Steven G. Rogers, President and Chief Executive Officer stated, "For the first quarter 2008 we achieved funds from operations ("FFO") of $0.95 per diluted share. Excluding one-time unusual items that negatively affected FFO by approximately $1.1 million, or $0.07 per diluted share, our first quarter operating results were in line with our expectations.

For the full year 2008, we currently are on track to meet our earnings outlook and goals. We refinanced our only maturing loan in 2008, taking approximately $18.4 million in excess loan proceeds and applying them against our line of credit. We are also pleased to have completed the $500.0 million investment goal of our Ohio PERS fund ("Fund I") with three high-quality, well-located assets in growing markets during the quarter. Our efforts will now be focused on improving operations at all of our properties in building per share FFO growth. Finally, our marketing effort on Fund II has progressed rapidly and we have received significant interest in a fund with a similar structure to our Ohio PERS investment."

Asset Recycling

-- On January 18, 2008, Parkway acquired Gateway Center, a 228,000 square foot Class A office property in the central business district of Orlando, Florida for a purchase price of approximately $55.0 million on behalf of Fund I. The property consists of ten floors of office space above a six-story, 817-space structured parking facility, as well as an adjacent 98-space surface parking area. Fund I expects to spend an additional $2.8 million for closing costs, building improvements, leasing costs and tenant improvements during the first two years of ownership.

-- On January 31, 2008, the Company acquired Desert Ridge Corporate Center, a 293,000 square foot office project in Phoenix, Arizona for a purchase price of approximately $81.6 million on behalf of Fund I. The project consists of two four-story Class A office buildings totaling 275,000 square feet, a free-standing retail building totaling 18,000 square feet, an adjacent 765-space structured parking facility and a 596 space surface parking lot. An additional $2.25 million is expected to be spent for closing costs, building improvements, leasing costs and tenant improvements during the first two years of ownership. Due to Fund I's $80.0 million limit on a single investment, the Company's effective ownership interest in this asset is 26.5%.

-- On February 15, 2008, the Company purchased Citicorp Plaza, a 600,000 square foot office project in the O'Hare submarket and within the city limits of Chicago, Illinois for a purchase price of approximately $100.0 million on behalf of Fund I. The project consists of three interconnected, eleven-story Class A office buildings, an adjacent 1,712-space, three-story parking facility, as well as an adjacent 276- space surface parking area. An additional $9.2 million is expected to be spent for closing costs, building improvements, leasing costs and tenant improvements during the first two years of ownership. Due to Fund I's $80.0 million limit on a single investment, Parkway's effective ownership interest in this asset is 40%. After the Citicorp Plaza purchase, Fund I was fully invested ahead of its original schedule.

Operations and Leasing

-- The Company's average rent per square foot increased 5.0% to $21.73 for the first quarter 2008 as compared to $20.69 for the first quarter 2007. On a same-store basis, the Company's average rent per square foot increased 2.1% to $21.58 for the first quarter 2008 as compared to $21.14 for the first quarter 2007.

-- The Company's average occupancy for the first quarter 2008 declined 10 basis points to 91.0% as compared to 91.1% for the first quarter 2007. This decline was primarily due to the purchase of three office investments for Fund I in the first quarter 2008, which had an average occupancy of 84.6%. On a same-store basis, the Company's average occupancy for the first quarter 2008 increased 70 basis points to 91.2% as compared to 90.5% for the first quarter 2007.

-- At April 1, 2008, occupancy of the office portfolio was 90.3% as compared to 92.0% at January 1, 2008 and 90.9% at April 1, 2007. Not included in the April 1, 2008 occupancy rate are 19 signed leases totaling 128,000 square feet, which commence in the second and third quarters of 2008. Including these leases, the portfolio was 91.2% leased at April 11, 2008.

-- Parkway's customer retention rate was 57.6% for the quarter ending March 31, 2008 as compared to 77.2% for the quarter ending December 31, 2007 and 52.4% for the quarter ending March 31, 2007. The largest lease that was not retained during the quarter was First NLC Financial Services ("FNLC"), a 50,100 square foot customer in Ft. Lauderdale, Florida, that declared bankruptcy in early 2008. Excluding FNLC, the Company's customer retention rate was 62.7% for the quarter ending March 31, 2008.

-- During the first quarter 2008, 71 leases were renewed or expanded on 413,000 rentable square feet at an average rent per square foot of $21.30, representing a 1.8% increase, and at a cost of $3.59 per square foot of the lease term in annual leasing costs. Included in these leases are 75,000 square feet of renewal and expansion leases in Chicago at an average cost of $6.92 per year of the lease term, accounting for 18% of the total renewal and expansion leases for the first quarter 2008.

-- During the first quarter 2008, 27 new leases were signed on 87,000 rentable square feet at an average rent per square foot of $21.57 and at a cost of $4.32 per square foot of the lease term in annual leasing costs.

-- On a same-store basis, the Company's share of net operating income ("NOI") decreased $257,000 or 0.9% for the first quarter 2008 as compared to the first quarter 2007 on a GAAP basis. On a cash basis, the Company's share of same-store NOI increased $414,000 or 1.5% for the first quarter 2008 as compared to the first quarter 2007. The increase in same-store cash NOI is primarily attributable to an increase in same-store average occupancy to 91.2% for the first quarter 2008 as compared to 90.5% for the first quarter 2007. Additionally, same-store rental rates increased 2.1% during the same period.

Capital Structure

-- On May 2, 2008, the Company owed $238.4 million related to its $311.0 million line of credit. The Company is in compliance with all covenants under the line of credit. The Company has no remaining debt maturities for 2008. Additionally, the Company's FAD covered its dividend in 2007 and for the first quarter 2008. For 2009, the Company has $21.8 million in debt maturities related to three assets in Houston, Texas that are currently 97.1% leased.

-- On May 2, 2008, the Company completed a $60.0 million recourse mortgage loan related to the refinance of a $41.7 million mortgage that was scheduled to mature in September 2008. The loan is secured by the Company's Capital City Plaza building in Atlanta, Georgia. The interest rate on the loan is a variable rate based on LIBOR plus 165 basis points. The loan term is for two years, with a one-year extension option at the Company's discretion. The excess loan proceeds of approximately $18.4 million were used to pay down the Company's line of credit. During the second quarter 2008, the Company expects to record a net gain on extinguishment of debt of approximately $500,000 associated with the prepayment of the maturing loan. The prepaid mortgage represented the Company's only outstanding maturity in 2008.

-- The Company's previously announced cash dividend of $0.65 per diluted share for the quarter ended March 31, 2008 represents a payout of approximately 68.5% of FFO per diluted share. The first quarter dividend was paid on March 26, 2008 and equates to an annualized dividend of $2.60 per share, a yield of 6.4% on the closing stock price on May 2, 2008 of $40.60. This dividend is the 86th consecutive quarterly distribution to Parkway's common stock shareholders.

-- At March 31, 2008, the Company's debt-to-total market capitalization ratio was 59.3% based on a stock price of $36.96 per share as compared to 56.8% at December 31, 2007 based on a stock price of $36.98 per share and 47.4% at March 31, 2007 based on a stock price of $52.25 per share. Additionally, at May 2, 2008, the Company's debt-to-total market capitalization ratio was 57.2% based on a stock price of $40.60 per share.

-- On February 1, 2008, the Company paid off $3.5 million in mortgage notes payable related to our 400 North Belt and Woodbranch buildings in Houston, Texas utilizing its line of credit. The mortgages had an interest rate of 8.25% per annum and were scheduled to mature on August 1, 2011. The Company recognized $401,000 in prepayment expenses associated with the extinguishment of these mortgages.

-- Mortgages were placed in connection with the asset purchases by Fund I during the quarter ended March 31, 2008 and are described below:

-- On January 18, 2008, Fund I placed a $33.0 million non-recourse first mortgage at a fixed interest rate of 5.92% in connection with the purchase of Gateway Center. Payments during the initial 36 months are interest only and the loan matures on February 10, 2016.

-- On January 31, 2008, the Company placed a $49.2 million non-recourse first mortgage on behalf of Fund I at a fixed interest rate of 5.77% in connection with the purchase of Desert Ridge Corporate Center. Payments during the initial 36 months are interest only and the loan matures on February 10, 2016.

-- On February 15, 2008, the Company placed a $60.0 million non- recourse first mortgage on behalf of Fund I at a fixed interest rate of 5.53% in connection with the purchase of Citicorp Plaza. Payments during the initial 12 months are interest only and the loan matures on March 10, 2016. -- Parkway Properties, Inc.