Moody’s drops Parkway Properties to junk

Moody's Investors Service said it downgraded the rating of Parkway Properties, Inc. to Ba1 from Baa3.

This concludes the review that began on May 3 after Parkway announced that it agreed to merge with Cousins Properties Inc. in an all-stock transaction and to spin off their combined Houston assets into a separately traded REIT.

The outlook is stable.

The action follows Parkway's Aug. 23 announcement that stockholders of both Parkway and Cousins approved all proposals related to the previously announced merger between Cousins and Parkway. The transactions are expected to close in the fourth quarter of 2016.

Moody’s said the downgrade to Ba1 reflects its expectation that Parkway's financial flexibility will decline as a result of the REIT's shift toward a secured funding strategy going forward. With this transaction, Parkway is merging into Cousins, and the Cousins executive management team will remain in place.

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