content: <HTML>
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  <TITLE>UNITED STATES</TITLE>
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  <P ALIGN="CENTER">UNITED STATES<BR>
  <BR>
  SECURITIES AND EXCHANGE COMMISSION<BR>
  <BR>
  WASHINGTON, DC  20549<BR>
  </P>
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  </CENTER>
  
  <P ALIGN="CENTER">FORM 8-K<BR>
  <BR>
  <BR>
  CURRENT REPORT<BR>
  </P>
  <TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=660 bordercolorlight="#FFFFFF" bordercolordark="#FFFFFF" bordercolor="#FFFFFF" bgcolor="#FFFFFF">
  <TR><TD VALIGN="TOP" COLSPAN=4 HEIGHT=69>
  <P ALIGN="CENTER">Pursuant to Section 13 or 15(d)<BR>
  of the <BR>
  Securities Exchange Act of 1934<BR>
  <BR>
  </TD>
  </TR>
  <TR><TD WIDTH="75%" VALIGN="TOP" COLSPAN=3 HEIGHT=22>
  <P>Date of Report (Date of earliest event reported):</TD>
  <TD WIDTH="25%" VALIGN="TOP" HEIGHT=22>
  <P ALIGN="CENTER">N/A
  <hr>
    </TD>
  </TR>
  <TR><TD VALIGN="TOP" COLSPAN=4>&nbsp;</TD>
  </TR>
  <TR><TD VALIGN="TOP" COLSPAN=4>
  <P ALIGN="CENTER">PARKWAY PROPERTIES, INC.
  <hr>
    </TD>
  </TR>
  <TR><TD VALIGN="TOP" COLSPAN=4>
  <P ALIGN="CENTER">(Exact name of registrant as specified in its charter)<BR>
  <BR>
  <BR>
  </TD>
  </TR>
  <TR><TD WIDTH="32%" VALIGN="TOP">
  <P ALIGN="CENTER">Maryland</TD>
  <TD WIDTH="29%" VALIGN="TOP">
  <P ALIGN="CENTER">1-11533</TD>
  <TD WIDTH="39%" VALIGN="TOP" COLSPAN=2>
  <P ALIGN="CENTER">74-2123597</TD>
  </TR>
  </TABLE>
  
  
  <hr>
  <TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=660 bordercolor="#FFFFFF" bordercolorlight="#FFFFFF" bordercolordark="#FFFFFF" bgcolor="#FFFFFF">
  <TR><TD WIDTH="32%" VALIGN="TOP" HEIGHT=18>
  <P>(State or other jurisdiction of<BR>
  incorporation or organization)</TD>
  <TD WIDTH="29%" VALIGN="TOP" HEIGHT=18>
  <P ALIGN="CENTER">(Commission File Number)</TD>
  <TD WIDTH="39%" VALIGN="TOP" COLSPAN=2 HEIGHT=18>
  <P>(IRS Employer Identification Number)</TD>
  </TR>
  <TR><TD WIDTH="32%" VALIGN="TOP" HEIGHT=18><P></P></TD>
  <TD WIDTH="29%" VALIGN="TOP" HEIGHT=18><P></P></TD>
  <TD WIDTH="39%" VALIGN="TOP" COLSPAN=2 HEIGHT=18><P></P></TD>
  </TR>
  <TR><TD VALIGN="TOP" COLSPAN=4 HEIGHT=18>
  <P ALIGN="CENTER">One Jackson Place Suite 1000<BR>
  188 East Capitol Street<BR>
  P. O. Box 24647<BR>
  Jackson, Mississippi  39225-4647
  <hr>
    </TD>
  </TR>
  <TR><TD VALIGN="TOP" COLSPAN=4 HEIGHT=27>
  <P ALIGN="CENTER">(Address of principal executive offices) (Zip Code)<BR>
  <BR>
  <BR>
  </TD>
  </TR>
  <TR><TD WIDTH="67%" VALIGN="TOP" COLSPAN=3 HEIGHT=19>
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Registrant's telephone number, including area code </TD>
  <TD WIDTH="33%" VALIGN="TOP" HEIGHT=19>
  <P>(601) 948-4091
  <hr>
    </TD>
  </TR>
  <TR><TD VALIGN="TOP" COLSPAN=4 HEIGHT=19>
  &nbsp;
  <hr>
  </TD>
  </TR>
  <TR><TD VALIGN="TOP" COLSPAN=4 HEIGHT=16>
  <P ALIGN="CENTER">(Former name, former address and former fiscal year, if changed since last report)</TD>
  </TR>
  </TABLE>
  
  
  <p ALIGN="CENTER">&nbsp;</p>
  <hr size="5" color="#000000">
  <B><FONT SIZE=3><P ALIGN="CENTER">FORM 8-K<BR>
  <BR>
  PARKWAY PROPERTIES, INC.</P>
  <P><BR>
  Item 5. Other Events.</P>
  <P ALIGN="JUSTIFY"><BR>
  </FONT>
  </B><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December 20, 2001, Parkway Properties, Inc. ("Parkway") purchased the Bank of America Plaza (the "Nashville Purchase"), a 418,000 square foot office building in Nashville, Tennessee.  Parkway acquired the Nashville Purchase for a purchase price of $30 million plus $1.5 million in closing costs and anticipated first year capital expenditures and leasing commissions.  The purchase was funded with bank borrowings on a line of credit with J. P. Morgan Chase &amp; Co. at a rate equal to the 30-day Libor rate plus 137.5 basis points and was 3.3125% at December 31, 2001.</P>
  <P ALIGN="JUSTIFY"><BR>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The twenty-story office building, located in the Nashville central business district, was constructed in 1977 and subsequently renovated in 1995 and 1999.  The property is currently 89% leased and has a rent roll that includes five creditworthy, stable tenants which account for 77% of the building's total rentable square footage.  Bank of America is the largest single tenant occupying 180,333 square feet (43% of the rentable square footage) under a lease that expires in 2012.  Other national building tenants include the Boult, Cummings law firm (24%), Ernst &amp; Young LLP (6%), Chicago Title (2%) and New York Life (2%).</P>
  <P ALIGN="JUSTIFY"><BR>
  <B>Item 7.  Financial Statements and Exhibits.</P>
  <P ALIGN="JUSTIFY"><BR>
  </B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Financial Statements</P>
  <P ALIGN="JUSTIFY"><BR>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following audited financial statement of the Nashville Purchase for the year ended December 31, 2000 is attached hereto.  Also included is the unaudited financial statement for the nine months ended September 30, 2001.</P></FONT>
  <TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=638 bordercolor="#FFFFFF" bordercolorlight="#FFFFFF" bordercolordark="#FFFFFF" bgcolor="#FFFFFF">
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  <FONT SIZE=3><P ALIGN="JUSTIFY"><BR>
  </FONT></TD>
  <TD WIDTH="8%" VALIGN="TOP">
  <B><FONT SIZE=3>
  <P ALIGN="RIGHT">Page</B></FONT>
  <hr>
  </TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Report of Independent Auditors</FONT></TD>
  <TD WIDTH="8%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="RIGHT">3</FONT></TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Statements of Rental Revenues and Direct Operating Expenses</FONT></TD>
  <TD WIDTH="8%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="RIGHT">4</FONT></TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes to Statements of Rental Revenues and Direct Operating Expenses</FONT></TD>
  <TD WIDTH="8%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="RIGHT">5</FONT></TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Pro Forma Consolidated Financial Statements</FONT></TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">
  <FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following unaudited Pro Forma Consolidated Financial Statements of Parkway are attached hereto:</FONT></TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">
  <B><FONT SIZE=3><P ALIGN="RIGHT">Page</B></FONT>
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pro Forma Consolidated Financial Statements (Unaudited)</FONT></TD>
  <TD WIDTH="8%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="RIGHT">7</FONT></TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pro Forma Consolidated Balance Sheet (Unaudited) - As of September 30, 2001</FONT></TD>
  <TD WIDTH="8%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="RIGHT">8</FONT></TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pro Forma Consolidated Statement of Income (Unaudited) -</FONT></TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the Year Ended December 31, 2000</FONT></TD>
  <TD WIDTH="8%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="RIGHT">9</FONT></TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pro Forma Consolidated Statement of Income (Unaudited) - </FONT></TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the Nine Months Ended September 30, 2001</FONT></TD>
  <TD WIDTH="8%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="RIGHT">10</FONT></TD>
  </TR>
  <TR><TD WIDTH="92%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes to Pro Forma Consolidated Financial Statements (Unaudited)</FONT></TD>
  <TD WIDTH="8%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="RIGHT">11</FONT></TD>
  </TR>
  </TABLE>
  
  <B><P ALIGN="CENTER">&nbsp;</P>
  <hr size="5" color="#000000">
  <P ALIGN="CENTER">
  <BR>
  Report of Independent Auditors</P>
  </B><P ALIGN="JUSTIFY"><BR>
  <BR>
  The Board of Directors</P>
  <P ALIGN="JUSTIFY">Parkway Properties, Inc.</P>
  <P ALIGN="JUSTIFY"><BR>
  We have audited the accompanying statement of rental revenues and direct operating expenses of the Nashville Purchase for the year ended December 31, 2000.  This statement is the responsibility of management.  Our responsibility is to express an opinion on this statement based on our audit.</P>
  <P ALIGN="JUSTIFY"><BR>
  We conducted our audit in accordance with auditing standards generally accepted in the United States.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of rental revenues and direct operating expenses is free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement.  An audit also includes assessing the basis of accounting and accounting principles used and significant estimates made by management, as well as evaluating the overall statement presentation.  We believe that our audit provides a reasonable basis for our opinion.</P>
  <P ALIGN="JUSTIFY"><BR>
  The accompanying statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in a Form 8-K of Parkway Properties, Inc., as described in Note 2, and is not intended to be a complete presentation of the Nashville Purchase revenues and expenses. </P>
  <P ALIGN="JUSTIFY"><BR>
  In our opinion, the statement of rental revenue and direct operating expenses referred to above presents fairly, in all material respects, the rental revenues and direct operating expenses described in Note 2 of the Nashville Purchase for the year ended December 31, 2000, in conformity with accounting principles generally accepted in the United States.</P>
  <P ALIGN="JUSTIFY"><BR>
  We have compiled the accompanying statement of rental revenues and direct operating expenses of the Nashville Purchase for the nine months ended September 30, 2001 in accordance with the Statement on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. A compilation is limited to presenting in the form of a financial statement information that is the representation of management.  We have not audited or reviewed the statement of rental revenues and direct operating expenses of the Nashville Purchase for the nine months ended September 30, 2001 and, accordingly, do not express an opinion or any other form of assurance on the statement.</P>
  <P><BR>
  <BR>
  Jackson, Mississippi&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="EYLLP Signature" SIZE=7>ey</P>
  </FONT><P>December 19, 2001</P>
  <hr size="5" color="#000000">
  <B><P ALIGN="CENTER">The Nashville Purchase<BR>
  <BR>
  Statements of Rental Revenues<BR>
  and Direct Operating Expenses</P>
  </B>
  <CENTER><TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=677 height="44" bordercolorlight="#FFFFFF" bordercolordark="#FFFFFF" bgcolor="#FFFFFF" bordercolor="#FFFFFF">
  <TR><TD WIDTH="316" VALIGN="TOP" height="19">
      <p ALIGN="CENTER">&nbsp;</p>
    </TD>
  <TD WIDTH="159" VALIGN="TOP" height="19">
  <B><P ALIGN="CENTER">Year Ended</B></TD>
  <TD WIDTH="144" VALIGN="TOP" height="19">
  <B><P ALIGN="CENTER">Nine Months Ended</B></TD>
  </TR>
  <TR><TD WIDTH="316" VALIGN="TOP" height="19">
      <p ALIGN="CENTER">&nbsp;</p>
    </TD>
  <TD WIDTH="159" VALIGN="TOP" height="19">
  <B><P ALIGN="CENTER">December 31, 2000</B></TD>
  <TD WIDTH="144" VALIGN="TOP" height="19">
  <B><P ALIGN="CENTER">September 30, 2001</B></TD>
  </TR>
  </TABLE>
    <hr>
    <TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=677 bgcolor="#FFFFFF" bordercolorlight="#FFFFFF" bordercolordark="#FFFFFF" bordercolor="#FFFFFF">
  <TR><TD WIDTH="316" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="159" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="144" VALIGN="TOP">
  <P ALIGN="CENTER">(unaudited)</TD>
  </TR>
  <TR><TD WIDTH="316" VALIGN="TOP">
  <P>Rental revenue</TD>
  <TD WIDTH="159" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="144" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="316" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Minimum rents </TD>
  <TD WIDTH="159" VALIGN="TOP">
  <P ALIGN="RIGHT">$5,429,700</TD>
  <TD WIDTH="144" VALIGN="TOP">
  <P ALIGN="RIGHT">$3,707,002</TD>
  </TR>
  <TR><TD WIDTH="316" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reimbursed charges </TD>
  <TD WIDTH="159" VALIGN="TOP">
  <P ALIGN="RIGHT">1,131,486</TD>
  <TD WIDTH="144" VALIGN="TOP">
  <P ALIGN="RIGHT">856,761</TD>
  </TR>
  <TR><TD WIDTH="316" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income</TD>
  <TD WIDTH="159" VALIGN="TOP">
  <P ALIGN="RIGHT">670,572</TD>
  <TD WIDTH="144" VALIGN="TOP">
  <P ALIGN="RIGHT">513,264</TD>
  </TR>
  </TABLE>
    <hr>
    <TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=677 bordercolorlight="#FFFFFF" bordercolordark="#FFFFFF" bgcolor="#FFFFFF" bordercolor="#FFFFFF">
  <TR><TD WIDTH="316" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="159" VALIGN="TOP">
  <P ALIGN="RIGHT">7,231,758</TD>
  <TD WIDTH="144" VALIGN="TOP">
  <P ALIGN="RIGHT">5,077,027</TD>
  </TR>
  <TR><TD WIDTH="316" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="159" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="144" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="316" VALIGN="TOP">
  <P>Direct operating expenses</TD>
  <TD WIDTH="159" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="144" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="316" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Utilities</TD>
  <TD WIDTH="159" VALIGN="TOP">
  <P ALIGN="RIGHT">759,710</TD>
  <TD WIDTH="144" VALIGN="TOP">
  <P ALIGN="RIGHT">577,906</TD>
  </TR>
  <TR><TD WIDTH="316" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Real estate taxes</TD>
  <TD WIDTH="159" VALIGN="TOP">
  <P ALIGN="RIGHT">587,836</TD>
  <TD WIDTH="144" VALIGN="TOP">
  <P ALIGN="RIGHT">511,498</TD>
  </TR>
  <TR><TD WIDTH="316" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maintenance services and supplies</TD>
  <TD WIDTH="159" VALIGN="TOP">
  <P ALIGN="RIGHT">182,217</TD>
  <TD WIDTH="144" VALIGN="TOP">
  <P ALIGN="RIGHT">111,886</TD>
  </TR>
  <TR><TD WIDTH="316" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Janitorial services and supplies</TD>
  <TD WIDTH="159" VALIGN="TOP">
  <P ALIGN="RIGHT">335,649</TD>
  <TD WIDTH="144" VALIGN="TOP">
  <P ALIGN="RIGHT">256,493</TD>
  </TR>
  <TR><TD WIDTH="316" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management fees</TD>
  <TD WIDTH="159" VALIGN="TOP">
  <P ALIGN="RIGHT">235,000</TD>
  <TD WIDTH="144" VALIGN="TOP">
  <P ALIGN="RIGHT">166,591</TD>
  </TR>
  <TR><TD WIDTH="316" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Salaries and wages</TD>
  <TD WIDTH="159" VALIGN="TOP">
  <P ALIGN="RIGHT">658,957</TD>
  <TD WIDTH="144" VALIGN="TOP">
  <P ALIGN="RIGHT">504,877</TD>
  </TR>
  <TR><TD WIDTH="316" VALIGN="TOP">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Administrative and miscellaneous expenses</TD>
  <TD WIDTH="159" VALIGN="TOP">
  <P ALIGN="RIGHT">354,331</TD>
  <TD WIDTH="144" VALIGN="TOP">
  <P ALIGN="RIGHT">255,109</TD>
  </TR>
  </TABLE>
    <hr>
    <TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=677 bordercolor="#FFFFFF" bgcolor="#FFFFFF" bordercolorlight="#FFFFFF" bordercolordark="#FFFFFF">
  <TR><TD WIDTH="316" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="159" VALIGN="TOP">
  <P ALIGN="RIGHT">3,113,700</TD>
  <TD WIDTH="144" VALIGN="TOP">
  <P ALIGN="RIGHT">2,384,360</TD>
  </TR>
  </TABLE>
    <hr>
    <TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=677 bordercolorlight="#FFFFFF" bordercolordark="#FFFFFF" bordercolor="#FFFFFF">
  <TR><TD WIDTH="316" VALIGN="TOP">
  &nbsp;</TD>
  <TD WIDTH="159" VALIGN="TOP">
  <P ALIGN="RIGHT">$4,118,058</TD>
  <TD WIDTH="144" VALIGN="TOP">
  <P ALIGN="RIGHT">$2,692,667</TD>
  </TR>
  </TABLE>
    <hr>
  </CENTER>
  
  <P ALIGN="CENTER">
  <BR>
  <BR>
  <BR>
  See accompanying notes.
  </P>
  <hr size="5" color="#000000">
  
  <P ALIGN="CENTER">&nbsp;
  </P>
  <B><P ALIGN="CENTER">The Nashville Purchase<BR>
  <BR>
  Notes to Statements of Rental Revenues<BR>
  and Direct Operating Expenses<BR>
  </B><BR>
  <B>December 31, 2000</P>
  </B><P><BR>
  <BR>
  <B>1.&nbsp;&nbsp;&nbsp;&nbsp;Organization and Significant Accounting Policies</P>
  </B><P><BR>
  <B>Description of Property</P>
  </B><P ALIGN="JUSTIFY"><BR>
  On December 20, 2001, Parkway Properties, Inc. ("Parkway") purchased the fee simple interest in the Bank of America Plaza office building located at 414 Union Avenue in Nashville, Tennessee (the "Nashville Purchase") from an unrelated party.  The Nashville Purchase contains approximately 418,000 (unaudited) net rentable square feet of office space.</P>
  <P ALIGN="JUSTIFY"><BR>
  <B>Rental Revenue</P>
  </B><FONT SIZE=2><P ALIGN="JUSTIFY"><BR>
  </FONT>Minimum rents from leases are accounted for ratably over the term of each lease.  Tenant reimbursements are recognized as revenue as the applicable services are rendered or expenses incurred.</P>
  <P><BR>
  The future minimum rents on the Nashville Purchase's non-cancelable operating leases at December 31, 2000 are as follows:<BR>
  </P>
  <P ALIGN="CENTER"><CENTER><TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=191 bordercolorlight="#FFFFFF" bordercolordark="#FFFFFF" bordercolor="#FFFFFF">
  <TR><TD WIDTH="45%" VALIGN="TOP">
  <B><P ALIGN="CENTER">Year</B></TD>
  <TD WIDTH="55%" VALIGN="TOP">
  <B><P ALIGN="CENTER">Amount</B></TD>
  </TR>
  <TR><TD WIDTH="100%" VALIGN="TOP" colspan="2">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="45%" VALIGN="TOP">
  <P ALIGN="CENTER">2001</TD>
  <TD WIDTH="55%" VALIGN="TOP">
  <P ALIGN="RIGHT">$&nbsp;&nbsp;4,831,998</TD>
  </TR>
  <TR><TD WIDTH="45%" VALIGN="TOP">
  <P ALIGN="CENTER">2002</TD>
  <TD WIDTH="55%" VALIGN="TOP">
  <P ALIGN="RIGHT">4,636,131</TD>
  </TR>
  <TR><TD WIDTH="45%" VALIGN="TOP">
  <P ALIGN="CENTER">2003</TD>
  <TD WIDTH="55%" VALIGN="TOP">
  <P ALIGN="RIGHT">4,549,330</TD>
  </TR>
  <TR><TD WIDTH="45%" VALIGN="TOP">
  <P ALIGN="CENTER">2004</TD>
  <TD WIDTH="55%" VALIGN="TOP">
  <P ALIGN="RIGHT">3,479,314</TD>
  </TR>
  <TR><TD WIDTH="45%" VALIGN="TOP">
  <P ALIGN="CENTER">2005</TD>
  <TD WIDTH="55%" VALIGN="TOP">
  <P ALIGN="RIGHT">2,357,347</TD>
  </TR>
  <TR><TD WIDTH="45%" VALIGN="TOP">
  <P ALIGN="CENTER">Thereafter</TD>
  <TD WIDTH="55%" VALIGN="TOP">
  <P ALIGN="RIGHT">8,812,249
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="45%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="55%" VALIGN="TOP">
  <P ALIGN="RIGHT">$28,666,369
  <hr size="7" color="#808080">
    </TD>
  </TR>
  </TABLE>
  </CENTER>
  
  <P ALIGN="JUSTIFY"><BR>
  The above amounts do not include tenant reimbursements for utilities, taxes, insurance and common area maintenance.</P>
  <P ALIGN="JUSTIFY"><BR>
  <B>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basis of Accounting</P>
  </B><P ALIGN="JUSTIFY"><BR>
  The accompanying statement of rental revenues and direct operating expenses is presented on the accrual basis.  The statement has been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission for real estate properties acquired.  Accordingly, the statement excludes certain expenses not comparable to the proposed future operations of the Nashville Purchase such as depreciation and mortgage interest expense.  Management is not aware of any material factors relating to the Nashville Purchase that would cause the reported financial information not to be necessarily indicative of future operating results.</P>
  <hr size="5" color="#000000">
  <P ALIGN="JUSTIFY"><BR>
  <B>3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management Fees</P>
  </B><P ALIGN="JUSTIFY"><BR>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management fees of approximately 3.5% of revenues received from the operations of the Nashville Purchase were paid to an unrelated management company.</P>
  <hr size="5" color="#000000">
  <B><P ALIGN="CENTER">PARKWAY PROPERTIES, INC.</P>
  
  <P ALIGN="CENTER">Pro Forma Consolidated Financial Statements</P>
  </B><P ALIGN="CENTER">(Unaudited)</P>
  <P ALIGN="JUSTIFY"><BR>
  <BR>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following unaudited pro forma consolidated balance sheet as of September 30, 2001 and pro forma consolidated statements of income of Parkway Properties, Inc. ("Parkway") for the year ended December 31, 2000 and nine months ended September 30, 2001 give effect to the Nashville Purchase and the Chicago Purchase as these terms are defined in the Notes to Pro Forma Unaudited Financial Statements. The pro forma consolidated financial statements have been prepared by management of Parkway based upon the historical financial statements of Parkway and the adjustments and assumptions in the accompanying notes to the pro forma consolidated financial statements.</P>
  <P ALIGN="JUSTIFY"><BR>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The pro forma consolidated balance sheet sets forth the effect of Parkway's Nashville Purchase, including the short-term bank borrowings, placement of non-recourse mortgage debt and the issuance of Series B Cumulative Convertible Preferred Stock ("Related Financings") as if they had been consummated on September 30, 2001.</P>
  <P ALIGN="JUSTIFY"><BR>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The pro forma consolidated statements of income set forth the effects of the Nashville Purchase, the Chicago Purchase and Related Financings as if each had been consummated on January 1, 2000.  </P>
  <P ALIGN="JUSTIFY"><BR>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These pro forma consolidated financial statements may not be indicative of the results that actually would have occurred if the Nashville Purchase, the Chicago Purchase and Related Financing had occurred on the date indicated or which may be obtained in the future.  The pro forma consolidated financial statements should be read in conjunction with the consolidated financial statements and notes of Parkway included in its annual report on Form 10-K for the year ended December 31, 2000.</P>
  <hr size="5" color="#000000">
  <B><P ALIGN="CENTER">PARKWAY PROPERTIES, INC. AND SUBSIDIARIES<BR>
  PRO FORMA CONSOLIDATED BALANCE SHEET<BR>
  September 30, 2001<BR>
  </B>(Unaudited)<B><BR>
  <BR>
  </P></B>
  <P ALIGN="CENTER"><CENTER><TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=706 bordercolor="#FFFFFF" bordercolorlight="#FFFFFF" bordercolordark="#FFFFFF">
  <TR><TD WIDTH="57%" VALIGN="TOP" height="57">
      <p style="line-height: 100%; margin-bottom: -15"></p>
    </TD>
  <TD WIDTH="13%" VALIGN="TOP" height="57">
  <B><P ALIGN="CENTER" style="line-height: 100%; margin-bottom: -15">Parkway</P>
  <P ALIGN="CENTER" style="line-height: 100%; margin-bottom: -15">Historical</B></TD>
  <TD WIDTH="18%" VALIGN="TOP" height="57">
  <B><P ALIGN="CENTER" style="line-height: 100%; margin-bottom: -15">Pro Forma</P>
  <P ALIGN="CENTER" style="line-height: 100%; margin-bottom: -15">Adjustments (1)</B></TD>
  <TD WIDTH="13%" VALIGN="TOP" height="57">
  <B><P ALIGN="CENTER" style="line-height: 100%; margin-bottom: -15">Parkway</P>
  <P ALIGN="CENTER" style="line-height: 100%; margin-bottom: -15">Pro Forma</B></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">
  <P ALIGN="CENTER">(In thousands)</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="101%" VALIGN="TOP" colspan="4" height="19">
      <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <B><P>Assets</B></TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <P>Real estate related investments:</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Office and parking properties</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">$832,958&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">$31,500</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">$864,458&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated depreciation</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">(73,690)</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">-</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">(73,690)</TD>
  </TR>
  <TR><TD WIDTH="101%" VALIGN="TOP" colspan="4" height="19">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">759,268&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">31,500</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">790,768&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Land held for sale</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">3,733&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">-</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">3,733&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Note receivable from Moore Building Associates LP</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">5,507&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">-</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">5,507&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mortgage loans</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">879&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">-</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">879&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Real estate partnership</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">394&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">-</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">394&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="101%" VALIGN="TOP" colspan="4" height="19">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">769,781&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">31,500</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">801,281&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <P>Interest, rents receivable and other assets</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">29,634&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">-</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">29,634&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <P>Cash and cash equivalents</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">1,535&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">-</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">1,535&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="101%" VALIGN="TOP" colspan="4" height="19">
      <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">$800,950</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">$31,500</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">$832,450&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="101%" VALIGN="TOP" colspan="4" height="19">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <B><P>Liabilities</B></TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <P>Notes payable to banks</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">$&nbsp;67,427&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">$31,500</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">$&nbsp;98,927&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <P>Mortgage notes payable without recourse</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">322,869&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">-</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">322,869&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <P>Accounts payable and other liabilities</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">31,531&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">-</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">31,531&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="101%" VALIGN="TOP" colspan="4" height="19">
      <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">421,827&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">31,500</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">453,327&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="101%" VALIGN="TOP" colspan="4" height="19">
      <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <B><P>Stockholders' Equity</B></TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <P>8.75% Series A Preferred stock, $.001 par value,</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,750,000 shares authorized and 2,650,000 shares</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;issued and outstanding </TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">66,250&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">-</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">66,250&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <P>8.34% Series B Cumulative Convertible Preferred</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;stock, $.001 par value, 2,142,857 shares</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;issued and outstanding</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">75,000&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">-</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">75,000&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <P>Common stock, $.001 par value, 67,250,000 shares</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;authorized, 9,272,181 shares issued and outstanding</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">9&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">-</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">9&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <P>Additional paid-in capital</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">196,743&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">-</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">196,743&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <P>Unearned compensation</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">(2,737)</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">-</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">(2,737)</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <P>Accumulated other comprehensive loss</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">(1,689)</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">-</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">(1,689)</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">
  <P>Retained earnings</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">45,547&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">-</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">45,547&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="101%" VALIGN="TOP" colspan="4" height="19">
      <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">379,123&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">-</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">379,123&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="101%" VALIGN="TOP" colspan="4" height="19">
      <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" height="19">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">$800,950&nbsp;</TD>
  <TD WIDTH="18%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">$31,500</TD>
  <TD WIDTH="13%" VALIGN="TOP" height="19">
  <P ALIGN="RIGHT">$832,450&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="101%" VALIGN="TOP" colspan="4" height="19">
      <hr>
    </TD>
  </TR>
  </TABLE>
  </CENTER>
  
  <P ALIGN="CENTER"><BR>
  <BR>
  <BR>
  <BR>
  See accompanying notes </P>
    <hr size="5" color="#000000">
  <B><FONT SIZE=2><P ALIGN="CENTER">PARKWAY PROPERTIES, INC. AND SUBSIDIARIES<BR>
  PRO FORMA CONSOLIDATED STATEMENT OF INCOME<BR>
  FOR THE YEAR ENDED DECEMBER 31, 2000<BR>
  </FONT>
  </B><FONT SIZE=2>(Unaudited)<BR>
  </FONT>
  </P><CENTER><TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=616 bordercolorlight="#FFFFFF" bordercolordark="#FFFFFF" bordercolor="#FFFFFF" height="24%">
  <TR><TD WIDTH="342" VALIGN="TOP">
      <p style="margin-top: -4; margin-bottom: 7">&nbsp;</p>
    </TD>
  <TD WIDTH="72" VALIGN="TOP">
  <B><FONT SIZE=2><P ALIGN="CENTER" style="margin-top: -4; margin-bottom: 7">Parkway </P>
  <P ALIGN="CENTER" style="margin-top: -4; margin-bottom: 7">Historical</B></FONT></TD>
  <TD WIDTH="115" VALIGN="TOP" COLSPAN=2>
  <B><FONT SIZE=2><P ALIGN="CENTER" style="margin-top: -4; margin-bottom: 7">Pro Forma</P>
  <P ALIGN="CENTER" style="margin-top: -4; margin-bottom: 7">Adjustments (3)</B></FONT></TD>
  <TD WIDTH="77" VALIGN="TOP">
  <B><FONT SIZE=2><P ALIGN="CENTER" style="margin-top: -4; margin-bottom: 7">Parkway</P>
  <P ALIGN="CENTER" style="margin-top: -4; margin-bottom: 7">Pro Forma</B></FONT></TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="268" VALIGN="TOP" COLSPAN=4>
  <FONT SIZE=2><P ALIGN="CENTER">(In thousands, except per share data)</FONT></TD>
  </TR>
  <TR><TD WIDTH="612" VALIGN="TOP" colspan="5">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <B><FONT SIZE=2><P>Revenues</B></FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="80" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>Income from office and parking  properties</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$118,970&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;29,124&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">
  <FONT SIZE=2><P>(a)</FONT></TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$148,094&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>Dividend income</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">1,205&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">1,205&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>Management company income</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">922&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">922&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>Interest on note receivable from Moore Building Associates LP</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">805&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">805&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>Incentive management fee from Moore Building Associates LP</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">191&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">191&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>Interest on cash equivalents</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">216&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">216&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>Interest on mortgage loans</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">90&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">90&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>Deferred gains and other income</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">125&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">125&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="612" VALIGN="TOP" colspan="5">
      <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="72" VALIGN="TOP">
  <p ALIGN="RIGHT"><font size="2">122,524</font></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">29,124&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <p ALIGN="RIGHT"><font size="2">151,648</font></TD>
  </TR>
  <TR><TD WIDTH="612" VALIGN="TOP" colspan="5">
      <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <B><FONT SIZE=2><P>Expenses</B></FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="80" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>Office and parking properties:</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="80" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating expense</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">49,397&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">13,412&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">
  <FONT SIZE=2><P>(a)</FONT></TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">62,809&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense:</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="80" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contractual</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">16,195&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">7,802&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">
  <FONT SIZE=2><P>(c)</FONT></TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">23,997&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of loan costs</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">176&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">176&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">19,651&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <P ALIGN="RIGHT"><font size="2">4,973&nbsp;</font></TD>
  <TD WIDTH="33" VALIGN="TOP">
  <FONT SIZE=2><P>(a)</FONT></TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">24,624&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>Operating expense for other real estate properties</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">60&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">60&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>Interest expense on bank notes:</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="80" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contractual</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">6,389&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">1,509&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">
  <FONT SIZE=2><P>(d)</FONT></TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">7,898&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of loan costs</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">538&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">538&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>Management company expenses</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">738&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">738&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>General and administrative</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">3,951&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">3,951&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="612" VALIGN="TOP" colspan="5">
      <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">97,095&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">27,696&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">124,791&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="612" VALIGN="TOP" colspan="5">
      <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <B><FONT SIZE=2><P>Income before gains and minority interest</B></FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">25,429&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">1,428&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <P ALIGN="RIGHT"><font size="2">26,857&nbsp;</font></TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>Gains on sales of real estate held for sale and </FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="80" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;real estate equity securities</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">9,471&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">9,471&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>Minority interest - unit holders</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">(4)</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">(4)</FONT></TD>
  </TR>
  <TR><TD WIDTH="612" VALIGN="TOP" colspan="5">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <B><FONT SIZE=2><P>Net income</B></FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">34,896&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">1,428&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">36,324&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>Change in unrealized gain on real estate equity securities</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">821&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">821&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="612" VALIGN="TOP" colspan="5">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <B><FONT SIZE=2><P>Comprehensive income</B></FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;35,717&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;1,428&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;37,145&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="612" VALIGN="TOP" colspan="5">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <B><FONT SIZE=2><P>Net income available to common stockholders:</B></FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="80" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>Net income</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;34,896&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;1,428&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;36,324&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>Dividends on preferred stock</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">5,797&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">5,797&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>Dividends on convertible preferred stock</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">4,681&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">4,681&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="612" VALIGN="TOP" colspan="5">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <B><FONT SIZE=2><P>Net income available to common stockholders</B></FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;29,099&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$(3,253)</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;25,846</FONT>&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="612" VALIGN="TOP" colspan="5">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <B><FONT SIZE=2><P>Net income per common share:</B></FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="80" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.96&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.63&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="612" VALIGN="TOP" colspan="5">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <B><FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>Diluted</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.93&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.60&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="612" VALIGN="TOP" colspan="5">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <B><FONT SIZE=2><P>Dividends per common share</B></FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.12&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.12&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="612" VALIGN="TOP" colspan="5">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <B><FONT SIZE=2><P>Weighted average shares outstanding:</B></FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="80" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">9,825&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">9,825&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="612" VALIGN="TOP" colspan="5">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="342" VALIGN="TOP">
  <B><FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>Diluted</FONT></TD>
  <TD WIDTH="72" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">9,926&nbsp;</FONT></TD>
  <TD WIDTH="80" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-&nbsp;</FONT></TD>
  <TD WIDTH="33" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="77" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">9,926&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="612" VALIGN="TOP" colspan="5">
  <hr>
    </TD>
  </TR>
  </TABLE>
  </CENTER>
  
  <P ALIGN="CENTER"><BR>
  <FONT SIZE=2>See accompanying notes.</FONT>
    </P>
    <hr size="5" color="#000000">
  
  <P ALIGN="CENTER">
  <FONT SIZE=2></P>
  <B><P ALIGN="CENTER">PARKWAY PROPERTIES, INC. AND SUBSIDIARIES<BR>
  PRO FORMA CONSOLIDATED STATEMENT OF INCOME<BR>
  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001<BR>
  </B>(Unaudited)</P></FONT>
  <P ALIGN="CENTER">&nbsp;<CENTER><TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=613 bordercolorlight="#FFFFFF" bordercolordark="#FFFFFF" bgcolor="#FFFFFF" bordercolor="#FFFFFF">
  <TR><TD WIDTH="57%" VALIGN="TOP">
      <p style="margin-top: 4; margin-bottom: -2">&nbsp;</p>
    </TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <B><FONT SIZE=2><P ALIGN="CENTER" style="margin-top: 4; margin-bottom: -2">Parkway </P>
  <P ALIGN="CENTER" style="margin-top: 4; margin-bottom: -2">Historical</B></FONT></TD>
  <TD WIDTH="18%" VALIGN="TOP" COLSPAN=2>
  <B><FONT SIZE=2><P ALIGN="CENTER" style="margin-top: 4; margin-bottom: -2">Pro Forma</P>
  <P ALIGN="CENTER" style="margin-top: 4; margin-bottom: -2">Adjustments (3)</B></FONT></TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <B><FONT SIZE=2><P ALIGN="CENTER" style="margin-top: 4; margin-bottom: -2">Parkway</P>
  <P ALIGN="CENTER" style="margin-top: 4; margin-bottom: -2">Pro Forma</B></FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="43%" VALIGN="TOP" COLSPAN=4>
  <FONT SIZE=2><P ALIGN="CENTER">(In thousands, except per share data)</FONT></TD>
  </TR>
  <TR><TD WIDTH="100%" VALIGN="TOP" colspan="5">
      <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Revenues</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Income from office and parking  properties</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$97,674&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$18,333</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">
  <FONT SIZE=2><P>(b)</FONT></TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$116,007&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Dividend income</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">495&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">495&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Management company income</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">624&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">624&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Interest on note receivable from Moore Building Associates LP</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">642&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">642&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Incentive management fee from Moore Building Associates LP</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">181&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">181&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Interest on cash equivalents</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">92&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">92&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Interest on mortgage loans</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">67&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">67&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Deferred gains and other income</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">79&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">79&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="99%" VALIGN="TOP" colspan="5">
      <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">99,854&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">18,333</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">118,187&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="99%" VALIGN="TOP" colspan="5">
      <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Expenses</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Office and parking properties:</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating expense</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">40,998&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">8,886</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">
  <FONT SIZE=2><P>(b)</FONT></TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">49,884&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense:</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contractual</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">14,500&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">3,772</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">
  <FONT SIZE=2><P>(c)</FONT></TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">18,272&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of loan costs</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">170&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">170&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">16,916&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">2,670</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">
  <FONT SIZE=2><P>(d)</FONT></TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">19,586&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Operating expense for other real estate properties</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">27&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">27&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Interest expense on bank notes:</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contractual</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">3,555&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">1,004</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">
  <FONT SIZE=2><P>(d)</FONT></TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">4,559&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of loan costs</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">499&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">499&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Management company expenses</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">212&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">212&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>General and administrative</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">3,511&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">3,511&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="99%" VALIGN="TOP" colspan="5">
      <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">80,388&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">16,332</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">96,720&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="99%" VALIGN="TOP" colspan="5">
      <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Income before gains and minority interest</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">19,466&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">2,001</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">21,467&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Net gains on real estate held for sale, office properties</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and real estate equity securities</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">1,611&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">1,611&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Minority interest - unit holders</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">(2)</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">(2)</FONT></TD>
  </TR>
  <TR><TD WIDTH="99%" VALIGN="TOP" colspan="5">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Net income</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">21,075&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">2,001</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">23,076&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Change in unrealized gain on real estate equity securities</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">(821)</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">(821)</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Change in market value of interest rate swap</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">(1,689)</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">(1,689)</FONT></TD>
  </TR>
  <TR><TD WIDTH="99%" VALIGN="TOP" colspan="5">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Comprehensive income</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$18,565&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;2,001</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$20,566&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="99%" VALIGN="TOP" colspan="5">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Net income available to common stockholders:</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Net income</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$21,075&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">2,001</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$23,076&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP" HEIGHT=17>
  <FONT SIZE=2><P>Dividends on preferred stock</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
  <FONT SIZE=2><P ALIGN="RIGHT">4,348&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
  <FONT SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP" HEIGHT=17><P></P></TD>
  <TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
  <FONT SIZE=2><P ALIGN="RIGHT">4,348&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>Dividends on convertible preferred stock</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">1,684&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">1,826</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">3,510&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="99%" VALIGN="TOP" colspan="5">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Net income available to common stockholders</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$15,043&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;175</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$15,218&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="99%" VALIGN="TOP" colspan="5">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Net income per common share:</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;1.61&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;1.62&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="99%" VALIGN="TOP" colspan="5">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>Diluted</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;1.59&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;1.61&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="99%" VALIGN="TOP" colspan="5">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Dividends per common share</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;1.82&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;1.82&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="99%" VALIGN="TOP" colspan="5">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>Weighted average shares outstanding:</B></FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">9,369&nbsp;</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">-</FONT></TD>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">9,369&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="99%" VALIGN="TOP" colspan="5">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="57%" VALIGN="TOP">
  <B><FONT SIZE=2><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>Diluted</FONT></TD>
  <TD WIDTH="12%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">9,472&nbsp;</FONT></TD>
  </CENTER>
  <TD WIDTH="12%" VALIGN="TOP">
    <p align="right">-</p>
  </TD>
  <CENTER>
  <TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="13%" VALIGN="TOP">
  <FONT SIZE=2><P ALIGN="RIGHT">9,472&nbsp;</FONT></TD>
  </TR>
  <TR><TD WIDTH="99%" VALIGN="TOP" colspan="5">
  <hr>
    </TD>
  </TR>
  </TABLE>
  </CENTER>
  
  <FONT SIZE=2><P ALIGN="CENTER">&nbsp;</P>
  <P ALIGN="CENTER"><BR>
  See accompanying notes.</P>
  <hr size="5" color="#000000">
  </FONT><B><FONT SIZE=3><P ALIGN="CENTER">PARKWAY PROPERTIES, INC.<BR>
  Notes to Pro Forma Consolidated Financial Statements<BR>
  </FONT>
  </B><FONT SIZE=3>(Unaudited)<B><BR>
  </P>
  </B><P ALIGN="CENTER"></P>
  <P ALIGN="JUSTIFY">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December 20, 2001, the Company purchased the fee simple interest in the Bank of America office building located at 414 Union Avenue (the "Nashville Purchase") in Nashville, Tennessee for $30,000,000.  The total purchase price, including closing costs, anticipated first year capital expenditures and leasing commissions, is expected to be approximately $31,500,000.</P>
  <P ALIGN="JUSTIFY"></P>
  <P ALIGN="JUSTIFY">2.&#9;On June 22, 2001, the Company purchased the fee simple interest in an office building located at 233 North Michigan Avenue and an adjacent four-level structured parking garage (the "Chicago Purchase") in Chicago, Illinois for $173,500,000.  The total purchase price, including closing costs, anticipated first year capital expenditures and leasing commissions are expected to be approximately $175,050,000.</P>
  <P ALIGN="JUSTIFY"></P>
  <P ALIGN="JUSTIFY">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The pro forma adjustments to the Consolidated Statement of Income for the year ended December 31, 2000 and nine months ended September 30, 2001 set forth the effects of the Nashville Purchase and the Chicago Purchase as if each had been consummated on January 1, 2000.  </P>
  <P ALIGN="JUSTIFY"></P>
  <P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These pro forma adjustments are detailed below for the year ended December 31, 2000 and nine months ended September 30, 2001.</P>
  <P ALIGN="JUSTIFY"></P>
  <P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The effect on income and expenses from real estate properties due to the above purchases is as follows:</P>
  <DIR>
  <DIR>
  
  <P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;For the year ended December 31, 2000:</P>
  </DIR>
  </DIR>
  </FONT>
  <P ALIGN="CENTER"><CENTER><TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=462 bordercolor="#FFFFFF" bgcolor="#FFFFFF" bordercolorlight="#FFFFFF" bordercolordark="#FFFFFF">
  <TR><TD WIDTH="31%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="24%" VALIGN="TOP">
  <B><FONT SIZE=3><P ALIGN="CENTER">Revenue</B></FONT></TD>
  <TD WIDTH="45%" VALIGN="TOP" COLSPAN=2>
  <B><FONT SIZE=3><P ALIGN="CENTER">Expenses</B></FONT></TD>
  </TR>
  <TR><TD WIDTH="100%" VALIGN="TOP" colspan="4">
      <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="31%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="24%" VALIGN="TOP">
  <B><FONT SIZE=3><P ALIGN="CENTER" style="margin-bottom: -10">Income From</B></FONT></TD>
  <TD WIDTH="45%" VALIGN="TOP" COLSPAN=2>
  <B><FONT SIZE=3><P ALIGN="CENTER" style="margin-bottom: -10">Real Estate Owned</B></FONT>
  <hr color="#808080">
    </TD>
  </TR>
  <TR><TD WIDTH="31%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="24%" VALIGN="TOP">
  <B><FONT SIZE=3><P ALIGN="CENTER" style="margin-top: -5; margin-bottom: 0">Real Estate</B></FONT></TD>
  <TD WIDTH="22%" VALIGN="TOP">
  <B><FONT SIZE=3><P ALIGN="CENTER" style="margin-top: -5; margin-bottom: 0">Operating</B></FONT></TD>
  <TD WIDTH="23%" VALIGN="TOP">
  <B><FONT SIZE=3><P ALIGN="CENTER" style="margin-top: -5; margin-bottom: 0">Depreciation</B></FONT></TD>
  </TR>
  <TR><TD WIDTH="31%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="24%" VALIGN="TOP">
  <B><FONT SIZE=3><P ALIGN="CENTER" style="margin-top: -5; margin-bottom: 0">Properties</B></FONT></TD>
  <TD WIDTH="22%" VALIGN="TOP">
  <B><FONT SIZE=3><P ALIGN="CENTER" style="margin-top: -5; margin-bottom: 0">Expense</B></FONT></TD>
  <TD WIDTH="23%" VALIGN="TOP">
  <B><FONT SIZE=3><P ALIGN="CENTER" style="margin-top: -5; margin-bottom: 0">Expense</B></FONT></TD>
  </TR>
  <TR><TD WIDTH="100%" VALIGN="TOP" colspan="4">
      <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="31%" VALIGN="TOP">
  <FONT SIZE=3><P>Nashville Purchase</FONT></TD>
  <TD WIDTH="24%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="RIGHT">$&nbsp;&nbsp;7,232,000</FONT></TD>
  <TD WIDTH="22%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="RIGHT">$&nbsp;&nbsp;3,114,000</FONT></TD>
  <TD WIDTH="23%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;709,000</FONT></TD>
  </TR>
  <TR><TD WIDTH="31%" VALIGN="TOP">
  <FONT SIZE=3><P>Chicago Purchase</FONT></TD>
  <TD WIDTH="24%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="RIGHT">21,892,000</FONT></TD>
  <TD WIDTH="22%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="RIGHT">10,298,000</FONT></TD>
  <TD WIDTH="23%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="RIGHT">4,264,000</FONT></TD>
  </TR>
  <TR><TD WIDTH="100%" VALIGN="TOP" colspan="4">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="31%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="24%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="RIGHT">$29,124,000</FONT></TD>
  <TD WIDTH="22%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="RIGHT">$13,412,000</FONT></TD>
  <TD WIDTH="23%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="RIGHT">$4,973,000</FONT></TD>
  </TR>
  <TR><TD WIDTH="100%" VALIGN="TOP" colspan="4">
      <hr>
    </TD>
  </TR>
  </TABLE>
  </CENTER>
  
  <FONT SIZE=3><P ALIGN="JUSTIFY"><BR>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation is provided by the straight-line method over the estimated useful life (40
  years for buildings and 5 - 15 years for building increments).</P>
  <P><BR>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;For the nine months ended September 30, 2001:<BR>
  </P></FONT>
  <P ALIGN="CENTER"><CENTER><TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=455 bordercolor="#FFFFFF" bordercolorlight="#FFFFFF" bordercolordark="#FFFFFF">
  <TR><TD WIDTH="31%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="25%" VALIGN="TOP">
  <B><FONT SIZE=3><P ALIGN="CENTER">Revenue</B></FONT></TD>
  <TD WIDTH="44%" VALIGN="TOP" COLSPAN=2>
  <B><FONT SIZE=3><P ALIGN="CENTER">Expenses</B></FONT></TD>
  </TR>
  <TR><TD WIDTH="100%" VALIGN="TOP" colspan="4">
      <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="31%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="25%" VALIGN="TOP">
  <B><FONT SIZE=3><P ALIGN="CENTER" style="margin-top: -5; margin-bottom: 0">Income From</B></FONT></TD>
  <TD WIDTH="44%" VALIGN="TOP" COLSPAN=2>
  <B><FONT SIZE=3><P ALIGN="CENTER" style="margin-top: -5; margin-bottom: 0">Real Estate Owned</B></FONT></TD>
  </TR>
  <TR><TD WIDTH="31%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="25%" VALIGN="TOP">
  <p style="margin-top: -5; margin-bottom: 0">&nbsp;</TD>
  <TD WIDTH="44%" VALIGN="TOP" COLSPAN=2>
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="31%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="25%" VALIGN="TOP">
  <B><FONT SIZE=3><P ALIGN="CENTER" style="margin-top: -5; margin-bottom: 0">Real Estate</B></FONT></TD>
  <TD WIDTH="20%" VALIGN="TOP">
  <B><FONT SIZE=3><P ALIGN="CENTER" style="margin-top: -5; margin-bottom: 0">Operating</B></FONT></TD>
  <TD WIDTH="24%" VALIGN="TOP">
  <B><FONT SIZE=3><P ALIGN="CENTER" style="margin-top: -5; margin-bottom: 0">Depreciation</B></FONT></TD>
  </TR>
  <TR><TD WIDTH="31%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="25%" VALIGN="TOP">
  <B><FONT SIZE=3><P ALIGN="CENTER" style="margin-top: -5; margin-bottom: 0">Properties</B></FONT></TD>
  <TD WIDTH="20%" VALIGN="TOP">
  <B><FONT SIZE=3><P ALIGN="CENTER" style="margin-top: -5; margin-bottom: 0">Expense</B></FONT></TD>
  <TD WIDTH="24%" VALIGN="TOP">
  <B><FONT SIZE=3><P ALIGN="CENTER" style="margin-top: -5; margin-bottom: 0">Expense</B></FONT></TD>
  </TR>
  <TR><TD WIDTH="100%" VALIGN="TOP" colspan="4">
      <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="31%" VALIGN="TOP">
  <FONT SIZE=3><P>Nashville Purchase</FONT></TD>
  <TD WIDTH="25%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="RIGHT">$  5,077,000</FONT></TD>
  <TD WIDTH="20%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="RIGHT">$2,384,000</FONT></TD>
  <TD WIDTH="24%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;531,000</FONT></TD>
  </TR>
  <TR><TD WIDTH="31%" VALIGN="TOP">
  <FONT SIZE=3><P>Chicago Purchase</FONT></TD>
  <TD WIDTH="25%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="RIGHT">13,256,000</FONT></TD>
  <TD WIDTH="20%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="RIGHT">6,502,000</FONT></TD>
  <TD WIDTH="24%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="RIGHT">2,139,000</FONT></TD>
  </TR>
  <TR><TD WIDTH="100%" VALIGN="TOP" colspan="4">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="31%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="25%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="RIGHT">$18,333,000</FONT></TD>
  <TD WIDTH="20%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="RIGHT">$8,886,000</FONT></TD>
  <TD WIDTH="24%" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="RIGHT">$2,670,000</FONT></TD>
  </TR>
  <TR><TD WIDTH="100%" VALIGN="TOP" colspan="4">
      <hr>
    </TD>
  </TR>
  </TABLE>
  </CENTER>
  
  <FONT SIZE=3>
  <P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation is provided by the straight-line method over the estimated useful life (40
  years for buildings and 5 - 15 years for building increments).</P>
  <hr size="5" color="#000000">
  <P ALIGN="JUSTIFY"><BR>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;Pro forma interest expense on real estate owned reflects interest on the non-recourse debt placed upon purchase at the actual amount and rate as if placed January 1, 2000 and is detailed below.</P>
  <P ALIGN="JUSTIFY"></P></FONT>
  <P ALIGN="CENTER"><CENTER><TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=524 bordercolorlight="#FFFFFF" bordercolordark="#FFFFFF" bordercolor="#FFFFFF">
  <TR><TD WIDTH="138" VALIGN="TOP">
  <B><FONT SIZE=3><P ALIGN="CENTER">Property/Placement</B></FONT></TD>
  <TD WIDTH="91" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="85" VALIGN="TOP">
  <B><FONT SIZE=3><P ALIGN="CENTER">Year Ended</B></FONT></TD>
  <TD WIDTH="134" VALIGN="TOP">
  <B><FONT SIZE=3><P ALIGN="CENTER">Nine Months Ended</B></FONT></TD>
  </TR>
  <TR><TD WIDTH="138" VALIGN="TOP">
  <B><FONT SIZE=3><P ALIGN="CENTER">Date/Rate</B></FONT></TD>
  <TD WIDTH="91" VALIGN="TOP">
  <B><FONT SIZE=3><P ALIGN="CENTER">Debt</B></FONT></TD>
  <TD WIDTH="85" VALIGN="TOP">
  <B><FONT SIZE=3><P ALIGN="CENTER">12/31/00</B></FONT></TD>
  <TD WIDTH="134" VALIGN="TOP">
  <B><FONT SIZE=3><P ALIGN="CENTER">09/30/01</FONT></B></TD>
  </TR>
  <TR><TD WIDTH="448" VALIGN="TOP" colspan="4">
  <hr>
    </TD>
  </TR>
  <TR><TD WIDTH="138" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="CENTER">Chicago Purchase</FONT></TD>
  <TD WIDTH="91" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="85" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="134" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="138" VALIGN="TOP">
  <FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6/01&nbsp;&nbsp;&nbsp;7.36%</FONT></TD>
  <TD WIDTH="91" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="CENTER">$106,000,000</FONT></TD>
  <TD WIDTH="85" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="CENTER">$7,802,000</FONT></TD>
  <TD WIDTH="134" VALIGN="TOP">
  <FONT SIZE=3><P ALIGN="CENTER">$3,772,000</FONT></TD>
  </TR>
  </TABLE>
  </CENTER>
  
  <FONT SIZE=3>
  <P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;The pro forma effect of the Nashville Purchase and the Chicago Purchase on interest expense on notes payable to banks was $1,509,000 for the year ended December 31, 2000 and $1,004,000 for the nine months ended September 30, 2001.</P>
  <P ALIGN="JUSTIFY"></P>
  <P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;The pro forma effect of the issuance of 1,603,499 shares of 8.34% Series B Cumulative Convertible Preferred stock on dividends on preferred stock was $4,681,000 for the year ended December 31, 2000 and
  $1,826,000 for the nine months ended September 30, 2001.</P>
  <P ALIGN="JUSTIFY"><BR>
  4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The pro forma net income per share for the year ended December 31, 2000 and the nine months ended September 30, 2001 reflect the issuance of 1,603,499 shares of 8.34% Series B Cumulative Convertible Preferred stock in connection with the Chicago Purchase.</P>
  <P ALIGN="JUSTIFY"><BR>
  5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No additional income tax expenses were provided because of the Company's net operating loss carryover and status as a REIT.</P>
  <P ALIGN="JUSTIFY"><BR>
  6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted net income per share for the year ended December 31, 2000 and nine months ended September 30, 2001 were $2.93 and
  $1.59, respectively, based on diluted weighted average shares outstanding of 9,926,000 and 9,472,000, respectively. </P>
  <P ALIGN="JUSTIFY"><BR>
  &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pro Forma diluted net income per share for the year ended December 31, 2000 and the nine months ended September 30, 2001 were
  $2.60 and $1.61, respectively, based on pro forma diluted weighted average shares outstanding of 9,926,000 and 9,472,000, respectively.</P>
  <hr size="5" color="#000000">
  <P ALIGN="CENTER"></P>
  <B><P ALIGN="CENTER">FORM 8-K<BR>
  <BR>
  PARKWAY PROPERTIES, INC.<BR>
  <BR>
  SIGNATURES<BR>
  <BR>
  </P>
  </B><P ALIGN="JUSTIFY">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.</P>
  <P ALIGN="JUSTIFY"><BR>
  </P></FONT>
  <TABLE BORDER="1" CELLSPACING=0 CELLPADDING=0 WIDTH=631 bordercolor="#FFFFFF" bordercolorlight="#FFFFFF" bordercolordark="#FFFFFF">
  <TR><TD WIDTH="51%" VALIGN="TOP">
  <FONT SIZE=3><P>DATE:&nbsp;&nbsp;&nbsp;January 28, 2002</FONT></TD>
  <TD WIDTH="49%" VALIGN="TOP" COLSPAN=2>
  <FONT SIZE=3><P>PARKWAY PROPERTIES, INC.</FONT></TD>
  </TR>
  <TR><TD WIDTH="51%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="42%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="51%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="42%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="51%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="42%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="51%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">
  <FONT SIZE=3><P>BY:</FONT></TD>
  <TD WIDTH="42%" VALIGN="TOP">
  <FONT SIZE=3><P>/s/&nbsp;Mandy M. Montgomery</FONT>
    <hr align="left">
  </TD>
  </TR>
  <TR><TD WIDTH="51%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="42%" VALIGN="TOP">
  <FONT SIZE=3><P>Mandy M. Montgomery, CPA</FONT></TD>
  </TR>
  <TR><TD WIDTH="51%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="42%" VALIGN="TOP">
  <FONT SIZE=3><P>Controller</FONT></TD>
  </TR>
  <TR><TD WIDTH="51%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="42%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="51%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="42%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="51%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="42%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  <TR><TD WIDTH="51%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="42%" VALIGN="TOP">
  <FONT SIZE=3><P>/s/&nbsp;Regina P. Shows</FONT>
    <hr align="left">
  </TD>
  </TR>
  <TR><TD WIDTH="51%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="42%" VALIGN="TOP">
  <FONT SIZE=3><P>Regina P. Shows, CPA</FONT></TD>
  </TR>
  <TR><TD WIDTH="51%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="42%" VALIGN="TOP">
  <FONT SIZE=3><P>Chief Accounting Officer</FONT></TD>
  </TR>
  <TR><TD WIDTH="51%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
  <TD WIDTH="42%" VALIGN="TOP">&nbsp;</TD>
  </TR>
  </TABLE>
  
  <FONT SIZE=3><P><BR>
  </P>
  <hr size="5" color="#000000">
  </FONT><P ALIGN="CENTER"></P></BODY>
  </HTML>
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metadata_filer: {"company-data": {"conformed-name": "PARKWAY PROPERTIES INC", "cik": "0000729237", "assigned-sic": "6798", "irs-number": "742123597", "state-of-incorporation": "MD", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-11533", "film-number": "02519610"}, "business-address": {"street1": "ONE JACKSON PL", "street2": "188 E CAPITOL ST STE 1000", "city": "JACKSON", "state": "MS", "zip": "39225-4647", "phone": "6019484091"}, "mail-address": {"street1": "ONE JACKSON PL P O BOX 24647", "street2": "188 E CAPITOL ST STE 1000", "city": "JACKSON", "state": "MS", "zip": "39225"}, "former-company": {"former-conformed-name": "PARKWAY CO", "date-changed": "19951018"}}
text: UNITED STATES
  UNITED STATES
  SECURITIES AND EXCHANGE COMMISSION
  WASHINGTON, DC  20549
  FORM 8-K
  CURRENT REPORT
  Pursuant to Section 13 or 15(d)
  of the
  Securities Exchange Act of 1934
  Date of Report (Date of earliest event reported):
  N/A
  PARKWAY PROPERTIES, INC.
  (Exact name of registrant as specified in its charter)
  Maryland
  1-11533
  74-2123597
  (State or other jurisdiction of
  incorporation or organization)
  (Commission File Number)
  (IRS Employer Identification Number)
  One Jackson Place Suite 1000
  188 East Capitol Street
  P. O. Box 24647
  Jackson, Mississippi  39225-4647
  (Address of principal executive offices) (Zip Code)
  Registrant's telephone number, including area code
  (601) 948-4091
  (Former name, former address and former fiscal year, if changed since last report)
  FORM 8-K
  PARKWAY PROPERTIES, INC.
  Item 5. Other Events.
  On December 20, 2001, Parkway Properties, Inc. ("Parkway") purchased the Bank of America Plaza (the "Nashville Purchase"), a 418,000 square foot office building in Nashville, Tennessee.  Parkway acquired the Nashville Purchase for a purchase price of $30 million plus $1.5 million in closing costs and anticipated first year capital expenditures and leasing commissions.  The purchase was funded with bank borrowings on a line of credit with J. P. Morgan Chase & Co. at a rate equal to the 30-day Libor rate plus 137.5 basis points and was 3.3125% at December 31, 2001.
  The twenty-story office building, located in the Nashville central business district, was constructed in 1977 and subsequently renovated in 1995 and 1999.  The property is currently 89% leased and has a rent roll that includes five creditworthy, stable tenants which account for 77% of the building's total rentable square footage.  Bank of America is the largest single tenant occupying 180,333 square feet (43% of the rentable square footage) under a lease that expires in 2012.  Other national building tenants include the Boult, Cummings law firm (24%), Ernst & Young LLP (6%), Chicago Title (2%) and New York Life (2%).
  Item 7.  Financial Statements and Exhibits.
  (a)    Financial Statements
  The following audited financial statement of the Nashville Purchase for the year ended December 31, 2000 is attached hereto.  Also included is the unaudited financial statement for the nine months ended September 30, 2001.
  Page
  Report of Independent Auditors
  3
  Statements of Rental Revenues and Direct Operating Expenses
  4
  Notes to Statements of Rental Revenues and Direct Operating Expenses
  5
  (b)    Pro Forma Consolidated Financial Statements
  The following unaudited Pro Forma Consolidated Financial Statements of Parkway are attached hereto:
  Page
  Pro Forma Consolidated Financial Statements (Unaudited)
  7
  Pro Forma Consolidated Balance Sheet (Unaudited) - As of September 30, 2001
  8
  Pro Forma Consolidated Statement of Income (Unaudited) -
  For the Year Ended December 31, 2000
  9
  Pro Forma Consolidated Statement of Income (Unaudited) -
  For the Nine Months Ended September 30, 2001
  10
  Notes to Pro Forma Consolidated Financial Statements (Unaudited)
  11
  Report of Independent Auditors
  The Board of Directors
  Parkway Properties, Inc.
  We have audited the accompanying statement of rental revenues and direct operating expenses of the Nashville Purchase for the year ended December 31, 2000.  This statement is the responsibility of management.  Our responsibility is to express an opinion on this statement based on our audit.
  We conducted our audit in accordance with auditing standards generally accepted in the United States.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of rental revenues and direct operating expenses is free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement.  An audit also includes assessing the basis of accounting and accounting principles used and significant estimates made by management, as well as evaluating the overall statement presentation.  We believe that our audit provides a reasonable basis for our opinion.
  The accompanying statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in a Form 8-K of Parkway Properties, Inc., as described in Note 2, and is not intended to be a complete presentation of the Nashville Purchase revenues and expenses.
  In our opinion, the statement of rental revenue and direct operating expenses referred to above presents fairly, in all material respects, the rental revenues and direct operating expenses described in Note 2 of the Nashville Purchase for the year ended December 31, 2000, in conformity with accounting principles generally accepted in the United States.
  We have compiled the accompanying statement of rental revenues and direct operating expenses of the Nashville Purchase for the nine months ended September 30, 2001 in accordance with the Statement on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. A compilation is limited to presenting in the form of a financial statement information that is the representation of management.  We have not audited or reviewed the statement of rental revenues and direct operating expenses of the Nashville Purchase for the nine months ended September 30, 2001 and, accordingly, do not express an opinion or any other form of assurance on the statement.
  Jackson, Mississippi
  ey
  December 19, 2001
  The Nashville Purchase
  Statements of Rental Revenues
  and Direct Operating Expenses
  Year Ended
  Nine Months Ended
  December 31, 2000
  September 30, 2001
  (unaudited)
  Rental revenue
  Minimum rents
  $5,429,700
  $3,707,002
  Reimbursed charges
  1,131,486
  856,761
  Other income
  670,572
  513,264
  7,231,758
  5,077,027
  Direct operating expenses
  Utilities
  759,710
  577,906
  Real estate taxes
  587,836
  511,498
  Maintenance services and supplies
  182,217
  111,886
  Janitorial services and supplies
  335,649
  256,493
  Management fees
  235,000
  166,591
  Salaries and wages
  658,957
  504,877
  Administrative and miscellaneous expenses
  354,331
  255,109
  3,113,700
  2,384,360
  $4,118,058
  $2,692,667
  See accompanying notes.
  The Nashville Purchase
  Notes to Statements of Rental Revenues
  and Direct Operating Expenses
  December 31, 2000
  1.    Organization and Significant Accounting Policies
  Description of Property
  On December 20, 2001, Parkway Properties, Inc. ("Parkway") purchased the fee simple interest in the Bank of America Plaza office building located at 414 Union Avenue in Nashville, Tennessee (the "Nashville Purchase") from an unrelated party.  The Nashville Purchase contains approximately 418,000 (unaudited) net rentable square feet of office space.
  Rental Revenue
  Minimum rents from leases are accounted for ratably over the term of each lease.  Tenant reimbursements are recognized as revenue as the applicable services are rendered or expenses incurred.
  The future minimum rents on the Nashville Purchase's non-cancelable operating leases at December 31, 2000 are as follows:
  Year
  Amount
  2001
  $  4,831,998
  2002
  4,636,131
  2003
  4,549,330
  2004
  3,479,314
  2005
  2,357,347
  Thereafter
  8,812,249
  $28,666,369
  The above amounts do not include tenant reimbursements for utilities, taxes, insurance and common area maintenance.
  2.     Basis of Accounting
  The accompanying statement of rental revenues and direct operating expenses is presented on the accrual basis.  The statement has been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission for real estate properties acquired.  Accordingly, the statement excludes certain expenses not comparable to the proposed future operations of the Nashville Purchase such as depreciation and mortgage interest expense.  Management is not aware of any material factors relating to the Nashville Purchase that would cause the reported financial information not to be necessarily indicative of future operating results.
  3.     Management Fees
  Management fees of approximately 3.5% of revenues received from the operations of the Nashville Purchase were paid to an unrelated management company.
  PARKWAY PROPERTIES, INC.
  Pro Forma Consolidated Financial Statements
  (Unaudited)
  The following unaudited pro forma consolidated balance sheet as of September 30, 2001 and pro forma consolidated statements of income of Parkway Properties, Inc. ("Parkway") for the year ended December 31, 2000 and nine months ended September 30, 2001 give effect to the Nashville Purchase and the Chicago Purchase as these terms are defined in the Notes to Pro Forma Unaudited Financial Statements. 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 Nashville Purchase, including the short-term bank borrowings, placement of non-recourse mortgage debt and the issuance of Series B Cumulative Convertible Preferred Stock ("Related Financings") as if they had been consummated on September 30, 2001.
  The pro forma consolidated statements of income set forth the effects of the Nashville Purchase, the Chicago Purchase and Related Financings as if each had been consummated on January 1, 2000.
  These pro forma consolidated financial statements may not be indicative of the results that actually would have occurred if the Nashville Purchase, the Chicago Purchase and Related Financing had occurred on the date indicated or which may be obtained in the future.  The pro forma consolidated financial statements should be read in conjunction with the consolidated financial statements and notes of Parkway included in its annual report on Form 10-K for the year ended December 31, 2000.
  PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
  PRO FORMA CONSOLIDATED BALANCE SHEET
  September 30, 2001
  (Unaudited)
  Parkway
  Historical
  Pro Forma
  Adjustments (1)
  Parkway
  Pro Forma
  (In thousands)
  Assets
  Real estate related investments:
  Office and parking properties
  $832,958
  $31,500
  $864,458
  Accumulated depreciation
  (73,690)
  -
  (73,690)
  759,268
  31,500
  790,768
  Land held for sale
  3,733
  -
  3,733
  Note receivable from Moore Building Associates LP
  5,507
  -
  5,507
  Mortgage loans
  879
  -
  879
  Real estate partnership
  394
  -
  394
  769,781
  31,500
  801,281
  Interest, rents receivable and other assets
  29,634
  -
  29,634
  Cash and cash equivalents
  1,535
  -
  1,535
  $800,950
  $31,500
  $832,450
  Liabilities
  Notes payable to banks
  $ 67,427
  $31,500
  $ 98,927
  Mortgage notes payable without recourse
  322,869
  -
  322,869
  Accounts payable and other liabilities
  31,531
  -
  31,531
  421,827
  31,500
  453,327
  Stockholders' Equity
  8.75% Series A Preferred stock, $.001 par value,
  2,750,000 shares authorized and 2,650,000 shares
  issued and outstanding
  66,250
  -
  66,250
  8.34% Series B Cumulative Convertible Preferred
  stock, $.001 par value, 2,142,857 shares
  issued and outstanding
  75,000
  -
  75,000
  Common stock, $.001 par value, 67,250,000 shares
  authorized, 9,272,181 shares issued and outstanding
  9
  -
  9
  Additional paid-in capital
  196,743
  -
  196,743
  Unearned compensation
  (2,737)
  -
  (2,737)
  Accumulated other comprehensive loss
  (1,689)
  -
  (1,689)
  Retained earnings
  45,547
  -
  45,547
  379,123
  -
  379,123
  $800,950
  $31,500
  $832,450
  See accompanying notes
  PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
  PRO FORMA CONSOLIDATED STATEMENT OF INCOME
  FOR THE YEAR ENDED DECEMBER 31, 2000
  (Unaudited)
  Parkway
  Historical
  Pro Forma
  Adjustments (3)
  Parkway
  Pro Forma
  (In thousands, except per share data)
  Revenues
  Income from office and parking  properties
  $118,970
  $  29,124
  (a)
  $148,094
  Dividend income
  1,205
  -
  1,205
  Management company income
  922
  -
  922
  Interest on note receivable from Moore Building Associates LP
  805
  -
  805
  Incentive management fee from Moore Building Associates LP
  191
  -
  191
  Interest on cash equivalents
  216
  -
  216
  Interest on mortgage loans
  90
  -
  90
  Deferred gains and other income
  125
  -
  125
  122,524
  29,124
  151,648
  Expenses
  Office and parking properties:
  Operating expense
  49,397
  13,412
  (a)
  62,809
  Interest expense:
  Contractual
  16,195
  7,802
  (c)
  23,997
  Amortization of loan costs
  176
  -
  176
  Depreciation and amortization
  19,651
  4,973
  (a)
  24,624
  Operating expense for other real estate properties
  60
  -
  60
  Interest expense on bank notes:
  Contractual
  6,389
  1,509
  (d)
  7,898
  Amortization of loan costs
  538
  -
  538
  Management company expenses
  738
  -
  738
  General and administrative
  3,951
  -
  3,951
  97,095
  27,696
  124,791
  Income before gains and minority interest
  25,429
  1,428
  26,857
  Gains on sales of real estate held for sale and
  real estate equity securities
  9,471
  -
  9,471
  Minority interest - unit holders
  (4)
  -
  (4)
  Net income
  34,896
  1,428
  36,324
  Change in unrealized gain on real estate equity securities
  821
  -
  821
  Comprehensive income
  $  35,717
  $ 1,428
  $  37,145
  Net income available to common stockholders:
  Net income
  $  34,896
  $ 1,428
  $  36,324
  Dividends on preferred stock
  5,797
  -
  5,797
  Dividends on convertible preferred stock
  -
  4,681
  4,681
  Net income available to common stockholders
  $  29,099
  $(3,253)
  $  25,846
  Net income per common share:
  Basic
  $      2.96
  -
  $      2.63
  Diluted
  $      2.93
  -
  $      2.60
  Dividends per common share
  $      2.12
  -
  $      2.12
  Weighted average shares outstanding:
  Basic
  9,825
  -
  9,825
  Diluted
  9,926
  -
  9,926
  See accompanying notes.
  PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
  PRO FORMA CONSOLIDATED STATEMENT OF INCOME
  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001
  (Unaudited)
  Parkway
  Historical
  Pro Forma
  Adjustments (3)
  Parkway
  Pro Forma
  (In thousands, except per share data)
  Revenues
  Income from office and parking  properties
  $97,674
  $18,333
  (b)
  $116,007
  Dividend income
  495
  -
  495
  Management company income
  624
  -
  624
  Interest on note receivable from Moore Building Associates LP
  642
  -
  642
  Incentive management fee from Moore Building Associates LP
  181
  -
  181
  Interest on cash equivalents
  92
  -
  92
  Interest on mortgage loans
  67
  -
  67
  Deferred gains and other income
  79
  -
  79
  99,854
  18,333
  118,187
  Expenses
  Office and parking properties:
  Operating expense
  40,998
  8,886
  (b)
  49,884
  Interest expense:
  Contractual
  14,500
  3,772
  (c)
  18,272
  Amortization of loan costs
  170
  -
  170
  Depreciation and amortization
  16,916
  2,670
  (d)
  19,586
  Operating expense for other real estate properties
  27
  -
  27
  Interest expense on bank notes:
  Contractual
  3,555
  1,004
  (d)
  4,559
  Amortization of loan costs
  499
  -
  499
  Management company expenses
  212
  -
  212
  General and administrative
  3,511
  -
  3,511
  80,388
  16,332
  96,720
  Income before gains and minority interest
  19,466
  2,001
  21,467
  Net gains on real estate held for sale, office properties
  and real estate equity securities
  1,611
  -
  1,611
  Minority interest - unit holders
  (2)
  -
  (2)
  Net income
  21,075
  2,001
  23,076
  Change in unrealized gain on real estate equity securities
  (821)
  -
  (821)
  Change in market value of interest rate swap
  (1,689)
  -
  (1,689)
  Comprehensive income
  $18,565
  $  2,001
  $20,566
  Net income available to common stockholders:
  Net income
  $21,075
  2,001
  $23,076
  Dividends on preferred stock
  4,348
  -
  4,348
  Dividends on convertible preferred stock
  1,684
  1,826
  3,510
  Net income available to common stockholders
  $15,043
  $     175
  $15,218
  Net income per common share:
  Basic
  $    1.61
  -
  $    1.62
  Diluted
  $    1.59
  -
  $    1.61
  Dividends per common share
  $    1.82
  -
  $    1.82
  Weighted average shares outstanding:
  Basic
  9,369
  -
  9,369
  Diluted
  9,472
  -
  9,472
  See accompanying notes.
  PARKWAY PROPERTIES, INC.
  Notes to Pro Forma Consolidated Financial Statements
  (Unaudited)
  1.       On December 20, 2001, the Company purchased the fee simple interest in the Bank of America office building located at 414 Union Avenue (the "Nashville Purchase") in Nashville, Tennessee for $30,000,000.  The total purchase price, including closing costs, anticipated first year capital expenditures and leasing commissions, is expected to be approximately $31,500,000.
  2.	On June 22, 2001, the Company purchased the fee simple interest in an office building located at 233 North Michigan Avenue and an adjacent four-level structured parking garage (the "Chicago Purchase") in Chicago, Illinois for $173,500,000.  The total purchase price, including closing costs, anticipated first year capital expenditures and leasing commissions are expected to be approximately $175,050,000.
  3.       The pro forma adjustments to the Consolidated Statement of Income for the year ended December 31, 2000 and nine months ended September 30, 2001 set forth the effects of the Nashville Purchase and the Chicago Purchase as if each had been consummated on January 1, 2000.
  These pro forma adjustments are detailed below for the year ended December 31, 2000 and nine months ended September 30, 2001.
  The effect on income and expenses from real estate properties due to the above purchases is as follows:
  (a)   For the year ended December 31, 2000:
  Revenue
  Expenses
  Income From
  Real Estate Owned
  Real Estate
  Operating
  Depreciation
  Properties
  Expense
  Expense
  Nashville Purchase
  $  7,232,000
  $  3,114,000
  $   709,000
  Chicago Purchase
  21,892,000
  10,298,000
  4,264,000
  $29,124,000
  $13,412,000
  $4,973,000
  Depreciation is provided by the straight-line method over the estimated useful life (40
  years for buildings and 5 - 15 years for building increments).
  (b)   For the nine months ended September 30, 2001:
  Revenue
  Expenses
  Income From
  Real Estate Owned
  Real Estate
  Operating
  Depreciation
  Properties
  Expense
  Expense
  Nashville Purchase
  $  5,077,000
  $2,384,000
  $   531,000
  Chicago Purchase
  13,256,000
  6,502,000
  2,139,000
  $18,333,000
  $8,886,000
  $2,670,000
  Depreciation is provided by the straight-line method over the estimated useful life (40
  years for buildings and 5 - 15 years for building increments).
  (c)   Pro forma interest expense on real estate owned reflects interest on the non-recourse debt placed upon purchase at the actual amount and rate as if placed January 1, 2000 and is detailed below.
  Property/Placement
  Year Ended
  Nine Months Ended
  Date/Rate
  Debt
  12/31/00
  09/30/01
  Chicago Purchase
  6/01   7.36%
  $106,000,000
  $7,802,000
  $3,772,000
  (d)   The pro forma effect of the Nashville Purchase and the Chicago Purchase on interest expense on notes payable to banks was $1,509,000 for the year ended December 31, 2000 and $1,004,000 for the nine months ended September 30, 2001.
  (e)   The pro forma effect of the issuance of 1,603,499 shares of 8.34% Series B Cumulative Convertible Preferred stock on dividends on preferred stock was $4,681,000 for the year ended December 31, 2000 and
  $1,826,000 for the nine months ended September 30, 2001.
  4.       The pro forma net income per share for the year ended December 31, 2000 and the nine months ended September 30, 2001 reflect the issuance of 1,603,499 shares of 8.34% Series B Cumulative Convertible Preferred stock in connection with the Chicago Purchase.
  5.       No additional income tax expenses were provided because of the Company's net operating loss carryover and status as a REIT.
  6.       Diluted net income per share for the year ended December 31, 2000 and nine months ended September 30, 2001 were $2.93 and
  $1.59, respectively, based on diluted weighted average shares outstanding of 9,926,000 and 9,472,000, respectively.
  Pro Forma diluted net income per share for the year ended December 31, 2000 and the nine months ended September 30, 2001 were
  $2.60 and $1.61, respectively, based on pro forma diluted weighted average shares outstanding of 9,926,000 and 9,472,000, respectively.
  FORM 8-K
  PARKWAY PROPERTIES, INC.
  SIGNATURES
  Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
  DATE:   January 28, 2002
  PARKWAY PROPERTIES, INC.
  BY:
  /s/ Mandy M. Montgomery
  Mandy M. Montgomery, CPA
  Controller
  /s/ Regina P. Shows
  Regina P. Shows, CPA
  Chief Accounting Officer