content: 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 of earliest event reported):  Dec. 24, 1996
                                                     ----------------
  
  
                      PARKWAY PROPERTIES, INC.
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       (Exact name of Registrant as specified in its charter)
  
  
  
  Maryland                    1-11533                   74-2123597
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  (State or other     (Commission File Number)        (IRS Employer
  jurisdiction of                                    Identification
  incorporation)                                         Number)
  
  
  300 One Jackson Place, 188 E. Capitol St., Jackson, MS  39201
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  (Address of principal executive offices)               (Zip Code)
  
  
  Registrant's telephone number, including area code (601) 948-4091
                                                     ---------------
  
  
  -----------------------------------------------------------------
   (Former name or former address, if changed since last report)
  
  
  
                              FORM 8-K
  
                      PARKWAY PROPERTIES, INC.
  
  Item 2.   Acquisition or Disposition of Assets.
  
              On   December  24,  1996,  Parkway  Properties,  Inc.
  ("Parkway") sold its Virginia Beach mortgage loan for
  $9,700,000  in  cash to an unrelated party.  This  mortgage  loan
  represented  a  second mortgage on the Pembroke  Office  Park  in
  Virginia Beach, Virginia. A portion of the proceeds from the sale
  were  used to repay seven underlying first mortgages on the  office
  buildings totaling $4,415,000.  Parkway will recognize a gain  of
  approximately $3,560,000 on the transaction in the fourth quarter 
  of 1996.
  
  Item 7.   Financial Statements and Exhibits.
  
                 (b)  Pro Forma Consolidated Financial Statements
  
                         The    following   unaudited   Pro   Forma
            Consolidated Financial Statements are attached hereto.
  
                      PARKWAY PROPERTIES, INC.
                                                               Page
                                                               ----
  Pro Forma Consolidated Financial Statements (Unaudited)         4
  Pro Forma Consolidated Balance Sheet (Unaudited) -
       As of September 30, 1996                                   5
  Pro Forma Consolidated Statement of Income (Unaudited) -
       For the Twelve Months Ended December 31, 1995              7
  Pro Forma Consolidated Statement of Income (Unaudited) -
       For the Nine Months Ended September 30, 1996               8
  Notes to Pro Forma Consolidated Financial
       Statements (Unaudited)                                     9
  
  
                  (c) Exhibits.
  
                       (10)  Note  Purchase Agreement among  Allied
            Capital  Commercial Corporation and Parkway Properties,
            Inc.  dated  December  24,  1996.   Parkway  agrees  to
            furnish  supplementally to the Securities and  Exchange
            Commission on request a copy of any omitted schedule or
            exhibit to this agreement.
  
                              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:       January 7, 1997
  
                                          PARKWAY PROPERTIES, INC.
  
  
  
                                     BY:  /s/Sarah P. Clark
                                          Sarah P. Clark
                                          Vice President, Chief Financial
                                          Officer, Treasurer and Secretary
  
  
                      PARKWAY PROPERTIES, INC.
             Pro Forma Consolidated Financial Statements
                             (Unaudited)
  
  The  following unaudited pro forma consolidated balance sheet  as
  of  September  30, 1996 and pro forma consolidated statements  of
  income of Parkway Properties, Inc. ("Parkway") for the twelve
  months ended December 31, 1995 and nine months ended September 30, 1996
  give effect to the December 24, 1996 sale  of the Virginia Beach mortgage
  loan and the September  30, 1996  purchase  of  the  BB&T Financial Center. 
  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  sale of the Virginia Beach mortgage loan  as  if  the
  transaction  occurred  on  September  30,  1996.   No  pro  forma
  adjustments  were needed for the purchase of the  BB&T  Finanical
  Center due to the September 30th purchase date.
  
  The  pro  forma consolidated statements of income set  forth  the
  effects  of  Parkway's September 30, 1996 purchase  of  the  BB&T
  Financial Center, August 9, 1996 purchase of the Falls Pointe and
  Roswell  North  Buildings,  the July  9,  1996  purchase  of  the
  Cherokee  Business Center and the 8381 and 8391  Courthouse  Road
  Buildings, the April 15, 1996 purchase of the 400 North Belt  and
  Woodbranch Buldings, the July 31, 1995 purchase of Mtel  Centre',
  the October 2, 1995 purchase of the IBM Building and the December
  19,  1995  purchase of the Waterstone Building. In addition,  the
  adjustments include the May 31, 1996 sale of 157 mortgage  loans,
  the  December 24, 1996 sale of the Virginia Beach mortgage  loan
  and  the  placement of non-recourse mortgage financing on certain
  recent  property  acquisitions as if  the  transactions  occurred
  January 1, 1995.
  
  These  pro  forma consolidated financial statements  may  not  be
  indicative  of the results that actually would have  occurred  if
  the  purchases, sale and/or financings had been in effect on  the
  dates indicated or which may be obtained in the future.  The  pro
  forma  consolidated  financial  statements  should  be  read   in
  conjunction  with the financial statements and notes  of  Parkway
  included in its annual report on Form 1O-KSB for the period ended
  December 31, 1995.
  
  
             PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
                PRO FORMA CONSOLIDATED BALANCE SHEET
                         SEPTEMBER 30, 1996
                             (Unaudited)
  
  
                                 Parkway     Pro Forma(2)  Parkway
                                 Historical  Adjustments  Pro Forma
                                 ----------  -----------  ---------
                                            (In thousands)
   Assets
   Real estate related investments
     Office buildings.............$129,507    $      -    $129,507
     Accumulated depreciation.....  (8,671)          -      (8,671)
                                  --------    --------    --------
                                   120,836           -     120,836
     Real estate held for sale
       Land.......................   8,206           -       8,206
       Operating properties.......   3,928           -       3,928
     Mortgage loans...............   6,173      (5,784)        389
     Real estate securities.......     507           -         507
     Real estate partnerships and
       corporate joint venture....     312           -         312
                                  --------    --------    --------
                                   139,962      (5,784)    134,178
   Interest and rents receivable
     and other assets.............   3,865        (227)      3,638
   Cash and cash equivalents......     134       8,115       8,249
                                  --------    --------    --------
                                  $143,961    $  2,104    $146,065
                                  ========    ========    ========
  
   Liabilities
   Notes payable to banks.........$  6,836    $(6,836)    $      -
   Mortgage notes payable without
     recourse.....................  53,452      9,850       63,302
   Mortgage notes payable on wrap
     mortgages....................   4,470     (4,470)           -
   Accounts payable and other
     liabilities..................   5,999          -        5,999
                                  --------    --------    --------
                                    70,757     (1,456)      69,301
                                  --------    --------    --------
   Shareholders' Equity
   Preferred stock, $.001 par
     value, 576,000 shares
     authorized, 576,000 shares
     issued in 1996...............       1                       1
   Common stock, $.001 par value,
     69,424,000 shares authorized,
     3,636,421 shares issued......       3           -           3
   Additional paid-in capital.....  51,924           -      51,924
   Retained earnings..............  21,061       3,560      24,621
                                  --------    --------    --------
                                    72,989       3,560      76,549
   Unrealized gain on securities..     215           -         215
                                  --------    --------    --------
                                    73,204       3,560      76,764
                                  --------    --------    --------
                                  $143,961    $  2,104    $146,065
                                  ========    ========    ========
  
  
             PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
             PRO FORMA CONSOLIDATED STATEMENT OF INCOME
                FOR THE TWELVE MONTHS ENDED 12/31/95
                             (Unaudited)
  
                                    Parkway    Pro Forma  Parkway
                                   Historical Adjustments Pro Forma
                                   ---------- ----------- ---------
                              (In  thousands,  except  per  share data)
  Revenues
  Income from real estate
    properties.......................$ 8,941    $16,149 (a)$25,090
  Interest on mortgage loans.........  1,421     (1,265)(e)    156
  Management company income..........  1,041          -      1,041
  Equity in earnings
    Real estate companies............    135          -        135
    Real estate partnerships and
      corporate joint venture........    116          -        116
  Interest on investments............    167          -        167
  Dividend income....................    601          -        601
  Deferred gains and other income....    345          -        345
  Gain on real estate
    and mortgage loans...............  6,552          -      6,552
  Gain on securities.................  4,314          -      4,314
                                     -------    -------    -------
                                      23,633     14,884     38,517
                                     -------    -------    -------
  Expenses
  Real estate owned
    Operating expense................  4,876      7,508 (a) 12,384
    Interest expense.................  2,230      3,065 (c)  5,295
    Depreciation and amortization....  1,331      1,922 (a)  3,253
    Minority interest................   (100)         -       (100)
  Interest expense
    Notes payable to banks...........    156       (156) (e)     -
    Notes payable on wrap mortgages..    135          -        135
  Management company expenses........    804          -        804
  Other expenses.....................  2,299          -      2,299
                                     -------    -------    -------
                                      11,731     12,339     24,070
                                     -------    -------    -------
  Income before taxes................ 11,902      2,545     14,447
  Income tax provision...............     82          - (4)     82
                                     -------    -------    -------
  Net income.........................$11,820    $ 2,545    $14,365
                                     =======    =======    =======
  Net income per share...............$  4.24               $  3.66
                                     =======               =======
  Weighted average shares
    outstanding......................  2,787                 3,927
                                     =======               =======
  
             PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
             PRO FORMA CONSOLIDATED STATEMENT OF INCOME
                 FOR THE NINE MONTHS ENDED 9/30/96
                             (Unaudited)
  
                                    Parkway    Pro Forma   Parkway
                                   Historical Adjustments Pro Forma
                                   ---------- ----------- ---------
                               (In thousands, except per share data)
  Revenues
  Income from real estate
    properties...................... $13,559   $ 6,186 (b) $19,745
  Management company income.........     537         -         537
  Interest on mortgage loans........   1,435    (1,384)(f)      51
  Equity in earnings:
    Real estate partnerships and
      corporate joint venture.......     121         -         121
  Gain on securities................     304         -         304
  Interest on investments...........     471         -         471
  Deferred gains and other income...      91         -          91
  Dividend income...................     118         -         118
  Gain on real estate and mortgage
    loans...........................   5,863         -       5,863
                                     -------   -------     -------
                                      22,499     4,802      27,301
                                     -------   -------     -------
  Expenses
  Real estate owned:
    Operating expense...............   6,570     2,525 (b)   9,095
    Interest expense................   2,390     1,226 (d)   3,616
    Depreciation and amortization...   1,591       797 (b)   2,388
    Minority interest...............     (12)        -         (12)
  Interest expense:
    Notes payable to banks..........      95       (95)(f)       -
    Notes payable on wrap mortgages.     340         -         340
  Management company expenses.......     483         -         483
  Other expenses....................   2,198         -       2,198
                                     -------   -------     -------
                                      13,655     4,453      18,108
                                     -------   -------     -------
  Income before taxes...............   8,844       349       9,193
  Income tax provision..............      23         - (4)      23
                                     -------   -------     -------
  Net income........................ $ 8,821   $   349     $ 9,170
                                     =======   =======     =======
  Net income per share.............. $  2.54               $  2.20
                                     =======               =======
  Weighted average shares
    outstanding                        3,474                 4,169
                                     =======               =======
                                     
                         PARKWAY PROPERTIES, INC.
           Notes to Pro Forma Consolidated Financial Statements
                                (Unaudited)
  
  
  1.   On  December 24, 1996, Parkway Properties, Inc. ("Parkway" or the
       "Company") sold the Virginia Beach mortgage loan to an unrelated
       party  for $9,700,000.  A portion of the proceeds from  the  sale
       were  used to repay the underlying first mortgages on the buildings
       totaling $4,415,000.
  
  2.   On  September  30, 1996, Parkway Carolina, Inc.,  a  wholly-owned
       subsidiary  of  Parkway  Properties,  Inc.  ("Parkway"   or   the
       "Company")  purchased the BB&T Financial Center  for  $24,500,000
       from an unrelated party.  This building consists of approximately
       239,000 net rentable square feet.
  
  3.   The pro forma adjustments to the Consolidated Balance Sheet as of
       September  30, 1996 include Parkway's sale of the Virginia  Beach
       mortgage  loan as if the transaction occurred on  September  30,
       1996.   No pro forma adjustments were needed for the purchase  of
       the  BB&T  Finanical  Center due to the September  30th  purchase
       date.
  
  4.   The  pro  forma  adjustments  to the Consolidated  Statements  of
       Income for the twelve months ended December 31, 1995 and the nine
       months  ended September 30, 1996 include the September  30,  1996
       purchase of the BB&T Financial Center, August 9, 1996 purchase of
       the  Falls Pointe and Roswell North Buildings, the July  9,  1996
       purchase  of the Cherokee Business Center and the 8381  and  8391
       Courthouse Road Buildings, the April 15, 1996 purchase of the 400
       North Belt and Woodbranch Buldings, the July 31, 1995 purchase of
       Mtel  Centre', the October 2, 1995 purchase of the  IBM  Building
       and the December 19, 1995 purchase of the Waterstone Building. In
       addition,  the adjustments include the May 31, 1996 sale  of  157
       mortgage loans, the December 24, 1996 sale of the Virginia  Beach
       mortgage   loan  and  the  placement  of  non-recourse  mortgage
       financing  on  certain  recent property acquisitions.  These  pro
       forma  adjustments are detailed below by property for the  twelve
       months  ended  December 31, 1995 and nine months ended  September
       30, 1996.
  
       The effect on income and expenses from real estate properties due
       to the above purchases are as follows:
  
       (a) For the twelve months ended December 31, 1995:
                           Revenue              Expenses
                         -----------   ---------------------------
                         Income From         Real Estate Owned
                         Real Estate    Operating     Depreciation
                         Properties      Expense        Expense
                         -----------   ------------   ------------
       Mtel Centre'      $ 2,420,000    $ 1,442,000    $   177,000
       IBM Building          959,000        449,000        102,000
       Waterstone          1,183,000        499,000        181,000
       400 North Belt
         & Woodbranch      3,470,000      1,970,000        347,000
       Cherokee &
         Courthouse
         Road Bldgs.       1,848,000        841,000        249,000
       Falls Pointe &
         Roswell North     2,270,000        929,000        315,000
       BB&T Financial
         Center            3,999,000      1,378,000        551,000
                         -----------    -----------    -----------
                         $16,149,000    $ 7,508,000    $ 1,922,000
                         ===========    ===========    ===========
  
   (b) For the nine months ended September 30, 1996:
                           Revenue              Expenses
                         -----------   ---------------------------
                         Income From         Real Estate Owned
                         Real Estate    Operating     Depreciation
                         Properties      Expense        Expense
                         -----------   ------------   ------------
       400 North Belt
        & Woodbranch     $ 1,036,000    $   551,000    $   102,000
       Cherokee &
         Courthouse
         Road Bldgs.         917,000        480,000        124,000
       Falls Pointe &
         Roswell North     1,161,000        439,000        158,000
       BB&T Financial
         Center            3,072,000      1,055,000        413,000
                         -----------    -----------    -----------
                         $ 6,186,000    $ 2,525,000    $   797,000
                         ===========    ===========    ===========
       
       Depreciation  is  provided by the straight-line method  over  the
       estimated useful lives of the buildings (40 years).
  
       Pro forma interest expense on real estate owned reflects the non-
       recourse  debt placed on the buildings at the actual amounts  and
       rates by property as if placed January 1, 1995 is as follows:
  
       Property/Placement               Twelve Months  Nine Months
           Date/Rate           Debt      12/31/95 (c)  9/30/96 (d)
       ------------------  -----------  -------------  -----------
       Mtel Centre
         12/95 7.75%       $11,000,000   $   595,000   $        -
  
       IBM Building
         2/96 7.78%          4,800,000       370,000       41,000
  
       Waterstone
         6/96 8.00%          5,620,000       450,000      185,000
  
       400 North Belt &
         Woodbranch
         7/96 8.25%         10,000,000       825,000      382,000
  
       Falls Pointe &
         Roswell North
         12/96 8.375%        9,850,000       825,000      618,000
  
                                          ----------   ----------
                                          $3,065,000   $1,226,000
                                          ==========   ==========
  
       The  January 1, 1995 pro forma effect of the sale of 157 mortgage
       loans  on  May 31, 1996 and the Virginia Beach mortgage loans  on
       December 24, 1996 is as follows:
  
                                       Twelve Months    Nine Months
                                        12/31/95 (e)    9/30/96 (f)
                                       -------------    -----------
       Interest Income:
            Mortgage loans            $ (1,265,000)     (1,384,000)
  
  5.   No  additional income tax expenses were provided because  of  the
       Company's net operating loss carryover.
  
  6.   All  per  share information for the twelve months ended  December
       31,  1995  has  been restated to reflect a 3 for 2  common  stock
       split  effected as a dividend of one share for every  two  shares
       outstanding on April 30, 1996 as well as the June 14,1996 private
       placement  of  1,140,000  shares  as  if  both  transactions  had
       occurred January 1, 1995.
  
  
                          NOTE PURCHASE AGREEMENT
  
       THIS NOTE PURCHASE AGREEMENT (this "Agreement") is made and
  entered into by and between (i) Parkway Properties, Inc., a Maryland
  corporation ("Seller"), and (ii) Allied Capital Commercial
  Corporation, a Maryland corporation ("BUYER").
  
       Seller proposes to sell and assign, and Buyer proposes to buy and
  assume, those certain debt instruments and loan documents owned by
  Seller as more fully set forth and defined on Exhibit A attached
  hereto (collectively referred to as the Mortgage Loans").
  
       NOW, THEREFORE, in consideration of the premises, of the mutual
  covenants of the parties hereto, and of other good and valuable
  consideration, the receipt and sufficiency of which are hereby
  acknowledged, the parties hereto, intending legally and equitably to
  be bound, hereby agree as set forth below
  
  1. CLOSING. The consummation of the transaction contemplated by this
  Agreement shall take place on a date agreed upon by both parties, but
  no later than December 30, 1996 (the "Closing"). At Closing, Seller
  shall deliver to Buyer: (1) the original Series A Notes and the
  original Series B Note, as re-executed on or about the date hereof,
  together with a copy of the original Main Note, and an original of the
  versions re-executed by the Maker on October 21, 1996 and on or about
  the date hereof (all as defined on attached Exhibit A and collectively
  referred to as the "Notes"), all endorsed to Buyer, (2) the original
  (or copies, if such original is not ~ Seller's possession) Loan
  Documents evidencing the obligations transferred at such Closing,
  including without limitation the mortgages and related collateral
  documents (collectively with the Notes referred to as the "Loan
  Documents" and attached hereto as a part of Exhibit A), together with
  copies of all other documents in Seller's possession pertaining to the
  Notes being transferred and the Loan Documents (collectively, the
  "Loan Piles"). At Closing, Seller shall assign and Buyer shall assume
  all of Seller's rights and obligations under the Loan Documents, and
  all liens and security interests securing the Notes so transferred.
  Closing may be effected, as the parties hereto elect, pursuant to an
  Escrow Agreement in the form attached hereto as Exhibit B.
  
  2. PURCHASE PRICE. At Closing, Buyer will pay Seller the sum of Nine
  Million Seven Hundred Thousand Dollars ($9,700,000.00) (the "Purchase
  Price").
  
  3. POWER OF SALE AND ASSUMPTION. Upon payment in full of the Purchase
  Price, Seller shall assign to Buyer, its successors and assigns, all
  of the rights, powers (including the power of sale) and privileges
  conferred by the Notes, mortgages and other Loan Documents to the same
  extent as Seller is authorized and empowered to exercise the same.
  Further, at Closing, Buyer shall assume ~ full all of Seller's
  obligations, liabilities and responsibilities with respect to the
  Mortgage Loans and the Loan Documents. Buyer hereby agrees to
  indemnify, and hold Seller harmless and their respective agents and
  attorneys harmless from and against (i) any and all losses, claims,
  liabilities, damages, deficiencies, costs and expenses suffered or
  incurred by Seller resulting from: (a) a material breach by Buyer of
  any representation, warranty or covenant contained herein; and (b)
  Buyer's ownership, servicing or management of the Mortgage Loans; and
  (ii) any and all actions, suits, proceedings, claims, complaints,
  demands, assessments, judgments, costs and expenses suffered or
  incurred by Seller, including reasonable attorneys' fees and
  disbursements incident to any such indemnified matter.
  
  4. REPRESENTATIONS AND WARRANTIES. Seller makes the representations
  and warranties, as of the date of execution of this Agreement and as
  of Closing (which shall, in accordance with Section 80, survive for a
  one (1)-year period beginning on the date of Closing), as set forth
  below.
  
       (a) Authority. Seller is a corporation duly formed, organized,
  existing and in good standing under the laws of the State of Maryland.
  Seller has full legal right, power and authority to execute and fully
  perform its obligations under this Agreement. The execution, delivery
  and performance by Seller of this Agreement and all transactions
  contemplated hereby have been duly authorized.
  
       (b) Non-Contravention. Neither the execution and delivery of this
  Agreement nor the consummation of ~e transactions contemplated hereby
  will (i) conflict with or constitute a breach of, or constitute a
  default under or any event which, with or without notice or lapse of
  time or both, would be a breach of or default under Seller's Articles
  of Incorporation, Bylaws or any other governing documents, (ii)
  constitute a violation of any law, regulation, judgment, order or
  decree applicable to Seller, or (iii) require any consent, approval,
  authorization, order, license or permit from any person
  
       (c) Sole Owner. The Seller is the sole owner of the Mortgage
  Loans.
  
       (d) Right to Sell. Except as to the consents required pursuant to
  the Series A. and B Notes (which consents have been duly obtained and
  are attached hereto as a part of the Notes included no Exhibit A
  hereto), the Seller has full right and authority to sell, assign and
  transfer the Mortgage Loans, and such assignment shall be a legal,
  valid and binding assignment of the Mortgage Loans to the Buyer.
  
       (e) Not Cross-Collateralized; Whole Loans. The Mortgage Loans are
  not cross-collateralized with any other indebtedness which is not
  subject to this Agreement, and the Mortgage Loans are whole loans and
  are not participations or other partial interests. To Seller's Actual
  Knowledge, there are no retained claims, residual interests or other
  ownership rights relating to the Mortgage Loans which Seller is not
  duly assigning to Buyer hereby.
  
       (f) Servicing and Collection. The servicing and collection
  practices used by Seller (and its subsidiaries and affiliates) in
  connection with the Mortgage Loans have been in compliance with
  applicable state or federal laws, rules and regulations pertaining to
  their business in all material respects. Buyer acknowledges that Seller
  did not originate the Mortgage Loans and have only serviced the
  Mortgage Loans since April 27, 1g95.
  
       (g) Good Title. The Seller is transferring the Mortgage Loans to
  Buyer free and clear of any and all liens, pledges, charges or security
  interests of any nature encumbering the Mortgage Loans
  
       (h) No Additional Advance. There is no requirement for any
  advances under the Mortgage Loans from and after Closing.
  
       (i) Valid Loans. Except as set forth in the Loan Documents or the
  Loan File, to Seller's Actual Knowledge no facts currently exist which
  would impair the validity or the enforceability of the Mortgage Loans
  by Buyer, except as such enforcement may be limited in the future by
  bankruptcy, insolvency, reorganization or other similar laws affecting
  the enforcement of creditors' rights generally, and by general
  principles of equity (regardless of whether such enforcement is
  considered in a proceeding in equity or at law). The Seller (and its
  subsidiaries and affiliates) has received no notice of any actual or
  alleged offset, defense, counterclaim or right to rescission with
  respect to the Notes or other Loan Documents.
  
       (j) Escrows. All taxes and governmental  assessments that prior to
  Closing became due and owing in respect of, and affect, the related
  mortgage properties have been paid, or an escrow of funds in an amount
  sufficient to to cover such payments has been established by Seller (or
  its subsidiaries or affiliates), and the same shall be assigned to
  Buyer at closing. Except as set forth on Exhibit C relating to those
  certain reserves for capital expenditures, insurance and taxes escrowed
  by Seller in the amounts set forth on Exhibit C and to be delivered by
  Seller to Buyer at Closing, Seller (or its subsidiaries or affiliates)
  holds no escrow deposits or similar accounts with respect to any of the
  property or assets of the Loan Documents.
  
       (k) Note Modifications, etc. Except as set forth in the Loan
  Files, the terms of the Notes and related Loan Documents have not been
  modified, waived, altered, satisfied, canceled or subordinated in any
  respect by Seller (or its subsidiaries or affiliates) or rescinded by
  Seller (or its subsidiaries or affiliates), nor has the maker of the
  Notes been released from its obligations thereunder by Seller (or its
  subsidiaries or affiliates), in whole or in any part, nor has any
  instrument nent been executed by Seller (or its subsidiaries or
  affiliates) that would effect any such cancellation, subordination,
  rescission or release.
  
       (1) Pay History. Since Seller (and its subsidiaries and
  affiliates) has serviced the Mortgage Loans, and except as described in
  Exhibit D hereto, all payments of principal and interest due and owing
  under the Mortgage Loans have been timely paid, and the Seller has
  delivered to the Buyer a complete account statement and history of the
  Mortgage Loans. as set forth as Exhibit D.
  
       (m) Valid Collateral Interests. To Seller's Actual Knowledge, the
  mortgages securing the Notes (including any related security agreement
  included therewith) are valid and enforceable liens on the related
  mortgaged properties, which mortgaged properties are free and clear of
  all encumbrances and liens having priority over the lien of such
  Mortgage Loans, except as set forth in that certain title policy
  issued by Lawyers Title Insurance Corporation and attached hereto as
  Exhibit F.
  
       (n) No Condemnation. Seller (and its subsidiaries and affiliates)
  has received no notice that there is any proceeding pending for the
  total or partial condemnation of the mortgaged properties securing the
  Mortgage Loans.
  
       (o) Mortgage Modifications, etc. Except as set forth in the Loan
  Documents and Loan Files, the collateral interests securing the Notes,
  including without limitation the related mortgages and BCC security
  interests, have not been modified, waived, altered, satisfied,
  canceled or subordinated in any respect by Seller (or its subsidiaries
  or affiliates) or rescinded by Seller (or its subsidiaries or
  affiliates), and the related properties have not been released from
  the lien or other subsidiaries of, nor has the borrower thereof been
  released from its obligations under, the mortgages and security
  interests by Seller (or its subsidiaries or affiliates), in whole or
  in any part, in a manner which materially interferes with the benefits
  of the security intended to be provided by the related mortgages or
  security interests or the use, enjoyment, value or marketability of
  the related properties for the purposes specified in the mortgage and
  other security documents, nor has any instrument been executed by
  Seller (or its subsidiaries or affiliates) that would effect any such
  cancellation, subordination, rescission or release.
  
       (p) Balance. As of even date herewith, the principal balance,
  accrued interest and any late fees or collection costs due and owing
  under the Mortgage Loans, are as set out in Exhibit C attached hereto.
  
  5.  REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer makes the
  representations and warranties, as of the date of execution of this
  Agreement and as of Closing, as set forth below.
  
       (a) Authority. Buyer is a corporation duly formed, organized,
  existing and in good standing under the laws of the State of Maryland.
  Buyer has full legal right, power and authority to execute and fully
  perform its obligations under this Agreement. The execution, delivery
  and performance by Buyer of this Agreement and all transactions
  contemplated hereby have been duly authorized.
  
       (b) Non-Contravention. Neither the execution and delivery of this
  Agreement nor the consummation of the transactions contemplated hereby
  will (I) conflict with or constitute a breach of, or constitute a
  default under or any event which, with or without notice or lapse of
  time or both, would be a breach of or default under Buyer's Articles
  of Incorporation, Bylaws or any other governing documents, (ii)
  constitute a violation of any law, regulation, judgment. order or
  decree applicable to Buyer, or (iii) require any consent, approval,
  authorization, order, license or permit from any person.
  
       (c) Independent Investigation. Buyer has made an independent
  investigation, to the extent Buyer deems necessary or appropriate,
  concerning the Mortgage Loans, including an investigation of the
  related Loan Documents and the physical condition of the collateral
  related thereto. By closing this transaction, Buyer acknowledges that
  they have completed such investigations to their satisfaction.
  However, it is understood and agreed that this provision shall in no
  way be deemed to limit Buyer's reliance on, or the accuracy of,
  Seller's representations and warranties set forth in this Agreement,
  which it is acknowledged are a material inducement to Buyer entering
  into this Agreement.
  
       (d) ACKNOWLEDGMENT. BUYER HEREBY EXPRESSLY ACKNOWLEDGES THAT IT
  HAS INSPECTED AND EXAMINED OR WILL INSPECT AND EXAMINE THE MORTGAGE
  LOANS, THE RELATED LOAN DOCUMENTS, INCLUDING WITHOUT LIMITATION, THE
  TITLE INSURANCE POLICY, AND THE COLLATERAL TO THE EXTENT DEEMED
  NECESSARY BY BUYER IN ORDER TO ENABLE BUYER TO EVALUATE THE PURCHASE
  OF THE MORTGAGE LOANS. BUYER REPRESENTS THAT IT IS A KNOWLEDGEABLE
  BUYER OF LOANS AND THAT, EXCEPT AS SET FORTH IN SECTION 4, IT IS
  RELYING ON ITS OWN EXPERTISE AND THAT OF  BUYER'S CONSULTANTS, AND
  THAT BUYER HAS CONDUCTED OR WILL CONDUCT COMPREHENSIVE INSPECTIONS AND
  INVESTIGATIONS OF THE MORTGAGE LOANS, LOAN DOCUMENTS AND, IF IT DEEMS
  NECESSARY, THE COLLATERAL. EXCEPT FOR SELLER'S REPRESENTATIONS
  EXPRESSLY SET FORTH HEREIN, BUYER FURTHER ACKNOWLEDGES AND AGREES THAT
  BUYER IS ACQUIRING THE MORTGAGE LOANS ON AN "AS IS, WHERE IS, WITH ALL
  FAULTS BASIS," WITHOUT REPRESENTATIONS, WARRANTIES OR COVENANTS,
  EXPRESS OR IMPLIED, OF ANY KIND OR NATURE, STATUTORY OR OTHERWISE,
  INCLUDING, WITHOUT LIMITATION, ANY WARRANTY WITH RESPECT TO THE VALUE
  OF ANY COLLATERAL SECURING ANY MORTGAGE LOAN, THE CREDIT WORTHINESS OF
  ANY MORTGAGE, THE VALIDITY OR PRIORITY  OF ANY SECURITY INTEREST WITH
  RESPECT TO ANY COLLATERAL AND THE ENFORCEABILITY OF ANY LOAN
  DOCUMENTS, AND SELLER DOES HEREBY DISCLAIM AND RENOUNCE ALL SUCH
  REPRESENTATIONS OR WARRANTIES, EXCEPT AS OTHERWISE SET FORTH IN THIS
  AGREEMENT.
  
  6. RECORDING PROCEDURES, ETC.  After Closing, Seller shall take such
  further action and execute and deliver such further instruments as
  Buyer, or its agents and nominees, shall reasonably request, within
  five (5) days of such request, to consummate the transactions
  contemplated by this Agreement, including but not limited to executing
  any such instruments as are necessary to further evidence or perfect
  Buyer's interest ~ the Mortgage Loans, :he Loan Documents, or any
  collateral related thereto. Buyer understands that the Mortgage Loans
  are sold "servicing released" so that the Seller will retain no
  obligation to collect payments from the debtor under the Mortgage
  Loans. Seller agrees to comply with reasonable requests made by Buyer
  after the sale in regard to matters pertaining to the Mortgage Loan
  being sold "servicing released. n Any payment received by Seller after
  Closing, which are for the period after Closing, will be forwarded by
  Sellers to Buyer,
  
  7. COSTS; ATTORNEYS' FEES. Buyer shall be solely responsible for all
  costs of transfer (including endorsements to the title insurance
  policies, title and UCC searches, recording fees, any other transfer
  tax, documentary stamp or similar tax or fee) which becomes payable
  solely by reason of the transfer of the Mortgage Loans from Seller to
  Buyer. Seller shall be responsible for all other such costs of
  transfer as they relate to Seller delivering the Mortgage Loans to
  Buyer in accordance with the representations and warranties set forth
  in this Agreement. Additionally, Seller shall be responsible for the
  full payment and satisfaction prior to Closing of those certain
  wrapped deeds of trust and any other senior claims to Buyer's
  interests in the underlying collateral, which undertaking it is
  understood shall be a condition of Buyer's obligation to close
  hereunder. Each party shall bear its own expenses of Closing. Buyer
  and Seller specifically acknowledge that if any litigation arises
  between the parties in respect of this Agreement, however, the
  prevailing party shall be entitled to recover costs thereof, including
  reasonable attorneys' fees.
  
  8. MISCELLANEOUS.
  
       (a) Brokers Except for the separate agreement between Seller and
  Dan Friedman of Enterprise, the parties represent to each other that
  neither of them nor their representatives has incurred any liability
  for any broker's, finder's or similar fee in connection with this
  Agreement and the transactions contemplated hereby and agree to
  indemnify and hold the other harmless with respect to any claims by
  brokers through such party. Seller shall pay the fees of Dan Friedman,
  and Seller hereby releases and indemnifies Buyer, its directors,
  officers, employees and agents from any and all liability arising from
  a breach of such undertaking.
  
       (b) Officers. The respective officers who execute this Agreement,
  and any certificate or other document required under this Agreement,
  are executing this Agreement and such certificate or other document in
  their respective capacities as officers of such entity and not
  individually.
  
       (c) Notices. Any notice, request, demand or other communication
  required or permitted under this Agreement shall be given in writing
  and shall be delivered or sent by certified mail, return receipt
  requested in a prepaid envelope, by overnight mail or courier, or by
  facsimile transmission, to the addresses set forth below or such other
  addresses as such party shall hereafter specify in accordance with
  this Section:
  
       If to Buyer:      Allied Capital Commercial Corporation
                         1666 K Street, N.W.
                         Washington, D.C. 20006
                         Attention: Robert J. Corry, Senior Vice President
  
       With a copy to:   Andrews &: Kurth L.L.P.
                         1701 Pennsylvania Avenue, N.W., Suite 200
                         Washington, D.C. 20006
                         Attention: Thomas R. Salley, Esquire
  
       If to Seller:     Parkway Properties, Inc.
                         One Jackson Place, Suite 300
                         Jackson, MS 39201
                         Attention: David R. Fowler, Vice President
  
       With a copy to:   Forman, Perry, Watkins & Krutz
                         A Professional Limited Liability Company
                         188 E. Capitol Street, Suite 1200
                         Jackson, MS 39201
                         Attention: Tim Gray, Esquire
  
       Such  notice or other communication shall be deemed to  have  been
  given  (i)  when  delivered,  if sent by certified  mail  or  delivered
  personally  or  by  facsimile  transmission,  or  (ii)  on  the  second
  following business day if sent by overnight mail or overnight courier.
  
       (b)  Choice of Law and Venue. The validity of this Agreement,  its
  construction,  interpretation, and enforcement, and the rights  of  the
  parties  hereto, shall be determined under, governed by, and  construed
  in  accordance with the internal laws of the Commonwealth of  Virginia,
  the  situs of the property securing the Mortgage Loans, without  regard
  to  principles of conflicts of laws. The parties agree that all actions
  or proceedings arising in connection with this Agreement shall be tried
  and  litigated  only  in the state and federal courts  located  in  the
  Commonwealth  of Virginia. Buyer and Seller waive any  right  each  may
  have  to  assert the doctrine of forum non conveniens or to  object  to
  venue  to the extent any proceeding is brought in accordance with  this
  Section.
  
       (c)  Waiver.  Waiver of any term, provision or condition  of  this
  Agreement must be in writing signed by the party making such waiver  to
  be  enforceable  against  such  party  and  shall  be  limited  to  the
  particular  matter  so waived and specified in such  waiver,  and  such
  waiver  shall not be deemed to constitute a waiver of any  other  term,
  provision or condition, nor shall such waiver be deemed Q waiver  of  a
  subsequent breach of the same, provision or condition. Failure or delay
  by  any  party to require strict performance of any term, provision  or
  condition  of  this  Agreement will not impair such  party's  right  to
  require full performance thereof at any other tune.
  
       (d)  Binding  Effect; Severability; Captions.  This  Agreement  is
  binding  and  inures to the benefit of the parties  hereto,  and  their
  respective successors and assigns. Any provision of this Agreement that
  may  be unenforceable in a particular jurisdiction as to any particular
  state  of facts shall be, as applied in such jurisdiction and  to  such
  facts,  ineffective  only  to the extent of such  unenforceability  and
  without  invalidating the remaining provisions hereof in  such  or  any
  other jurisdiction. The captions herein shall not be construed as  part
  of the text hereof.
  
       (e)  Entire  Agreement; Amendments. This Agreement, including  any
  attachments,  exhibits and schedules referred to herein  and  attached,
  constitutes the entire agreement between ~e parties pertaining  to  the
  subject  matter  hereof  and supersedes any and all  prior  agreements,
  representations and understandings of the parties, written or oral. The
  terms  of  this  Agreement shall not be modified or amended  except  by
  subsequent written agreement of the parties.
  
       (f)  WAIVER  OF JURY TTRIAL/SERVICE OF PROCESS. BUYER  AND  SELLER
  EACH  HEREBY  WAIVE  TRIAL BY JURY AND ANY RIGHT THERETO,  AND  FURTHER
  AGREE THAT SERVICE OF PROCESS MAY BE DULY EFFECTED UPON THEM BY SERVICE
  BY  NATIONALLY RECOGNIZED OVERNIGHT COURIER SERVICE AND CERTIFIED MAIL,
  RETURN  RECEIPT REQUESTED, CHARGES PREPAID, TO THE ADDRESSES SET  FORTH
  ABOVE.
  
       (g)  Assignments;  Binding Effect. This  Agreement  shall  not  be
  assigned  by  either party without the express written consent  of  the
  other  party.  This  Agreement shall inure to the  benefit  of  and  be
  binding  upon  the respective successors end permitted  assigns  of  ~e
  parties.
  
       (h)  Survival. Each of the representations, warranties,  covenants
  and all other provisions contained in this Agreement or in any document
  given  or  furnished under or in connection with this  Agreement  shall
  survive  the  Closing  for a period of one (1)  year,  and  any  action
  attempting to enforce this Agreement shall be commenced within such one
  (1)-year   period   or   forever  barred.  Thereafter,   all   of   the
  representations and warranties made in this Agreement shall  be  deemed
  null, void and without any further force or effect.
  
       (i)  Limitation  on Liability. Notwithstanding anything  contained
  herein  to the contrary, Buyer acknowledges and agrees that no trustee,
  holder  of any beneficial interests, officer or employee of Seller  nor
  any affiliate of Seller shall have any personal liability, directly  or
  indirectly,   under   this   Agreement,  or  under   any   certificate,
  representation,  warranty or other instrument delivered  in  connection
  herewith, and Buyer shall have recourse hereunder only against Seller's
  assets. Each document to be executed by Seller at Closing shall contain
  a similar exculpation.
  
       (j) Actual Knowledge. Reference to Seller's Actual Knowledge shall
  mean the actual subjective awareness of any employee employed since
  April 27, 1995 or of any officer of: Seller, any subsidiary of Seller,
  or any affiliate of Seller. References to Seller having notice of any
  particular fact shall mean actual notice to any employee employed since
  April 27, 1995 or to any officer of: Seller, any subsidiary of Seller,
  or any affiliate of Seller. Reference to Buyer's Actual Knowledge shall
  mean the actual subjective awareness of any employee employed since
  April 27, 1995 or of any officer of Buyer. References to Buyer having
  notice of any particular fact shall mean actual notice to any employee
  employed since July 1, 1996 or to any officer of Buyer.
       
       (k) Knowledge as a Defense. Seller shall have no liability with respect
  to  a breach of the covenants, representations and warranties of Seller
  set  forth in this Agreement or any documents delivered hereto  to  the
  extent  that  Purchaser proceeds with the Closing  of  the  transaction
  contemplated with Actual Knowledge of such breach.
  
       (1) Counterparts. This Agreement may be executed in any number  of
  counterparts,  each  of which shall be deemed an original  and  all  of
  which shall constitute one and the same instrument.
  
       IN  WITNESS WHEREOF the undersigned have caused this Agreement  to
  be executed as of December 24, 1996.
  
                                PARKWAY PROPERTIES, INC.
  
                                By:
  
                                Name:
  
                                Title:
  
   Witness:                     By:
  
                                Name:
  
                                Title:
  
                                ALLIED CAPITAL COMMERCIAL
                                    CORPORATION
  
  Attest:                       By:
  
       , (Assistant) Secretary
  
  
                             List of Exhibits
                                  
                                  
       A.  List of Mortgage Loans and Loan Documents
  
       B.  Form of Escrow Agreement
  
       C.  Statement of Principal Balance, Accrued Interest,
           Escrowed Amounts, Late Fees, etc.
  
       D.  Pay History
  
       E.  Title Insurance Policies and Endorsements
metadata_documents: [{"type": "8-K", "sequence": "1", "secsgml_size_bytes": 48233}]
metadata_filer: {"company-data": {"conformed-name": "PARKWAY PROPERTIES INC", "cik": "0000729237", "assigned-sic": "6512", "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": "97502181"}, "business-address": {"street1": "300 ONE JACKSON PL", "street2": "188 E CAPITOL ST STE 300", "city": "JACKSON", "state": "MS", "zip": "39225-2728", "phone": "6019484091"}, "mail-address": {"street1": "P O BOX 22728", "street2": "P O BOX 22728", "city": "JACKSON", "state": "MS", "zip": "39201"}, "former-company": {"former-conformed-name": "PARKWAY CO", "date-changed": "19951018"}}
text: 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 of earliest event reported):  Dec. 24, 1996
                                                     ----------------
  
                      PARKWAY PROPERTIES, INC.
  -----------------------------------------------------------------
       (Exact name of Registrant as specified in its charter)
  
  Maryland                    1-11533                   74-2123597
  -----------------------------------------------------------------
  (State or other     (Commission File Number)        (IRS Employer
  jurisdiction of                                    Identification
  incorporation)                                         Number)
  
  300 One Jackson Place, 188 E. Capitol St., Jackson, MS  39201
  -----------------------------------------------------------------
  (Address of principal executive offices)               (Zip Code)
  
  Registrant's telephone number, including area code (601) 948-4091
                                                     ---------------
  
  -----------------------------------------------------------------
   (Former name or former address, if changed since last report)
  
                              FORM 8-K
  
                      PARKWAY PROPERTIES, INC.
  
  Item 2.   Acquisition or Disposition of Assets.
  
              On   December  24,  1996,  Parkway  Properties,  Inc.
  ("Parkway") sold its Virginia Beach mortgage loan for
  $9,700,000  in  cash to an unrelated party.  This  mortgage  loan
  represented  a  second mortgage on the Pembroke  Office  Park  in
  Virginia Beach, Virginia. A portion of the proceeds from the sale
  were  used to repay seven underlying first mortgages on the  office
  buildings totaling $4,415,000.  Parkway will recognize a gain  of
  approximately $3,560,000 on the transaction in the fourth quarter 
  of 1996.
  
  Item 7.   Financial Statements and Exhibits.
  
                 (b)  Pro Forma Consolidated Financial Statements
  
                         The    following   unaudited   Pro   Forma
            Consolidated Financial Statements are attached hereto.
  
                      PARKWAY PROPERTIES, INC.
                                                               Page
                                                               ----
  Pro Forma Consolidated Financial Statements (Unaudited)         4
  Pro Forma Consolidated Balance Sheet (Unaudited) -
       As of September 30, 1996                                   5
  Pro Forma Consolidated Statement of Income (Unaudited) -
       For the Twelve Months Ended December 31, 1995              7
  Pro Forma Consolidated Statement of Income (Unaudited) -
       For the Nine Months Ended September 30, 1996               8
  Notes to Pro Forma Consolidated Financial
       Statements (Unaudited)                                     9
  
                  (c) Exhibits.
  
                       (10)  Note  Purchase Agreement among  Allied
            Capital  Commercial Corporation and Parkway Properties,
            Inc.  dated  December  24,  1996.   Parkway  agrees  to
            furnish  supplementally to the Securities and  Exchange
            Commission on request a copy of any omitted schedule or
            exhibit to this agreement.
  
                              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:       January 7, 1997
  
                                          PARKWAY PROPERTIES, INC.
  
                                     BY:  /s/Sarah P. Clark
                                          Sarah P. Clark
                                          Vice President, Chief Financial
                                          Officer, Treasurer and Secretary
  
                      PARKWAY PROPERTIES, INC.
             Pro Forma Consolidated Financial Statements
                             (Unaudited)
  
  The  following unaudited pro forma consolidated balance sheet  as
  of  September  30, 1996 and pro forma consolidated statements  of
  income of Parkway Properties, Inc. ("Parkway") for the twelve
  months ended December 31, 1995 and nine months ended September 30, 1996
  give effect to the December 24, 1996 sale  of the Virginia Beach mortgage
  loan and the September  30, 1996  purchase  of  the  BB&T Financial Center. 
  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  sale of the Virginia Beach mortgage loan  as  if  the
  transaction  occurred  on  September  30,  1996.   No  pro  forma
  adjustments  were needed for the purchase of the  BB&T  Finanical
  Center due to the September 30th purchase date.
  
  The  pro  forma consolidated statements of income set  forth  the
  effects  of  Parkway's September 30, 1996 purchase  of  the  BB&T
  Financial Center, August 9, 1996 purchase of the Falls Pointe and
  Roswell  North  Buildings,  the July  9,  1996  purchase  of  the
  Cherokee  Business Center and the 8381 and 8391  Courthouse  Road
  Buildings, the April 15, 1996 purchase of the 400 North Belt  and
  Woodbranch Buldings, the July 31, 1995 purchase of Mtel  Centre',
  the October 2, 1995 purchase of the IBM Building and the December
  19,  1995  purchase of the Waterstone Building. In addition,  the
  adjustments include the May 31, 1996 sale of 157 mortgage  loans,
  the  December 24, 1996 sale of the Virginia Beach mortgage  loan
  and  the  placement of non-recourse mortgage financing on certain
  recent  property  acquisitions as if  the  transactions  occurred
  January 1, 1995.
  
  These  pro  forma consolidated financial statements  may  not  be
  indicative  of the results that actually would have  occurred  if
  the  purchases, sale and/or financings had been in effect on  the
  dates indicated or which may be obtained in the future.  The  pro
  forma  consolidated  financial  statements  should  be  read   in
  conjunction  with the financial statements and notes  of  Parkway
  included in its annual report on Form 1O-KSB for the period ended
  December 31, 1995.
  
             PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
                PRO FORMA CONSOLIDATED BALANCE SHEET
                         SEPTEMBER 30, 1996
                             (Unaudited)
  
                                 Parkway     Pro Forma(2)  Parkway
                                 Historical  Adjustments  Pro Forma
                                 ----------  -----------  ---------
                                            (In thousands)
   Assets
   Real estate related investments
     Office buildings.............$129,507    $      -    $129,507
     Accumulated depreciation.....  (8,671)          -      (8,671)
                                  --------    --------    --------
                                   120,836           -     120,836
     Real estate held for sale
       Land.......................   8,206           -       8,206
       Operating properties.......   3,928           -       3,928
     Mortgage loans...............   6,173      (5,784)        389
     Real estate securities.......     507           -         507
     Real estate partnerships and
       corporate joint venture....     312           -         312
                                  --------    --------    --------
                                   139,962      (5,784)    134,178
   Interest and rents receivable
     and other assets.............   3,865        (227)      3,638
   Cash and cash equivalents......     134       8,115       8,249
                                  --------    --------    --------
                                  $143,961    $  2,104    $146,065
                                  ========    ========    ========
  
   Liabilities
   Notes payable to banks.........$  6,836    $(6,836)    $      -
   Mortgage notes payable without
     recourse.....................  53,452      9,850       63,302
   Mortgage notes payable on wrap
     mortgages....................   4,470     (4,470)           -
   Accounts payable and other
     liabilities..................   5,999          -        5,999
                                  --------    --------    --------
                                    70,757     (1,456)      69,301
                                  --------    --------    --------
   Shareholders' Equity
   Preferred stock, $.001 par
     value, 576,000 shares
     authorized, 576,000 shares
     issued in 1996...............       1                       1
   Common stock, $.001 par value,
     69,424,000 shares authorized,
     3,636,421 shares issued......       3           -           3
   Additional paid-in capital.....  51,924           -      51,924
   Retained earnings..............  21,061       3,560      24,621
                                  --------    --------    --------
                                    72,989       3,560      76,549
   Unrealized gain on securities..     215           -         215
                                  --------    --------    --------
                                    73,204       3,560      76,764
                                  --------    --------    --------
                                  $143,961    $  2,104    $146,065
                                  ========    ========    ========
  
             PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
             PRO FORMA CONSOLIDATED STATEMENT OF INCOME
                FOR THE TWELVE MONTHS ENDED 12/31/95
                             (Unaudited)
  
                                    Parkway    Pro Forma  Parkway
                                   Historical Adjustments Pro Forma
                                   ---------- ----------- ---------
                              (In  thousands,  except  per  share data)
  Revenues
  Income from real estate
    properties.......................$ 8,941    $16,149 (a)$25,090
  Interest on mortgage loans.........  1,421     (1,265)(e)    156
  Management company income..........  1,041          -      1,041
  Equity in earnings
    Real estate companies............    135          -        135
    Real estate partnerships and
      corporate joint venture........    116          -        116
  Interest on investments............    167          -        167
  Dividend income....................    601          -        601
  Deferred gains and other income....    345          -        345
  Gain on real estate
    and mortgage loans...............  6,552          -      6,552
  Gain on securities.................  4,314          -      4,314
                                     -------    -------    -------
                                      23,633     14,884     38,517
                                     -------    -------    -------
  Expenses
  Real estate owned
    Operating expense................  4,876      7,508 (a) 12,384
    Interest expense.................  2,230      3,065 (c)  5,295
    Depreciation and amortization....  1,331      1,922 (a)  3,253
    Minority interest................   (100)         -       (100)
  Interest expense
    Notes payable to banks...........    156       (156) (e)     -
    Notes payable on wrap mortgages..    135          -        135
  Management company expenses........    804          -        804
  Other expenses.....................  2,299          -      2,299
                                     -------    -------    -------
                                      11,731     12,339     24,070
                                     -------    -------    -------
  Income before taxes................ 11,902      2,545     14,447
  Income tax provision...............     82          - (4)     82
                                     -------    -------    -------
  Net income.........................$11,820    $ 2,545    $14,365
                                     =======    =======    =======
  Net income per share...............$  4.24               $  3.66
                                     =======               =======
  Weighted average shares
    outstanding......................  2,787                 3,927
                                     =======               =======
  
             PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
             PRO FORMA CONSOLIDATED STATEMENT OF INCOME
                 FOR THE NINE MONTHS ENDED 9/30/96
                             (Unaudited)
  
                                    Parkway    Pro Forma   Parkway
                                   Historical Adjustments Pro Forma
                                   ---------- ----------- ---------
                               (In thousands, except per share data)
  Revenues
  Income from real estate
    properties...................... $13,559   $ 6,186 (b) $19,745
  Management company income.........     537         -         537
  Interest on mortgage loans........   1,435    (1,384)(f)      51
  Equity in earnings:
    Real estate partnerships and
      corporate joint venture.......     121         -         121
  Gain on securities................     304         -         304
  Interest on investments...........     471         -         471
  Deferred gains and other income...      91         -          91
  Dividend income...................     118         -         118
  Gain on real estate and mortgage
    loans...........................   5,863         -       5,863
                                     -------   -------     -------
                                      22,499     4,802      27,301
                                     -------   -------     -------
  Expenses
  Real estate owned:
    Operating expense...............   6,570     2,525 (b)   9,095
    Interest expense................   2,390     1,226 (d)   3,616
    Depreciation and amortization...   1,591       797 (b)   2,388
    Minority interest...............     (12)        -         (12)
  Interest expense:
    Notes payable to banks..........      95       (95)(f)       -
    Notes payable on wrap mortgages.     340         -         340
  Management company expenses.......     483         -         483
  Other expenses....................   2,198         -       2,198
                                     -------   -------     -------
                                      13,655     4,453      18,108
                                     -------   -------     -------
  Income before taxes...............   8,844       349       9,193
  Income tax provision..............      23         - (4)      23
                                     -------   -------     -------
  Net income........................ $ 8,821   $   349     $ 9,170
                                     =======   =======     =======
  Net income per share.............. $  2.54               $  2.20
                                     =======               =======
  Weighted average shares
    outstanding                        3,474                 4,169
                                     =======               =======
                                     
                         PARKWAY PROPERTIES, INC.
           Notes to Pro Forma Consolidated Financial Statements
                                (Unaudited)
  
  1.   On  December 24, 1996, Parkway Properties, Inc. ("Parkway" or the
       "Company") sold the Virginia Beach mortgage loan to an unrelated
       party  for $9,700,000.  A portion of the proceeds from  the  sale
       were  used to repay the underlying first mortgages on the buildings
       totaling $4,415,000.
  
  2.   On  September  30, 1996, Parkway Carolina, Inc.,  a  wholly-owned
       subsidiary  of  Parkway  Properties,  Inc.  ("Parkway"   or   the
       "Company")  purchased the BB&T Financial Center  for  $24,500,000
       from an unrelated party.  This building consists of approximately
       239,000 net rentable square feet.
  
  3.   The pro forma adjustments to the Consolidated Balance Sheet as of
       September  30, 1996 include Parkway's sale of the Virginia  Beach
       mortgage  loan as if the transaction occurred on  September  30,
       1996.   No pro forma adjustments were needed for the purchase  of
       the  BB&T  Finanical  Center due to the September  30th  purchase
       date.
  
  4.   The  pro  forma  adjustments  to the Consolidated  Statements  of
       Income for the twelve months ended December 31, 1995 and the nine
       months  ended September 30, 1996 include the September  30,  1996
       purchase of the BB&T Financial Center, August 9, 1996 purchase of
       the  Falls Pointe and Roswell North Buildings, the July  9,  1996
       purchase  of the Cherokee Business Center and the 8381  and  8391
       Courthouse Road Buildings, the April 15, 1996 purchase of the 400
       North Belt and Woodbranch Buldings, the July 31, 1995 purchase of
       Mtel  Centre', the October 2, 1995 purchase of the  IBM  Building
       and the December 19, 1995 purchase of the Waterstone Building. In
       addition,  the adjustments include the May 31, 1996 sale  of  157
       mortgage loans, the December 24, 1996 sale of the Virginia  Beach
       mortgage   loan  and  the  placement  of  non-recourse  mortgage
       financing  on  certain  recent property acquisitions.  These  pro
       forma  adjustments are detailed below by property for the  twelve
       months  ended  December 31, 1995 and nine months ended  September
       30, 1996.
  
       The effect on income and expenses from real estate properties due
       to the above purchases are as follows:
  
       (a) For the twelve months ended December 31, 1995:
                           Revenue              Expenses
                         -----------   ---------------------------
                         Income From         Real Estate Owned
                         Real Estate    Operating     Depreciation
                         Properties      Expense        Expense
                         -----------   ------------   ------------
       Mtel Centre'      $ 2,420,000    $ 1,442,000    $   177,000
       IBM Building          959,000        449,000        102,000
       Waterstone          1,183,000        499,000        181,000
       400 North Belt
         & Woodbranch      3,470,000      1,970,000        347,000
       Cherokee &
         Courthouse
         Road Bldgs.       1,848,000        841,000        249,000
       Falls Pointe &
         Roswell North     2,270,000        929,000        315,000
       BB&T Financial
         Center            3,999,000      1,378,000        551,000
                         -----------    -----------    -----------
                         $16,149,000    $ 7,508,000    $ 1,922,000
                         ===========    ===========    ===========
  
   (b) For the nine months ended September 30, 1996:
                           Revenue              Expenses
                         -----------   ---------------------------
                         Income From         Real Estate Owned
                         Real Estate    Operating     Depreciation
                         Properties      Expense        Expense
                         -----------   ------------   ------------
       400 North Belt
        & Woodbranch     $ 1,036,000    $   551,000    $   102,000
       Cherokee &
         Courthouse
         Road Bldgs.         917,000        480,000        124,000
       Falls Pointe &
         Roswell North     1,161,000        439,000        158,000
       BB&T Financial
         Center            3,072,000      1,055,000        413,000
                         -----------    -----------    -----------
                         $ 6,186,000    $ 2,525,000    $   797,000
                         ===========    ===========    ===========
       
       Depreciation  is  provided by the straight-line method  over  the
       estimated useful lives of the buildings (40 years).
  
       Pro forma interest expense on real estate owned reflects the non-
       recourse  debt placed on the buildings at the actual amounts  and
       rates by property as if placed January 1, 1995 is as follows:
  
       Property/Placement               Twelve Months  Nine Months
           Date/Rate           Debt      12/31/95 (c)  9/30/96 (d)
       ------------------  -----------  -------------  -----------
       Mtel Centre
         12/95 7.75%       $11,000,000   $   595,000   $        -
  
       IBM Building
         2/96 7.78%          4,800,000       370,000       41,000
  
       Waterstone
         6/96 8.00%          5,620,000       450,000      185,000
  
       400 North Belt &
         Woodbranch
         7/96 8.25%         10,000,000       825,000      382,000
  
       Falls Pointe &
         Roswell North
         12/96 8.375%        9,850,000       825,000      618,000
  
                                          ----------   ----------
                                          $3,065,000   $1,226,000
                                          ==========   ==========
  
       The  January 1, 1995 pro forma effect of the sale of 157 mortgage
       loans  on  May 31, 1996 and the Virginia Beach mortgage loans  on
       December 24, 1996 is as follows:
  
                                       Twelve Months    Nine Months
                                        12/31/95 (e)    9/30/96 (f)
                                       -------------    -----------
       Interest Income:
            Mortgage loans            $ (1,265,000)     (1,384,000)
  
  5.   No  additional income tax expenses were provided because  of  the
       Company's net operating loss carryover.
  
  6.   All  per  share information for the twelve months ended  December
       31,  1995  has  been restated to reflect a 3 for 2  common  stock
       split  effected as a dividend of one share for every  two  shares
       outstanding on April 30, 1996 as well as the June 14,1996 private
       placement  of  1,140,000  shares  as  if  both  transactions  had
       occurred January 1, 1995.
  
                          NOTE PURCHASE AGREEMENT
  
       THIS NOTE PURCHASE AGREEMENT (this "Agreement") is made and
  entered into by and between (i) Parkway Properties, Inc., a Maryland
  corporation ("Seller"), and (ii) Allied Capital Commercial
  Corporation, a Maryland corporation ("BUYER").
  
       Seller proposes to sell and assign, and Buyer proposes to buy and
  assume, those certain debt instruments and loan documents owned by
  Seller as more fully set forth and defined on Exhibit A attached
  hereto (collectively referred to as the Mortgage Loans").
  
       NOW, THEREFORE, in consideration of the premises, of the mutual
  covenants of the parties hereto, and of other good and valuable
  consideration, the receipt and sufficiency of which are hereby
  acknowledged, the parties hereto, intending legally and equitably to
  be bound, hereby agree as set forth below
  
  1. CLOSING. The consummation of the transaction contemplated by this
  Agreement shall take place on a date agreed upon by both parties, but
  no later than December 30, 1996 (the "Closing"). At Closing, Seller
  shall deliver to Buyer: (1) the original Series A Notes and the
  original Series B Note, as re-executed on or about the date hereof,
  together with a copy of the original Main Note, and an original of the
  versions re-executed by the Maker on October 21, 1996 and on or about
  the date hereof (all as defined on attached Exhibit A and collectively
  referred to as the "Notes"), all endorsed to Buyer, (2) the original
  (or copies, if such original is not ~ Seller's possession) Loan
  Documents evidencing the obligations transferred at such Closing,
  including without limitation the mortgages and related collateral
  documents (collectively with the Notes referred to as the "Loan
  Documents" and attached hereto as a part of Exhibit A), together with
  copies of all other documents in Seller's possession pertaining to the
  Notes being transferred and the Loan Documents (collectively, the
  "Loan Piles"). At Closing, Seller shall assign and Buyer shall assume
  all of Seller's rights and obligations under the Loan Documents, and
  all liens and security interests securing the Notes so transferred.
  Closing may be effected, as the parties hereto elect, pursuant to an
  Escrow Agreement in the form attached hereto as Exhibit B.
  
  2. PURCHASE PRICE. At Closing, Buyer will pay Seller the sum of Nine
  Million Seven Hundred Thousand Dollars ($9,700,000.00) (the "Purchase
  Price").
  
  3. POWER OF SALE AND ASSUMPTION. Upon payment in full of the Purchase
  Price, Seller shall assign to Buyer, its successors and assigns, all
  of the rights, powers (including the power of sale) and privileges
  conferred by the Notes, mortgages and other Loan Documents to the same
  extent as Seller is authorized and empowered to exercise the same.
  Further, at Closing, Buyer shall assume ~ full all of Seller's
  obligations, liabilities and responsibilities with respect to the
  Mortgage Loans and the Loan Documents. Buyer hereby agrees to
  indemnify, and hold Seller harmless and their respective agents and
  attorneys harmless from and against (i) any and all losses, claims,
  liabilities, damages, deficiencies, costs and expenses suffered or
  incurred by Seller resulting from: (a) a material breach by Buyer of
  any representation, warranty or covenant contained herein; and (b)
  Buyer's ownership, servicing or management of the Mortgage Loans; and
  (ii) any and all actions, suits, proceedings, claims, complaints,
  demands, assessments, judgments, costs and expenses suffered or
  incurred by Seller, including reasonable attorneys' fees and
  disbursements incident to any such indemnified matter.
  
  4. REPRESENTATIONS AND WARRANTIES. Seller makes the representations
  and warranties, as of the date of execution of this Agreement and as
  of Closing (which shall, in accordance with Section 80, survive for a
  one (1)-year period beginning on the date of Closing), as set forth
  below.
  
       (a) Authority. Seller is a corporation duly formed, organized,
  existing and in good standing under the laws of the State of Maryland.
  Seller has full legal right, power and authority to execute and fully
  perform its obligations under this Agreement. The execution, delivery
  and performance by Seller of this Agreement and all transactions
  contemplated hereby have been duly authorized.
  
       (b) Non-Contravention. Neither the execution and delivery of this
  Agreement nor the consummation of ~e transactions contemplated hereby
  will (i) conflict with or constitute a breach of, or constitute a
  default under or any event which, with or without notice or lapse of
  time or both, would be a breach of or default under Seller's Articles
  of Incorporation, Bylaws or any other governing documents, (ii)
  constitute a violation of any law, regulation, judgment, order or
  decree applicable to Seller, or (iii) require any consent, approval,
  authorization, order, license or permit from any person
  
       (c) Sole Owner. The Seller is the sole owner of the Mortgage
  Loans.
  
       (d) Right to Sell. Except as to the consents required pursuant to
  the Series A. and B Notes (which consents have been duly obtained and
  are attached hereto as a part of the Notes included no Exhibit A
  hereto), the Seller has full right and authority to sell, assign and
  transfer the Mortgage Loans, and such assignment shall be a legal,
  valid and binding assignment of the Mortgage Loans to the Buyer.
  
       (e) Not Cross-Collateralized; Whole Loans. The Mortgage Loans are
  not cross-collateralized with any other indebtedness which is not
  subject to this Agreement, and the Mortgage Loans are whole loans and
  are not participations or other partial interests. To Seller's Actual
  Knowledge, there are no retained claims, residual interests or other
  ownership rights relating to the Mortgage Loans which Seller is not
  duly assigning to Buyer hereby.
  
       (f) Servicing and Collection. The servicing and collection
  practices used by Seller (and its subsidiaries and affiliates) in
  connection with the Mortgage Loans have been in compliance with
  applicable state or federal laws, rules and regulations pertaining to
  their business in all material respects. Buyer acknowledges that Seller
  did not originate the Mortgage Loans and have only serviced the
  Mortgage Loans since April 27, 1g95.
  
       (g) Good Title. The Seller is transferring the Mortgage Loans to
  Buyer free and clear of any and all liens, pledges, charges or security
  interests of any nature encumbering the Mortgage Loans
  
       (h) No Additional Advance. There is no requirement for any
  advances under the Mortgage Loans from and after Closing.
  
       (i) Valid Loans. Except as set forth in the Loan Documents or the
  Loan File, to Seller's Actual Knowledge no facts currently exist which
  would impair the validity or the enforceability of the Mortgage Loans
  by Buyer, except as such enforcement may be limited in the future by
  bankruptcy, insolvency, reorganization or other similar laws affecting
  the enforcement of creditors' rights generally, and by general
  principles of equity (regardless of whether such enforcement is
  considered in a proceeding in equity or at law). The Seller (and its
  subsidiaries and affiliates) has received no notice of any actual or
  alleged offset, defense, counterclaim or right to rescission with
  respect to the Notes or other Loan Documents.
  
       (j) Escrows. All taxes and governmental  assessments that prior to
  Closing became due and owing in respect of, and affect, the related
  mortgage properties have been paid, or an escrow of funds in an amount
  sufficient to to cover such payments has been established by Seller (or
  its subsidiaries or affiliates), and the same shall be assigned to
  Buyer at closing. Except as set forth on Exhibit C relating to those
  certain reserves for capital expenditures, insurance and taxes escrowed
  by Seller in the amounts set forth on Exhibit C and to be delivered by
  Seller to Buyer at Closing, Seller (or its subsidiaries or affiliates)
  holds no escrow deposits or similar accounts with respect to any of the
  property or assets of the Loan Documents.
  
       (k) Note Modifications, etc. Except as set forth in the Loan
  Files, the terms of the Notes and related Loan Documents have not been
  modified, waived, altered, satisfied, canceled or subordinated in any
  respect by Seller (or its subsidiaries or affiliates) or rescinded by
  Seller (or its subsidiaries or affiliates), nor has the maker of the
  Notes been released from its obligations thereunder by Seller (or its
  subsidiaries or affiliates), in whole or in any part, nor has any
  instrument nent been executed by Seller (or its subsidiaries or
  affiliates) that would effect any such cancellation, subordination,
  rescission or release.
  
       (1) Pay History. Since Seller (and its subsidiaries and
  affiliates) has serviced the Mortgage Loans, and except as described in
  Exhibit D hereto, all payments of principal and interest due and owing
  under the Mortgage Loans have been timely paid, and the Seller has
  delivered to the Buyer a complete account statement and history of the
  Mortgage Loans. as set forth as Exhibit D.
  
       (m) Valid Collateral Interests. To Seller's Actual Knowledge, the
  mortgages securing the Notes (including any related security agreement
  included therewith) are valid and enforceable liens on the related
  mortgaged properties, which mortgaged properties are free and clear of
  all encumbrances and liens having priority over the lien of such
  Mortgage Loans, except as set forth in that certain title policy
  issued by Lawyers Title Insurance Corporation and attached hereto as
  Exhibit F.
  
       (n) No Condemnation. Seller (and its subsidiaries and affiliates)
  has received no notice that there is any proceeding pending for the
  total or partial condemnation of the mortgaged properties securing the
  Mortgage Loans.
  
       (o) Mortgage Modifications, etc. Except as set forth in the Loan
  Documents and Loan Files, the collateral interests securing the Notes,
  including without limitation the related mortgages and BCC security
  interests, have not been modified, waived, altered, satisfied,
  canceled or subordinated in any respect by Seller (or its subsidiaries
  or affiliates) or rescinded by Seller (or its subsidiaries or
  affiliates), and the related properties have not been released from
  the lien or other subsidiaries of, nor has the borrower thereof been
  released from its obligations under, the mortgages and security
  interests by Seller (or its subsidiaries or affiliates), in whole or
  in any part, in a manner which materially interferes with the benefits
  of the security intended to be provided by the related mortgages or
  security interests or the use, enjoyment, value or marketability of
  the related properties for the purposes specified in the mortgage and
  other security documents, nor has any instrument been executed by
  Seller (or its subsidiaries or affiliates) that would effect any such
  cancellation, subordination, rescission or release.
  
       (p) Balance. As of even date herewith, the principal balance,
  accrued interest and any late fees or collection costs due and owing
  under the Mortgage Loans, are as set out in Exhibit C attached hereto.
  
  5.  REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer makes the
  representations and warranties, as of the date of execution of this
  Agreement and as of Closing, as set forth below.
  
       (a) Authority. Buyer is a corporation duly formed, organized,
  existing and in good standing under the laws of the State of Maryland.
  Buyer has full legal right, power and authority to execute and fully
  perform its obligations under this Agreement. The execution, delivery
  and performance by Buyer of this Agreement and all transactions
  contemplated hereby have been duly authorized.
  
       (b) Non-Contravention. Neither the execution and delivery of this
  Agreement nor the consummation of the transactions contemplated hereby
  will (I) conflict with or constitute a breach of, or constitute a
  default under or any event which, with or without notice or lapse of
  time or both, would be a breach of or default under Buyer's Articles
  of Incorporation, Bylaws or any other governing documents, (ii)
  constitute a violation of any law, regulation, judgment. order or
  decree applicable to Buyer, or (iii) require any consent, approval,
  authorization, order, license or permit from any person.
  
       (c) Independent Investigation. Buyer has made an independent
  investigation, to the extent Buyer deems necessary or appropriate,
  concerning the Mortgage Loans, including an investigation of the
  related Loan Documents and the physical condition of the collateral
  related thereto. By closing this transaction, Buyer acknowledges that
  they have completed such investigations to their satisfaction.
  However, it is understood and agreed that this provision shall in no
  way be deemed to limit Buyer's reliance on, or the accuracy of,
  Seller's representations and warranties set forth in this Agreement,
  which it is acknowledged are a material inducement to Buyer entering
  into this Agreement.
  
       (d) ACKNOWLEDGMENT. BUYER HEREBY EXPRESSLY ACKNOWLEDGES THAT IT
  HAS INSPECTED AND EXAMINED OR WILL INSPECT AND EXAMINE THE MORTGAGE
  LOANS, THE RELATED LOAN DOCUMENTS, INCLUDING WITHOUT LIMITATION, THE
  TITLE INSURANCE POLICY, AND THE COLLATERAL TO THE EXTENT DEEMED
  NECESSARY BY BUYER IN ORDER TO ENABLE BUYER TO EVALUATE THE PURCHASE
  OF THE MORTGAGE LOANS. BUYER REPRESENTS THAT IT IS A KNOWLEDGEABLE
  BUYER OF LOANS AND THAT, EXCEPT AS SET FORTH IN SECTION 4, IT IS
  RELYING ON ITS OWN EXPERTISE AND THAT OF  BUYER'S CONSULTANTS, AND
  THAT BUYER HAS CONDUCTED OR WILL CONDUCT COMPREHENSIVE INSPECTIONS AND
  INVESTIGATIONS OF THE MORTGAGE LOANS, LOAN DOCUMENTS AND, IF IT DEEMS
  NECESSARY, THE COLLATERAL. EXCEPT FOR SELLER'S REPRESENTATIONS
  EXPRESSLY SET FORTH HEREIN, BUYER FURTHER ACKNOWLEDGES AND AGREES THAT
  BUYER IS ACQUIRING THE MORTGAGE LOANS ON AN "AS IS, WHERE IS, WITH ALL
  FAULTS BASIS," WITHOUT REPRESENTATIONS, WARRANTIES OR COVENANTS,
  EXPRESS OR IMPLIED, OF ANY KIND OR NATURE, STATUTORY OR OTHERWISE,
  INCLUDING, WITHOUT LIMITATION, ANY WARRANTY WITH RESPECT TO THE VALUE
  OF ANY COLLATERAL SECURING ANY MORTGAGE LOAN, THE CREDIT WORTHINESS OF
  ANY MORTGAGE, THE VALIDITY OR PRIORITY  OF ANY SECURITY INTEREST WITH
  RESPECT TO ANY COLLATERAL AND THE ENFORCEABILITY OF ANY LOAN
  DOCUMENTS, AND SELLER DOES HEREBY DISCLAIM AND RENOUNCE ALL SUCH
  REPRESENTATIONS OR WARRANTIES, EXCEPT AS OTHERWISE SET FORTH IN THIS
  AGREEMENT.
  
  6. RECORDING PROCEDURES, ETC.  After Closing, Seller shall take such
  further action and execute and deliver such further instruments as
  Buyer, or its agents and nominees, shall reasonably request, within
  five (5) days of such request, to consummate the transactions
  contemplated by this Agreement, including but not limited to executing
  any such instruments as are necessary to further evidence or perfect
  Buyer's interest ~ the Mortgage Loans, :he Loan Documents, or any
  collateral related thereto. Buyer understands that the Mortgage Loans
  are sold "servicing released" so that the Seller will retain no
  obligation to collect payments from the debtor under the Mortgage
  Loans. Seller agrees to comply with reasonable requests made by Buyer
  after the sale in regard to matters pertaining to the Mortgage Loan
  being sold "servicing released. n Any payment received by Seller after
  Closing, which are for the period after Closing, will be forwarded by
  Sellers to Buyer,
  
  7. COSTS; ATTORNEYS' FEES. Buyer shall be solely responsible for all
  costs of transfer (including endorsements to the title insurance
  policies, title and UCC searches, recording fees, any other transfer
  tax, documentary stamp or similar tax or fee) which becomes payable
  solely by reason of the transfer of the Mortgage Loans from Seller to
  Buyer. Seller shall be responsible for all other such costs of
  transfer as they relate to Seller delivering the Mortgage Loans to
  Buyer in accordance with the representations and warranties set forth
  in this Agreement. Additionally, Seller shall be responsible for the
  full payment and satisfaction prior to Closing of those certain
  wrapped deeds of trust and any other senior claims to Buyer's
  interests in the underlying collateral, which undertaking it is
  understood shall be a condition of Buyer's obligation to close
  hereunder. Each party shall bear its own expenses of Closing. Buyer
  and Seller specifically acknowledge that if any litigation arises
  between the parties in respect of this Agreement, however, the
  prevailing party shall be entitled to recover costs thereof, including
  reasonable attorneys' fees.
  
  8. MISCELLANEOUS.
  
       (a) Brokers Except for the separate agreement between Seller and
  Dan Friedman of Enterprise, the parties represent to each other that
  neither of them nor their representatives has incurred any liability
  for any broker's, finder's or similar fee in connection with this
  Agreement and the transactions contemplated hereby and agree to
  indemnify and hold the other harmless with respect to any claims by
  brokers through such party. Seller shall pay the fees of Dan Friedman,
  and Seller hereby releases and indemnifies Buyer, its directors,
  officers, employees and agents from any and all liability arising from
  a breach of such undertaking.
  
       (b) Officers. The respective officers who execute this Agreement,
  and any certificate or other document required under this Agreement,
  are executing this Agreement and such certificate or other document in
  their respective capacities as officers of such entity and not
  individually.
  
       (c) Notices. Any notice, request, demand or other communication
  required or permitted under this Agreement shall be given in writing
  and shall be delivered or sent by certified mail, return receipt
  requested in a prepaid envelope, by overnight mail or courier, or by
  facsimile transmission, to the addresses set forth below or such other
  addresses as such party shall hereafter specify in accordance with
  this Section:
  
       If to Buyer:      Allied Capital Commercial Corporation
                         1666 K Street, N.W.
                         Washington, D.C. 20006
                         Attention: Robert J. Corry, Senior Vice President
  
       With a copy to:   Andrews &: Kurth L.L.P.
                         1701 Pennsylvania Avenue, N.W., Suite 200
                         Washington, D.C. 20006
                         Attention: Thomas R. Salley, Esquire
  
       If to Seller:     Parkway Properties, Inc.
                         One Jackson Place, Suite 300
                         Jackson, MS 39201
                         Attention: David R. Fowler, Vice President
  
       With a copy to:   Forman, Perry, Watkins & Krutz
                         A Professional Limited Liability Company
                         188 E. Capitol Street, Suite 1200
                         Jackson, MS 39201
                         Attention: Tim Gray, Esquire
  
       Such  notice or other communication shall be deemed to  have  been
  given  (i)  when  delivered,  if sent by certified  mail  or  delivered
  personally  or  by  facsimile  transmission,  or  (ii)  on  the  second
  following business day if sent by overnight mail or overnight courier.
  
       (b)  Choice of Law and Venue. The validity of this Agreement,  its
  construction,  interpretation, and enforcement, and the rights  of  the
  parties  hereto, shall be determined under, governed by, and  construed
  in  accordance with the internal laws of the Commonwealth of  Virginia,
  the  situs of the property securing the Mortgage Loans, without  regard
  to  principles of conflicts of laws. The parties agree that all actions
  or proceedings arising in connection with this Agreement shall be tried
  and  litigated  only  in the state and federal courts  located  in  the
  Commonwealth  of Virginia. Buyer and Seller waive any  right  each  may
  have  to  assert the doctrine of forum non conveniens or to  object  to
  venue  to the extent any proceeding is brought in accordance with  this
  Section.
  
       (c)  Waiver.  Waiver of any term, provision or condition  of  this
  Agreement must be in writing signed by the party making such waiver  to
  be  enforceable  against  such  party  and  shall  be  limited  to  the
  particular  matter  so waived and specified in such  waiver,  and  such
  waiver  shall not be deemed to constitute a waiver of any  other  term,
  provision or condition, nor shall such waiver be deemed Q waiver  of  a
  subsequent breach of the same, provision or condition. Failure or delay
  by  any  party to require strict performance of any term, provision  or
  condition  of  this  Agreement will not impair such  party's  right  to
  require full performance thereof at any other tune.
  
       (d)  Binding  Effect; Severability; Captions.  This  Agreement  is
  binding  and  inures to the benefit of the parties  hereto,  and  their
  respective successors and assigns. Any provision of this Agreement that
  may  be unenforceable in a particular jurisdiction as to any particular
  state  of facts shall be, as applied in such jurisdiction and  to  such
  facts,  ineffective  only  to the extent of such  unenforceability  and
  without  invalidating the remaining provisions hereof in  such  or  any
  other jurisdiction. The captions herein shall not be construed as  part
  of the text hereof.
  
       (e)  Entire  Agreement; Amendments. This Agreement, including  any
  attachments,  exhibits and schedules referred to herein  and  attached,
  constitutes the entire agreement between ~e parties pertaining  to  the
  subject  matter  hereof  and supersedes any and all  prior  agreements,
  representations and understandings of the parties, written or oral. The
  terms  of  this  Agreement shall not be modified or amended  except  by
  subsequent written agreement of the parties.
  
       (f)  WAIVER  OF JURY TTRIAL/SERVICE OF PROCESS. BUYER  AND  SELLER
  EACH  HEREBY  WAIVE  TRIAL BY JURY AND ANY RIGHT THERETO,  AND  FURTHER
  AGREE THAT SERVICE OF PROCESS MAY BE DULY EFFECTED UPON THEM BY SERVICE
  BY  NATIONALLY RECOGNIZED OVERNIGHT COURIER SERVICE AND CERTIFIED MAIL,
  RETURN  RECEIPT REQUESTED, CHARGES PREPAID, TO THE ADDRESSES SET  FORTH
  ABOVE.
  
       (g)  Assignments;  Binding Effect. This  Agreement  shall  not  be
  assigned  by  either party without the express written consent  of  the
  other  party.  This  Agreement shall inure to the  benefit  of  and  be
  binding  upon  the respective successors end permitted  assigns  of  ~e
  parties.
  
       (h)  Survival. Each of the representations, warranties,  covenants
  and all other provisions contained in this Agreement or in any document
  given  or  furnished under or in connection with this  Agreement  shall
  survive  the  Closing  for a period of one (1)  year,  and  any  action
  attempting to enforce this Agreement shall be commenced within such one
  (1)-year   period   or   forever  barred.  Thereafter,   all   of   the
  representations and warranties made in this Agreement shall  be  deemed
  null, void and without any further force or effect.
  
       (i)  Limitation  on Liability. Notwithstanding anything  contained
  herein  to the contrary, Buyer acknowledges and agrees that no trustee,
  holder  of any beneficial interests, officer or employee of Seller  nor
  any affiliate of Seller shall have any personal liability, directly  or
  indirectly,   under   this   Agreement,  or  under   any   certificate,
  representation,  warranty or other instrument delivered  in  connection
  herewith, and Buyer shall have recourse hereunder only against Seller's
  assets. Each document to be executed by Seller at Closing shall contain
  a similar exculpation.
  
       (j) Actual Knowledge. Reference to Seller's Actual Knowledge shall
  mean the actual subjective awareness of any employee employed since
  April 27, 1995 or of any officer of: Seller, any subsidiary of Seller,
  or any affiliate of Seller. References to Seller having notice of any
  particular fact shall mean actual notice to any employee employed since
  April 27, 1995 or to any officer of: Seller, any subsidiary of Seller,
  or any affiliate of Seller. Reference to Buyer's Actual Knowledge shall
  mean the actual subjective awareness of any employee employed since
  April 27, 1995 or of any officer of Buyer. References to Buyer having
  notice of any particular fact shall mean actual notice to any employee
  employed since July 1, 1996 or to any officer of Buyer.
       
       (k) Knowledge as a Defense. Seller shall have no liability with respect
  to  a breach of the covenants, representations and warranties of Seller
  set  forth in this Agreement or any documents delivered hereto  to  the
  extent  that  Purchaser proceeds with the Closing  of  the  transaction
  contemplated with Actual Knowledge of such breach.
  
       (1) Counterparts. This Agreement may be executed in any number  of
  counterparts,  each  of which shall be deemed an original  and  all  of
  which shall constitute one and the same instrument.
  
       IN  WITNESS WHEREOF the undersigned have caused this Agreement  to
  be executed as of December 24, 1996.
  
                                PARKWAY PROPERTIES, INC.
  
                                By:
  
                                Name:
  
                                Title:
  
   Witness:                     By:
  
                                Name:
  
                                Title:
  
                                ALLIED CAPITAL COMMERCIAL
                                    CORPORATION
  
  Attest:                       By:
  
       , (Assistant) Secretary
  
                             List of Exhibits
                                  
                                  
       A.  List of Mortgage Loans and Loan Documents
  
       B.  Form of Escrow Agreement
  
       C.  Statement of Principal Balance, Accrued Interest,
           Escrowed Amounts, Late Fees, etc.
  
       D.  Pay History
  
       E.  Title Insurance Policies and Endorsements