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Cousins, Parkway execs: HoustonCo a value play in its own right

Executives used their prepared remarks during a conference callconvened to discuss the newly announced mergerof Cousins Properties Inc.and Parkway Properties Inc.and simultaneous Houston-only REIT spinoff to trumpet Houston's resilienceand continued attractiveness, which stand despite recent distress brought aboutby tumbling energy prices.

Executives insisted that the aggregation of the companies' respectiveHouston properties is not just a regrouping of assets but a play that will drivevalue through quality, scale and growth.

"HoustonCo's state-of-the-art, iconic properties give usa dominant position in the attractive Galleria, Greenway and Westchase submarkets,"said Parkway President and CEO Jim Heistand, who will lead the new REIT. "Witha strong balance sheet and operating cash flows, a scalable platform, and a managementteam with demonstrated operating expertise and a disciplined investment approach,HoustonCo will be an attractive investment opportunity."

Parkway COO M. Jayson Lipsey touted the new REIT's "highlydifferentiated" business strategy and disciplined approach to investment. Thecompany will increase NOI margins via economies of scale and leverage its poweras the largest office landlord in the market in lease negotiations.

"The combined portfolio will have the best local talentavailable and use creative leasing strategies to minimize future expirations, realizemark-to-market opportunities and generate superior revenue growth," Lipseysaid.

The COO assured call participants that the company will maintaina flexible balance sheet, low leverage and "well-laddered" maturitiesto hedge against further near-term weakening in the market.

"Our conservative balance sheet, including $150 millionsurplus cash on hand, plus an additional $50 million undrawn credit facility, willposition us to withstand further dislocation without requiring the company to seekadditional external capital in the near term, and eventually opportunistically pursueinvestments," Lipsey said.