Parkway Properties Inc – ‘424B4’ on 11/8/96

As of:  Friday, 11/8/96   ·   Accession #:  950152-96-5805   ·   File #:  333-11631

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Prospectus   —   Rule 424(b)(4)
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Document/Exhibit                   Description                      Pages   Size 

 1: 424B4       Parkway Properties 424(B)(4)                          28    114K 

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                                                Filed Pursuant to Rule 424(b)(4)
                                                      Registration No. 333-11631

PROSPECTUS

 1,140,000 SHARES OF COMMON STOCK,
 $0.001 PAR VALUE PER SHARE,
 OF PARKWAY PROPERTIES, INC.

       The 1,140,000 shares of common stock, $0.001 par value per share (the
"Common Stock"), of Parkway Properties, Inc. ("Parkway"), to which this         
Prospectus relates are offered for the stockholders identified in this          
Prospectus under the heading "Selling Stockholders," or for the account of      
pledgees, donees, transferees or other successors in interest of the Selling    
Stockholders. Such sales may be made to or through one or more brokers or       
dealers on the New York Stock Exchange, Inc. (the "NYSE") at prices and at terms
then prevailing or at prices related to the then-current market price, or in    
negotiated transactions. Such transactions may include, but are not limited to, 
one or more of the following: (i) a block trade in which the broker or dealer so
engaged will attempt to sell the Common Stock as an agent, but may position and 
resell a portion of the block as principal to facilitate the transaction; (ii)  
purchases by a broker or dealer for its account pursuant to this Prospectus; and
(iii) ordinary brokerage transactions and transactions in which the broker      
solicits purchasers. In effecting sales, brokers or dealers engaged by the      
Selling Stockholders may arrange for other brokers or dealers to participate. In
the event of a transaction hereunder in which a broker or dealer acts as a      
principal (other than to facilitate an installment sale transaction, or to a    
market maker acting as such in routine transactions in the over-the-counter     
market), this Prospectus will be supplemented to provide material facts with    
respect to such transaction.                                                    

         Brokers or dealers involved in sales hereunder will receive commissions
or discounts in amounts to be negotiated prior to the sale. Such brokers or     
dealers and any other participating brokers or dealers may be deemed to be      
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), in connection with such sales, and any profits or commissions
earned by them in such transactions may be deemed to be underwriting discounts  
or commissions under the Securities Act.                                        

THE COMMON STOCK OFFERED HEREBY INVOLVES CERTAIN RISKS.  SEE  
"RISK FACTORS" BEGINNING ON PAGE 3.                                             

    Parkway will receive no portion of the proceeds of the sale of the
Common Stock hereunder. Parkway will incur the costs of preparation,            
reproduction and distribution for this Registration Statement. The Selling      
Stockholders will pay any brokerage discounts or commissions.                   

       Sales of Common Stock may also be made for the account of the Selling
Stockholders or for the account of donees, transferees or other successors in   
interest of the Selling Stockholders pursuant to Rule 144 under the Securities  
Act. The securities offered herein are "restricted securities" as defined by    
Rule 144 under the Securities Act and investors of such securities are required 
by Rule 144 to hold the restricted securities for a minimum of two years from   
the date of purchase for full consideration. The Common Stock became listed on  
the                                                                             

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NYSE under the symbol "PKY" on August 22, 1996. On November 7, 1996, the closing
sale price was reported to be $21.50 per share of Common Stock.                 

     No dealer, salesman or other person has been authorized to give any
information or to make any representation not contained or incorporated by      
reference in this Prospectus and, if given or made, such information or         
representation must not be relied upon as having been authorized by Parkway.    
This Prospectus does not constitute an offer to sell or a solicitation of any   
offer to buy any of the securities offered hereby in any jurisdiction to any    
person to whom it is unlawful to make such offer or solicitation in such        
jurisdiction. Neither the delivery of this Prospectus nor any sale made         
hereunder shall, under any circumstances, create any implication that the       
information herein is correct as of any time subsequent to the date hereof or   
that there has been no change in the affairs of Parkway since such date or, in  
the case of information incorporated herein by reference, the date of filing    
with the Securities and Exchange Commission (the "SEC").                        

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE 
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS   
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE     
CONTRARY IS A CRIMINAL OFFENSE.                                                 

       INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THE SHARES OF COMMON STOCK HAS BEEN FILED    
WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SHARES OF COMMON STOCK MAY   
NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO   
SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SHARES OF COMMON STOCK IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE   
WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES   
LAWS OF ANY SUCH STATE.                                                         

    THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING.  ANY REPRESENTATION TO THE                
CONTRARY IS UNLAWFUL.                                                           

The date of this Prospectus is November 8, 1996.

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 AVAILABLE INFORMATION

        Parkway is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance        
therewith files reports, proxy statements and other information with the SEC.   
Such reports, proxy statements and other information filed by Parkway may be    
inspected at, and, upon payment of the SEC's customary charges, copies obtained 
from, the Public Reference Section of the SEC, 450 Fifth Street, N.W.,          
Washington, DC 20549. Such reports, proxy statements and other information are  
also available for inspection and copying at prescribed rates at the SEC's      
regional offices in New York, New York (Seven World Trade Center, 13th Floor,   
New York, New York 10048) and in Chicago, Illinois (Suite 1400, Citicorp Center,
500 West Madison Street, Chicago, Illinois 60661-2511). The SEC maintains a Web 
site (http://www.sec.gov) that also contains reports, proxy statements and other
information concerning Parkway. In addition, the Common Stock is traded on the  
NYSE under the symbol "PKY" and reports, proxy statements and other information 
concerning Parkway can be inspected and copied at the offices of the NYSE, 20   
Broad Street, New York, New York 10005.                                         

     Parkway has filed with the SEC a Registration Statement on Form S-3
(the "Registration Statement") under the Securities Act and the rules and       
regulations promulgated thereunder, with respect to the Common Stock. This      
Prospectus constitutes the Prospectus of Parkway, filed as part of the          
Registration Statement. As permitted by the rules and regulations of the SEC,   
this Prospectus omits certain information contained in the Registration         
Statement, and reference is made to the Registration Statement and the exhibits 
listed therein, which can be inspected at the public reference facilities of the
SEC noted above, and copies of which can be obtained from the SEC at prescribed 
rates as indicated above.                                                       

      NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN AS CONTAINED HEREIN IN CONNECTION WITH THE MATTERS    
DESCRIBED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST 
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY PARKWAY. NEITHER THE DELIVERY   
HEREOF NOR ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL, UNDER ANY       
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS 
HEREIN SET FORTH SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN  
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES OFFERED BY    
THIS PROSPECTUS IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS      
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.                                 

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 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

         Incorporated into this Prospectus by reference are the documents listed
below filed by Parkway or its predecessor, The Parkway Company, under the       
Exchange Act. Copies of any such documents, other than exhibits to such         
documents, are available without charge to each person to whom a copy of this   
Prospectus has been delivered upon written or oral request of such person from  
Parkway, 300 One Jackson Place, 188 East Capitol Street, Jackson, Mississippi   
39201-2195, Attention: Chief Financial Officer, telephone number (601) 948-4091.

     The following documents or portions thereof are hereby incorporated
into this Prospectus by reference:                                              

     1.       The Parkway Company's Annual Report on Form 10-KSB for the
               year ended December 31, 1995 (Commission File No. 0-12505).

        2.       The Parkway Company's Quarterly Report on Form 10-QSB for the
               quarter ended March 31, 1996 (Commission File No. 0-12505).

        3.       The Parkway Company's Quarterly Report on Form 10-QSB for the
                 quarter ended June 30, 1996 (Commission File No. 0-12505), as
   amended by Form 10-QSB/A dated August 30, 1996.

   4.       The Parkway Company's Current Report on Form 8-K/A dated
March 1, 1996 (Commission File No. 0-12505).

 5.       The Parkway Company's Current Report on Form 8-K dated
 April 15, 1996 (Commission File No. 0-12505).

 6.       The Parkway Company's Current Report on Form 8-K dated
May 31, 1996 (Commission File No. 0-12505). 

 7.       The Parkway Company's Current Report on Form 8-K dated
June 14, 1996 (Commission File No. 0-12505).

      8.       The Parkway Company's Proxy Material for its Annual Meeting
          of Shareholders held on July 18, 1996 (Commission File
No. 0-12505).                               

   9.       The Parkway Company's Current Report on Form 8-K/A dated
June 28, 1996 (Commission File No. 0-12505).

 10.      The Parkway Company's Current Report on Form 8-K dated
July 9, 1996 (Commission File No. 0-12505). 

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      11.      Parkway Properties, Inc.'s Current Report on Form 8-K dated
 August 2, 1996 (Commission File No. 1-11533).

      12.      Parkway Properties, Inc.'s Current Report on Form 8-K dated
 August 9, 1996 (Commission File No. 1-11533).

        13.      Parkway Properties, Inc.'s Current Report on Form 8-K/A dated
  August 30, 1996 (Commission File No. 1-11533).

      14.      Parkway Properties, Inc.'s Current Report on Form 8-K dated
     September 30, 1996 (Commission File No. 1-11533).

        15.      Parkway Properties, Inc.'s Current Report on Form 8-K/A dated
   October 22, 1996 (Commission File No. 1-11533).

         All documents filed by Parkway pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the    
termination of the offering shall be deemed to be incorporated by reference     
herein and to be a part hereof from the respective dates of the filing thereof. 
Any statement contained in a document incorporated or deemed to be incorporated 
by reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein, or in any other
subsequently filed document that also is or is deemed to be incorporated by     
reference herein, modifies or supersedes such statement. Any such statement so  
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.                                        

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                                TABLE OF CONTENTS                                                                    


                                                                                                               PAGE  

                                                                                                                     
THE COMPANY.....................................................................................................  1  
         Organization...........................................................................................  1  
         Operating Strategy.....................................................................................  1  
         Possible Election of REIT Status.......................................................................  2  

RISK FACTORS....................................................................................................  3  
         Risks Associated with Indebtedness.....................................................................  3  
         Risks of Real Estate Ownership.........................................................................  3  
         Tax Risks Associated with Potential REIT Election......................................................  4  
         Limitation on Net Operating Loss Carryforwards.........................................................  5  
         Tenant Defaults........................................................................................  5  
         Americans with Disabilities Act........................................................................  6  
         Risk of Catastrophic Loss..............................................................................  6  
         Possible Environmental Liabilities.....................................................................  6  
         Competition............................................................................................  7  
         Risk of Acquisitions...................................................................................  7  
         Possible Ownership Restrictions........................................................................  7  

SELLING STOCKHOLDERS............................................................................................  8  

USE OF PROCEEDS.................................................................................................  8  

PLAN OF DISTRIBUTION............................................................................................  9  

DESCRIPTION OF SECURITIES.......................................................................................  9  
         Common Stock........................................................................................... 10  
         Restrictions on Transfer............................................................................... 10  
         Right of Board of Directors to Classify or Reclassify Shares........................................... 10  
         Excess Stock........................................................................................... 11  
         Class A Preferred Stock................................................................................ 12  
         Anti-Takeover Provisions............................................................................... 12  

FEDERAL INCOME TAX CONSIDERATIONS............................................................................... 15  
         Introductory Notes..................................................................................... 15  
         Taxation of the Company................................................................................ 15  
         Taxation of Stockholders............................................................................... 19  

LEGAL MATTERS................................................................................................... 21  

EXPERTS  ....................................................................................................... 21  

INDEMNIFICATION OF DIRECTORS AND OFFICERS....................................................................... 21  

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 THE COMPANY

ORGANIZATION                                                                    

        Parkway Properties, Inc. ("Parkway") was incorporated under the laws
of the State of Maryland on May 17, 1996. Formed as a wholly-owned subsidiary of
The Parkway Company, a Texas corporation, Parkway merged with The Parkway       
Company on August 2, 1996 (the "Merger") pursuant to the Agreement and Plan of  
Merger dated July 17, 1996 by and between Parkway and The Parkway Company. As a 
result of the Merger, Parkway succeeded to the business and operations of The   
Parkway Company. This reincorporation in Maryland allows Parkway to avail itself
of the benefits of the Maryland General Corporation Law, something management of
Parkway believes to be beneficial should Parkway elect to be taxed as a real    
estate investment trust ("REIT") under the Internal Revenue Code of 1986, as    
amended (the "Code"). See "--Possible Election of REIT Status."                 

      Additionally, on August 22, 1996 shares of common stock, par value
$0.001 per share of Parkway ("Common Stock") became listed on the New York Stock
Exchange, Inc. ("NYSE") under the symbol "PKY." Prior to this date, the Common  
Stock had been listed on the NASDAQ National Market under the symbol "PKWY."    

OPERATING STRATEGY                                                              

          Parkway is a full service, self-managed real estate investment company
specializing primarily in the ownership, management and leasing of office       
properties in the southeast and southwest United States (particularly the states
of Mississippi, North Carolina, Georgia, Texas and Virginia). Parkway seeks     
investments where the expertise of Parkway's management can add value through   
direct asset and/or property management, a "hands-on" operating philosophy and  
Parkway's liquidity and financial strength. Parkway owns a portfolio of income  
producing real estate properties. At September 30, 1996, Parkway owned or had an
interest in 16 office buildings in eight states with an aggregate of            
approximately 1,877,000 square feet of leasable space.                          

    Through its wholly-owned subsidiary, Eastover Realty Corporation
("Eastover Realty"), Parkway is also involved in the management of commercial   
properties for which it receives management fees. Eastover Realty currently     
manages and leases a portfolio of approximately 1,560,000 square feet of office 
and industrial space. Eastover Realty also performs brokerage services to third 
parties on a commission basis. Eastover Realty manages Parkway's office         
buildings in Jackson, Mississippi.                                              

        In addition to direct real estate acquisitions, Parkway's investment
strategy has also historically included the consummation of business combination
transactions with other public real estate and financial companies which Parkway
deemed to be undervalued. Since 1979, Parkway has completed eight such business 
combinations. Most recently, Parkway acquired First Continental Real Estate     
Investment Trust effective May 10, 1994, Congress Street                        

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Properties, Inc. effective November 29, 1994 and EB, Inc. effective April 27,   
1995. As a result of these various business combinations, Parkway has acquired a
portfolio of non-core real estate assets, securities and mortgage loans, which  
it is proceeding to liquidate.                                                  

POSSIBLE ELECTION OF REIT STATUS                                                

        Parkway presently pays virtually no federal income taxes ($64,000 in
1995) because net operating losses ("NOLs") shelter most of Parkway's income    
from such taxes. However, the increase in the number of outstanding shares of   
Common Stock which resulted from the completion of the private placement of     
shares of Common Stock in June 1996 (the "Private Placement") and Parkway's     
recent mergers caused the use of Parkway's NOLs to be significantly limited in  
any one year. Accordingly, subject to further analysis, Parkway intends to elect
to qualify as a REIT for the taxable year beginning January 1, 1997, which will 
allow Parkway to be generally exempt from federal income taxes even if its NOLs 
are limited or exhausted providing it makes sufficient distributions to its     
stockholders. Parkway and its advisors are presently examining Parkway's assets,
sources of revenue and operating history to determine if Parkway will be        
eligible to be taxed as a REIT and the steps that need to be taken for Parkway  
to qualify as a REIT under the Code. However, the examination is ongoing and    
there can be no assurance whether a REIT election can or will be made. See "Risk
Factors--Tax Risks Associated with Potential REIT Election."                    

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RISK FACTORS

         An investment in the Common Stock involves various risks. Prospective
investors should carefully consider the following information in conjunction    
with the other information contained or incorporated by reference in this       
Prospectus before making a decision to purchase any Common Stock.               

RISKS ASSOCIATED WITH INDEBTEDNESS                                              

          Although Parkway intends to maintain what it believes to be acceptable
leverage, there are no formal limits on the amount of indebtedness that Parkway 
may incur. Furthermore, certain of Parkway's indebtedness have variable interest
rates which may rise if the level of interest rates in general increases.       
Parkway intends to repay amounts drawn under its line of credit with Deposit    
Guaranty National Bank which can be used only to purchase income producing real 
property (the "Acquisition Line of Credit"), with funds obtained from fixed rate
financing secured by the buildings purchased with the Acquisition Line of Credit
or with cash available from operations and proceeds from the sale of non-core   
assets. There can be no assurance that such fixed rate financing will be        
available or available on acceptable terms, or that non-core assets will be sold
to purchase office properties or repay debt, and in the event variable rate debt
remains outstanding, any increase in interest rates could have a material       
adverse impact on Parkway's financial results.                                  

RISKS OF REAL ESTATE OWNERSHIP                                                  

       Parkway's assets primarily consist of equity investments in various
types of real property. As a result, stockholders of Parkway are subject to the 
risks inherent in the ownership and management of real property owned by        
Parkway. These risks include, among others: adverse changes in general or local 
economic conditions; adverse changes in interest rates and in the availability  
of permanent mortgage financing which may render the acquisition, sale or       
refinancing of properties difficult or unattractive; existing law, rules and    
regulations and judicial decisions regarding liability for a variety of         
potential problems related to real estate generally; adverse changes in real    
estate, zoning, environmental or land-use laws; increases in real property taxes
and federal or local economic or rent controls; other governmental rules;       
increases in operating costs and the need for additional capital and tenant     
improvements; the cash demands of tenant improvements and leasing commission    
obligations; the supply of and demand for properties; possible insolvencies and 
other material defaults by tenants; overbuilding in certain markets; ability to 
obtain or maintain full occupancy of properties or to provide for adequate      
maintenance or insurance; the presence of hazardous waste materials; mechanics  
liens resulting from construction; property related claims and litigation;      
fiscal policies; and acts of God. The illiquidity of real estate investments    
generally impairs the ability of real estate owners to respond quickly to       
changed circumstances.                                                          

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      Additionally, a substantial percentage of Parkway's properties are
located in the southeast and southwest United States (particularly the states of
Mississippi, North Carolina, Georgia, Texas and Virginia) and such properties   
consist predominantly of office properties. Parkway's performance, therefore,   
will be linked to economic conditions in the southeast and southwest United     
States as well as the market for office space generally. To the extent that     
these conditions impact the market rents for office space, they could result in 
a reduction of net income, funds from operations and cash available for         
distribution and thus affect the financial performance of Parkway.              

        Certain significant expenditures associated with investments in real
estate (such as mortgage payments, real estate taxes, insurance and maintenance 
costs and the cash demands of tenant improvements and leasing commission        
obligations) are generally not reduced when circumstances cause a reduction in  
rental revenues from the property. In addition, real estate values and yields   
from investments in properties may also be affected by such factors as          
conditions in financial markets, environmental conditions and compliance with   
laws. If large numbers of vacancies occur in Parkway's office properties,       
Parkway may be required to make significant expenditures for marketing, tenant  
improvements and leasing commissions in connection with attracting new tenants  
for such vacant space. Any of these factors may adversely affect Parkway's net  
income, funds from operations and cash available for distribution.              

TAX RISKS ASSOCIATED WITH POTENTIAL REIT ELECTION                               

    Subject to its eligibility to do so, Parkway intends to elect to
qualify as a REIT under the Code in order to qualify for the tax benefits of    
such a classification. No assurance can be given that Parkway will be eligible  
to make such election, and, if it does, that all benefits potentially arising   
from such an election will be realized. Among the risk factors to be considered 
in this context are the following:                                              

    Earnings and Profits Calculation. In order to elect REIT status,
Parkway cannot have earnings and profits which have been generated during years 
in which Parkway was not qualified as a REIT. For this purpose, under the Code, 
earnings and profits of companies which have been acquired by Parkway and the   
earnings and profits of any of Parkway's subsidiaries are included in           
calculating Parkway's earnings and profits account. The determination of the    
earnings and profits account of a company is a highly technical and complex     
undertaking. Parkway's predecessor, The Parkway Company, was organized in 1971  
and over the years has acquired several companies. In calculating the earnings  
and profits account, studies have been undertaken of not only Parkway's earnings
and profits history, but also the history of all acquired companies. Although   
these studies have not been finalized, Parkway believes that a reasonably       
accurate determination of Parkway's earnings and profits account is possible. To
the extent such account is positive, Parkway will be required to distribute     
dividends sufficient to reduce that account to zero prior to the end of the     
first taxable year in which Parkway's election of REIT status under the Code    
becomes effective. Any determination made by Parkway with respect to its        
earnings and profits account is not binding on the Internal Revenue Service (the
"Service"). In the event the Service were to successfully challenge Parkway's   
calculation of                                                                  

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earnings and profits, a possible outcome of such challenge could be the         
termination of Parkway's status as a REIT in the event of its future election to
be qualified as a REIT.                                                         

       Possible Restructuring. In order to qualify as a REIT, Parkway must
restructure both the manner in which it owns certain of its assets and its      
active business operations. Because no assurance can be given that REIT status  
will be obtained, it is possible that the substantial costs incurred and the    
operating structures adopted in anticipation of such election will not result in
the benefits intended.                                                          

LIMITATION ON NET OPERATING LOSS CARRYFORWARDS                                  

         For federal income tax purposes, Parkway has approximately $9,688,000
of NOLs as of June 30, 1996. In addition to the NOLs, two of Parkway's          
subsidiaries have NOLs of approximately $23,500,000 in the aggregate. Parkway   
estimates that approximately $10,440,000 of these NOLs will be available, on a  
limited basis, for use by Parkway after application of certain restrictions     
under the Code. As a consequence of the issuances of shares in business         
combination transactions and for cash, the ability of Parkway to apply NOLs to  
offset its taxable income is significantly limited, and Parkway may be required 
to pay federal income tax on a portion of its income unless it is able to elect 
to qualify as a REIT, in which case the rules relating to taxation of REITs     
would apply.                                                                    

TENANT DEFAULTS                                                                 

         A substantial part of Parkway's income is expected to be derived from
rental income from real property. Consequently, Parkway's ability to make       
expected distributions to stockholders would be adversely affected if a         
significant number of tenants failed to meet their lease obligations. In the    
event of a default by a tenant, Parkway may experience delays in enforcing its  
rights as lessor and may incur substantial costs in protecting its investment.  
At any time, a tenant may also seek protection under the bankruptcy laws, which 
could result in the rejection and termination of such tenant's lease and thereby
cause a reduction in the net income, funds from operations and cash available   
for distribution of Parkway. If a tenant rejects its lease pursuant to          
applicable bankruptcy laws, Parkway's claim for breach of the lease in excess of
any applicable security deposit would (absent collateral securing the claim) be 
treated as a general unsecured claim. The amount of the claim would be capped at
the amount owed for unpaid prepetition lease payments unrelated to the          
rejection, plus the greater of one year's lease payment or 15% of the remaining 
lease payments payable under the lease (but not to exceed the amount of three   
years' lease payments).                                                         

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AMERICANS WITH DISABILITIES ACT                                                 

      Under the Americans with Disabilities Act of 1990, as amended (the
"ADA"), all public accommodations are required to meet certain federal          
requirements related to access and use by disabled persons. Compliance with the 
public accommodations provision of the ADA could require the removal of access  
barriers, and noncompliance could result in the imposition of fines or awards of
damages. Additional legislation may impose further burdens or restrictions on   
owners with respect to access by disabled persons. The ultimate amount of the   
cost of compliance with the ADA or such legislation is not currently            
ascertainable, and, while such costs are not expected to have a material effect 
on Parkway, such costs could be substantial. Parkway has not undertaken ADA     
studies of all of its properties and, as to those properties with respect to    
which Parkway has not undertaken ADA studies, possible costs of compliance could
arise.                                                                          

RISK OF CATASTROPHIC LOSS                                                       

        Parkway has obtained or has caused its tenants to obtain, commercial
general liability, fire and extended coverage insurance with respect to its     
properties, of the types and in the amounts which management believes are       
customarily obtained for similar properties. There are, however, certain types  
of losses (generally of a catastrophic nature, such as earthquakes, floods and  
wars) that may be either uninsurable or not economically insurable. Should such 
an uninsured loss occur, Parkway could lose both its invested capital and       
anticipated profits relating to such property.                                  

POSSIBLE ENVIRONMENTAL LIABILITIES                                              

Under various federal, state and local laws, ordinances and 
regulations, an owner of real estate is liable for the costs of removal or      
remediation of certain hazardous or toxic substances on or in such property.    
Such laws often impose liability without regard to whether the owner knew of, or
was responsible for, the presence of such hazardous or toxic substances. The    
presence of such substances, or the failure to properly remediate such          
substances, may adversely affect the owner's ability to sell or rent such       
property or to use such property as collateral in its borrowings. Management of 
Parkway is not aware of any environmental liability with respect to the         
properties that management believes would have a material adverse effect on     
Parkway's business, assets or results of operations. Phase I environmental      
audits have been conducted at each of the properties acquired by Parkway since  
June 1, 1995 and Parkway will perform such audits with respect to properties    
acquired in the future. No assurance can be given that there are no existing    
environmental liabilities with respect to any of Parkway's properties or that   
any prior owner of any such property did not create any material environmental  
condition not known to Parkway.                                                 

Asbestos was formerly used in commercial construction as a  
fireproofing and insulation material. Under certain circumstances, asbestos can 
become a hazard to the health of the occupants of buildings and it must be      
regularly monitored to ensure that it has not become a health hazard. Parkway is
not aware of any material asbestos problems at the properties owned             

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by Parkway, but is aware of asbestos at certain properties which secure mortgage
loans owned by Parkway. The fact that asbestos is present in properties which   
are collateral for Parkway's loans could have an adverse effect on the value of 
Parkway's collateral. Further, there can be no assurance that asbestos problems 
do not exist at properties owned by Parkway. If there is asbestos in Parkway's  
properties (or in a property upon which Parkway forecloses) that requires       
removal or other remediation, the costs thereof could be substantial.           

COMPETITION                                                                     

          All of the properties owned by Parkway are located in developed areas.
There are numerous other office properties and real estate companies within the 
market area of each such property which will compete with Parkway for tenants   
and development and acquisition opportunities. The number of competitive office 
properties and real estate companies in such areas could have a material effect 
on (i) Parkway's ability to rent space at the properties, the amount of rents   
currently charged and tenant improvements and other tenant concessions required 
to lease the property; and (ii) development and acquisition opportunities.      
Parkway will compete for tenants and acquisitions with others who may have      
greater resources than Parkway. Furthermore, Parkway has more than one office   
building in certain markets (e.g., Jackson, Mississippi) and those buildings may
compete against one another for the same tenants.                               

RISK OF ACQUISITIONS                                                            

        Parkway has acquired 11 office properties since July 31, 1995 and is
in the process of acquiring additional properties. Although Parkway believes it 
has sufficient management depth to take Parkway through this period of asset    
growth, there can be no assurance that Parkway will be able to assimilate the   
acquisitions into its portfolio without certain operating disruptions and       
unanticipated costs.                                                            

POSSIBLE OWNERSHIP RESTRICTIONS                                                 

         The provisions of the Charter of Parkway (the "Charter") provide that
if a transfer of stock of Parkway or a change in the capital structure of       
Parkway would result in (i) any person (as defined in the Charter) directly or  
indirectly acquiring beneficial ownership of more than 9.8% of the equity       
securities of Parkway; (ii) the outstanding Common Stock and preferred stock of 
Parkway being constructively or beneficially owned by fewer than 100 persons; or
(iii) Parkway being "closely held" within the meaning of Section 856 of the     
Code, then: (A) any proposed transfer will be void ab initio and will not be    
recognized by Parkway; (B) Parkway will have the right to redeem the shares     
proposed to be transferred; and (C) the shares proposed to be transferred will  
be automatically converted into and exchanged for shares of a separate class of 
stock, the Excess Stock (as hereinafter defined), having no dividend or voting  
rights. Holders of Excess Stock do have certain rights in the event of any      
liquidation, dissolution or winding up of the corporation. The Charter further  
provides that the Excess Stock will be held by Parkway as trustee for the person
or persons to whom the shares are ultimately transferred, until such            

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time as the shares are retransferred to a person or persons in whose hands the  
shares would not be Excess Stock and certain price-related restrictions are     
satisfied. These provisions are designed to enable Parkway to meet the share    
ownership requirements applicable to REITs under the Code, but may also have an 
anti-takeover effect.                                                           

SELLING STOCKHOLDERS

   All of the Common Stock offered hereby is to be offered for the
account of the security holders (the "Selling Stockholders") set forth in the   
table below. Each of the Selling Stockholders acquired its securities from the  
Company in transactions that were exempt from the registration requirements of  
the Securities Act.                                                             

                                                        [Enlarge/Download Table]

                                                          Shares of                             Shares of   
                                                        Common Stock            Shares of     Common Stock  
              Selling Stockholders (1)                   Owned Prior          Common Stock     Owned After  
              ------------------------                 to the Offering      Offered for Sale  the Offering  
                                                       ---------------      ----------------  --------------
                                                                                                            
Morgan Stanley U.S. Real Estate (Retail)............        14,000                14,000           0        
MS SICAV REAL ESTATE................................       253,000               253,000           0        
Morgan Stanley Institutional Fund                                                                           
  Real Estate Portfolio.............................       323,000               323,000           0        
Delaware Group Dividend and Income                                                                          
  Fund, Inc.........................................       120,500               120,500           0        
Delaware Pooled Trust, Inc. for The Real                                                                    
  Estate Investment Trust Portfolio.................        29,500                29,500           0        
Charter Oak Partners................................       200,000               200,000           0        
Pennsylvania Public School                                                                                  
  Employees' Retirement System......................       200,000               200,000           0        

<FN>                                                                                                        
(1)       None of the Selling Stockholders had any material relationship with                               
          Parkway, its predecessor or any affiliates of Parkway, within the past                            
          three years.                                                                                      

 USE OF PROCEEDS

      Parkway will not receive any proceeds from this offering of Common
Stock by the Selling Stockholders.                                              

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PLAN OF DISTRIBUTION

         Parkway has been advised by the Selling Stockholders that the Selling
Stockholders may sell all or a portion of the securities offered by it hereby   
from time to time on the NYSE at prices prevailing at the time of such sales.   
The Selling Stockholders may also make private sales directly to or through a   
broker or brokers. Alternatively, the Selling Stockholders may from time to time
offer the securities through underwriters, dealers or agents, who may receive   
compensation in the form of underwriting discounts, commissions or concessions  
from the Selling Stockholders and/or the purchasers of the securities for whom  
they may act as agent. To the extent required, the number of securities to be   
sold, the purchase price, the name of any such agent, dealer or underwriter and 
any applicable commissions with respect to a particular offer will be set forth 
in an accompanying Prospectus Supplement. The aggregate net proceeds to the     
Selling Stockholders from the sale of the securities sold by the Selling        
Stockholders hereby will be the purchase price of such securities less any      
broker's commissions.                                                           

        No determination has been made whether the Selling Stockholders will
sell any of the securities offered hereby.                                      

     In order to comply with the securities laws of certain states, if
applicable, the securities will be sold in such jurisdictions only through      
registered or licensed brokers or dealers. In addition, the securities may not  
be sold in certain states unless they have been registered or qualified for sale
in the applicable state or an exemption from the registration or qualification  
requirement is available and complied with.                                     

The Selling Stockholders and any broker-dealers, agents or  
underwriters that participate with the Selling Stockholders in the distribution 
of the securities may be deemed to be "underwriters" within the meaning of the  
Securities Act, in which event any commissions received by such broker-dealers, 
agents or underwriters and any profit on the resale of the securities purchased 
by them may be deemed to be underwriting commissions or discounts under the     
Securities Act.                                                                 

 DESCRIPTION OF SECURITIES

   The total number of shares of capital stock of all classes that
Parkway is authorized to issue is 100,000,000. The capital stock is currently   
classified as (i) 69,424,000 shares of Common Stock, 4,211,896 of which are     
currently issued and outstanding; (ii) 576,000 shares of Class A Preferred      
Stock, none of which are currently issued or outstanding; and (iii) 30,000,000  
shares of excess stock, par value $0.001 per share ("Excess Stock"), none of    
which are currently issued or outstanding.                                      

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COMMON STOCK                                                                    

      The holders of shares of Common Stock are entitled to one vote per
share on all matters to be voted upon by the stockholders. The holders of shares
of Common Stock have no cumulative voting rights. Additionally, subject to the  
rights of holders of preferred stock, holders of shares of Common Stock are     
entitled to receive, pro rata in relation to the number of shares of Common     
Stock held by them, such dividends as may be declared from time to time by the  
directors out of funds legally available therefor.                              

         In the event of the voluntary or involuntary liquidation, dissolution
or winding-up of Parkway, after distribution in full of the preferential        
amounts, if any, to be distributed to the holders of any then outstanding       
preferred stock, and subject to the right, if any, of the holders of any        
outstanding preferred stock to participate further in any liquidating           
distributions, all of the assets of Parkway, if any, remaining, of whatever kind
available for distribution to stockholders after the foregoing distributions    
have been made shall be distributed to the holders of the Common Stock, ratably 
in proportion to the number of shares of Common Stock held by them.             

RESTRICTIONS ON TRANSFER                                                        

     Pursuant to the provisions of the Charter, if a transfer of stock
occurs whereby any person would own, beneficially or constructively, in excess  
of 9.8 percent of the outstanding capital stock of Parkway (excluding shares of 
Excess Stock) ("Transfer"), then such amount in excess of the 9.8 percent limit 
shall automatically be converted into shares of Excess Stock and any such       
Transfer will be void ab initio. However, such restrictions will not prevent the
settlement of a transaction entered into through the facilities of any          
interdealer quotation system or national securities exchange upon which shares  
of capital stock of Parkway are traded, provided that certain transactions may  
be settled by providing shares of Excess Stock.                                 

RIGHT OF BOARD OF DIRECTORS TO CLASSIFY OR RECLASSIFY SHARES                    

     The Board of Directors of Parkway is authorized by the Charter to
classify or reclassify any unissued shares of the capital stock of Parkway, by  
setting, altering or eliminating the designation, preferences, conversion or    
other rights, voting powers, qualifications and terms and conditions of         
redemption of, limitations as to dividends and any other restrictions on, such  
capital stock. The power of the Board of Directors to classify and reclassify   
any of the shares of capital stock includes the authority to classify or        
reclassify such shares into a class of preferred stock. The Board of Directors, 
without stockholder approval, can issue preferred stock with voting and         
conversion rights which could adversely affect the rights of holders of shares  
of Common Stock. This could create an impediment to a future tender or exchange 
offer for Parkway by, among other things, increasing the number of shares       
necessary to gain control of Parkway.                                           

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EXCESS STOCK                                                                    

     Holders of shares of Excess Stock have no voting rights except as
required by law, and are not entitled to any dividends. Any dividend or         
distribution paid prior to the discovery by Parkway that shares of capital stock
have been converted into Excess Stock shall be repaid to Parkway upon demand.   
Upon any purported Transfer resulting in Excess Stock, Excess Stock shall not be
issued in certificated form but shall be held by Parkway, in book entry form, as
trustee in trust (the "Trust") for the exclusive benefit of the beneficiary or  
beneficiaries to whom an interest in such Excess Stock may later be transferred.
The purported record transferee in such a case may freely designate a           
beneficiary of an interest in the Trust (representing the number of shares of   
Excess Stock held by the Trust attributable to a purported Transfer that        
resulted in Excess Stock), if the Excess Stock held in the Trust would not be   
Excess Stock in the hands of such beneficiary and the purported record          
transferee does not receive a price for designating such beneficiary that       
reflects a price per share of Excess Stock that exceeds (i) the price per share 
such purported record transferee paid for the shares in the purported Transfer  
that resulted in the Excess Stock; or (ii) if the purported record transferee   
did not give value for such Excess Stock (through a gift, devise or other       
transaction), a price per share equal to the market price on the date of the    
purported Transfer that resulted in the Excess Stock. Upon such transfer of an  
interest in the Trust, the corresponding Excess Stock in the Trust shall        
automatically be exchanged for an equal number of shares of capital stock, and  
such shares shall be transferred of record to the transferee of the interest in 
the Trust. Prior to any transfer of any interest in the Trust, the purported    
record transferee must give advance notice to Parkway of the intended transfer  
and must have waived in writing its redemption rights under the Charter.        
Notwithstanding the foregoing, if a purported record transferee receives a price
for designating a beneficiary of an interest in the Trust that exceeds the      
allowable amounts, such purported record transferee shall pay, or cause such    
beneficiary to pay, such excess to Parkway. Excess Stock so held in Trust shall 
be issued and outstanding capital stock of Parkway. The purported record        
transferee shall have no rights in such Excess Stock except the right to        
designate a transferee upon the terms specified above. The purported beneficial 
transferee shall have no rights in such Excess Stock except as provided above.  

         In the event of any voluntary or involuntary liquidation, dissolution
or winding up of, or any distribution of the assets of, Parkway, each holder of 
Excess Stock shall be entitled to receive that portion of the assets of Parkway 
that would have been distributed to the shares of capital stock in respect of   
which the Excess Stock was issued. Parkway, as holder of the Excess Stock in    
Trust or, if Parkway has been dissolved, any trustee appointed by Parkway prior 
to its dissolution, shall distribute ratably to the beneficiaries of the Trust, 
when determined, any such assets received in respect of the Excess Stock in any 
liquidation, dissolution or winding up of, or any distribution of the assets of,
Parkway. Except as provided above, Excess Stock is not transferable.            

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CLASS A PREFERRED STOCK                                                         

     The holders of Class A Preferred Stock have no voting rights and,
except as provided above, such shares are not convertible. Dividends on shares  
of Class A Preferred Stock will be declared and paid simultaneously with any    
dividends payable on the Common Stock and, for all dividends paid and declared  
on or before December 31, 1996, such dividend will be paid at a per share       
dividend rate of the greater of (i) twenty-four cents ($0.24) per share per     
quarter or (ii) the per share dividend declared and paid on Common Stock for the
same quarter, as adjusted for stock dividends, stock splits or similar capital  
changes. For all dividends paid and declared on Class A Preferred Stock after   
December 31, 1996, such dividends will be paid at a per share dividend rate of  
the greater of (i) thirty-eight cents ($0.38) per share per quarter or (ii) the 
per share dividend declared and paid on Common Stock for the same quarter, as   
adjusted for stock dividends, stock splits or similar capital changes. No       
dividend will be paid or declared, nor any distribution made on any other class 
of stock (other than a dividend payable in stock of the same class) nor will any
shares of Common Stock be acquired for consideration by Parkway unless all      
accrued dividends on the Class A Preferred Stock for all past dividend periods  
have been paid.                                                                 

         In the event of the voluntary or involuntary liquidation, dissolution
or winding up of Parkway, each holder of Class A Preferred Stock will be        
entitled to receive out of Parkway's assets, before any distribution or payment 
shall be made to the holders of any other class of stock, an amount equal to    
$15.25 per share of Class A Preferred Stock plus any accrued dividends not paid,
without interest. If the amounts payable on liquidation, dissolution or winding 
up in respect to the shares of Class A Preferred Stock are not paid in full, the
shares of such class will share ratably in any distribution of assets in        
accordance with the sums which would be payable in such distribution if all sums
payable were discharged in full. If such payment has been made in full to the   
holders of all shares of Class A Preferred Stock on voluntary or involuntary    
liquidation, dissolution or winding up, the remaining assets of Parkway shall be
distributed among the holders of preferred stock and the remaining stock of     
Parkway in accordance with their respective rights.                             

ANTI-TAKEOVER PROVISIONS                                                        

  Special Voting Requirements for Certain Business Combinations.
Pursuant to Maryland law, Parkway is governed by special procedures that apply  
to certain business combinations between a corporation and interested           
stockholders. The purpose of such provisions is to protect the corporation and  
its stockholders against hostile takeovers by requiring that certain criteria   
are satisfied. These criteria include prior approval by the board of directors, 
prior approval by a majority or supermajority vote of disinterested stockholders
and requirements that a "fair price" be paid to the disinterested stockholders. 

       Maryland law provides that a Maryland corporation may not engage in
any "business combination" with any "interested stockholder." An "interested    
stockholder" is defined, in essence, as any person owning beneficially, directly
or indirectly, ten percent or more of the outstanding voting stock of a Maryland
corporation. Unless an exemption applies, Parkway may                           

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not engage in any business combination with an interested stockholder for a     
period of five years after the interested stockholder became an interested      
stockholder, and thereafter may not engage in a business combination unless it  
is recommended by the Board of Directors and approved by the affirmative vote of
at least (i) eighty percent of the votes entitled to be cast by the holders of  
all outstanding voting stock of Parkway, voting together as a single voting     
group and (ii) two-thirds of the votes entitled to be cast by all holders of    
outstanding shares of voting stock other than voting stock held by the          
interested stockholder. The voting requirements do not apply at any time to     
business combinations with an interested stockholder or its affiliates if       
approved by the Board of Directors of the corporation prior to the time the     
interested stockholder first became an interested stockholder. Additionally, if 
the business combination involves the receipt of consideration by the           
stockholders in exchange for the corporation's stock, the voting requirements do
not apply if certain "fair price" conditions are met.                           

         Control Share Acquisitions. Maryland law provides for the elimination
of the voting rights of shares held by any person who makes a "control share    
acquisition" except to the extent that such acquisition is exempt or is approved
by at least two-thirds of all votes entitled to be cast on the matter, excluding
shares of capital stock owned by the acquirer or by officers or directors who   
are employees of the corporation whose shares were acquired. A "control share   
acquisition" is the direct or indirect acquisition by any person of ownership   
of, or the power to direct the exercise of voting power with respect to, shares 
of voting stock ("control shares") that would, if aggregated with all other     
voting stock owned by such person, entitle such person to exercise voting power 
in electing directors within one of the following ranges of voting power: (i)   
one-fifth or more but less than one-third; (ii) one-third or more but less than 
a majority; or (iii) a majority or more of voting power.                        

          A person who has made or proposes to make a control share acquisition,
upon the satisfaction of certain conditions (including an undertaking to pay    
expenses), may compel the Board of Directors to call a special meeting of       
stockholders to be held within 50 days of demand to consider the voting rights  
of the shares. If no request for a meeting is made, the corporation may itself  
present the question at any stockholders meeting. If voting rights are not      
approved at the meeting or if the acquiring person does not deliver an acquiring
person statement as permitted by the statute, then, subject to certain          
conditions and limitations, the corporation may redeem any or all of the control
shares (except those for which voting rights have previously been approved) for 
fair value determined, without regard to voting rights, as of the date of the   
last control share acquisition or as of the date of any meeting of stockholders 
at which the voting rights of such shares are considered and not approved.      

      If voting rights for control shares are approved at a stockholders
meeting and the acquirer becomes entitled to vote a majority of the shares      
entitled to vote, all other stockholders may exercise appraisal rights. The fair
value of the stock as determined for purposes of such appraisal rights may not  
be less than the highest price per share paid in the control share acquisition, 
and certain limitations and restrictions otherwise applicable to the exercise of
dissenters' rights do not apply in the context of a control share acquisition.  
The control share acquisition statute does not apply to stock acquired in a     
merger, consolidation or stock exchange if the corporation is a party to the    
transaction. Thus, Maryland law makes it difficult for a                        

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change in control to occur, even though such change in control may be in the    
best interests of the corporation's stockholders.                               

        Supermajority Votes. The Charter provides that certain provisions of
the Charter may not be repealed or amended except upon the affirmative vote of  
holders of not less than eighty percent of all votes entitled to be cast on the 
matter. The Charter provisions to which this supermajority vote applies include 
the following: (i) certain provisions the amendment or repeal of which would    
threaten Parkway's status as a REIT; (ii) the removal of directors; (iii) the   
provision giving the Board of Directors the authority to adopt, amend or repeal 
Parkway's Bylaws; (iv) the provision regarding the indemnification of agents and
limitation of liability of officers and directors; (v) the provision concerning 
cumulative voting in the election of directors; and (vi) the vote required to   
amend that part of the Charter requiring a supermajority vote for the above     
provisions.                                                                     

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 FEDERAL INCOME TAX CONSIDERATIONS

INTRODUCTORY NOTES                                                              

  The following discussion summarizes certain Federal income tax
considerations that may be relevant to a prospective stockholder. This          
discussion is based on current law. The discussion is not exhaustive of all     
possible tax considerations and does not give a detailed discussion of any      
state, local, or foreign tax considerations. It also does not discuss all of the
aspects of Federal income taxation that may be relevant to a prospective        
stockholder in light of his or her particular circumstances or to certain types 
of stockholders (including insurance companies, tax-exempt entities, financial  
institutions or broker-dealers, foreign corporations and persons who are not    
citizens or residents of the United States) who are subject to special treatment
under the Federal income tax laws.                                              

        EACH PROSPECTIVE PURCHASER IS ADVISED TO CONSULT WITH HIS OR HER OWN
TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF THE        
PURCHASE, OWNERSHIP AND SALE OF SECURITIES IN AN ENTITY ELECTING TO BE TAXED AS 
A REAL ESTATE INVESTMENT TRUST, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN,   
AND OTHER TAX CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP, SALE AND ELECTION AND OF
POTENTIAL CHANGES IN APPLICABLE TAX LAWS.                                       

TAXATION OF THE COMPANY                                                         

          General. Subject to its eligibility to do so, Parkway intends to elect
to be taxed as a REIT under Sections 856 through 860 of the Code effective      
January 1, 1997. Parkway's qualification and taxation as a REIT depends upon its
ability to meet on a continuing basis, through actual annual operating results, 
distribution levels and diversity of stock ownership, the various qualification 
tests and organizational requirements imposed under the Code, as discussed      
below. No assurances, however, can be given that Parkway will be eligible to    
make such election, and, if it does, that all benefits potentially arising from 
such an election will be realized. See "--Failure to Qualify" below.            

         The following is a general summary of the Code provisions that govern
the Federal income tax treatment of a REIT and its stockholders. These          
provisions of the Code are highly technical and complex. This summary is        
qualified in its entirety by the applicable Code provisions, the regulations    
promulgated thereunder ("Treasury Regulations"), and administrative and judicial
interpretations thereof.                                                        

         If Parkway qualifies for taxation as a REIT, it generally will not be
subject to Federal corporate income taxes on net income that it currently       
distributes to stockholders. This treatment substantially eliminates the "double
taxation" (at the corporate and stockholder levels) that generally results from 
investment in a corporation. Notwithstanding its REIT election, however, Parkway
will be subject to Federal income tax in the following circumstances. First,    

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Parkway will be taxed at regular corporate rates on any undistributed taxable   
income, including undistributed net capital gains. Second, under certain        
circumstances, the company may be subject to the "alternative minimum tax" on   
its items of tax preference. Third, if Parkway has (i) net income from the sale 
or other disposition of "foreclosure property" (which is, in general, property  
acquired by foreclosure or otherwise on default of a loan secured by the        
property) which is held primarily for sale to customers in the ordinary course  
of business or (ii) other non-qualifying income from foreclosure property, it   
will be subject to tax at the highest corporate rate on such income. Fourth, if 
Parkway has net income from prohibited transactions (which are, in general,     
certain sales or other dispositions of property (other than foreclosure         
property) held primarily for sale to customers in the ordinary course of        
business), such income will be subject to a 100% tax. Fifth, if Parkway should  
fail to satisfy the 75% gross income test or the 95% gross income test (as      
discussed below), and has nonetheless maintained its qualification as a REIT    
because certain other requirements have been met, it will be subject to a 100%  
tax on the net income attributable to the greater of the amount by which it     
fails the 75% or 95% test, multiplied by a fraction intended to reflect its     
profitability. Sixth, if Parkway should fail to distribute during each calendar 
year at least the sum of (i) 85% of its REIT ordinary income for such year; (ii)
95% of its REIT capital gain net income for such year; and (iii) any            
undistributed taxable income from prior years, Parkway would be subject to a 4% 
excise tax on the excess of such required distribution over the amounts actually
distributed. Seventh, if Parkway acquires any asset from a C corporation (i.e., 
a corporation generally subject to full corporate level tax) in a transaction in
which the basis of the asset in Parkway's hands is determined by reference to   
the basis of the asset (or any other property) in the hands of the C            
corporation, and Parkway recognizes gain on the disposition of such asset during
the 10-year period beginning on the date on which such asset was acquired by it,
then, to the extent of such property's built-in gain (the excess of the fair    
market value of such property at the time of acquisition by Parkway over the    
adjusted basis of such property at such time), such gain will be subject to tax 
at the highest regular corporate rate applicable (as provided in Treasury       
Regulations that have not yet been promulgated). This tax will also apply to    
built-in gain on the disposition of assets owned by Parkway at the time of its  
election of REIT status, for the ten year period following such election.       

Requirements for Qualification. The Code defines a REIT as a
corporation, trust or association (i) which is managed by one or more trustees  
or directors; (ii) the beneficial ownership of which is evidenced by            
transferable shares or by transferable certificates of beneficial interest;     
(iii) which would be taxable as a domestic corporation but for Sections 856     
through 860 of the Code; (iv) which is neither a financial institution nor an   
insurance company subject to certain provisions of the Code; (v) the beneficial 
ownership of which is held by 100 or more persons; (vi) during the last half of 
each taxable year not more than 50% in value of the outstanding stock of which  
is owned, directly or indirectly, by five or fewer individuals (as defined in   
the Code to include certain entities); and (vii) which meets certain other      
tests, described below, regarding the nature of its income and assets. The Code 
provides that conditions (i) through (iv), inclusive, must be met during the    
entire taxable year and that condition (v) must be met during at least 335 days 
of a taxable year of 12 months, or during a proportionate part of a taxable year
of less than 12 months. Conditions (v) and (vi) will not apply until after the  
first taxable year for which an election is made to be taxed as a REIT.         
Parkway's Charter contains restrictions regarding the transfer of its shares    
that are intended to                                                            

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assist it in satisfying the share ownership requirements described in (v) and   
(vi) above. See "Risk Factors--Possible Ownership Restrictions."                

        In addition, a corporation may not elect to become a REIT unless its
taxable year is the calendar year. Parkway's taxable year is the calendar year. 

     Income Tests. In order to maintain qualification as a REIT, three
gross income requirements must be satisfied annually. First, at least 75% of the
REIT's gross income (excluding gross income from prohibited transactions) for   
each taxable year must be derived directly or indirectly from investments       
relating to real property or mortgages on real property (including "rents from  
real property" and, in certain circumstances, interest) or from certain types of
temporary investments. Second, at least 95% of the REIT's gross income          
(excluding gross income from prohibited transactions) for each taxable year must
be derived from such real property investments described above, and from        
dividends, interest and gain from the sale or disposition of stock or           
securities, or from any combination of the foregoing. Third, short-term gain    
from the sale or other disposition of stock or securities, gain from prohibited 
transactions and gain on the sale or other disposition of real property held for
less than four years (apart from involuntary conversions and sales of           
foreclosure property) must represent less than 30% of the REIT's gross income   
(including gross income from prohibited transactions) for each taxable year.    

        Rents received by Parkway will qualify as "rents from real property"
in satisfying the above gross income tests only if several conditions are met.  
First, the amount of rent must not be based in whole or in part on the income or
profits of any person. However, amounts received or accrued generally will not  
be excluded from "rents from real property" solely by reason of being based on a
fixed percentage or percentages of receipts or sales. Second, rents received    
from a tenant will not qualify as "rents from real property" if Parkway, or an  
owner of 10% or more of Parkway, directly or constructively owns 10% or more of 
such tenant (a "Related Party Tenant"). Third, if rent attributable to personal 
property that is leased in connection with a lease of real property is greater  
than 15% of the total rent received under the lease, then the portion of rent   
attributable to such personal property will not qualify as "rents from real     
property." Finally, for rents received to qualify as "rents from real property,"
Parkway generally must not operate or manage the property or furnish or render  
services to tenants, other than through an "independent contractor" from whom   
Parkway derives no revenue. The "independent contractor" requirement, however,  
does not apply to the extent the services provided by Parkway are "usually or   
customarily rendered" in connection with the rental of space for occupancy only 
and are not otherwise considered "rendered to the occupant." Parkway believes   
that all services that are provided to its tenants will be considered "usually  
or customarily" rendered in connection with the rental of comparable properties.
Further, any noncustomary services will be provided only through qualifying     
independent contractors.                                                        

          If Parkway fails to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, it may nevertheless qualify as a REIT for such year 
if it is entitled to relief under certain provisions of the Code. These relief  
provisions generally will be available if its failure to meet such tests was due
to reasonable cause and not due to willful neglect, Parkway attaches a schedule 
of the sources of its income to its return, and any income information on the   

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schedules was not due to fraud with intent to evade tax. It is not possible,    
however, to state whether in all circumstances Parkway would be entitled to the 
benefit of these relief provisions. As discussed above in "General," even if    
these relief provisions were to apply, a tax would be imposed with respect to   
the excess net income.                                                          

          Asset Tests. At the close of each quarter of its taxable year, Parkway
must also satisfy three tests relating to the nature of its assets. First, at   
least 75% of the value of Parkway's total assets must be represented by real    
estate assets (including stock or debt instruments held for not more than one   
year purchased with the proceeds of a stock or debt offering of the company),   
cash, cash items and government securities. Second, not more than 25% of        
Parkway's total assets may be represented by securities other than those in the 
75% asset class. Third, of the investments included in the 25% asset class, the 
value of any one issuer's securities owned by Parkway may not exceed 5% of the  
value of Parkway's total assets, and Parkway may not own more than 10% of any   
one issuer's outstanding voting securities. The 5% test must generally be met   
for any quarter in which a REIT acquires securities of an issuer.               

       Annual Distribution Requirements. Parkway, in order to qualify as a
REIT, is required to distribute dividends (other than capital gain dividends) to
its stockholders in an amount at least equal to (i) the sum of (a) 95% of its   
"REIT taxable income" (computed without regard to the dividends paid deduction  
and the REIT's net capital gain) and (b) 95% of the net income (after tax), if  
any, from foreclosure property, minus (ii) the sum of certain items of noncash  
income. Such distributions must be paid in the taxable year to which they       
relate, or in the following taxable year if declared before Parkway timely files
its tax return for such year and if paid on or before the first regular dividend
payment after such declaration. To the extent that Parkway does not distribute  
all of its net capital gain or distributes at least 95%, but less than 100%, of 
its "REIT taxable income," as adjusted, it will be subject to tax on the        
nondistributed amount at regular capital gains and ordinary corporate tax rates.
Furthermore, if Parkway should fail to distribute during each calendar year at  
least the sum of (i) 85% of its REIT ordinary income for such year; (ii) 95% of 
its REIT capital gain income for such year; and (iii) any undistributed taxable 
income from prior periods, it will be subject to a 4% excise tax on the excess  
of such required distribution over the amounts actually distributed.            

         Parkway has made and intends to continue to make timely distributions
sufficient to satisfy the annual distribution requirements. It is possible,     
however, that Parkway, from time to time, may not have sufficient cash or liquid
assets to meet the distribution requirements due to timing differences between  
the actual receipt of income and actual payment of deductible expenses and the  
inclusion of such income and deduction of such expenses in arriving at Parkway's
taxable income, or if the amount of nondeductible expenses such as principal    
amortization or capital expenditures exceed the amount of noncash deductions. In
the event that such timing differences occur, in order to meet the distribution 
requirements, Parkway may arrange for short-term, or possible long-term,        
borrowing to permit the payment of required dividends. If the amount of         
nondeductible expenses exceeds noncash deductions, Parkway may refinance its    
indebtedness to reduce principal payments and borrow funds for capital          
expenditures.                                                                   

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         Under certain circumstances, Parkway may be able to rectify a failure
to meet the distribution requirement for a year by paying "deficiency dividends"
to stockholders in a later year that may be included in Parkway's deduction for 
dividends paid for the earlier year. Thus, Parkway may be able to avoid being   
taxed on amounts distributed as deficiency dividends; however, Parkway will be  
required to pay interest to the Service based upon the amount of any deduction  
taken for deficiency dividends.                                                 

          Failure to Qualify. If Parkway fails to qualify for taxation as a REIT
in any taxable year and no relief provisions apply, Parkway will be subject to  
tax (including any applicable alternative minimum tax) on its taxable income at 
regular corporate rates. Distributions to stockholders in any year in which     
Parkway fails to qualify will not be deductible by it, nor will such            
distributions be required to be made. In such event, to the extent of current   
and accumulated earnings and profits, all distributions to stockholders will be 
taxable as ordinary income, and, subject to certain limitations in the Code,    
corporate distributees may be eligible for the dividends received deduction.    
Unless entitled to relief under specific statutory provisions, Parkway also will
be disqualified from taxation as a REIT for the four taxable years following the
year during which qualification was lost. It is not possible to state whether in
all circumstances Parkway would be entitled to such statutory relief.           

TAXATION OF STOCKHOLDERS                                                        

 Taxation of Taxable Domestic Stockholders. As long as Parkway
qualifies as a REIT, distributions made to its taxable domestic stockholders out
of current or accumulated earnings and profits (and not designated as capital   
gain dividends) will be taken into account by them as ordinary income, and      
corporate stockholders will not be eligible for the dividends received deduction
as to such amounts. Distributions that are designated as capital gain dividends 
will be taxed as long-term capital gains (to the extent they do not exceed      
Parkway's actual net capital gain for the taxable year) without regard to the   
period for which the stockholder has held his or her shares. However, corporate 
stockholders may be required to treat up to 20% of certain capital gain         
dividends as ordinary income. Distributions in excess of current and accumulated
earnings and profits will not be taxable to a stockholder to the extent that    
they do not exceed the adjusted basis of the stockholder's shares, but rather   
will reduce the adjusted basis of such shares. To the extent that such          
distributions exceed the adjusted basis of a stockholder's shares, they will be 
included in income as long-term capital gain (or short-term capital gain if the 
shares have been held for one year or less), assuming the shares are a capital  
asset in the hands of the stockholders. In addition, any dividend declared by   
Parkway in October, November or December of any year payable to a stockholder of
record on a specific date in any such month shall be treated as both paid by    
Parkway and received by the stockholder on December 31 of such year, provided   
that the dividend is actually paid by Parkway during January of the following   
calendar year. Stockholders may not include in their individual income tax      
returns any net operating losses or capital losses of Parkway.                  

In general, any loss upon a sale or exchange of shares by a 
stockholder who has held such shares for six months or less (after applying     
certain holding period rules) will be treated                                   

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as long-term capital loss to the extent of distributions from Parkway required  
to be treated by such stockholder as long-term capital gain.                    

        Backup Withholding. Parkway will report to its domestic stockholders
and the Service the amount of dividends paid during each calendar year, and the 
amount of tax withheld, if any, with respect thereto. Under the backup          
withholding rules, a stockholder may be subject to backup withholding at the    
rate of 31% with respect to dividends paid unless such holder (i) is a          
corporation or comes within certain other exempt categories and, when required, 
demonstrates this fact, or (ii) provides a taxpayer identification number,      
certifies as to no loss of exemption from backup withholding, and otherwise     
complies with applicable requirements of the backup withholding rules. A        
stockholder who does not provide Parkway with its correct taxpayer              
identification number may also be subject to penalties imposed by the Service.  
Any amount paid as backup withholding will be creditable against the            
stockholder's income tax liability. In addition, Parkway may be required to     
withhold a portion of capital gain distributions made to any stockholders who   
fail to certify their non-foreign status to the company.                        

     Taxation of Foreign Stockholders and Tax-Exempt Stockholders. The
rules governing U.S. Federal income taxation of nonresident alien individuals,  
foreign corporations, foreign partnerships and other foreign stockholders, as   
well as U.S. tax-exempt stockholders, are complex, and no attempt will be made  
herein to review these rules. Prospective stockholders who fall within these    
categories should consult with their own tax advisors to determine the impact of
U.S. Federal, state and local income tax laws with regard to an investment in   
the shares, including any reporting requirements.                               

         State and Local Taxes. Parkway and its stockholders may be subject to
state or local taxation in various state or local jurisdictions, including those
in which it or they transact business or reside (although stockholders who are  
individuals generally should not be required to file state income tax returns   
outside of their state of residence with respect to Parkway's operations and    
distributions). The state and local tax treatment of Parkway and its            
stockholders may not conform to the Federal income tax consequences discussed   
above. Consequently, prospective stockholders should consult their own tax      
advisors regarding the effect of state and local tax laws on an investment in   
the shares.                                                                     

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 LEGAL MATTERS

       The legality of the issuance of the Common Stock offered hereby has
been passed upon for Parkway by Jaeckle Fleischmann & Mugel, LLP, Buffalo, New  
York.                                                                           

 EXPERTS

         The consolidated financial statements of The Parkway Company (Parkway
Properties, Inc.'s predecessor) included in The Parkway Company's Annual Report 
on Form 10-KSB for the year ended December 31, 1995, have been audited by Ernst 
& Young LLP, independent auditors, as set forth in their report thereon and     
included therein and incorporated by reference herein. Such financial statements
are incorporated herein by reference in reliance on such reports given upon the 
authority of such firm as experts in accounting and auditing.                   

 INDEMNIFICATION OF DIRECTORS AND OFFICERS

 Parkway's Charter contains a provision authorizing Parkway to
indemnify, to the fullest extent permitted by Maryland law, its directors and   
officers, whether serving Parkway or, at its request, any other entity.         
Additionally, the Charter provides that to the fullest extent permitted by      
Maryland law, no director or officer shall be liable to Parkway or its          
stockholders for money damages.                                                 

Section 2-418 of the Maryland General Corporation Law (the  
"Indemnification Statute"), the law of the state in which Parkway is organized, 
empowers a company, subject to certain limitations, to indemnify its officers   
and directors against expenses, including attorneys' fees, judgments, penalties,
fines, settlements and expenses, actually and reasonably incurred by them in any
suit or proceeding to which they are parties unless the act or omission of the  
director was material to the matter giving rise to the proceeding and was       
committed in bad faith, or was the result of active and deliberate dishonesty,  
or the director received an improper personal benefit or, with respect to a     
criminal action or proceeding, the director had no reasonable cause to believe  
their conduct was unlawful.                                                     

Parkway has entered into an indemnification agreement (the  
"Indemnification Agreement") with each of its directors and officers and the    
Board of Directors has authorized Parkway to enter into an Indemnification      
Agreement with each of the future directors and officers of Parkway. The        
Indemnification Statute permits a corporation to indemnify its directors and    
officers. However, the protection that is specifically afforded by the          
Indemnification Statute authorizes other arrangements for indemnification of    
directors and officers, including insurance. The Indemnification Agreement is   
intended to provide                                                             

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indemnification to the maximum extent allowable by, or not in violation of, or  
offensive to, any law of the State of Maryland.                                 

         The Indemnification Agreement provides that Parkway shall indemnify a
director or officer who is a party to the agreement (the "Indemnitee") if he or 
she was or is a party to or otherwise involved in any proceeding by reason of   
the fact that he or she was or is a director or officer of Parkway, or was or is
serving at its request in a certain capacity of another entity, against losses  
incurred in connection with the defense or settlement of such proceeding. This  
indemnification shall be provided to the fullest extent permitted by the        
Indemnification Agreement. This is similar to the indemnification provided by   
the Indemnification Statute except that indemnification is not available under  
the Indemnification Agreement to the Indemnitee who pays any amount in          
settlement of a proceeding without Parkway's written consent.                   

22

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘424B4’ Filing		Date		First		Last			Other Filings
		1/1/97		8		21
		12/31/96		18					10KSB,  10KSB/A
Filed on:		11/8/96		2
		11/7/96		2
		10/22/96		5					8-K/A
		9/30/96		5		7			10QSB,  8-K
		8/30/96		4		5			10QSB/A,  8-K/A,  PRES14A
		8/22/96		2		7
		8/9/96		5					8-K
		8/2/96		5		7			8-K
		7/18/96		4					DEF 14A,  PRE 14A
		7/17/96		7
		7/9/96		4					8-K
		6/30/96		4		11			10QSB,  10QSB/A
		6/28/96		4					8-K/A
		6/14/96		4					8-K
		5/31/96		4					8-K
		5/17/96		7
		4/15/96		4					8-K
		3/31/96		4					10QSB
		3/1/96		4					8-K/A
		12/31/95		4		27			10KSB,  10KSB/A
		7/31/95		13					8-K
		6/1/95		12
		4/27/95		8					10-C,  8-K
		11/29/94		8					8-K/A
		5/10/94		7
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