Two real estate companies with a Charlotte presence are combining in a deal that includes the spin-off of Houston-based assets.
Atlanta-based Cousins Properties is buying Orlando, Fla.-based Parkway Properties for about $1.95 billion in stock, the companies announced Friday. Among their Charlotte holdings, Cousins owns the Fifth Third Center and Parkway owns the NASCAR Plaza office tower, site of the Observer’s new offices.
Under the agreement, Parkway shareholders will receive 1.63 shares of Cousins stock for each Parkway share they own. At the deal’s completion, the Houston company would be spun off through a special dividend distributed to shareholders.
The new Cousins would own 41 properties around the Southeast and continue to be led by Cousins CEO Larry Gellerstedt. Parkway Properties CEO Jim Heistand would head up the Houston company, with five properties.
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Parkway shares rose more than 6 percent to close at $16.45, while Cousins shares fell more than 3 percent to close at $10.35.
Office vacancies in Houston have been on the rise as that city’s energy-driven economy feels the drag of lower oil prices. The new spin-off will have a $150 million cash surplus and a $50 million undrawn credit line that will allow it to make investments without the need for outside capital in the short-term, the companies said.
The new Houston company will be able to “capitalize on that market’s eventual resurgence,” Gellerstedt said in a statement.
The transactions are expected to close in the fourth quarter, pending shareholder approval. The company expects to save $18 million in annual expenses by eliminating “duplicative operating costs” in overlapping markets.