MizuhoSecurities USA Inc. analyst Rich Anderson lowered his investment opinionof Parkway PropertiesInc. to "neutral" from "buy," with a pricetarget of $17.50.
Theanalyst wrote in a research report: "We are downgrading PKY to …but maintaining our $17.50 PT. Last week's merger announcement with CousinsProperties (CUZ, not rated) valued PKY at $17.45/share based on the previousCUZ close. Considering the stock deal and 1.63 ratio, PKY will go the way CUZgoes, barring any change of plan or a topping bid for PKY (which we don'texpect). While our conversations suggest CUZ investors generally like thetransaction, we don't cover the stock and hence believe the prudent path is tolower our rating on PKY at this time."
Sandler O'Neill & Partners LP analyst lowered his investment opinion of Parkway Properties to "hold" from"buy," with a price target to $17.
The analyst wrote in a research report: "Effectively,PKY is contributing all of its assets ex-Houston to CUZ and CUZ is likewisecontributing just its Houston assets to PKY. CUZ will operate a Sunbelt class Aoffice REIT and PKY will continue on as a pure-play Houston REIT run by most ofthe current management team (no change of control payments for those stayingaboard). While there is no geographic restriction of either company, Friday'sconference call suggested that HoustonCo would remain Oil City-focused whileCUZ would work with the other markets. We continue to believe this transactionoffers a good way for PKY shareholders to realize value of the ex-Houstonassets not weighed down by energy and to eventually play a Houston recovery asa standalone. What's interesting on the heels of Friday's announced merger isthe seeming increased investor interest in the possibility of having astandalone Houston REIT to play the oil recovery, whenever that is, versusprevious to the PKY/CUZ merger when Houston exposure was simply seen as a bignegative. However, with the shares of PKY now tied to CUZ from a tradingperspective, we downgrade to HOLD."