Moody’s may downgrade Parkway

Moody’s Investors Service said it placed the Baa3 issuer rating of Parkway Properties, Inc. on review for downgrade.

This action follows news that Parkway is merging with Cousins Properties in an all-stock transaction, the agency said.

Along with the merger, the company plans to spin-off the combined Houston assets into a separately traded public REIT, Moody’s said.

The transactions are expected to close in the fourth quarter of 2016, the agency said.

With this transaction, Parkway is merging into Cousins and the Cousins executive management team will remain in place, the agency explained.

Although Parkway will be part of a larger, more diversified office REIT focused on high-growth Sunbelt markets, Moodys’ said it expects secured leverage will increase significantly as Cousins relies on a secured funding model.

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