="TOP">
  <B><P ALIGN="CENTER">Income From</B></TD>
  <TD WIDTH="50%" VALIGN="TOP" COLSPAN=2>
  <B><P ALIGN="CENTER">Real Estate Owned</B></TD>
  </TR>
  <TR><TD WIDTH="27%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="23%" VALIGN="TOP">
  <B><P ALIGN="CENTER">Real Estate</B></TD>
  <TD WIDTH="25%" VALIGN="TOP">
  <B><P ALIGN="CENTER">Operating</B></TD>
  <TD WIDTH="25%" VALIGN="TOP">
  <B><P ALIGN="CENTER">Depreciation</B></TD>
  </TR>
  <TR><TD WIDTH="27%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="23%" VALIGN="TOP">
  <B><P ALIGN="CENTER">Properties</B></TD>
  <TD WIDTH="25%" VALIGN="TOP">
  <B><P ALIGN="CENTER">Expense</B></TD>
  <TD WIDTH="25%" VALIGN="TOP">
  <B><P ALIGN="CENTER">Expense</B></TD>
  </TR>
  <TR><TD WIDTH="27%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="23%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="25%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="25%" VALIGN="TOP">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="27%" VALIGN="TOP">
  <P ALIGN="CENTER">Chicago Purchase</TD>
  <TD WIDTH="23%" VALIGN="TOP">
  <P ALIGN="CENTER">$21,892,000</TD>
  <TD WIDTH="25%" VALIGN="TOP">
  <P ALIGN="CENTER">$10,298,000</TD>
  <TD WIDTH="25%" VALIGN="TOP">
  <P ALIGN="CENTER">$ 3,939,000</TD>
  </TR>
  </TABLE>
  
  <P ALIGN="JUSTIFY"><BR>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation is provided by the straight-line method over the estimated useful life of the building (40 years).</P>
  <P>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;For the three months ended March 31, 2001:<BR>
  </P>
  <TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=638 bordercolor="#FFFFFF">
  <TR><TD WIDTH="27%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="23%" VALIGN="TOP">
  <B><P ALIGN="CENTER">Revenue</B></TD>
  <TD WIDTH="50%" VALIGN="TOP" COLSPAN=2>
  <B><P ALIGN="CENTER">Expenses</B></TD>
  </TR>
  <tr>
    <TD WIDTH="27%" VALIGN="TOP">
      <hr>
    </TD>
  <TD WIDTH="23%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="50%" VALIGN="TOP" COLSPAN=2>
  <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="27%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="23%" VALIGN="TOP">
  <B><P ALIGN="CENTER">Income From</B></TD>
  <TD WIDTH="50%" VALIGN="TOP" COLSPAN=2>
  <B><P ALIGN="CENTER">Real Estate Owned</B></TD>
  </TR>
  <TR><TD WIDTH="27%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="23%" VALIGN="TOP">
  <B><P ALIGN="CENTER">Real Estate</B></TD>
  <TD WIDTH="25%" VALIGN="TOP">
  <B><P ALIGN="CENTER">Operating</B></TD>
  <TD WIDTH="25%" VALIGN="TOP">
  <B><P ALIGN="CENTER">Depreciation</B></TD>
  </TR>
  <TR><TD WIDTH="27%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="23%" VALIGN="TOP">
  <B><P ALIGN="CENTER">Properties</B></TD>
  <TD WIDTH="25%" VALIGN="TOP">
  <B><P ALIGN="CENTER">Expense</B></TD>
  <TD WIDTH="25%" VALIGN="TOP">
  <B><P ALIGN="CENTER">Expense</B></TD>
  </TR>
  <tr>
    <TD WIDTH="27%" VALIGN="TOP">
      <hr>
    </TD>
  <TD WIDTH="23%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="50%" VALIGN="TOP" COLSPAN=2>
  <hr>
    </TD>
  </tr>
  <TR><TD WIDTH="27%" VALIGN="TOP">
  <P ALIGN="CENTER">Chicago Purchase</TD>
  <TD WIDTH="23%" VALIGN="TOP">
  <P ALIGN="CENTER">$7,097,000</TD>
  <TD WIDTH="25%" VALIGN="TOP">
  <P ALIGN="CENTER">$3,337,000</TD>
  <TD WIDTH="25%" VALIGN="TOP">
  <P ALIGN="CENTER">$985,000</TD>
  </TR>
  </TABLE>
  
  
  <P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation is provided by the straight-line method over the estimated useful life of the building (40 years).</P>
  <hr>
  <P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;Pro forma interest expense on real estate owned reflects the non-recourse debt placed upon purchase at the actual amount and rate as if placed January 1, 2000 and is
  detailed below.<BR>
  </P>
  <CENTER><TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=564 bordercolor="#FFFFFF">
  <TR><TD WIDTH="28%" VALIGN="TOP">
  <B><P ALIGN="CENTER">Property/Placement</B></TD>
  <TD WIDTH="23%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="20%" VALIGN="TOP">
  <B><P ALIGN="CENTER">Year Ended</B></TD>
  <TD WIDTH="29%" VALIGN="TOP">
  <B><P ALIGN="CENTER">Three Months Ended</B></TD>
  </TR>
  <TR><TD WIDTH="28%" VALIGN="TOP">
  <B><P ALIGN="CENTER">Date/Rate</B></TD>
  <TD WIDTH="23%" VALIGN="TOP">
  <B><P ALIGN="CENTER">Debt</B></TD>
  <TD WIDTH="20%" VALIGN="TOP">
  <B><P ALIGN="CENTER">12/31/00</B></TD>
  <TD WIDTH="29%" VALIGN="TOP">
  <B><P ALIGN="CENTER">3/31/01</B></TD>
  </TR>
  <TR><TD WIDTH="28%" VALIGN="TOP">
  <hr>
    </TD>
  <TD WIDTH="23%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="20%" VALIGN="TOP">
    <hr>
    </TD>
  <TD WIDTH="29%" VALIGN="TOP">
    <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="28%" VALIGN="TOP">
  <P ALIGN="CENTER">Chicago Purchase</TD>
  <TD WIDTH="23%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="20%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="29%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="28%" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6/01&nbsp;&nbsp;&nbsp;7.36%</TD>
  <TD WIDTH="23%" VALIGN="TOP">
  <P ALIGN="CENTER">$106,000,000</TD>
  <TD WIDTH="20%" VALIGN="TOP">
  <P ALIGN="CENTER">$7,802,000</TD>
  <TD WIDTH="29%" VALIGN="TOP">
  <P ALIGN="CENTER">$1,950,000</TD>
  </TR>
  </TABLE>
  </CENTER>
  
  
  <P ALIGN="JUSTIFY">
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;The pro forma effect of the Chicago Purchase on interest expense on notes payable to banks was $913,000 for the year ended December 31, 2000 and $228,000 for the three months ended March 31,
  2001.</P>
  <P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;The pro forma effect of the issuance of 1,603,499 shares of 8.34% Series B Cumulative Convertible Preferred stock on dividends on preferred stock was $4,681,000 for the
  year ended December 31, 2000 and $1,170,000 for the three months ended March 31, 2001.</P>
  <P ALIGN="JUSTIFY">
  3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The pro forma net income per share for the year ended December 31, 2000 and the three months ended March 31, 2001 reflect the issuance of 1,603,499 shares of 8.34% Series B Cumulative Convertible Preferred stock.
  </P>
  <P ALIGN="JUSTIFY">
  4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No additional income tax expenses were provided because of the Company's net operating loss carryover and status as a
  REIT.</P>
  <P ALIGN="JUSTIFY">
  5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted net income per share for the year ended December 31, 2000 and three months ended March 31, 2001 were $2.93 and $.67, respectively, based on diluted weighted average shares outstanding of 9,926,000 and
  9,521,000, respectively. </P>
  <P ALIGN="JUSTIFY">
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pro Forma diluted net income per share for the year ended December 31, 2000 and the three months ended March 31, 2001 were $2.35 and $.61, respectively, based on pro forma diluted weighted
  average shares outstanding of 9,926,000 and 9,521,000, respectively.</P>
  <hr>
  <B><P ALIGN="CENTER">FORM 8-K<BR>
  <BR>
  PARKWAY PROPERTIES, INC.<BR>
  <BR>
  SIGNATURES<BR>
  <BR>
  </P>
  </B><P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.</P>
  <P ALIGN="JUSTIFY"><BR>
  </P>
  <TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=631 bordercolor="#FFFFFF">
  <TR><TD WIDTH="51%" VALIGN="TOP">
  <P>DATE:&nbsp;&nbsp;&nbsp;June 21, 2001</TD>
  <TD WIDTH="49%" VALIGN="TOP" COLSPAN=2>
  <P>PARKWAY PROPERTIES, INC.</TD>
  </TR>
  <TR><TD WIDTH="51%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="42%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="51%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="42%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="51%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="42%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="51%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">
  <P>BY:</TD>
  <TD WIDTH="42%" VALIGN="TOP">
  <P>/s/&nbsp;Regina P. Shows
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="51%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="42%" VALIGN="TOP">
  <P>Regina P. Shows, CPA</TD>
  </TR>
  <TR><TD WIDTH="51%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="42%" VALIGN="TOP">
  <P>Chief Accounting Officer</TD>
  </TR>
  <TR><TD WIDTH="51%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="42%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="51%" VALIGN="TOP">
      <hr>
      &nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">
    <hr>
    &nbsp;</TD>
  <TD WIDTH="42%" VALIGN="TOP">
    <hr>
    &nbsp;</TD>
  </TR>
  <TR><TD WIDTH="51%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="42%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  </TABLE>
  
  <P><BR>
  </P></BODY>
  </HTML>
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metadata_filer: {"company-data": {"conformed-name": "PARKWAY PROPERTIES INC", "cik": "0000729237", "assigned-sic": "6798", "irs-number": "742123597", "state-of-incorporation": "MD", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-11533", "film-number": "1664577"}, "business-address": {"street1": "ONE JACKSON PL", "street2": "188 E CAPITOL ST STE 1000", "city": "JACKSON", "state": "MS", "zip": "39225-4647", "phone": "6019484091"}, "mail-address": {"street1": "ONE JACKSON PL P O BOX 24647", "street2": "188 E CAPITOL ST STE 1000", "city": "JACKSON", "state": "MS", "zip": "39225"}, "former-company": {"former-conformed-name": "PARKWAY CO", "date-changed": "19951018"}}
text: UNITED STATES
  UNITED STATES
  SECURITIES AND EXCHANGE COMMISSION
  WASHINGTON, DC  20549
  FORM 8-K
  CURRENT REPORT
  Pursuant to Section 13 or 15(d)
  of the
  Securities Exchange Act of 1934
  Date of Report (Date earliest event reported):
  N/A
  Parkway Properties, Inc.
  (Exact name of registrant as specified in its charter)
  Maryland
  74-2123597
  (State or other jurisdiction of
  (IRS Employer Identification No.)
  incorporation or organization)
  One Jackson Place Suite 1000
  188 East Capitol Street
  P. O. Box 24647
  Jackson, Mississippi 39225-4647
  (Address of principal executive offices) (Zip Code)
  Registrant's telephone number, including area code
  (601) 948-4091
  (Former name, former address and former fiscal year, if changed since last report)
  FORM 8-K
  PARKWAY PROPERTIES, INC.
  Item 5.   Other Events.
  Proposed Purchase:
  Parkway Properties, Inc. ("Parkway") has entered into a contract to acquire the fee simple interest in an office building located at 233 North Michigan Avenue and an adjacent, four-level structured parking garage
  ("Chicago Purchase") in Chicago, Illinois for $173,500,000 in cash.  The total purchase price, including closing costs, anticipated first year capital expenditures and leasing commissions, is expected to be $175,050,000.  The building contains 1,067,000
  net rentable square feet which includes office, retail and storage.
  The Chicago Purchase, which is subject to customary due diligence procedures, is expected to close on or about June 22, 2001.  The Company expects to fund the purchase with short-term bank
  borrowings, long-term financing and the issuance of Series B Cumulative Convertible Preferred Stock.
  Item 7.   Financial Statements and Exhibits.
  (a)   Financial Statements
  The following audited financial statement of the Chicago Purchase for the year ended December 31, 2000 is attached hereto. Also included is the unaudited financial statement for the three months ended March 31,
  2001.
  Page
  Report of Independent Auditors
  4
  Statements of Rental Revenues and Direct Operating Expenses
  5
  Notes to Statements of Rental Revenues and Direct Operating Expenses
  6
  (b)   Pro Forma Consolidated Financial Statements
  The following unaudited Pro Forma Consolidated Financial Statements are
  attached hereto:
  Page
  Pro Forma Consolidated Financial Statements (Unaudited)
  8
  Pro Forma Consolidated Balance Sheet (Unaudited) - As of March 31, 2001
  9
  Pro Forma Consolidated Statement of Income (Unaudited) -
  For the Year Ended December 31, 2000
  10
  Pro Forma Consolidated Statement of Income (Unaudited) -
  For the Three Months Ended March 31, 2001
  11
  Notes to Pro Forma Consolidated Financial Statements (Unaudited)
  12
  (c)   Exhibits
  (10)   Purchase and Sale Agreement between TST 233 N. Michigan, L.L.C., a Delaware limited liability company, and Parkway Properties LP, a Delaware limited partnership. Parkway agrees to furnish
  supplementally to the Securities and Exchange Commission on request a copy of any omitted schedule or exhibit to this agreement.
  Report of Independent Auditors
  The Board of Directors
  Parkway Properties, Inc.
  We have audited the accompanying statement of rental revenues and direct operating expenses of the Chicago Purchase for the year ended December 31, 2000.  This statement is the responsibility of management.  Our responsibility is to express an opinion on
  this statement based on our audit.
  We conducted our audit in accordance with auditing standards generally accepted in the United States.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of rental revenues and direct
  operating expenses is free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement.  An audit also includes assessing the accounting principles used and significant
  estimates made by management, as well as evaluating the overall statement presentation.  We believe that our audit provides a reasonable basis for our opinion.
  The accompanying statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in a Form 8-K of Parkway Properties, Inc., as described in Note 2, and is not intended to be a
  complete presentation of the Chicago Purchase revenues and expenses.
  In our opinion, the statement of rental revenue and direct operating expenses referred to above presents fairly, in all material respects, the rental revenues and direct operating expenses described in Note 2 of the Chicago Purchase for the year ended
  December 31, 2000, in conformity with accounting principles generally accepted in the United States.
  We have compiled the accompanying statement of rental revenues and direct operating expenses of the Chicago Purchase for the three months ended March 31, 2001 in accordance with the Statement on Standards for Accounting and Review Services issued by the
  American Institute of Certified Public Accountants. A compilation is limited to presenting in the form of a financial statement information that is the representation of management.  We have not audited or reviewed the statement of rental revenues and
  direct operating expenses of the Chicago Purchase for the three months ended March 31, 2001 and, accordingly, do not express an opinion or any other form of assurance on the statement.
  Jackson, Mississippi
  ey
  June 15, 2001
  The Chicago Purchase
  Statements of Rental Revenues
  and Direct Operating Expenses
  Year Ended
  Three Months Ended
  December 31, 2000
  March 31, 2001
  (unaudited)
  Rental revenue (Note 1):
  Minimum rents
  $15,958,572
  $4,682,647
  Reimbursed charges
  4,742,782
  2,093,269
  Other income
  1,190,387
  321,113
  21,891,741
  7,097,029
  Direct operating expenses (Note 2):
  Utilities
  1,786,493
  486,451
  Real estate taxes
  3,566,037
  1,507,500
  Maintenance services and supplies
  881,381
  210,144
  Janitorial services and supplies
  1,160,369
  346,998
  Management fees
  460,666
  161,269
  Salaries and wages
  1,855,734
  468,366
  Administrative and miscellaneous expenses
  587,181
  156,241
  10,297,861
  3,336,969
  Excess of rental revenue over direct operating expenses
  $11,593,880
  $3,760,060
  See accompanying notes.
  The Chicago Purchase
  Notes to Statements of Rental Revenues
  and Direct Operating Expenses
  December 31, 2000
  1.    Organization and Significant Accounting Policies
  Description of Property
  Parkway Properties, Inc. (the "Company") has entered into a contract to acquire the fee simple interest in an office building located at 233 North Michigan Avenue and an adjacent, four-level structured parking
  garage (the "Chicago Purchase") in Chicago, Illinois from an unrelated party.  The Chicago Purchase contains approximately 1,067,000 (unaudited) net rentable square feet which includes office, retail and storage.
  Rental Revenue
  Minimum rents from leases are accounted for ratably over the term of each lease.  Tenant reimbursements are recognized as revenue as the applicable services are rendered or expenses incurred.
  The future minimum rents on the Chicago Purchase's non-cancelable operating leases at December 31, 2000 are as follows:
  Year
  Amount
  2001
  $  18,189,485
  2002
  18,703,299
  2003
  18,921,767
  2004
  18,434,130
  2005
  16,245,524
  Thereafter
  70,976,217
  $161,470,422
  The above amounts do not include tenant reimbursements for utilities, taxes, insurance and common area maintenance.
  2.     Basis of Accounting
  The accompanying statement of rental revenues and direct operating expenses is presented on the accrual basis.  The statement has been prepared in accordance with the applicable rules and regulations of the
  Securities and Exchange Commission for real estate properties acquired.  Accordingly, the statement excludes certain expenses not comparable to the proposed future operations of the Chicago Purchase such as depreciation and mortgage interest expense.
  Management is not aware of any material factors relating to the Chicago Purchase that would cause the reported financial information not to be necessarily indicative of future operating results.
  3.     Management Fees
  Management fees of approximately 2.25% of revenues received from the operations of the Chicago Purchase were paid to an unrelated management company.
  PARKWAY PROPERTIES, INC.
  Pro Forma Consolidated Financial Statements
  (Unaudited)
  The following unaudited pro forma consolidated balance sheet as of March 31, 2001 and pro forma consolidated statements of income of Parkway Properties, Inc. ("Parkway") for the year ended December 31, 2000 and
  three months ended March 31, 2001 give effect to the proposed Chicago Purchase. The pro forma consolidated financial statements have been prepared by management of Parkway based upon the historical financial statements of Parkway and the adjustments and
  assumptions in the accompanying notes to the pro forma consolidated financial statements.
  The pro forma consolidated balance sheet sets forth the effect of Parkway's proposed Chicago Purchase including the short-term bank borrowings, placement of non-recourse mortgage debt and the issuance of Series B
  Cumulative Convertible Preferred stock ("Related Financing") as if they had been consummated on March 31, 2001.
  The pro forma consolidated statements of income sets forth the effects of the proposed Chicago Purchase and Related Financing as if each had been consummated on January 1, 2000.
  These pro forma consolidated financial statements may not be indicative of the results that actually would have occurred if the Chicago Purchase and Related Financing had occurred on the date indicated or which
  may be obtained in the future.  The pro forma consolidated financial statements should be read in conjunction with the consolidated financial statements and notes of Parkway included in its annual report on Form 10-K for the year ended December 31, 2000.
  PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
  PRO FORMA CONSOLIDATED BALANCE SHEET
  March 31, 2001
  (Unaudited)
  Parkway
  Historical
  Pro Forma
  Adjustments (1)
  Parkway
  Pro Forma
  (In thousands)
  Assets
  Real estate related investments:
  Office and parking properties
  $650,787
  $175,050
  $825,837
  Accumulated depreciation
  (62,852)
  -
  (62,852)
  587,935
  175,050
  762,985
  Land held for sale
  3,733
  -
  3,733
  Note receivable from Moore Building Associates LP
  5,458
  -
  5,458
  Mortgage loans
  882
  -
  882
  Real estate partnership
  399
  -
  399
  598,407
  175,050
  773,457
  Interest, rents receivable and other assets
  16,526
  -
  16,526
  Cash and cash equivalents
  1,719
  -
  1,719
  $616,652
  $175,050
  $791,702
  Liabilities
  Notes payable to banks
  $  66,709
  $  14,050
  $  80,759
  Mortgage notes payable without recourse
  222,739
  106,000
  328,739
  Accounts payable and other liabilities
  15,499
  -
  15,499
  304,947
  120,050
  424,997
  Stockholders' Equity
  8.75% Series A Preferred stock, $.001 par value,
  2,750,000 shares authorized and 2,650,000 shares
  issued and outstanding
  66,250
  -
  66,250
  8.34% Series B Cumulative Convertible Preferred
  stock, $.001 par value, 2,142,857 shares
  authorized and 1,603,499 shares issued and
  outstanding (pro forma)
  -
  56,122
  56,122
  Common stock, $.001 par value, 67,250,000 shares
  authorized, 9,312,002 shares issued and outstanding
  9
  -
  9
  Additional paid-in capital
  200,615
  (1,122)
  199,493
  Unearned compensation
  (3,164)
  -
  (3,164)
  Accumulated other comprehensive loss
  (709)
  -
  (709)
  Retained earnings
  48,704
  -
  48,704
  311,705
  55,000
  366,705
  $616,652
  $175,050
  $791,702
  See accompanying notes
  PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
  PRO FORMA CONSOLIDATED STATEMENT OF INCOME
  FOR THE YEAR ENDED DECEMBER 31, 2000
  (Unaudited)
  Parkway
  Historical
  Pro Forma
  Adjustments (2)
  Parkway
  Pro Forma
  (In thousands, except per share data)
  Revenues
  Income from office and parking  properties
  $118,970
  $  21,892
  (a)
  $140,862
  Dividend income
  1,205
  -
  1,205
  Management company income
  922
  -
  922
  Interest on note receivable from Moore Building Associates LP
  805
  -
  805
  Incentive management fee from Moore Building Associates LP
  191
  -
  191
  Interest on investments
  216
  -
  216
  Interest on mortgage loans
  90
  -
  90
  Deferred gains and other income
  125
  -
  125
  122,524
  21,892
  144,416
  Expenses
  Office and parking properties:
  Operating expense
  49,397
  10,298
  (a)
  59,695
  Interest expense:
  Contractual
  16,195
  7,802
  (c)
  23,997
  Amortization of loan costs
  176
  -
  176
  Depreciation and amortization
  19,651
  3,939
  (a)
  23,590
  Operating expense for other real estate properties
  60
  -
  60
  Interest expense on bank notes:
  Contractual
  6,389
  913
  (d)
  7,302
  Amortization of loan costs
  538
  -
  538
  Management company expenses
  738
  -
  738
  General and administrative
  3,951
  -
  3,951
  97,095
  22,952
  120,047
  Income before gains and minority interest
  25,429
  (1,060)
  24,369
  Gains on sales of real estate held for sale and
  real estate equity securities
  9,471
  -
  9,471
  Minority interest - unit holders
  (4)
  -
  (4)
  Net income
  34,896
  (1,060)
  33,836
  Dividends on preferred stock
  5,797
  4,681
  (e)
  10,478
  Net income available to common stockholders
  29,099
  (5,741)
  23,358
  Other comprehensive income - change in unrealized
  gain on real estate equity securities
  821
  -
  821
  Comprehensive income
  $  29,920
  $ (5,741)
  $  24,179
  Net income per common share:
  Basic
  $      2.96
  $     (.58)
  $      2.38
  Diluted
  $      2.93
  $     (.58)
  $      2.35
  Dividends per common share:
  Basic
  $      2.12
  -
  $      2.12
  Diluted
  $      2.12
  -
  $      2.12
  Weighted average shares outstanding:
  Basic
  9,825
  -
  9,825
  Diluted
  9,926
  -
  9,926
  See accompanying notes.
  PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
  PRO FORMA CONSOLIDATED STATEMENT OF INCOME
  FOR THE THREE MONTHS ENDED MARCH 31, 2001
  (Unaudited)
  Parkway
  Historical
  Pro Forma
  Adjustments (2)
  Parkway
  Pro Forma
  (In thousands, except per share data)
  Revenues
  Income from office and parking  properties
  $29,859
  $ 7,097
  (b)
  $36,956
  Dividend income
  495
  -
  495
  Management company income
  186
  -
  186
  Interest on note receivable from Moore Building Associates LP
  230
  -
  230
  Incentive management fee from Moore Building Associates LP
  61
  -
  61
  Interest on investments
  25
  -
  25
  Interest on mortgage loans
  23
  -
  23
  Deferred gains and other income
  30
  -
  30
  30,909
  7,097
  38,006
  Expenses
  Office and parking properties:
  Operating expense
  12,518
  3,337
  (b)
  15,855
  Interest expense:
  -
  Contractual
  4,192
  1,950
  (c)
  6,142
  Amortization of loan costs
  50
  -
  50
  Depreciation and amortization
  5,184
  985
  (b)
  6,169
  Operating expense for other real estate properties
  9
  -
  9
  Interest expense on bank notes:
  Contractual
  1,396
  228
  (d)
  1,624
  Amortization of loan costs
  155
  -
  155
  Management company expenses
  31
  -
  31
  General and administrative
  1,118
  -
  1,118
  24,653
  6,500
  31,153
  Income before gains and minority interest
  6,256
  597
  6,853
  Net gains real estate held for sale, office property
  and real estate equity securities
  1,611
  -
  1,611
  Minority interest - unit holders
  (1)
  -
  (1)
  Net income
  7,866
  597
  8,463
  Dividends on preferred stock
  1,449
  1,170
  (e)
  2,619
  Net income available to common stockholders
  6,417
  (573)
  5,844
  Other comprehensive income
  Change in unrealized gain on real estate equity securities
  (821)
  -
  (821)
  Change in market value of interest rate swap
  (709)
  -
  (709)
  Comprehensive income
  $  4,887
  $  (573)
  $  4,314
  Net income per common share:
  Basic
  $    0.68
  $  0.06
  $    0.62
  Diluted
  $    0.67
  $  0.06
  $    0.61
  Dividends per common share:
  Basic
  $    0.56
  -
  $    0.56
  Diluted
  $    0.56
  -
  $    0.56
  Weighted average shares outstanding:
  Basic
  9,425
  -
  9,425
  Diluted
  9,521
  -
  9,521
  See accompanying notes.
  PARKWAY PROPERTIES, INC.
  Notes to Pro Forma Consolidated Financial Statements
  (Unaudited)
  1.       The Company announced  it has entered into a contract to acquire the fee simple interest in an office building located at 233 North Michigan Avenue and an adjacent, four-level structured
  parking garage (the "Chicago Purchase") in Chicago, Illinois for $173,500,000.  The total purchase price, including closing costs, anticipated first year capital expenditures and leasing commissions, is expected to be approximately $175,050,000.
  2.       The pro forma adjustments to the Consolidated Statement of Income for the year ended December 31, 2000 and three months ended March 31, 2001 set forth the effects of the proposed Chicago
  Purchase as if it had been consummated on January 1, 2000.
  These pro forma adjustments are detailed below for the year ended December 31, 2000 and three months ended March 31, 2001.
  The effect on income and expenses from real estate properties due to the above purchase is as follows:
  (a)   For the year ended December 31, 2000:
  Revenue
  Expenses
  Income From
  Real Estate Owned
  Real Estate
  Operating
  Depreciation
  Properties
  Expense
  Expense
  Chicago Purchase
  $21,892,000
  $10,298,000
  $ 3,939,000
  Depreciation is provided by the straight-line method over the estimated useful life of the building (40 years).
  (b)   For the three months ended March 31, 2001:
  Revenue
  Expenses
  Income From
  Real Estate Owned
  Real Estate
  Operating
  Depreciation
  Properties
  Expense
  Expense
  Chicago Purchase
  $7,097,000
  $3,337,000
  $985,000
  Depreciation is provided by the straight-line method over the estimated useful life of the building (40 years).
  (c)   Pro forma interest expense on real estate owned reflects the non-recourse debt placed upon purchase at the actual amount and rate as if placed January 1, 2000 and is
  detailed below.
  Property/Placement
  Year Ended
  Three Months Ended
  Date/Rate
  Debt
  12/31/00
  3/31/01
  Chicago Purchase
  6/01   7.36%
  $106,000,000
  $7,802,000
  $1,950,000
  (d)   The pro forma effect of the Chicago Purchase on interest expense on notes payable to banks was $913,000 for the year ended December 31, 2000 and $228,000 for the three months ended March 31,
  2001.
  (e)   The pro forma effect of the issuance of 1,603,499 shares of 8.34% Series B Cumulative Convertible Preferred stock on dividends on preferred stock was $4,681,000 for the
  year ended December 31, 2000 and $1,170,000 for the three months ended March 31, 2001.
  3.       The pro forma net income per share for the year ended December 31, 2000 and the three months ended March 31, 2001 reflect the issuance of 1,603,499 shares of 8.34% Series B Cumulative Convertible Preferred stock.
  4.       No additional income tax expenses were provided because of the Company's net operating loss carryover and status as a
  REIT.
  5.       Diluted net income per share for the year ended December 31, 2000 and three months ended March 31, 2001 were $2.93 and $.67, respectively, based on diluted weighted average shares outstanding of 9,926,000 and
  9,521,000, respectively.
  Pro Forma diluted net income per share for the year ended December 31, 2000 and the three months ended March 31, 2001 were $2.35 and $.61, respectively, based on pro forma diluted weighted
  average shares outstanding of 9,926,000 and 9,521,000, respectively.
  FORM 8-K
  PARKWAY PROPERTIES, INC.
  SIGNATURES
  Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
  DATE:   June 21, 2001
  PARKWAY PROPERTIES, INC.
  BY:
  /s/ Regina P. Shows
  Regina P. Shows, CPA
  Chief Accounting Officer