| R                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------|
| For Quarterly Period Ended September 30, 2011                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | or                                                                                       |
| £                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
| For the Transition Period from                                                        to                       |

| Maryland                        |   | 74-2123597                        |
|---------------------------------|--------|-----------------------------------|
| (State or other jurisdiction of |   | (IRS Employer Identification No.) |
| incorporation or organization)  |   |                              |

|   | P.O. Box 24647 |
|--------|----------------|

|   | Registrant’s telephone number, including area code (601) 948-4091 |
|--------|-------------------------------------------------------------------------|

|   | Registrant’s web site www.pky.com |
|--------|-----------------------------------------|

| Large accelerated filer £ | Accelerated filer R | Non-accelerated filer £                  | Smaller reporting company £ |
|--------------------------------|---------------------|-----------------------------------------------|----------------------------------|
|                           |                | (Do not check if a smaller reporting company) |                             |

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|                          |   |                                                                                        | Page   |
|-------------------------------|--------|---------------------------------------------------------------------------------------------|--------|
| Part I. Financial Information |
| Item 1.                       |   | Financial Statements                                                                        |   |
|                          |   |                                                                                        |   |
|                          |   | Consolidated Balance Sheets, September 30, 2011 and December 31, 2010                       | 3      |
|                          |   |                                                                                        |   |
|                          |   | Consolidated Statements of Operations for the Three Months and Nine Months Ended            |   |
|                          |   | September 30, 2011 and 2010                                                                 | 4      |
|                          |   |                                                                                        |   |
|                          |   | Consolidated Statement of Changes in Equity for the Nine Months Ended                       |   |
|                          |   | September 30, 2011                                                                          | 6      |
|                          |   |                                                                                        |   |
|                          |   | Consolidated Statements of Cash Flows for the Nine Months Ended                             |   |
|                          |   | September 30, 2011 and 2010                                                                 | 7      |
|                          |   |                                                                                        |   |
|                          |   | Notes to Consolidated Financial Statements                                                  | 8      |
|                          |   |                                                                                        |   |
| Item 2.                       |   | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 26     |
|                          |   |                                                                                        |   |
| Item 3.                       |   | Quantitative and Qualitative Disclosures About Market Risk                                  | 49     |
|                          |   |                                                                                        |   |
| Item 4.                       |   | Controls and Procedures                                                                     | 49     |
|                          |   |                                                                                        |   |
|                          |   |                                                                                        |   |
| Part II. Other Information    |
|                          |   |                                                                                        |   |
|                          |   |                                                                                        |   |
| Item 1.                       |   | Legal Proceedings                                                                           | 49     |
|                          |   |                                                                                        |   |
| Item 1A.                      |   | Risk Factors                                                                                | 49     |
|                          |   |                                                                                        |   |
| Item 2.                       |   | Unregistered Sales of Equity Securities and Use of Proceeds                                 | 49     |
|                          |   |                                                                                        |   |
| Item 5.                       |   | Other Information                                                                           | 50     |
|                          |   |                                                                                        |   |
| Item 6.                       |   | Exhibits                                                                                    | 50     |
|                          |   |                                                                                        |   |
|                          |   |                                                                                        |   |
| Signatures                    |
|                          |   |                                                                                        |   |
| Authorized Signatures         | 50     |

----

|                                                                                                                                                                                                                                                        |   | September 302011 |   |   | December 312010 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|--------|--------|-----------------|
|                                                                                                                                                                                                                                                        |   |
| Assets                                                                                                                                                                                                                                                      |   | (unaudited)      |
| Real estate related investments:                                                                                                                                                                                                                            |   |             |   |   |            |
| Office and parking properties                                                                                                                                                                                                                               | $      | 1,685,906   |   | $      | 1,755,310  |
| Office property held for sale                                                                                                                                                                                                                               |   | 134,963     |   |   | -               |
| Land held for development                                                                                                                                                                                                                                   |   | 609         |   |   | 609        |
| Accumulated depreciation                                                                                                                                                                                                                                    |   | (275,729)        |   |   | (366,152)       |
|                                                                                                                                                                                                                                                        |   | 1,545,749   |   |   | 1,389,767  |
|                                                                                                                                                                                                                                                        |   |             |   |   |            |
| Land available for sale                                                                                                                                                                                                                                     |   | 750         |   |   | 750        |
| Mortgage loans                                                                                                                                                                                                                                              |   | 1,500       |   |   | 10,336     |
|                                                                                                                                                                                                                                                        |   | 1,547,999   |   |   | 1,400,853  |
|                                                                                                                                                                                                                                                        |   |             |   |   |            |
| Receivables and other assets                                                                                                                                                                                                                                |   | 133,799     |   |   | 132,530    |
| Intangible assets, net                                                                                                                                                                                                                                      |   | 116,736     |   |   | 50,629     |
| Other assets held for sale                                                                                                                                                                                                                                  |   | 31,983      |   |   | -          |
| Management contracts, net                                                                                                                                                                                                                                   |   | 50,714      |   |   | -          |
| Cash and cash equivalents                                                                                                                                                                                                                                   |   | 32,951      |   |   | 19,670     |
|                                                                                                                                                                                                                                                        | $      | 1,914,182   |   | $      | 1,603,682  |
|                                                                                                                                                                                                                                                        |   |             |   |   |            |
|                                                                                                                                                                                                                                                        |   |             |   |   |            |
| Liabilities                                                                                                                                                                                                                                                 |   |             |   |   |            |
| Notes payable to banks                                                                                                                                                                                                                                      | $      | 113,852     |   | $      | 110,839    |
| Mortgage notes payable                                                                                                                                                                                                                                      |   | 830,709     |   |   | 773,535    |
| Accounts payable and other liabilities                                                                                                                                                                                                                      |   | 123,409     |   |   | 98,818     |
| Liabilities held for sale                                                                                                                                                                                                                                   |   | 165,340     |   |   | -          |
|                                                                                                                                                                                                                                                        |   | 1,233,310   |   |   | 983,192    |
|                                                                                                                                                                                                                                                        |   |             |   |   |            |
|                                                                                                                                                                                                                                                        |   |             |   |   |            |
| Equity                                                                                                                                                                                                                                                      |   |             |   |   |            |
| Parkway Properties, Inc. stockholders’ equity:                                                                                                                                                                                                        |   |             |   |   |            |
| 8.00% Series D Preferred stock,  $.001 par value, 5,421,296 and     4,374,896  shares authorized, issued and outstanding in     2011 and 2010, respectively                           |   | 128,942     |   |   | 102,787    |
| Common stock, $.001 par value, 64,578,704 and 65,625,104 shares     authorized in 2011 and 2010, respectively, 22,118,817 and     21,923,610 shares issued and outstanding in 2011 and 2010, respectively |   | 22          |   |   | 22         |
| Common stock held in trust, at cost, 12,070 and     58,134 shares in 2011 and 2010, respectively                                                                                                                                   |   | (309)            |   |   | (1,896)         |
| Additional paid-in capital                                                                                                                                                                                                                                  |   | 517,527     |   |   | 516,167    |
| Accumulated other comprehensive loss                                                                                                                                                                                                                        |   | (5,704)          |   |   | (3,003)         |
| Accumulated deficit                                                                                                                                                                                                                                         |   | (209,732)        |   |   | (127,575)       |
| Total Parkway Properties, Inc. stockholders’ equity                                                                                                                                                                                                   |   | 430,746     |   |   | 486,502    |
| Noncontrolling interest - real estate partnerships                                                                                                                                                                                                          |   | 250,126     |   |   | 133,988    |
| Total equity                                                                                                                                                                                                                                                |   | 680,872     |   |   | 620,490    |
|                                                                                                                                                                                                                                                        | $      | 1,914,182   |   | $      | 1,603,682  |

----

|   |                 Three Months Ended |
|--------|---------------------------------------------------------------------------------------------------------------|
|   |               September 30                   |
|   |                                                                                                          |   | 2011 |   |   | 2010 |
|   |                                                                                                          |   (unaudited) |
|   | Revenues                                                                                                      |   |   |   |   |   |
|   | Income from office and parking properties                                                                     | $ | 63,594  |   | $ | 45,095  |
|   | Management company income                                                                                     |   | 6,120  |   |   | 585  |
|   |      Total revenues                                                                  |   | 69,714  |   |   | 45,680  |
|   |                                                                                                          |   |   |   |   |   |
|   | Expenses and other                                                                                            |   |   |   |   |   |
|   | Property operating expense                                                                                    |   | 30,639  |   |   | 21,612  |
|   | Depreciation and amortization                                                                                 |   | 26,087  |   |   | 14,825  |
|   | Impairment loss on real estate                                                                                |   | 107,240  |   |   | -  |
|   | Impairment loss on mortgage loan receivable                                                                   |   | 9,235  |   |   | -  |
|   | Change in fair value of contingent consideration                                                              |   | (12,000) |   |   | -  |
|   | Management company expenses                                                                                   |   | 4,319  |   |   | 858  |
|   | General and administrative                                                                                    |   | 1,902  |   |   | 1,758  |
|   | Acquisition costs                                                                                             |   | 25  |   |   | -  |
|   | Total expenses and other                                                                                      |   | 167,447  |   |   | 39,053  |
|   |                                                                                                          |   |   |   |   |   |
|   | Operating income (loss)                                                                                       |   | (97,733) |   |   | 6,627  |
|   |                                                                                                          |   |   |   |   |   |
|   | Other income and expenses                                                                                     |   |   |   |   |   |
|   | Interest and other income                                                                                     |   | 87  |   |   | 354  |
|   | Equity in earnings (loss) of unconsolidated joint ventures                                                    |   | (14) |   |   | 62  |
|   | Gain on involuntary conversion                                                                                |   | -  |   |   | 40  |
|   | Gain on sale of real estate                                                                                   |   | 743  |   |   | -  |
|   | Interest expense                                                                                              |   | (13,473) |   |   | (10,164) |
|   |                                                                                                          |   |   |   |   |   |
|   | Loss before income taxes                                                                                      |   | (110,390) |   |   | (3,081) |
|   |                                                                                                          |   |   |   |   |   |
|   | Income tax (expense) benefit                                                                                  |   | 174  |   |   | (59) |
|   |                                                                                                          |   |   |   |   |   |
|   | Loss from continuing operations                                                                               |   | (110,216) |   |   | (3,140) |
|   | Discontinued operations:                                                                                      |   |   |   |   |   |
|   |      Loss from discontinued operations                                               |   | (22,633) |   |   | (1,048) |
|   |      Gain on sale of real estate from discontinued operations                        |   | 2,275  |   |   | -  |
|   | Total discontinued operations                                                                                 |   | (20,358) |   |   | (1,048) |
|   |                                                                                                          |   |   |   |   |   |
|   | Net loss                                                                                                      |   | (130,574) |   |   | (4,188) |
|   | Net loss attributable to noncontrolling interest – real estate partnerships                             |   | 77,546  |   |   | 2,356  |
|   |                                                                                                          |   |   |   |   |   |
|   | Net loss for Parkway Properties, Inc.                                                                         |   | (53,028) |   |   | (1,832) |
|   | Dividends on preferred stock                                                                                  |   | (2,710) |   |   | (1,737) |
|   | Net loss attributable to common stockholders                                                                  | $ | (55,738) |   | $ | (3,569) |
|   |                                                                                                          |   |   |   |   |   |
|   | Net loss per common share attributable to Parkway Properties, Inc.:                                           |   |   |   |   |   |
|   | Basic:                                                                                                        |   |   |   |   |   |
|   |      Loss from continuing operations attributable to Parkway Properties, Inc.        | $ | (1.64) |   | $ | (0.12) |
|   |      Discontinued operations                                                         |   | (0.95) |   |   | (0.05) |
|   |      Basic net loss attributable to Parkway Properties, Inc.                         | $ | (2.59) |   | $ | (0.17) |
|   | Diluted:                                                                                                      |   |   |   |   |   |
|   |      Loss from continuing operations attributable to Parkway Properties, Inc.        | $ | (1.64) |   | $ | (0.12) |
|   |      Discontinued operations                                                         |   | (0.95) |   |   | (0.05) |
|   |      Diluted net loss attributable to Parkway Properties, Inc.                       | $ | (2.59) |   | $ | (0.17) |
|   |                                                                                                          |   |   |   |   |   |
|   | Weighted average shares outstanding:                                                                          |   |   |   |   |   |
|   | Basic                                                                                                         |   | 21,502  |   |   | 21,438  |
|   | Diluted                                                                                                       |   | 21,502  |   |   | 21,438  |

----

|                                                                                                   |   | Nine Months Ended September 30 |
|--------------------------------------------------------------------------------------------------------|--------|-------------------------------------|
|                                                                                                   |   | 2011                                |   |   | 2010 |
|                                                                                                   |   | (Unaudited)                         |
| Revenues                                                                                               |   |                                |   |   |   |
| Income from office and parking properties                                                              | $      | 170,244                        |   | $ | 137,392  |
| Management company income                                                                              |   | 9,990                          |   |   | 1,331  |
| Total revenues                                                                                         |   | 180,234                        |   |   | 138,723  |
|                                                                                                   |   |                                |   |   |   |
| Expenses and other                                                                                     |   |                                |   |   |   |
| Property operating expense                                                                             |   | 79,156                         |   |   | 65,478  |
| Depreciation and amortization                                                                          |   | 64,519                         |   |   | 46,260  |
| Impairment loss on real estate                                                                         |   | 107,240                        |   |   | -  |
| Impairment loss on mortgage loan receivable                                                            |   | 9,235                          |   |   | -  |
| Change in fair value of contingent consideration                                                       |   | (12,000)                            |   |   | -  |
| Management company expenses                                                                            |   | 8,398                          |   |   | 2,243  |
| General and administrative                                                                             |   | 5,380                          |   |   | 5,361  |
| Acquisition costs                                                                                      |   | 16,754                         |   |   | -  |
| Total expenses and other                                                                               |   | 278,682                        |   |   | 119,342  |
|                                                                                                   |   |                                |   |   |   |
| Operating income (loss)                                                                                |   | (98,448)                            |   |   | 19,381  |
|                                                                                                   |   |                                |   |   |   |
| Other income and expenses                                                                              |   |                                |   |   |   |
| Interest and other income                                                                              |   | 849                            |   |   | 1,105  |
| Equity in earnings of unconsolidated joint ventures                                                    |   | 65                             |   |   | 253  |
| Gain on involuntary conversion                                                                         |   | -                              |   |   | 40  |
| Gain on sale of real estate                                                                            |   | 743                            |   |   | -  |
| Interest expense                                                                                       |   | (37,280)                            |   |   | (30,576) |
|                                                                                                   |   |                                |   |   |   |
| Loss before income taxes                                                                               |   | (134,071)                           |   |   | (9,797) |
|                                                                                                   |   |                                |   |   |   |
| Income tax expense                                                                                     |   | (50)                                |   |   | (176) |
|                                                                                                   |   |                                |   |   |   |
| Loss from continuing operations                                                                        |   | (134,121)                           |   |   | (9,973) |
| Discontinued operations:                                                                               |   |                                |   |   |   |
|      Income (loss) from discontinued operations                               |   | (26,410)                            |   |   | 1,444  |
|      Gain on sale of real estate from discontinued operations                 |   | 6,567                          |   |   | 8,518  |
| Total discontinued operations                                                                          |   | (19,843)                            |   |   | 9,962  |
|                                                                                                   |   |                                |   |   |   |
| Net loss                                                                                               |   | (153,964)                           |   |   | (11) |
| Net loss attributable to noncontrolling interest – real estate partnerships                      |   | 84,112                         |   |   | 7,581  |
|                                                                                                   |   |                                |   |   |   |
| Net income (loss) for Parkway Properties, Inc.                                                         |   | (69,852)                            |   |   | 7,570  |
| Dividends on preferred stock                                                                           |   | (7,341)                             |   |   | (4,137) |
| Net income (loss) attributable to common stockholders                                                  | $      | (77,193)                            |   | $ | 3,433  |
|                                                                                                   |   |                                |   |   |   |
| Net income (loss) per common share attributable to Parkway Properties, Inc.:                           |   |                                |   |   |   |
| Basic:                                                                                                 |   |                                |   |   |   |
|      Loss from continuing operations attributable to Parkway Properties, Inc. | $      | (2.67)                              |   | $ | (0.30) |
|      Discontinued operations                                                  |   | (0.92)                              |   |   | 0.46  |
|      Basic net income (loss) attributable to Parkway Properties, Inc.         | $      | (3.59)                              |   | $ | 0.16  |
| Diluted:                                                                                               |   |                                |   |   |   |
|      Loss from continuing operations attributable to Parkway Properties, Inc. | $      | (2.67)                              |   | $ | (0.30) |
|      Discontinued operations                                                  |   | (0.92)                              |   |   | 0.46  |
|      Diluted net income (loss) attributable to Parkway Properties, Inc.       | $      | (3.59)                              |   | $ | 0.16  |
|                                                                                                   |   |                                |   |   |   |
| Weighted average shares outstanding:                                                                   |   |                                |   |   |   |
| Basic                                                                                                  |   | 21,489                         |   |   | 21,413  |
| Diluted                                                                                                |   | 21,489                         |   |   | 21,413  |

----

|                                                                                                                                                                                                                               |   | Parkway Properties, Inc. Stockholders |   |   |        |   |   |                     |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------|-------------|--------|--------|--------------------------|
|                                                                                                                                                                                                                               |   | PreferredStock                        |   |   | CommonStock |   |   | CommonStock Heldin Trust |   |   | AdditionalPaid-InCapital |   |   | AccumulatedOtherComprehensiveLoss |   |   | AccumulatedDeficit |   |   | NoncontrollingInterest –Real EstatePartnerships |   |   | TotalEquity |
| Balance at December 31, 2010                                                                                                                                                                                                       | $      | 102,787                          |   | $      | 22     |   | $      | (1,896)                  |   | $ | 516,167  |   | $ | (3,003) |   | $ | (127,575) |   | $ | 133,988  |   | $ | 620,490  |
| Comprehensive loss                                                                                                                                                                                                                 |   |                                  |   |   |        |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                                                                                                                                           |   | -                                |   |   | -      |   |   | -                   |   |   | -  |   |   | -  |   |   | (69,852) |   |   | (84,112) |   |   | (153,964) |
| Change in fair value of interest rate swaps                                                                                                                                                                                        |   | -                                |   |   | -      |   |   | -                   |   |   | -  |   |   | (2,701) |   |   | -  |   |   | (7,398) |   |   | (10,099) |
| Total comprehensive loss                                                                                                                                                                                                           |   | -                                |   |   | -      |   |   | -                   |   |   | -  |   |   | -  |   |   | -  |   |   | -  |   |   | (164,063) |
| Common dividends declared - $0.225 per share                                                                                                                                                                                       |   | -                                |   |   | -      |   |   | -                   |   |   | -  |   |   | -  |   |   | (4,964) |   |   | -  |   |   | (4,964) |
| Preferred dividends declared - $1.50 per share                                                                                                                                                                                     |   | -                                |   |   | -      |   |   | -                   |   |   | -  |   |   | -  |   |   | (7,341) |   |   | -  |   |   | (7,341) |
| Share-based compensation                                                                                                                                                                                                           |   | -                                |   |   | -      |   |   | -                   |   |   | 1,389  |   |   | -  |   |   | -  |   |   | -  |   |   | 1,389  |
| Issuance of 1,046,400 shares of 8.0% Series D Preferred stock                                                                                                                                                                      |   | 26,155                           |   |   | -      |   |   | -                   |   |   | -  |   |   | -  |   |   | -  |   |   | -  |   |   | 26,155  |
| 17,636 shares issued in lieu of Directors’ fees                                                                                                                                                                              |   | -                                |   |   | -      |   |   | -                   |   |   | 319  |   |   | -  |   |   | -  |   |   | -  |   |   | 319  |
| Issuance costs for shelf registration                                                                                                                                                                                              |   | -                                |   |   | -      |   |   | -                   |   |   | (12) |   |   | -  |   |   | -  |   |   | -  |   |   | (12) |
|     18,819 and 11 shares withheld to      satisfy tax withholding obligation in connection with the vesting of restricted stock and deferred incentive share units, respectively |   | -                                |   |   | -      |   |   | -                   |   |   | (336) |   |   | -  |   |   | -  |   |   | -  |   |   | (336) |
| Distribution of 48,125 shares of common stock from deferred compensation plan                                                                                                                                                      |   | -                                |   |   | -      |   |   | 1,625               |   |   | -  |   |   | -  |   |   | -  |   |   | -  |   |   | 1,625  |
| Contribution of 2,061 shares of common stock to deferred compensation plan                                                                                                                                                         |   | -                                |   |   | -      |   |   | (38)                     |   |   | -  |   |   | -  |   |   | -  |   |   | -  |   |   | (38) |
| Contribution of capital by noncontrolling interest                                                                                                                                                                                 |   | -                                |   |   | -      |   |   | -                   |   |   | -  |   |   | -  |   |   | -  |   |   | 251,168  |   |   | 251,168  |
| Distribution of capital to noncontrolling interest                                                                                                                                                                                 |   | -                                |   |   | -      |   |   | -                   |   |   | -  |   |   | -  |   |   | -  |   |   | (43,520) |   |   | (43,520) |
| Balance at September 30, 2011                                                                                                                                                                                                      | $      | 128,942                          |   | $      | 22     |   | $      | (309)                    |   | $ | 517,527  |   | $ | (5,704) |   | $ | (209,732) |   | $ | 250,126  |   | $ | 680,872  |

----

|                                                                        |   | Nine Months Ended |
|-----------------------------------------------------------------------------|--------|-------------------|
|                                                                        |   | September 30      |
|                                                                        |   | 2011              |   |   | 2010 |
|                                                                        |   | (Unaudited)       |
| Operating activities                                                        |   |              |   |   |   |
| Net loss                                                                    | $      | (153,964)         |   | $ | (11) |
| Adjustments to reconcile net loss to cash provided by operating activities: |   |              |   |   |   |
| Depreciation and amortization                                               |   | 64,519       |   |   | 46,260  |
| Depreciation and amortization – discontinued operations               |   | 19,787       |   |   | 19,118  |
| Amortization of above (below) market leases                                 |   | 1,463        |   |   | (364) |
| Amortization of above (below) market leases – discontinued operations |   | (1,069)           |   |   | 217  |
| Amortization of loan costs                                                  |   | 1,573        |   |   | 1,317  |
| Amortization of mortgage loan discount                                      |   | (400)             |   |   | (522) |
| Share-based compensation expense                                            |   | 1,389        |   |   | 877  |
| Deferred income tax benefit                                                 |   | (364)             |   |   | -  |
| Operating distributions from unconsolidated joint ventures                  |   | 507          |   |   | -  |
| Gain on sale of real estate investments                                     |   | (7,310)           |   |   | (8,558) |
| Non-cash impairment loss on real estate                                     |   | 107,240      |   |   | -  |
| Non-cash impairment loss on real estate – discontinued operations     |   | 21,467       |   |   | -  |
| Non-cash impairment loss on mortgage loan receivable                        |   | 9,235        |   |   | -  |
| Equity in earnings of unconsolidated joint ventures                         |   | (65)              |   |   | (253) |
| Change in fair value of contingent consideration                            |   | (12,000)          |   |   | -  |
| Increase in deferred leasing costs                                          |   | (11,434)          |   |   | (7,543) |
| Changes in operating assets and liabilities:                                |   |              |   |   |   |
| Change in receivables and other assets                                      |   | (20,990)          |   |   | (8,129) |
| Change in accounts payable and other liabilities                            |   | 5,443        |   |   | 10,750  |
|                                                                        |   |              |   |   |   |
| Cash provided by operating activities                                       |   | 25,027       |   |   | 53,159  |
|                                                                        |   |              |   |   |   |
| Investing activities                                                        |   |              |   |   |   |
| Distributions from unconsolidated joint ventures                            |   | 3,201        |   |   | -  |
| Investment in real estate                                                   |   | (488,279)         |   |   | (32,174) |
| Investment in other assets                                                  |   | (3,500)           |   |   | -  |
| Investment in management company                                            |   | (32,400)          |   |   | -  |
| Proceeds from sale of real estate                                           |   | 200,193      |   |   | 4,758  |
| Improvements to real estate                                                 |   | (29,120)          |   |   | (23,407) |
|                                                                        |   |              |   |   |   |
| Cash used in investing activities                                           |   | (349,905)         |   |   | (50,823) |
|                                                                        |   |              |   |   |   |
| Financing activities                                                        |   |              |   |   |   |
| Principal payments on mortgage notes payable                                |   | (103,792)         |   |   | (98,582) |
| Proceeds from mortgage notes payable                                        |   | 222,013      |   |   | 70,000  |
| Proceeds from bank borrowings                                               |   | 241,822      |   |   | 100,969  |
| Payments on bank borrowings                                                 |   | (238,809)         |   |   | (100,969) |
| Debt financing costs                                                        |   | (4,828)           |   |   | (1,000) |
| Purchase of Company stock                                                   |   | (336)             |   |   | (799) |
| Dividends paid on common stock                                              |   | (4,884)           |   |   | (4,836) |
| Dividends paid on preferred stock                                           |   | (6,818)           |   |   | (3,600) |
| Contributions from noncontrolling interest partners                         |   | 251,168      |   |   | -  |
| Distributions to noncontrolling interest partners                           |   | (43,520)          |   |   | -  |
| Proceeds from stock offering                                                |   | 26,143       |   |   | 44,883  |
|                                                                        |   |              |   |   |   |
| Cash provided by financing activities                                       |   | 338,159      |   |   | 6,066  |
|                                                                        |   |              |   |   |   |
| Change in cash and cash equivalents                                         |   | 13,281       |   |   | 8,402  |
|                                                                        |   |              |   |   |   |
| Cash and cash equivalents at beginning of period                            |   | 19,670       |   |   | 20,697  |
|                                                                        |   |              |   |   |   |
| Cash and cash equivalents at end of period                                  | $      | 32,951       |   | $ | 29,099  |

----

----

|                                                                                                                                                                  | Three Months EndedSeptember 30 |         | Nine Months EndedSeptember  30 |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|--------------|------------------------------------------|
|                                                                                                                                                                  |
|                                                                                                                                                                  |                           | 2011         |                                     |   | 2010 |   |   | 2011 |   |   | 2010 |
| Numerator:                                                                                                                                                            |                           |         |                                     |   |   |   |   |   |   |   |   |
|      Basic and diluted net income (loss)          attributable to common stockholders      |  $                        | (55,738)     |                                     | $ | (3,569) |   | $ | (77,193) |   | $ | 3,433  |
|                                                                                                                                                                  |                           |         |                                     |   |   |   |   |   |   |   |   |
|      Basic weighted average shares                                                                                                           |                           | 21,502  |                                     |   | 21,438  |   |   | 21,489  |   |   | 21,413  |
|      Dilutive weighted average shares                                                                                                        |                           | 21,502  |                                     |   | 21,438  |   |   | 21,489  |   |   | 21,413  |
|      Diluted net income (loss) per share attributable to          Parkway Properties, Inc. |  $                        | (2.59)       |                                     |  $ |  (0.17) |   |  $ | (3.59) |   |  $ |  0.16  |

|                                                                           | Nine Months EndedSeptember 30 |         |
|--------------------------------------------------------------------------------|-------------------------------|--------------|
|                                                                           |                          |
|                                                                           | 2011                          |         | 2010 |   |
|                                                                           | (in thousands)                |
| Supplemental cash flow information:                                            |                          |         |   |   |   |   |
| Cash paid for interest                                                         | $                             | 43,250  |   | $ | 39,986  |   |
| Cash paid for income taxes                                                     |                          | 24      |   |   | 141  |   |
| Supplemental schedule of non-cash investing and financing activity:            |                          |         |   |   |   |   |
| Mortgage note payable transferred to purchaser                                 |                          | -       |   |   | (8,666) |   |
| Mortgage loan issued to purchaser                                              |                          | -       |   |   | (1,500) |   |
| Contingent consideration related to the contribution of the Management Company |                          | 19,000  |   |   | -  |   |
| Restricted shares and deferred incentive share units issued                    |                          | 2,240   |   |   | 1,898  |   |
| Mortgage loan assumed in purchase                                              |                          | 87,225  |   |   | -  |   |
| Shares issued in lieu of Directors’ fees                                 |                          | 319     |   |   | 285  |   |

----

----

|                 |   |  Amount  |   | WeightedAverage Life |
|----------------------|--------|---------------|--------|----------------------|
| Land                 | $      | 66,267   |   | N/A                  |
| Buildings            |   | 380,147  |   | 40              |
| Tenant improvements  |   | 45,267   |   | 6               |
| Lease commissions    |   | 26,913   |   | 6               |
| Lease in place value |   | 41,195   |   | 6               |
| Above market leases  |   | 27,428   |   | 7               |
| Below market leases  |   | (4,955)       |   | 13              |
| Other                |   | 2,388    |   | 7               |
| Mortgage assumed     |   | (87,225)      |   | 7               |

|   |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Three Months Ended                                                                                                                                                                                                                                                                                                                                                                                                                          |   |   | Nine Months Ended |
|--------|--------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------------|
|   |                                                         |                                                                                             September 30 |                                                                       September 30 |   |
|   |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 2011                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   | 2010              |   |   | 2011 |   |   | 2010 |
|   | Revenues                                                     | $                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 69,714                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $      | 70,031       |   | $ | 211,167  |   | $ | 211,795  |
|   | Net income (loss) attributable tocommon stockholders         | $                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | (55,738)                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | $      | (3,598)           |   | $ | (71,857) |   | $ | (590) |
|   | Basic net income (loss) attributable tocommon stockholders   | $                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | (2.59)                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | $      | (0.17)            |   | $ | (3.34) |   | $ | (0.03) |
|   | Diluted net income (loss) attributable tocommon stockholders | $                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | (2.59)                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | $      | (0.17)            |   | $ | (3.34) |   | $ | (0.03) |

----

----

| Office Property              |   | Location          |   | SquareFeet  |   | Date ofSale |   |   | Net SalesPrice |   |   | Net BookValue ofReal Estate |   |   |  Gainon Sale |
|------------------------------|--------|-------------------|--------|-------------|--------|-------------|--------|--------|----------------|--------|--------|-----------------------------|--------|--------|-------------------|
| One Park Ten                 |   | Houston, TX       |   | 163    |   | 04/15/2010  |   | $      | 14,924    |   | $      | 6,406                  |   | $      | 8,518        |
| 2010 Dispositions            |   |              |   | 163    |   |        |   | $      | 14,924    |   | $      | 6,406                  |   | $      | 8,518        |
|                         |   |              |   |        |   |        |   |   |           |   |   |                        |   |   |              |
| 233 North Michigan           |   | Chicago, IL       |   | 1,070  |   | 05/11/2011  |   | $      | 156,546   |   | $      | 152,254                |   | $      | 4,292        |
| Greenbrier I & II        |   | Hampton Roads, VA |   | 172    |   | 07/19/2011  |   |   | 16,275    |   |   | 15,070                 |   |   | 1,205        |
| Glen Forest                  |   | Richmond, VA      |   | 81     |   | 08/16/2011  |   |   | 8,950     |   |   | 7,880                  |   |   | 1,070        |
| Tower at 1301 Gervais        |   | Columbia, SC      |   | 298    |   | 09/08/2011  |   |   | 18,421    |   |   | 18,421                 |   |   | -            |
| 2011 Dispositions            |   |              |   | 1,621  |   |        |   | $      | 200,192   |   | $      | 193,625                |   | $      | 6,567        |
|  Property Held For Sale |   |              |   |        |   |        |   |   |           |   |   |                        |   |   |              |
| 111 East Wacker              |   | Chicago, IL       |   | 1,013  |   | -           |   | $      | -         |   | $      | -                      |   | $      | -            |

----

|                                   | September 30 |
|----------------------------------------|--------------|
|                                   | 2011         |
| Balance Sheet:                         |         |
| Investment property                    |  $      | 168,613  |
| Accumulated depreciation               |         | (33,650) |
| Office property held for sale          |         | 134,963  |
| Rents receivable and other assets      |         | 27,472  |
| Intangible assets, net                 |         | 4,511  |
| Other assets held for sale             |         | 31,983  |
| Total assets held for sale             |  $      | 166,946  |
|                                   |         |
| Mortgage notes payable                 |  $      | 148,272  |
| Accounts payable and other liabilities |         | 17,068  |
| Total liabilities held for sale        |  $      | 165,340  |

|                                                    |   | Three Months EndedSeptember 30 |   |   | Nine Months EndedSeptember 30 |
|---------------------------------------------------------|--------|--------------------------------|--------|--------|-------------------------------|
|                                                    |   | 2011                           |   |   | 2010                          |   |   | 2011 |   |   | 2010 |
| Income statement:                                       |   |                           |   |   |                          |   |   |   |   |   |   |
| Revenues                                                |   |                           |   |   |                          |   |   |   |   |   |   |
| Income from office and parking properties               | $      | 9,042                     |   | $      | 16,472                   |   | $ | 41,218  |   | $ | 56,217  |
|                                                    |   | 9,042                     |   |   | 16,472                   |   |   | 41,218  |   |   | 56,217  |
|                                                    |   |                           |   |   |                          |   |   |   |   |   |   |
| Expenses                                                |   |                           |   |   |                          |   |   |   |   |   |   |
| Office and parking properties:                          |   |                           |   |   |                          |   |   |   |   |   |   |
| Operating expense                                       |   | 3,316                     |   |   | 7,715                    |   |   | 18,016  |   |   | 24,863  |
| Interest expense                                        |   | 2,389                     |   |   | 3,504                    |   |   | 8,358  |   |   | 10,792  |
| Depreciation and amortization                           |   | 6,203                     |   |   | 6,301                    |   |   | 19,787  |   |   | 19,118  |
| Impairment loss                                         |   | 19,767                    |   |   | -                        |   |   | 21,467  |   |   | -  |
|                                                    |   | 31,675                    |   |   | 17,520                   |   |   | 67,628  |   |   | 54,773  |
|                                                    |   |                           |   |   |                          |   |   |   |   |   |   |
| Income (loss) from discontinued operations              |   | (22,633)                       |   |   | (1,048)                       |   |   | (26,410) |   |   | 1,444  |
| Gain on sale of real estate fromdiscontinued operations |   | 2,275                     |   |   | -                        |   |   | 6,567  |   |   | 8,518  |
| Total discontinued operations                           | $      | (20,358)                       |   | $      | (1,048)                       |   | $ | (19,843) |   | $ | 9,962  |

----

----

| ·   | A $12.1 million non-recourse mortgage loan secured by Cypress Center, a 286,000 square foot office complex in the Westshore submarket of Tampa, Florida.  The mortgage loan has a stated rate of LIBOR plus 200 basis points with a maturity of May 18, 2016.  Upon obtaining the mortgage, Fund II entered into an interest rate swap that fixes the interest rate at 4.1% through November 18, 2015. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A $33.9 million non-recourse mortgage loan secured by Bank of America Center, a 421,000 square foot office property in the central business district of Orlando, Florida.  The mortgage loan has a stated rate of LIBOR plus 200 basis points with a maturity of May 18, 2018.  Upon obtaining the mortgage, Fund II entered into an interest rate swap that fixes the interest rate at 4.7% through November 18, 2017. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A $22.1 million non-recourse mortgage loan secured by Two Ravinia Drive, a 438,000 square foot office property located in the Central Perimeter submarket of Atlanta, Georgia.  The mortgage loan has a stated rate of LIBOR plus 200 basis points with a maturity of May 20, 2019.  Upon obtaining the mortgage, Fund II entered into an interest rate swap that fixes the interest rate at 4.99% through November 18, 2018. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A $90.2 million non-recourse mortgage loan secured by Two Liberty Place, a 941,000 square foot office property located in the central business district of Philadelphia, Pennsylvania.  The mortgage loan has a fixed rate of 5.2% and a maturity date of June 10, 2019. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                 | Parkway’s |             | Square Feet |
|----------------------------------------------------------------------|-----------------|------------------|-------------|
| Joint Venture Entity and Property Name                               |            | Location         |        | Ownership % |   | (In thousands) |
| Parkway Properties Office Fund, LP                                   |            |             |        |   |   |   |
| Desert Ridge Corporate Center                                        |            | Phoenix, AZ      |        | 26.50% |   | 293 |
| Maitland 100                                                         |            | Orlando, FL      |        | 25.00% |   | 128 |
| 555 Winderley                                                        |            | Orlando, FL      |        | 25.00% |   | 102 |
| Gateway Center                                                       |            | Orlando, FL      |        | 25.00% |   | 228 |
| BellSouth Building                                                   |            | Jacksonville, FL |        | 25.00% |   | 92 |
| Centurion Centre                                                     |            | Jacksonville, FL |        | 25.00% |   | 88 |
| 100 Ashford Center                                                   |            | Atlanta, GA      |        | 25.00% |   | 160 |
| Peachtree Ridge                                                      |            | Atlanta, GA      |        | 25.00% |   | 160 |
| Overlook II                                                          |            | Atlanta, GA      |        | 25.00% |   | 260 |
| U.S. Cellular Plaza                                                  |            | Chicago, IL      |        | 40.00% |   | 610 |
| Chatham Centre                                                       |            | Schaumburg, IL   |        | 25.00% |   | 206 |
| Renaissance Center                                                   |            | Memphis, TN      |        | 25.00% |   | 190 |
| 1401 Enclave Parkway                                                 |            | Houston, TX      |        | 25.00% |   | 209 |
| Total Parkway Properties Office Fund, LP                             |            |             |        | 28.20% |   | 2,726 |
|                                                                 |            |             |        |   |   |   |
| Parkway Properties Office Fund II, LP                                |            |             |        |   |   |   |
|     Hayden Ferry Lakeside I                      |            | Phoenix, AZ      |        | 30.00% |   | 203 |
|     245 Riverside                                |            | Jacksonville, FL |        | 30.00% |   | 135 |
|     Bank of America Center                       |            | Orlando, FL      |        | 30.00% |   | 421 |
|     Corporate Center Four at International Plaza |            | Tampa, FL        |        | 30.00% |   | 250 |
|     Cypress Center I - III                       |            | Tampa, FL        |        | 30.00% |   | 286 |
|     Falls Pointe                                 |            | Atlanta, GA      |        | 30.00% |   | 107 |
|     Lakewood II                                  |            | Atlanta, GA      |        | 30.00% |   | 123 |
|     3344 Peachtree                               |            | Atlanta, GA      |        | 33.03% |   | 485 |
|     Two Ravinia                                  |            | Atlanta, GA      |        | 30.00% |   | 438 |
|     Carmel Crossing                              |            | Charlotte, NC    |        | 30.00% |   | 326 |
|     Two Liberty Place                            |            | Philadelphia, PA |        | 19.00% |   | 941 |
| Total Parkway Properties Office Fund II, LP                          |            |             |        | 27.70% |   | 3,715 |
|                                                                 |            |             |        |   |   |   |
| Total Consolidated Joint Ventures                                    |            |             |        | 27.90% |   | 6,441 |

----

----

|                 | Threshold     | Target        | Maximum       |
|----------------------|---------------|---------------|---------------|
| Absolute Return Goal | 10%           | 12%           | 14%           |
| Relative Return Goal | RMS + 100 bps | RMS + 200 bps | RMS + 300 bps |

----

|                |          |   | Weighted    |        |         |         | Weighted    |
|---------------------|---------------|--------|-------------|-------------|--------------|--------------|-------------|
|                |          |   | Average     |        | Deferred     |         | Average     |
|                | Restricted    |   | Grant-Date  |        | Incentive    |         | Grant-Date  |
|                | Shares        |   | Fair Value  |        | Share Units  |         | Fair Value  |
| Balance at 12/31/10 | 479,930  |   |  $     | 12.81  |         | 15,640  |        |  $ | 25.71  |
| Issued              | 196,371  |   | 10.23  |        | 17,010  |         | 16.37  |
| Vested              | (59,405)      |   | 32.28  |        | (30)         |         | 52.36  |
| Forfeited           | -        |   | -      |        | (1,875)      |         | 25.25  |
| Balance at 09/30/11 | 616,896  |   |  $     | 10.11  |         | 30,745  |        |  $ | 20.54  |

----

----

----

----

|                                                                                                                                                | At or for the three months ended |           |   | At or for the three months ended |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------|----------------|--------|----------------------------------|
|                                                                                                                                                | September 30, 2011               |           |   | September 30, 2010               |
|                                                                                                                                                | Office                           |           |   | Unallocated                      |   |   |   |   |   | Office |   |   | Unallocated |   |   |   |
|                                                                                                                                                | Properties                       |           |   | and Other                        |   |   | Consolidated |   |   | Properties |   |   | and Other |   |   | Consolidated |
|                                                                                                                                                | (in thousands)                   | (in thousands) |
|                                                                                                                                                | (Unaudited)                      |
|                                                                                                                                                |                             |
| Income from office and parking properties (a)                                                                                                       |  $                          | 63,594    |   | $                                | -  |   | $ | 63,594  |   | $ | 45,095  |   | $ | -  |   | $ | 45,095  |
| Management company income                                                                                                                           |                             | -         |   |                             | 6,120  |   |   | 6,120  |   |   | -  |   |   | 585  |   |   | 585  |
| Property operating expenses (b)                                                                                                                     |                             | (30,639)       |   |                             | -  |   |   | (30,639) |   |   | (21,612) |   |   | -  |   |   | (21,612) |
| Depreciation and amortization                                                                                                                       |                             | (26,087)       |   |                             | -  |   |   | (26,087) |   |   | (14,825) |   |   | -  |   |   | (14,825) |
| Management company expenses                                                                                                                         |                             | -         |   |                             | (4,319) |   |   | (4,319) |   |   | -  |   |   | (858) |   |   | (858) |
| Income tax expense-current                                                                                                                          |                             | -         |   |                             | (190) |   |   | (190) |   |   | -  |   |   | (59) |   |   | (59) |
| Income tax expense-deferred                                                                                                                         |                             | -         |   |                             | 364  |   |   | 364  |   |   | -  |   |   | -  |   |   | -  |
| General and administrative expenses                                                                                                                 |                             | -         |   |                             | (1,902) |   |   | (1,902) |   |   | -  |   |   | (1,758) |   |   | (1,758) |
| Acquisition costs                                                                                                                                   |                             | -         |   |                             | (25) |   |   | (25) |   |   | -  |   |   | -  |   |   | -  |
| Other income                                                                                                                                        |                             | -         |   |                             | 87  |   |   | 87  |   |   | -  |   |   | 354  |   |   | 354  |
| Equity in earnings (loss) of               unconsolidated joint ventures |                             | (14)           |   |                             | -  |   |   | (14) |   |   | 62  |   |   | -  |   |   | 62  |
| Gain on involuntary conversion                                                                                                                      |                             | -         |   |                             | -  |   |   | -  |   |   | 40  |   |   | -  |   |   | 40  |
| Interest expense (c)                                                                                                                                |                             | (11,878)       |   |                             | (1,595) |   |   | (13,473) |   |   | (8,673) |   |   | (1,491) |   |   | (10,164) |
| Adjustment for noncontrolling interest-real estate partnerships                                                                                     |                             | 77,546    |   |                             | -  |   |   | 77,546  |   |   | 2,356  |   |   | -  |   |   | 2,356  |
| Loss from discontinued operations                                                                                                                   |                             | (22,633)       |   |                             | -  |   |   | (22,633) |   |   | (1,048) |   |   | -  |   |   | (1,048) |
| Gain on sale of real estate from discontinued operations                                                                                            |                             | 2,275     |   |                             | -  |   |   | 2,275  |   |   | -  |   |   | -  |   |   | -  |
| Gain on sale of real estate                                                                                                                         |                             | 743       |   |                             | -  |   |   | 743  |   |   | -  |   |   | -  |   |   | -  |
| Change in fair value of contingent        consideration                                                     |                             | -         |   |                             | 12,000  |   |   | 12,000  |   |   | -  |   |   | -  |   |   | -  |
| Impairment loss on real estate                                                                                                                      |                             | (107,240)      |   |                             | -  |   |   | (107,240) |   |   | -  |   |   | -  |   |   | -  |
| Impairment loss on mortgage loan        receivable                                                          |                             | -         |   |                             | (9,235) |   |   | (9,235) |   |   | -  |   |   | -  |   |   | -  |
|                                                                                                                                                |                             |           |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends on preferred stock                                                                                                                        |                             | -         |   |                             | (2,710) |   |   | (2,710) |   |   | -  |   |   | (1,737) |   |   | (1,737) |
| Net income (loss) attributable to common stockholders                                                                                               |                             | (54,333)       |   |                             | (1,405) |   |   | (55,738) |   |   | 1,395  |   |   | (4,964) |   |   | (3,569) |
|                                                                                                                                                |                             |           |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization                                                                                                                       |                             | 26,087    |   |                             | -  |   |   | 26,087  |   |   | 14,825  |   |   | -  |   |   | 14,825  |
| Depreciation and amortization – discontinued operations                                                                                       |                             | 6,203     |   |                             | -  |   |   | 6,203  |   |   | 6,301  |   |   | -  |   |   | 6,301  |
| Depreciation and amortization noncontrolling interest – real estate partnerships                                                              |                             | (11,574)       |   |                             | -  |   |   | (11,574) |   |   | (4,011)  |   |   | -  |   |   | (4,011)  |
| Adjustment for depreciation and amortization-unconsolidated joint ventures                                                                          |                             | 38        |   |                             | -  |   |   | 38  |   |   | 85  |   |   | -  |   |   | 85  |
| Impairment loss on real estate                                                                                                                      |                             | 54,767    |   |                             | -  |   |   | 54,767  |   |   | -  |   |   | -  |   |   | -  |
| Gain on sale of real estate                                                                                                                         |                             | (3,018)        |   |                             | -  |   |   | (3,018) |   |   | -  |   |   | -  |   |   | -  |
| Funds from operations available to common stockholders                                                                                              | $                                | 18,170         |   | $                                | (1,405) |   | $ | 16,765 |   | $ | 18,595  |   | $ | (4,964) |   | $ | 13,631  |
|                                                                                                                                                |                             |           |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital expenditures (d)                                                                                                                            | $                                | 12,906    |   | $                                | -  |   | $ | 12,906  |   | $ | 12,629  |   | $ | -  |   | $ | 12,629  |

| (a) | Included in income from office and parking properties are rental revenues, customer reimbursements, parking income and other income. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------|

| (b) | Included in property operating expenses are real estate taxes, insurance, contract services, repairs and maintenance and property operating expenses. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | Interest expense for office properties represents interest expense on property secured mortgage debt.  It does not include interest expense on the Company’s unsecured line of credit, which is included in “Unallocated and Other”. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d) | Capital expenditures include building improvements, tenant improvements and deferred leasing costs. |
|-----|-----------------------------------------------------------------------------------------------------|

----

|                                                                                                   | At or for the nine months ended |            |           | At or for the nine months ended |
|--------------------------------------------------------------------------------------------------------|---------------------------------|-----------------|----------------|---------------------------------|
|                                                                                                   | September 30, 2011              |            |           | September 30, 2010              |
|                                                                                                   | Office                          |            |           | Unallocated                     |   |   |   |   |   | Office |   |   | Unallocated |   |   |   |
|                                                                                                   | Properties                      |            |           | and Other                       |   |   | Consolidated |   |   | Properties |   |   | and Other |   |   | Consolidated |
|                                                                                                   | (in thousands)                  |            | (in thousands) |
|                                                                                                   | (Unaudited)                     |
| Income from office and parking properties (a)                                                          |  $                         | 170,244    |           | $                               | -  |   | $ | 170,244  |   | $ | 137,392  |   | $ | -  |   | $ | 137,392  |
| Management company income                                                                              |                            | -          |           |                            | 9,990  |   |   | 9,990  |   |   | -  |   |   | 1,331  |   |   | 1,331  |
| Property operating expenses (b)                                                                        |                            | (79,156)        |           |                            | -  |   |   | (79,156) |   |   | (65,478) |   |   | -  |   |   | (65,478) |
| Depreciation and amortization                                                                          |                            | (64,519)        |           |                            | -  |   |   | (64,519) |   |   | (46,260) |   |   | -  |   |   | (46,260) |
| Management company expenses                                                                            |                            | -          |           |                            | (8,398) |   |   | (8,398) |   |   | -  |   |   | (2,243) |   |   | (2,243) |
| Income tax expense-current                                                                             |                            | -          |           |                            | (414) |   |   | (414) |   |   | -  |   |   | (176) |   |   | (176) |
| Income tax expense-deferred                                                                            |                            | -          |           |                            | 364  |   |   | 364  |   |   | -  |   |   | -  |   |   | -  |
| General and administrative expenses                                                                    |                            | -          |           |                            | (5,380) |   |   | (5,380) |   |   | -  |   |   | (5,361) |   |   | (5,361) |
| Acquisition costs                                                                                      |                            | (1,124)         |           |                            | (15,630) |   |   | (16,754) |   |   | -  |   |   | -  |   |   | -  |
| Other income                                                                                           |                            | -          |           |                            | 849  |   |   | 849  |   |   | -  |   |   | 1,105  |   |   | 1,105  |
| Equity in earnings of unconsolidated joint ventures                                                    |                            | 65         |           |                            | -  |   |   | 65  |   |   | 253  |   |   | -  |   |   | 253  |
| Gain on involuntary conversion                                                                         |                            | -          |           |                            | -  |   |   | -  |   |   | 40  |   |   | -  |   |   | 40  |
| Interest expense (c)                                                                                   |                            | (31,903)        |           |                            | (5,377) |   |   | (37,280) |   |   | (26,001) |   |   | (4,575) |   |   | (30,576) |
| Adjustment for noncontrolling interest-real estate partnerships                                        |                            | 84,112     |           |                            | -  |   |   | 84,112  |   |   | 7,581  |   |   | -  |   |   | 7,581  |
| Income (loss) from discontinued     operations                                |                            | (26,410)        |           |                            | -  |   |   | (26,410) |   |   | 1,444  |   |   | -  |   |   | 1,444  |
| Gain on sale of real estate from discontinued operations                                               |                            | 6,567      |           |                            | -  |   |   | 6,567  |   |   | 8,518  |   |   | -  |   |   | 8,518  |
| Gain on sale of real estate                                                                            |                            | 743        |           |                            | -  |   |   | 743  |   |   | -  |   |   | -  |   |   | -  |
| Change in fair value of contingent consideration                                                       |                            | -          |           |                            | 12,000  |   |   | 12,000  |   |   | -  |   |   | -  |   |   | -  |
| Impairment loss on real estate                                                                         |                            | (107,240)       |           |                            | -  |   |   | (107,240) |   |   | -  |   |   | -  |   |   | -  |
| Impairment loss on mortgage loan          receivable |                            | -          |           |                            | (9,235) |   |   | (9,235) |   |   | -  |   |   | -  |   |   | -  |
|                                                                                                   |                            |            |           |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dividends on preferred stock                                                                           |                            | -          |           |                            | (7,341) |   |   | (7,341) |   |   | -  |   |   | (4,137) |   |   | (4,137) |
| Net income (loss) available to common stockholders                                                     |                            | (48,621)        |           |                            | (28,572) |   |   | (77,193) |   |   | 17,489  |   |   | (14,056) |   |   | 3,433  |
|                                                                                                   |                            |            |           |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization                                                                          |                            | 64,519     |           |                            | -  |   |   | 64,519  |   |   | 46,260  |   |   | -  |   |   | 46,260  |
| Depreciation and amortization – discontinued operations                                          |                            | 19,787     |           |                            | -  |   |   | 19,787  |   |   | 19,118  |   |   | -  |   |   | 19,118  |
| Depreciation and amortization noncontrolling interest – real estate partnerships                 |                            | (25,351)        |           |                            | -  |   |   | (25,351) |   |   | (12,837) |   |   | -  |   |   | (12,837) |
| Adjustment for depreciation and amortization-unconsolidated joint ventures                             |                            | 198        |           |                            | -  |   |   | 198  |   |   | 253  |   |   | -  |   |   | 253  |
| Impairment loss on real estate                                                                         |                            | 56,467     |           |                            | -  |   |   | 56,467  |   |   | -  |   |   | -  |   |   | -  |
| Gain on sale of real estate                                                                            |                            | (7,310)         |           |                            | -  |   |   | (7,310) |   |   | (8,518) |   |   | -  |   |   | (8,518) |
| Funds from operations available to common stockholders                                                 | $                               | 59,689     |           | $                               | (28,572) |   | $ | 31,117  |   | $ | 61,765  |   | $ | (14,056) |   | $ | 47,709  |
|                                                                                                   |                            |            |           |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total assets                                                                                           | $                               | 1,822,926  |           | $                               | 91,256  |   | $ | 1,914,182 |   | $ | 1,601,498  |   | $ | 19,567  |   | $ | 1,621,065  |
|                                                                                                   |                            |            |           |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Office and parking properties                                                                          | $                               | 1,545,749  |           | $                               | -  |   | $ | 1,545,749  |   | $ | 1,403,101  |   | $ | -  |   | $ | 1,403,101  |
| Capital expenditures (d)                                                                               | $                               | 40,554     |           | $                               | -  |   | $ | 40,554  |   | $ | 30,950  |   | $ | -  |   | $ | 30,950  |

| (a) | Included in income from office and parking properties are rental revenues, customer reimbursements, parking income and other income. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------|

| (b) | Included in property operating expenses are real estate taxes, insurance, contract services, repairs and maintenance and property operating expenses. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | Interest expense for office properties represents interest expense on property secured mortgage debt.  It does not include interest expense on the Company’s unsecured line of credit, which is included in “Unallocated and Other”. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d) | Capital expenditures include building improvements, tenant improvements and deferred leasing costs. |
|-----|-----------------------------------------------------------------------------------------------------|

----

----

----

----

| Office Property              |   | Location          |   | SquareFeet |   | Date ofSale |   |   | Gross SalesPrice |   |   | Gain        |
|------------------------------|--------|-------------------|--------|------------|--------|-------------|--------|--------|------------------|--------|--------|-------------|
| 233 North Michigan (1)       |   | Chicago, IL       |   | 1,070      |   | 05/11/11    |   | $      | 162,200     |   | $      | 4,292  |
| Maitland 200 (2)             |   | Orlando, FL       |   | 204        |   | 07/06/11    |   |   | 23,000      |   |   | 743    |
| Greenbrier I & II (1)    |   | Hampton Roads, VA |   | 172        |   | 07/19/11    |   |   | 16,700      |   |   | 1,205  |
| Glen Forest (1)              |   | Richmond, VA      |   | 81         |   | 08/16/11    |   |   | 9,300       |   |   | 1,070  |
| Tower at 1301 Gervais (1)(3) |   | Columbia, SC      |   | 298        |   | 09/08/11    |   |   | 19,500      |   |   | -      |
|                         |   |              |   |       |   |        |   | $      | 230,700     |   | $      | 7,310  |

| (1)   | In accordance with GAAP, the gain on sale of real estate and all current and prior period income from this property has been classified as discontinued operations. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Parkway owned a 20% interest in Maitland 200.  Parkway’s proportionate share of the total sales price is $4.6 million. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------|

----

| (3)   | Parkway recognized a non-cash impairment loss of $967,000 in connection with the sale of the Tower at 1301 Gervais during the third quarter of 2011. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | A $12.1 million non-recourse mortgage loan secured by Cypress Center, a 286,000 square foot office complex in the Westshore submarket of Tampa, Florida.  The mortgage loan has a stated rate of LIBOR plus 200 basis points with a maturity of May 18, 2016.  Upon obtaining the mortgage, Fund II entered into an interest rate swap that fixes the interest rate at 4.1% through November 18, 2015. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | A $33.9 million non-recourse mortgage loan secured by Bank of America Center, a 421,000 square foot office property in the central business district of Orlando, Florida.  The mortgage loan has a stated rate |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | of LIBOR plus 200 basis points with a maturity of May 18, 2018.  Upon obtaining the mortgage, Fund II entered into an interest rate swap that fixes the interest rate at 4.7% through November 18, 2017. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A $22.1 million non-recourse mortgage loan secured by Two Ravinia Drive, a 438,000 square foot office property located in the Central Perimeter submarket of Atlanta, Georgia.  The mortgage loan has a stated rate of LIBOR plus 200 basis points with a maturity of May 20, 2019.  Upon obtaining the mortgage, Fund II entered into an interest rate swap that fixes the interest rate at 4.99% through November 18, 2018. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A $90.2 million non-recourse mortgage loan secured by Two Liberty Place, a 941,000 square foot office property located in the central business district of Philadelphia, Pennsylvania.  The mortgage loan has a fixed rate of 5.2% and a maturity date of June 10, 2019. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                                                     |   | Nine Months Ended |
|--------------------------------------------------------------------------|--------|-------------------|
|                                                                     |   | September 30      |
|                                                                     |   | 2011              |   |   | 2010 |
|                                                                     |   | (Unaudited)       |
| Net income (loss) for Parkway Properties, Inc.                           | $      | (69,852)          |   | $ | 7,570  |
| Adjustments to net income (loss) for Parkway Properties, Inc.:           |   |              |   |   |   |
| Interest expense                                                         |   | 44,367       |   |   | 39,862  |
| Amortization of financing costs                                          |   | 1,573        |   |   | 1,317  |
| (Gain) loss on early extinguishment of debt                              |   | (302)             |   |   | 189  |
| Acquisition costs                                                        |   | 15,060       |   |   | -  |
| Depreciation and amortization                                            |   | 84,306       |   |   | 65,378  |
| Amortization of share-based compensation                                 |   | 1,389        |   |   | 877  |
| Gain on sale of real estate                                              |   | (7,310)           |   |   | (8,518) |
| Non-cash (gain) loss (Parkway’s share)                             |   | 65,702       |   |   | (40) |
| Change in fair value of contingent consideration                         |   | (12,000)          |   |   | -  |
| Tax expense (benefit)                                                    |   | 50           |   |   | 176  |
| EBITDA adjustments - unconsolidated joint ventures                       |   | 306          |   |   | 363  |
| EBITDA adjustments - noncontrolling interest in real estate partnerships |   | (39,963)          |   |   | (22,036) |
| EBITDA (1)                                                               | $      | 83,326       |   | $ | 85,138  |
|                                                                     |   |              |   |   |   |
| Interest coverage ratio:                                                 |   |              |   |   |   |
| EBITDA                                                                   | $      | 83,326       |   | $ | 85,138  |
| Interest expense:                                                        |   |              |   |   |   |
| Interest expense                                                         | $      | 44,367       |   | $ | 39,862  |
| Interest expense - unconsolidated joint ventures                         |   | 108          |   |   | 110  |
| Interest expense - noncontrolling interest in real estate partnerships   |   | (14,306)          |   |   | (8,995) |
| Total interest expense                                                   | $      | 30,169       |   | $ | 30,977  |
| Interest coverage ratio                                                  |   | 2.76         |   |   | 2.75  |
|                                                                     |   |              |   |   |   |
| Fixed charge coverage ratio:                                             |   |              |   |   |   |
| EBITDA                                                                   | $      | 83,326       |   | $ | 85,138  |
| Fixed charges:                                                           |   |              |   |   |   |
| Interest expense                                                         | $      | 30,169       |   | $ | 30,977  |
| Preferred dividends                                                      |   | 7,341        |   |   | 4,137  |
| Principal payments (excluding early extinguishment of debt)              |   | 9,246        |   |   | 10,794  |
| Principal payments - unconsolidated joint ventures                       |   | 26           |   |   | 24  |
| Principal payments - noncontrolling interest in real estate partnerships |   | (1,990)           |   |   | (762) |
| Total fixed charges                                                      | $      | 44,792       |   | $ | 45,170  |
| Fixed charge coverage ratio                                              |   | 1.86         |   |   | 1.88  |
|                                                                     |   |              |   |   |   |
| Modified fixed charge coverage ratio:                                    |   |              |   |   |   |
| EBITDA                                                                   | $      | 83,326       |   | $ | 85,138  |
| Modified fixed charges:                                                  |   |              |   |   |   |
| Interest expense                                                         | $      | 30,169       |   | $ | 30,977  |
| Preferred dividends                                                      |   | 7,341        |   |   | 4,137  |
| Total modified fixed charges                                             | $      | 37,510       |   | $ | 35,114  |
| Modified fixed charge coverage ratio                                     |   | 2.22         |   |   | 2.42  |
|                                                                     |   |              |   |   |   |
| Net Debt to EBITDA multiple:                                             |   |              |   |   |   |
| EBITDA - trailing 12 months                                              | $      | 110,543      |   | $ | 114,120  |
| Adjustment to annualize investing activities                             |   | 4,848        |   |   | -  |
| Adjusted EBITDA - trailing 12 months                                     | $      | 115,391      |   | $ | 114,120  |
| Mortgage notes payable                                                   | $      | 978,981      |   | $ | 815,452  |
| Notes payable to banks                                                   |   | 113,852      |   |   | 100,000  |
| Adjustments for unconsolidated joint ventures                            |   | 2,449        |   |   | 2,483  |
| Adjustments for noncontrolling interest in real estate partnerships      |   | (433,592)         |   |   | (212,130) |
| Parkway’s share of total debt                                      |   | 661,690      |   |   | 705,805  |
| Less:  Parkway’s share of cash                           |   | (14,165)          |   |   | (20,413) |
| Parkway’s share of net debt                                        | $      | 647,525      |   | $ | 685,392  |
| Net Debt to EBITDA multiple                                              |   | 5.61         |   |   | 6.01  |

----

|                                                       |   | Nine Months Ended |
|------------------------------------------------------------|--------|-------------------|
|                                                       |   | September 30      |
|                                                       |   | 2011              |   |   | 2010 |
|                                                       |   | (Unaudited)       |
| Cash flows provided by operating activities                | $      | 25,027       |   | $ | 53,159  |
| Amortization of (above) below market leases                |   | (394)             |   |   | 147  |
| Amortization of mortgage loan discount                     |   | 400          |   |   | 522  |
| Operating distributions from unconsolidated joint ventures |   | (507)             |   |   | -  |
| Interest expense                                           |   | 44,367       |   |   | 39,862  |
| Gain (loss) on early extinguishment of debt                |   | (302)             |   |   | 189  |
| Acquisition costs                                          |   | 15,060       |   |   | -  |
| Tax expense-current                                        |   | 414          |   |   | 176  |
| Change in deferred leasing costs                           |   | 11,434       |   |   | 7,543  |
| Change in receivables and other assets                     |   | 20,990       |   |   | 8,129  |
| Change in accounts payable and other liabilities           |   | (5,443)           |   |   | (10,750) |
| Adjustments for noncontrolling interests                   |   | (28,091)          |   |   | (14,455) |
| Adjustments for unconsolidated joint ventures              |   | 371          |   |   | 616  |
| EBITDA                                                     | $      | 83,326       |   | $ | 85,138  |

----

|                                                                           | Increase      |
|--------------------------------------------------------------------------------|---------------|
|                                                                           | (Decrease)    |
|                                                                           | (Unaudited)   |
| Net loss attributable to Parkway Properties, Inc.                              |  $       | (69,852) |
| Net loss attributable to noncontrolling interests                              | (84,112)      |
| Net loss                                                                       | (153,964)     |
| Change in market value of interest rate swaps                                  | (10,099)      |
| Comprehensive loss                                                             | (164,063)     |
| Common stock dividends declared                                                | (4,964)       |
| Preferred stock dividends declared                                             | (7,341)       |
| Share-based compensation                                                       | 1,389    |
| Issuance of 8.0% Series D Preferred stock                                      | 26,155   |
| Shares issued in lieu of Directors’ fees                                 | 319      |
| Issuance costs for shelf registration                                          | (12)          |
| Shares withheld to satisfy tax withholding obligation on vesting of restricted |          |
|     stock and deferred incentive share units               | (336)         |
| Net shares distributed from deferred compensation plan                         | 1,625    |
| Net shares contributed to deferred compensation plan                           | (38)          |
| Contribution of capital by noncontrolling interest                             | 251,168  |
| Distribution of capital to noncontrolling interest                             | (43,520)      |
|                                                                           |  $       | 60,382 |

----

|                                             | Three Months Ended September 30 |         | Nine Months Ended September 30 |
|--------------------------------------------------|---------------------------------|--------------|--------------------------------|
|                                             |                            |         |                           |   |   | Increase | % |   |   |   |   |   |   | Increase | % |
|                                             |                            | 2011         |                           | 2010 |   | (Decrease) | Change |   |   | 2011 |   | 2010 |   | (Decrease) | Change |
| Revenue from office and parking properties:      |                            |         |                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Same-store properties                            | $                               | 44,549  | $                              | 45,095  | $ | (546) | -1.2 % |   | $ | 135,870  | $ | 137,392  | $ | (1,522) | -1.1 % |
| Properties acquired                              |                            | 19,045  |                           | -  |   | 19,045  | N/M* |   |   | 34,374  |   | -  |   | 34,374  | N/M* |
| Total revenue from office and parking properties | $                               | 63,594  | $                              | 45,095  | $ | 18,499  | 41.0 % |   | $ | 170,244  | $ | 137,392  | $ | 32,852  | 23.9 % |
| *N/M – not meaningful                      |                            |         |                           |   |   |   |   |   |   |   |   |   |   |   |   |

|                                             | Three Months Ended September 30 |         |    | Nine Months Ended September 30 |
|--------------------------------------------------|---------------------------------|--------------|---------|--------------------------------|
|                                             |                            |         |    |                           |   | Increase |   | % |   |   |   |   |   |   | Increase | % |
|                                             |                            | 2011         |    | 2010                           |   | (Decrease) |   | Change |   |   | 2011 |   | 2010 |   | (Decrease) | Change |
| Expense from office and parking properties:      |                            |         |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Same-store properties                            | $                               | 22,490  | $       | 21,612                    | $ | 878  |   | 4.1 % |   | $ | 66,043  | $ | 65,478  | $ | 565  | 0.9 % |
| Properties acquired                              |                            | 8,143   |    | -                         |   | 8,143  |   | N/M* |   |   | 13,104  |   | -  |   | 13,104  | N/M* |
| Properties disposed                              |                            | 6       |    | -                         |   | 6  |   | N/M* |   |   | 9  |   | -  |   | 9  | N/M* |
| Total expense from office and parking properties |  $                         | 30,639  |  $ | 21,612                    |  $ | 9,027  |   | 41.8 % |   |  $ | 79,156  |  $ | 65,478  |  $ | 13,678  | 20.9 % |
| *N/M – not meaningful                      |                            |         |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

----

|                 | Threshold     | Target        | Maximum       |
|----------------------|---------------|---------------|---------------|
| Absolute Return Goal | 10%           | 12%           | 14%           |
| Relative Return Goal | RMS + 100 bps | RMS + 200 bps | RMS + 300 bps |

|                                 |                                 Three Months Ended September 30 |                    Nine Months Ended September 30 |
|--------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------|
|                                 |                                                                                                                                                                                                                  |                                                                                                                                        |   |   |   | Increase | % |   |   |   |   |   |   | Increase | % |   |
|                                 |                                                                                                                                                                                                                  | 2011                                                                                                                                        |   | 2010 |   | (Decrease) | Change |   |   | 2011 |   | 2010 |   | (Decrease) | Change |   |
| Interest expense:                    |                                                                                                                                                                                                                  |                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgage interest expense            | $                                                                                                                                                                                                                     | 11,612                                                                                                                                 | $ | 8,479  | $ | 3,133  | 37.0 % |   | $ | 31,213  | $ | 25,346  | $ | 5,867  | 23.1 % |   |
| Credit facility interest expense     |                                                                                                                                                                                                                  | 1,299                                                                                                                                  |   | 1,317  |   | (18) | -1.4 % |   |   | 4,534  |   | 3,938  |   | 596  | 15.1 % |   |
| Loss on early extinguishment of debt |                                                                                                                                                                                                                  | -                                                                                                                                      |   | -  |   | -  | 0.0 % |   |   | -  |   | 53  |   | (53) | -100.0 % |   |
| Mortgage loan cost amortization      |                                                                                                                                                                                                                  | 266                                                                                                                                    |   | 194  |   | 72  | 37.1 % |   |   | 690  |   | 602  |   | 88  | 14.6 % |   |
| Credit facility cost amortization    |                                                                                                                                                                                                                  | 296                                                                                                                                    |   | 174  |   | 122  | 70.1 % |   |   | 843  |   | 637  |   | 206  | 32.3 % |   |
| Total interest expense               | $                                                                                                                                                                                                                     | 13,473                                                                                                                                 | $ | 10,164  | $ | 3,309  | 32.6 % |   | $ | 37,280  | $ | 30,576  | $ | 6,704  | 21.9 % |   |

----

|                                                     |    | Three Months Ended September 30 |    |    | Nine Months Ended September 30 |
|----------------------------------------------------------|---------|---------------------------------|---------|---------|--------------------------------|
|                                                     |    |                            |    |    |                           | Increase | % |   |   |   |   |   |   | Increase | % |
|                                                     |    | 2011                            |    | 2010    |                           | (Decrease) | Change |   |   | 2011 |   | 2010 |   | (Decrease) | Change |
| Discontinued operations:                                 |    |                            |    |    |                           |   |   |   |   |   |   |   |   |   |   |
| Income (loss) from discontinued operations               |  $ | (22,633)                        |  $ | (1,048) |  $                        | (21,585) | N/M* |   |  $ | (26,410) |  $ | 1,444  |  $ | (27,854) | N/M* |
| Gain on sale of real estate from discontinued operations |    | 2,275                      |    | -  |                           | 2,275  | N/M* |   |   | 6,567  |   | 8,518  |   | (1,951) | -22.9 % |
| Total discontinued operations                            |  $ | (20,358)                        |  $ | (1,048) |  $                        | (19,310) | N/M* |   |  $ | (19,843) |  $ | 9,962  |  $ | (29,805) | N/M* |
|  *N/M – Not Meaningful                        |    |                            |    |    |                           |   |   |   |   |   |   |   |   |   |   |

| Office Property              |   | Location          |   | SquareFeet  |   | Date ofSale |   |   | Net SalesPrice |   |   | Net BookValue ofReal Estate |   |   | Gainon Sale |
|------------------------------|--------|-------------------|--------|-------------|--------|-------------|--------|--------|----------------|--------|--------|-----------------------------|--------|--------|-------------|
| One Park Ten                 |   | Houston, TX       |   | 163    |   | 04/15/2010  |   | $      | 14,924    |   | $      | 6,406                  |   | $      | 8,518  |
| 2010 Dispositions            |   |              |   | 163    |   |        |   | $      | 14,924    |   | $      | 6,406                  |   | $      | 8,518  |
|                         |   |              |   |        |   |        |   |   |           |   |   |                        |   |   |        |
| 233 North Michigan           |   | Chicago, IL       |   | 1,070  |   | 05/11/2011  |   | $      | 156,546   |   | $      | 152,254                |   | $      | 4,292  |
| Greenbrier I & II        |   | Hampton Roads, VA |   | 172    |   | 07/19/2011  |   |   | 16,275    |   |   | 15,070                 |   |   | 1,205  |
| Glen Forest                  |   | Richmond, VA      |   | 81     |   | 08/16/2011  |   |   | 8,950     |   |   | 7,880                  |   |   | 1,070  |
| Tower at Gervais             |   | Columbia, SC      |   | 298    |   | 09/08/2011  |   |   | 18,421    |   |   | 18,421                 |   |   | -      |
| 2011 Dispositions            |   |              |   | 1,621  |   |        |   | $      | 200,192   |   | $      | 193,625                |   | $      | 6,567  |
|  Property Held For Sale |   |              |   |        |   |        |   |   |           |   |   |                        |   |   |        |
| 111 East Wacker              |   | Chicago, IL       |   | 1,013  |   | -           |   | $      | -         |   | $      | -                      |   | $      | -      |

----

|                                   | September 30 |
|----------------------------------------|--------------|
|                                   | 2011         |
| Balance Sheet:                         |         |
| Investment property                    |  $      | 168,613  |
| Accumulated depreciation               |         | (33,650) |
| Office property held for sale          |         | 134,963  |
| Rents receivable and other assets      |         | 27,472  |
| Intangible assets, net                 |         | 4,511  |
| Other assets held for sale             |         | 31,983  |
| Total assets held for sale             |  $      | 166,946  |
|                                   |         |
| Mortgage notes payable                 |  $      | 148,272  |
| Accounts payable and other liabilities |         | 17,068  |
| Total liabilities held for sale        |  $      | 165,340 |

|                              |                            |      |                           |     |   |       |   |   |   |      |   |      |   |       |   |   |   |   |
|-----------------------------------|---------------------------------|-----------|--------------------------------|----------|--------|------------|--------|--------|--------|-----------|--------|-----------|--------|------------|--------|--------|--------|--------|
|                              | Three Months Ended September 30 |      | Nine Months Ended September 30 |
|                              |                            |      |                           |     |   | Increase   | %      |   |   |      |   |      |   | Increase   | %      |
|                              |                            | 2011      |                           | 2010     |   | (Decrease) | Change |   |   | 2011      |   | 2010      |   | (Decrease) | Change |
| Income tax (expense) benefit      |                            |      |                           |     |   |       |   |   |   |      |   |      |   |       |   |
| Income taxexpense-current         | $                               | 190  | $                              | 59  | $      | 131   | N/M*   |   | $      | 414  | $      | 176  | $      | 238   | N/M*   |
| Income taxbenefit-deferred        |                            | (364)     |                           | -   |   | (364)      | N/M*   |   |   | (364)     |   | -    |   | (364)      | N/M*   |
| Total income tax(expense) benefit | $                               | (174)     | $                              | 59  | $      | (233)      | N/M*   |   | $      | 50   | $      | 176  | $      | (126)      | N/M*   |
| *N/M – not meaningful       |                            |      |                           |     |   |       |   |   |   |      |   |      |   |       |   |

----

|                                                                |   |        |   | Interest   |   |     |   |   | Outstanding   |
|---------------------------------------------------------------------|--------|-------------|--------|------------|--------|----------|--------|--------|---------------|
| Credit Facilities                                                   |   | Lender      |   | Rate       |   | Maturity |   |   | Balance       |
| $10 Million Unsecured Working Capital Revolving Credit Facility (1) |   | PNC Bank    |   | 3.5 % |   | 01/31/14 |   | $      | 1,852    |
| $190.0 Million Unsecured Revolving Credit Facility (1)              |   | Wells Fargo |   | 3.5 % |   | 01/31/14 |   |   | 112,000  |
|                                                                |   |        |   | 3.5 % |   |     |   | $      | 113,852  |

----

|    |                                   |    |          |     |           |         |    | Fair Market Value  |
|---------|----------------------------------------|---------|---------------|----------|----------------|--------------|---------|--------------------|
|    |                                   |    |          |     |           |         |    | Liability          |
| Type of | Balance Sheet                          |    | Notional      | Maturity |           | Fixed        |    |  September 30 |
| Hedge   | Location                               |    | Amount        | Date     | Reference Rate | Rate         |    | 2011               |   | 2010 |
| Swap    | Accounts payableand other liabilities  |  $ | 100,000  | 03/31/11 | 1-month LIBOR  | 4.785 % |  $ | -             |  $ | (1,690) |
| Swap    | Accounts payableand other liabilities  |  $ | 23,500   | 12/01/14 | 1-month LIBOR  | 5.800 % |    | (2,533)            |   | (2,767) |
| Swap    | Accounts payableand other liabilities  |  $ | 12,088   | 11/18/15 | 1-month LIBOR  | 4.060 % |    | (578)              |   | -  |
| Swap    | Accounts payableand other liabilities  |  $ | 33,875   | 11/18/17 | 1-month LIBOR  | 4.740 % |    | (2,699)            |   | -  |
| Swap    | Accounts payableAnd other liabilities  |  $ | 22,000   | 01/25/18 | 1-month LIBOR  | 4.500%       |    | (1,422)            |   | -  |
| Swap    | Accounts payable and other liabilities |  $ | 9,250    | 09/30/18 | 1-month LIBOR  | 5.245 % |    | (1,039)            |   | -  |
| Swap    | Accounts payable and other liabilities |  $ | 22,500   | 10/08/18 | 1-month LIBOR  | 5.372 % |    | (2,723)            |   | -  |
| Swap    | Accounts payableand other liabilities  |  $ | 22,100   | 11/18/18 | 1-month LIBOR  | 4.990 % |    | (2,108)            |   | -  |
|    |                                   |    |          |     |           |         | $       | (13,102)           | $ | (4,457) |

----

| ·   | Cypress Center in Tampa, Florida, for a $12.1 million notional amount that fixes the interest rate at 4.06% through November 18, 2015. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Bank of America Center in Orlando, Florida, for a $33.9 million notional amount that fixes the interest rate at 4.74% through November 18, 2017. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Two Ravinia in Atlanta, Georgia, for a $22.1 million notional amount that fixes the interest rate at 4.99% through November 18, 2018. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------|

----

|                                      |   | Total         |   |   |          |   |   | Recurring    |
|-------------------------------------------|--------|---------------|--------|--------|---------------|--------|--------|--------------|
|                                      |   | Mortgage      |   |   | Balloon       |   |   | Principal    |
|                                      |   | Maturities    |   |   | Payments      |   |   | Amortization |
| Schedule of Mortgage Maturities by Years: |   |          |   |   |          |   |   |         |
| 2011*                                     | $      | 11,282   |   | $      | 8,484    |   | $      | 2,798   |
| 2012                                      |   | 59,366   |   |   | 48,408   |   |   | 10,958  |
| 2013                                      |   | 11,449   |   |   | -        |   |   | 11,449  |
| 2014                                      |   | 12,908   |   |   | -        |   |   | 12,908  |
| 2015                                      |   | 41,859   |   |   | 26,891   |   |   | 14,968  |
| 2016                                      |   | 414,906  |   |   | 405,334  |   |   | 9,572   |
| Thereafter                                |   | 427,211  |   |   | 410,617  |   |   | 16,594  |
| Total                                     | $      | 978,981  |   | $      | 899,734  |   | $      | 79,247  |
| Fair value at 09/30/11                    | $      | 967,047  |   |   |          |   |   |         |

| *Remaining three months |
|-------------------------|

| ·   | A $12.1 million non-recourse mortgage loan secured by Cypress Center, a 286,000 square foot office complex in the Westshore submarket of Tampa, Florida.  The mortgage loan has a stated rate of LIBOR plus 200 basis points with a maturity of May 18, 2016.  Upon obtaining the mortgage, the fund entered into an interest rate swap that fixes the interest rate at 4.1% through November 18, 2015. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A $33.9 million non-recourse mortgage loan secured by Bank of America Center, a 421,000 square foot office property in the central business district of Orlando, Florida.  The mortgage loan has a stated rate of LIBOR plus 200 basis points with a maturity of May 18, 2018.  Upon obtaining the mortgage, the fund entered into an interest rate swap that fixes the interest rate at 4.7% through November 18, 2017. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | A $22.1 million non-recourse mortgage loan secured by Two Ravinia Drive, a 438,000 square foot office property located in the Central Perimeter submarket of Atlanta, Georgia.  The mortgage loan has a stated rate of LIBOR plus 200 basis points with a maturity of May 20, 2019.  Upon obtaining the mortgage, the fund entered into an interest rate swap that fixes the interest rate at 4.99% through November 18, 2018. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A $90.2 million non-recourse mortgage loan secured by Two Liberty Place, a 941,000 square foot office property located in the central business district of Philadelphia, Pennsylvania.  The mortgage loan has a fixed rate of 5.2% with a maturity of June 10, 2019. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                          |   | Nine Months Ended |
|---------------------------------------------------------------|--------|-------------------|
|                                                          |   | September 30      |
|                                                          |   | 2011              |   |   | 2010 |
| Net income (loss) for Parkway Properties, Inc.                | $      | (69,852)          |   | $ | 7,570  |
| Adjustments to derive funds from operations:                  |   |              |   |   |   |
| Depreciation and amortization                                 |   | 64,519       |   |   | 46,260  |
| Depreciation and amortization – discontinued operations |   | 19,787       |   |   | 19,118  |
| Noncontrolling interest depreciation and amortization         |   | (25,351)          |   |   | (12,837) |
| Adjustments for unconsolidated joint ventures                 |   | 198          |   |   | 253  |
| Preferred dividends                                           |   | (7,341)           |   |   | (4,137) |
| Impairment loss on real estate                                |   | 56,467       |   |   | -  |
| Gain on sale of real estate                                   |   | (7,310)           |   |   | (8,518) |
| Funds from operations attributable to common stockholders (1) | $      | 31,117       |   | $ | 47,709  |

----

| (1)   | Funds from operations attributable to common stockholders for the nine months ended September 30, 2011 and 2010 include the following items at Parkway’s proportionate ownership share (in thousands): |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                   |   |         |         | Nine Months Ended |
|--------------------------------------------------------|--------|--------------|--------------|-------------------|
|                                                   |   |         | September 30 |
|                                                   |   | 2011         |         |              | 2010 |
| (Gain) loss on extinguishment of debt                  | $      | (302)        |         | $                 | 189  |
| Non-cash impairment loss on real estate                |   | 56,467  |         |              | -  |
| Acquisition costs – combination                  |   | 13,936  |         |              | -  |
| Acquisition costs – office property acquisitions |   | 1,124   |         |              | -  |
| Expenses related to litigation                         |   | 119     |         |              | 719  |
| Non-recurring lease termination fee income             |   | (5,554)      |         |              | (7,078) |
| Change in fair value of contingent consideration       |   | (12,000)     |         |              | -  |

----

|                 | Total Number        | Maximum Number |
|----------------------|---------------------|----------------|
|                 | of Shares Purchased | of Shares that |
|                 | Total Number        | Average        | as Part of Publicly | May Yet Be |
|                 | Of Shares           | Price Paid     | Announced Plans | Purchased Under |
| Period               | Purchased           | per Share      | or Programs | the Plans or Programs |
|                 |                |           |   |   |
| 07/01/11 to 07/31/11 | 2,131(1)            | $              | 17.13  | - | - |
| 08/01/11 to 08/31/11 | -              |           | - | - | - |
| 09/01/11 to 09/30/11 | -              |           | - | - | - |
| Total                | 2,131          |    $ | 17.13  | - | - |

| (1)   | As permitted under the Company’s equity compensation plan, these shares were withheld by the Company to satisfy tax withholding obligations for employees in connection with the vesting of stock.  Shares withheld for tax withholding obligations do not affect the total number of shares available for repurchase under any approved common stock repurchase plan.  At September 30, 2011, the Company did not have an authorized stock repurchase plan in place. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 31.1 | Certification of Chairman of the Board of Directors pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|------|----------------------------------------------------------------------------------------------------------------|

| 32.1 | Certification of Chairman of the Board of Directors pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|------|----------------------------------------------------------------------------------------------------------------|

|                         | PARKWAY PROPERTIES, INC. |                         |
|------------------------------|--------------------------|------------------------------|
|                         |                     |                         |   |
| Date:  November 8, 2011 | By:                      | /s/ Mandy M. Pope       |   |
|                         |                     | Executive Vice President and |   |
|                         |                     | Chief Accounting Officer     |   |
|                         |                     |                         |   |

----