S&P changes Parkway Properties to negative

Standard & Poor's said it revised its outlook on Parkway Properties Inc. to negative from stable. At the same time, the agency affirmed its BBB- corporate credit rating.

“Our rating on Parkway reflects our assessment of the company's limited scale, geographically concentrated portfolio of suburban office assets leased primarily in south eastern U.S., and average operating profitability relative to its peers," said S&P credit analyst Anita Ogbara in a news release.

"Unlike several of the office REITs we rate, Parkway is not active as a real estate developer, reducing the risks associated with new construction. However, we do expect Parkway to grow through acquisitions over the next few years.”

S&P expects protracted weakness in the company's key markets to result in rising vacancy levels, potential tenant bankruptcies, and credit metrics remaining elevated at or near current levels with debt to EBITDA above 7x and FCC of about 3x over the next few quarters.

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