----

----

----

----

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

----

----

----

----

|                  |                                                                                           | Page   |
|-----------------------|------------------------------------------------------------------------------------------------|--------|
|                  |                                                                                           |   |
| PART I.               |                                                                                           |   |
| Item 1.               | Business                                                                                       | 3      |
| Item 1A.              | Risk Factors                                                                                   | 6      |
| Item 1B.              | Unresolved Staff Comments                                                                      | 12     |
| Item 2.               | Properties                                                                                     | 12     |
| Item 3.               | Legal Proceedings                                                                              | 17     |
| Item 4.               | [Removed and Reserved]                                                                         | 18     |
|                  |                                                                                           |   |
| PART II.              |                                                                                           |   |
| Item 5.               | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases        |   |
|                  | of Equity Securities                                                                           | 18     |
| Item 6.               | Selected Financial Data                                                                        | 21     |
| Item 7.               | Management's Discussion and Analysis of Financial Condition and Results of Operations          | 22     |
| Item 7A.              | Quantitative and Qualitative Disclosures About Market Risk                                     | 47     |
| Item 8.               | Financial Statements and Supplementary Data                                                    | 47     |
| Item 9.               | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure           | 87     |
| Item 9A.              | Controls and Procedures                                                                        | 87     |
| Item 9B.              | Other Information                                                                              | 89     |
|                  |                                                                                           |   |
| PART III.             |                                                                                           |   |
| Item 10.              | Directors, Executive Officers and Corporate Governance                                         | 89     |
| Item 11.              | Executive Compensation                                                                         | 89     |
| Item 12.              | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 89     |
| Item 13.              | Certain Relationships and Related Transactions, and Director Independence                      | 90     |
| Item 14               | Principal Accountant Fees and Services                                                         | 90     |
|                  |                                                                                           |   |
| PART IV.              |                                                                                           |   |
| Item 15.              | Exhibits and Financial Statement Schedules                                                     | 90     |
|                  |                                                                                           |   |
| SIGNATURES            |                                                                                           |
| Authorized Signatures | 93                                                                                             |

----

| ·   | Fund and Fund-Like Investments.  The Company believes that fund and fund-like investments have the highest priority of the Company’s capital allocation, because it gives Parkway’s stockholders the highest risk adjusted return as measured by internal rate of return, capitalization rate and accretion per share. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Operator-Owner.  The Company plans to make a full transformation to an operator-owner, with the goal of being a majority operator/owner by the end of the Plan.  This has been a goal for several years and will continue to be a core strategy as Parkway seeks to increase fee income and maximize its return on equity and accretion per share.  Additionally, the Company will continue to expand PRS, which offers expert real estate management guidance, professional property management services and strategic marketing and leasing services aimed at increasing net operating income and maximizing profit upon exit. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Capital Allocation Discipline.  The Company’s overall capital structure goal is to achieve a net debt to gross asset value ratio of 50% or less, as determined by using a capitalization rate of 8.5% on recurring cash income, and a net debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) multiple of 6.5 times or less.  Beyond the balance sheet, capital allocation refers to the Company’s goal to exit non-strategic markets through the continuation of its Asset Recycling program.  Most of the properties |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Uncompromising Focus on Operations.  Parkway believes that its uncompromising focus on operations is what sets it apart from other office property owners.  An important goal of the FOCUS Plan is to move decision-making authority to the regional office level.  The Company’s market leaders already have the responsibility of setting rents, increasing net operating income margins and maintaining a consistent standard of operations and will be given more profit and loss responsibility and investment authority going forward.  It is important that we know our markets, which is best achieved when Parkway’s people live and work within the market.  An integral part of the FOCUS Plan is a program referred to as “We Know… City.”  These three words imply that Parkway employees know more than just how to manage real estate, but that they have a deep understanding of a city’s history, economics, infrastructure, politics and much more.  By truly knowing the cities where the Company is invested, we are better positioned for leasing, active asset management, recruitment and investments. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Shareholder Returns.  All of the previously mentioned goals funnel to the ultimate goal of the FOCUS Plan, which is to maximize total return to Parkway’s shareholders.  The Company has set a goal of achieving a 12% compounded annual total return to its shareholders for the three-year period starting July 1, 2010. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

| ·   | changes in supply of or demand for office properties or customers for such properties in an area in which we own buildings; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------|

| ·   | the ongoing need for capital improvements; |
|--------------------|--------------------------------------------|

| ·   | increased operating costs, which may not necessarily be offset by increased rents, including insurance premiums, utilities and real estate taxes, due to inflation and other factors; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | changes in tax, real estate and zoning laws; |
|--------------------|----------------------------------------------|

| ·   | changes in governmental rules and fiscal policies; and |
|--------------------|--------------------------------------------------------|

| ·   | civil unrest, acts of war, acts of God, including earthquakes, hurricanes and other natural disasters (which may result in uninsured losses) and other factors beyond our control. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | that interest rates may rise; |
|--------------------|-------------------------------|

| ·   | that our cash flow will be insufficient to make required payments of principal and interest; |
|--------------------|----------------------------------------------------------------------------------------------|

| ·   | that we will be unable to refinance some or all of our debt; |
|--------------------|--------------------------------------------------------------|

| ·   | that any refinancing will not be on terms as favorable as those of the existing debt; |
|--------------------|---------------------------------------------------------------------------------------|

| ·   | that required payments on mortgages and on our other debt are not reduced if the economic performance of any property declines; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------|

| ·   | that debt service obligations will reduce funds available for distribution to our stockholders; |
|--------------------|-------------------------------------------------------------------------------------------------|

----

| ·   | that any default on our debt, due to noncompliance with financial covenants or otherwise, could result in acceleration of those obligations; and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | that we may be unable to refinance or repay the debt as it becomes due. |
|--------------------|-------------------------------------------------------------------------|

----

| ·   | maintaining ownership of specified minimum levels of real estate related assets; |
|--------------------|----------------------------------------------------------------------------------|

| ·   | generating specified minimum levels of real estate related income; |
|--------------------|--------------------------------------------------------------------|

| ·   | maintaining certain diversity of ownership requirements with respect to our shares; and |
|--------------------|-----------------------------------------------------------------------------------------|

| ·   | distributing at least 90% of our taxable income on an annual basis. |
|--------------------|---------------------------------------------------------------------|

----

| ·   | any proposed transfer will be void from the beginning and we will not recognize such transfer; |
|--------------------|------------------------------------------------------------------------------------------------|

| ·   | we may institute legal proceedings to enjoin such transfer; |
|--------------------|-------------------------------------------------------------|

| ·   | we will have the right to redeem the shares proposed to be transferred; and |
|--------------------|-----------------------------------------------------------------------------|

| ·   | the shares proposed to be transferred will be automatically converted into and exchanged for shares of a separate class of stock, the Excess Stock. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | actual or anticipated quarterly fluctuations in our operating results and financial condition; |
|--------------------|------------------------------------------------------------------------------------------------|

----

| ·   | changes in revenues or earnings estimates or publication of research reports and recommendations by financial analysts or actions taken by rating agencies with respect to our securities or those of other REITs; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the ability of our tenants to pay rent to us and meet their other obligations to us under current lease terms; |
|--------------------|----------------------------------------------------------------------------------------------------------------|

| ·   | our ability to re-lease spaces as leases expire; |
|--------------------|--------------------------------------------------|

| ·   | our ability to refinance our indebtedness as it matures; |
|--------------------|----------------------------------------------------------|

| ·   | any changes in our distribution policy; |
|--------------------|-----------------------------------------|

| ·   | any future issuances of equity securities; |
|--------------------|--------------------------------------------|

| ·   | strategic actions by us or our competitors, such as acquisitions or restructurings; |
|--------------------|-------------------------------------------------------------------------------------|

| ·   | general market conditions and, in particular, developments related to market conditions for the real estate industry; and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------|

| ·   | domestic and international economic factors unrelated to our performance. |
|--------------------|---------------------------------------------------------------------------|

----

| ·   | Cash reserves and cash generated from operating activities; |
|--------------------|-------------------------------------------------------------|

|  ·   |  Sales of equity securities; |
|--------------------------|-----------------------------------|

| ·   | Sales of office properties; |
|--------------------|-----------------------------|

| ·   | Mortgage financing; |
|--------------------|---------------------|

|  ·   |  Contributions from partners; and/or |
|--------------------------|-------------------------------------------|

| ·   | Advances on the Company’s credit facility. |
|--------------------|--------------------------------------------------|

|               |          |           |      |     | Estimated |     |     |
|--------------------|---------------|----------------|-----------|----------|-----------|----------|----------|
|               |          |           |      |     | Average   | % of     |     |
|               | Number        | Total Net      | % of      | Average  | Market    | Leases   | %        |
|               | of            | Rentable       | Total Net | Rent Per | Rent Per  | Expiring | Leased   |
|               | Office        | Square Feet    | Rentable  | Square   | Square    | In       | at       |
| Location           | Properties(1) | (in thousands) | Feet      | Foot (2) | Foot (3)  | 2011 (4) | 1/1/2011 |
| Chicago, IL        | 4             | 2,897          | 22.0%     | $29.67   | $27.63    | 7.4%     | 88.6%    |
| Houston, TX        | 12            | 2,031          | 15.4%     | 20.36    | 21.33     | 15.8%    | 93.6%    |
| Atlanta, GA        | 9             | 1,778          | 13.5%     | 22.52    | 19.74     | 21.1%    | 82.5%    |
| Memphis, TN        | 6             | 1,200          | 9.1%      | 21.16    | 18.11     | 9.0%     | 83.1%    |
| Jackson, MS        | 7             | 1,112          | 8.4%      | 18.49    | 17.51     | 12.8%    | 78.9%    |
| Orlando, FL        | 5             | 922            | 7.0%      | 22.40    | 20.87     | 7.4%     | 84.9%    |
| Phoenix, AZ        | 3             | 689            | 5.2%      | 25.95    | 20.70     | 16.8%    | 87.5%    |
| Richmond, VA       | 6             | 495            | 3.8%      | 17.58    | 16.16     | 13.0%    | 79.7%    |
| Jacksonville, FL   | 4             | 482            | 3.6%      | 19.42    | 17.81     | 4.1%     | 93.7%    |
| Nashville, TN      | 1             | 436            | 3.3%      | 18.35    | 16.50     | 2.9%     | 83.1%    |
| Columbia, SC       | 2             | 407            | 3.1%      | 14.86    | 16.10     | 4.2%     | 75.7%    |
| Charlotte, NC      | 1             | 327            | 2.5%      | 17.69    | 17.00     | 12.6%    | 78.1%    |
| Ft. Lauderdale, FL | 2             | 216            | 1.6%      | 22.50    | 21.26     | 12.9%    | 67.6%    |
| Hampton Roads, VA  | 1             | 172            | 1.3%      | 19.26    | 18.00     | 10.3%    | 84.1%    |
| Other Markets      | 1             | 32             | 0.2%      | 14.00    | 8.00      | 7.6%     | 7.6%     |
|               | 64            | 13,196         | 100.0%    | $22.73   | $21.15    | 11.7%    | 85.3%    |

----

|       |   | Net            |        | Annualized     | Weighted Avg    | Weighted Est    |
|------------|--------|----------------|-------------|----------------|-----------------|-----------------|
|       |   | Rentable       | Percent of  | Rental         | Expiring Gross  | Avg Market      |
| Year of    | Number | Square Feet    | Total Net   | Amount         | Rental Rate Per | Rent Per Net    |
| Lease      | of     | Expiring       | Rentable    | Expiring (1)   | Net Rentable    | Rentable        |
| Expiration | Leases | (in thousands) | Square Feet | (in thousands) | Square Foot (2) | Square Foot (3) |
| 2011       | 314    | 1,549          | 11.7%       |  $        | 35,774     |  $         | 23.10  |  $ | 20.62  |
| 2012       | 242    | 1,629          | 12.3%       | 38,099    | 23.39      | 21.95      |
| 2013       | 207    | 1,177          | 8.9%        | 26,259    | 22.31      | 19.85      |
| 2014       | 154    | 1,376          | 10.4%       | 30,186    | 21.93      | 20.25      |
| 2015       | 168    | 1,694          | 12.9%       | 35,420    | 20.91      | 16.76      |
| 2016       | 84     | 1,282          | 9.7%        | 27,166    | 21.19      | 19.65      |
| Thereafter | 109    | 2,553          | 19.4%       | 63,064    | 24.71      | 23.18      |
|       | 1,278  | 11,260         | 85.3%       |  $        | 255,968    |  $         | 22.73  |  $ | 21.15  |

----

|                                                     |           |                    |      | LeasedSquareFeet (1) | AnnualizedRentalRevenue (1) |
|----------------------------------------------------------|----------------|-------------------------|-----------|----------------------|-----------------------------|
|                                                     | No. ofProps.   | Square Footage Expiring |      |
| Customer                                                 | 2011           | 2012                    | 2013      | 2014                 | 2015                        | 2016 | Thereafter |
| General Services Administration (“GSA”) (2)  | 15   | 102                | 21   | 35              | 3                      | 46  | -  | 265  | 472  |  $ | 9,966  |
| Cox Enterprises/AutoTrader.com (3)                       | 2              | 198                | -    | 90              | -                      | 17  | -  | 17  | 322  | 6,982  |
| Health Care Service Corporation (“BCBS”) (4) | 1              | -                  | 230  | -               | -                      | -  | -  | -  | 230  | 5,945  |
| Blue Cross Blue Shield of Georgia, Inc. (5)              | 1              | -                  | -    | -               | -                      | -  | -  | 199  | 199  | 5,426  |
| Regions Financial Corporation (6)                        | 2              | 19                 | 5    | 5               | -                      | 4  | 237  | -  | 270  | 5,404  |
| Nabors Industries/Nabors Corporate Services              | 1              | -                  | -    | -               | 216                    | -  | -  | -  | 216  | 4,420  |
| Extra Space Storage                                      | 1              | -                  | -    | -               | -                      | 134  | -  | -  | 134  | 3,042  |
| Bank of America, NA (7)                                  | 6              | 2                  | -    | 28              | -                      | 124  | 3  | 16  | 173  | 2,843  |
| Southwestern Energy Company                              | 2              | -                  | -    | -               | 118                    | -  | -  | -  | 118  | 2,679  |
| Combined Insurance Company of America (8)                | 1              | -                  | -    | -               | -                      | -  | -  | 99  | 99  | 2,670  |
| Clear Channel Communications                             | 1              | -                  | -    | -               | -                      | -  | -  | 74  | 74  | 2,577  |
| Young & Rubicam (9)                                  | 1              | 9                  | -    | -               | -                      | -  | -  | 69  | 78  | 2,505  |
| Schlumberger Technology (10)                             | 1              | -                  | 155  | -               | -                      | -  | -  | -  | 155  | 2,439  |
| Golin-Harris Communications, Inc.                        | 1              | -                  | 67   | -               | -                      | -  | -  | -  | 67  | 2,375  |
| U.S. Cellular Corporation (11)                           | 1              | -                  | -    | -               | -                      | -  | -  | 222  | 222  | 2,372  |
| Honeywell (12)                                           | 1              | -                  | -    | -               | -                      | -  | -  | 102  | 102  | 2,335  |
| United Healthcare Services                               | 1              | -                  | 67   | -               | -                      | -  | -  | -  | 67  | 2,328  |
| Louisiana-Pacific Corporation                            | 1              | -                  | -    | -               | -                      | 105  | -  | -  | 105  | 2,226  |
| Stein Mart, Inc.                                         | 1              | -                  | -    | -               | -                      | -  | 107  | -  | 107  | 2,186  |
| Motorola, Inc.                                           | 1              | 15                 | -    | -               | -                      | 53  | -  | -  | 68  | 2,106  |
| Shefsky & Froelich, Ltd                              | 1              | -                  | -    | -               | -                      | 69  | -  | -  | 69  | 1,881  |
| BDO USA, LLP (13)                                        | 2              | -                  | 1    | -               | 7                      | -  | 42  | -  | 50  | 1,738  |
| Forman, Perry, Watkins, Krutz & Tardy (14)           | 1              | -                  | -    | -               | -                      | -  | 126  | -  | 126  | 1,679  |
| URS Corporation (15)                                     | 2              | 3                  | -    | -               | -                      | -  | 57  | -  | 60  | 1,436  |
| Burrell Communications Group, LLC                        | 1              | -                  | -    | -               | -                      | -  | 35  | -  | 35  | 1,430  |
|                                                     |           | 348                | 546  | 158             | 344                    | 552  | 607  | 1,063  | 3,618  |  $ | 80,990  |
| Total Rentable Square Footage (1)                        | 13,196    |                    |
| Total Annualized Rental Revenue (1)                      |  $        | 205,186            |      |

| (1)       | Annualized Rental Revenue represents the gross rental rate (including escalations) per square foot, multiplied by the number of square feet leased by the customer.  Annualized rent for customers in consolidated and unconsolidated joint ventures is calculated based on our ownership interest.  However, leased square feet represents 100% of square feet leased through direct ownership or through joint ventures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)       | GSA’s lease at the Meridian Building in Atlanta, Georgia, provides an option to cancel 16,778 square feet effective February 2015 with 90 days written notice.  The GSA’s lease at the Falls Building in Memphis, Tennessee provides two options to cancel.  The first is an option to cancel 2,922 square feet effective January 2013.  The second option is to cancel 22,973 square feet effective January 2013 with 120 days written notice.  The GSA’s lease at Carmel Crossing-Davie in Charlotte, North Carolina, provides an option to cancel 21,384 square feet effective November 2011 with 30 days written notice.  GSA has 80,503 square feet of leases in the Jackson, Mississippi Central Business District that are relocating to the newly developed federal courthouse in 2011.                                                            |
|  (3) | Cox Enterprises, which is located at Peachtree Dunwoody Pavilion in Atlanta, Georgia, has an option to cancel 106,758 square feet between June and December 2012 with a notice date of June 2011.  In the event the customer exercises this option at the earliest termination date, the Company expects to receive a fee at the notice date of approximately $950,000 associated with this lease termination which will be recorded into income through the early termination date.  Additionally, the customer will continue to pay rent through the early termination date.  AutoTrader.com will vacate 193,043 square feet upon expiration in February 2011.  Parkway has signed a 46,000 square foot lease to backfill the AutoTrader space and is in letter of intent or lease documentation stages with approximately 37,000 square feet of additional prospects for the space. |
| (4)       | BCBS, which is located at 111 East Wacker in Chicago, Illinois, has exercised its option to cancel 168,405 square feet in March 2012.  The customer will pay a total termination fee of $7.3 million which will be recorded into income over the remaining term of the lease through March 2012.  Additionally, the customer will continue to pay rent through the March 2012 expiration date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (5)       | Blue Cross Blue Shield of Georgia, Inc., which is located at Capital City Plaza in Atlanta, Georgia, has the option to cancel 59,222 square feet in either January 2016 or January 2018 with nine months written notice.  Additionally, the lease provides the option to cancel an additional 29,610 square feet in January 2018 with nine months written notice.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

----

| (6)  | Regions Financial Corporation, which is located at the Morgan Keegan Tower in Memphis, Tennessee, has the option to cancel 3,197 square feet with four months written notice.                                                                                                                                                                                                     |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (7)  | Bank of America, NA at Bank of America Plaza in Nashville, Tennessee, has an option to cancel 123,710 square feet in October 2014 with 12 months notice.  Also, Bank of America, successor to Countrywide Home Loans, which is located at Maitland 100 in Orlando, Florida, has the option to cancel 11,779 square feet in June of 2012 with six months written notice. |
| (8)  | Combined Insurance Company of America’s lease at 111 East Wacker in Chicago, Illinois, provides a cancellation option in July 2018 with 12 months written notice.                                                                                                                                                                                                           |
| (9)  | Young & Rubicam, which is located at 233 North Michigan in Chicago, Illinois, has the option to cancel approximately 34,000 square feet in October of 2015 with 12 months written notice.                                                                                                                                                                                     |
| (10) | In February 2011, Schlumberger Technology, which is located at the Schlumberger building in Houston, Texas, signed a 64-month lease extension for 155,324 square feet.  The new expiration of Schlumberger’s lease is June 2017 with an option to cancel in June 2015 with a 12-month written notice.                                                             |
| (11) | U.S. Cellular Corporation at US Cellular Plaza in Chicago, Illinois, has the option to cancel up to 39,648 square feet in December 2013 and in September 2014 with a notice date of September 2013.                                                                                                                                                                               |
| (12) | Honeywell, which is located at the Honeywell Building in Houston, Texas, has a lease cancellation option in December 2014, which requires a 12-month notice.                                                                                                                                                                                                                      |
| (13) | BDO USA, LLP, which is located at Bank of America Plaza in Nashville, Tennessee, has the option to cancel 6,549 square feet in February 2012 with 120 days written notice.  Additionally, the customer’s lease at 233 North Michigan in Chicago, Illinois, provides the option to cancel 43,477 square feet in December 2012 with 12 months written notice.       |
| (14) | Forman, Perry, Watkins, Krutz & Tardy, which is located at City Centre in Jackson, Mississippi, has certain cancellation rights pending changes in partnership structure.                                                                                                                                                                                                     |
| (15) | URS Corporation, which is located at Squaw Peak Corporate Center in Phoenix, Arizona, has the option to cancel 10,000 square feet between December 2011 and December 2013 with 90 days written notice.                                                                                                                                                                            |

| Year | Average Occupancy | Average Rental Rate per Square Foot |
|------|-------------------|-------------------------------------|
| 2006 | 89.9%             |  $                             | 24.25  |
| 2007 | 85.0%             |  $                             | 23.90  |
| 2008 | 94.1%             |  $                             | 26.05  |
| 2009 | 95.7%             |  $                             | 27.31  |
| 2010 | 91.2%             |  $                             | 26.72  |

|       | Square Feet | Percentage  | Annualized   | Percentage of    |      |
|------------|-------------|-------------|--------------|------------------|-----------|
|       | of Leases   | of Total    | Rental       | Total Annualized | Number of |
| Year       | Expiring    | Square Feet | Revenue (1)  | Rental Revenue   | Leases    |
| 2011       | 67     | 6.6%        |  $      | 1,946       | 7.0%      | 16  |
| 2012       | 359    | 35.4%       | 10,292  | 36.8%            | 10   |
| 2013       | 102    | 10.1%       | 3,140   | 11.2%            | 14   |
| 2014       | 11     | 1.1%        | 301     | 1.1%             | 3    |
| 2015       | 104    | 10.3%       | 2,845   | 10.2%            | 7    |
| 2016       | 70     | 6.9%        | 2,073   | 7.4%             | 6    |
| 2017       | 54     | 5.3%        | 1,606   | 5.7%             | 5    |
| 2018       | 14     | 1.4%        | 452     | 1.6%             | 2    |
| 2019       | 44     | 4.3%        | 1,322   | 4.7%             | 2    |
| 2020       | 19     | 1.9%        | 514     | 1.9%             | 1    |
| Thereafter | 132    | 13.1%       | 3,472   | 12.4%            | 2    |
|       | 976    | 96.4%       |  $      | 27,963      | 100.0%    | 68  |

| (1)   | Annualized rental revenue represents the gross rental rate (including escalations) per square feet, multiplied by the number of square feet leased by the customer. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Nature of Business | Lease Expiration | Effective Rental Rate Per Square Foot | Lease Options |
|--------------------|------------------|---------------------------------------|---------------|
| Insurance          | (1)              | $25.85                                | (2)           |

| (1)   | This customer has 230,000 square feet expiring in 2012.  This includes 62,000 square feet originally scheduled to expire in 2012 and 168,000 square feet resulting from the exercise of an early termination option. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | In September 2010 this customer provided notice they would exercise their option to cancel 168,000 square feet, originally set to expire in 2017.  The customer will pay a total termination fee of $7.3 million, of which $3.7 million was paid upon receipt of the termination notice in September 2010.  The total termination fee of $7.3 million will be recorded into income from the notice date of September 2010 through the March 2012 expiration.  Additionally, the customer will continue to pay rent through the March 2012 expiration date. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                  | 111 East            |
|-----------------------|---------------------|
|                  | Wacker              |
| Land                  | $  23,285 |
| Building and Garage   | 150,326             |
| Building Improvements | 18,655              |
| Tenant Improvements   | 10,142              |

----

|   | ITEM 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------|

|          | Year Ended        |              | Year Ended        |
|---------------|-------------------|-------------------|-------------------|
|          | December 31, 2010 |              | December 31, 2009 |
| Quarter Ended | High              | Low               | Distributions     |   | High | Low | Distributions |
| March 31      |  $           | 22.93   |  $           | 16.35   | $ | 0.075   |   |  $ | 18.94   |  $ | 8.60   |  $ | 0.325   |
| June 30       |  $           | 20.73   |  $           | 14.38   | 0.075   |   |  $ | 16.22   |  $ | 10.17   | 0.325   |
| September 30  |  $           | 16.83   |  $           | 13.46   | 0.075   |   |  $ | 20.86   |  $ | 10.88   | 0.325   |
| December 31   |  $           | 18.54   |  $           | 14.71   | 0.075   |   |  $ | 21.50   |  $ | 17.29   | 0.325   |
|          |              |              | $                 | 0.300   |   |   |   |  $ | 1.300   |

|                           | Year Ended  |
|--------------------------------|-------------|
|                           | December 31 |
|                           | 2010        | 2009 |
| Ordinary income                |  $     | 0.23  |  $ | 0.71  |
| Unrecaptured Section 1250 gain | 0.06   | -  |
| Return of capital              | 0.01   | 0.59  |
|                           |  $     | 0.30  |  $ | 1.30  |

|          | Year Ended        |        | Year Ended        |
|---------------|-------------------|-------------|-------------------|
|          | December 31, 2010 |        | December 31, 2009 |
| Quarter Ended | High              | Low         | Distributions     |   | High | Low | Distributions |
| March 31      |  $           | 25.04  |  $           | 21.77  |  $ | 0.50  |   |  $ | 17.54  |  $ | 10.13  |  $ | 0.50  |
| June 30       |  $           | 25.00  |  $           | 23.38  |  0.50  |   |  $ | 20.50  |  $ | 12.68  | 0.50  |
| September 30  |  $           | 25.75  |  $           | 23.50  |  0.50  |   |  $ | 23.07  |  $ | 17.90  | 0.50  |
| December 31   |  $           | 25.81  |  $           | 24.80  |  0.50  |   |  $ | 24.25  |  $ | 20.53  | 0.50  |
|          |              |        |  $           | 2.00  |   |   |   |  $ | 2.00  |

|                           | Year Ended December 31 |
|--------------------------------|------------------------|
|                           | 2010                   | 2009 |
| Ordinary income                |  $                | 1.57  |  $ | 2.00  |
| Unrecaptured Section 1250 gain | 0.43              | -  |
|                           |  $                | 2.00  |  $ | 2.00  |

----

|                 |                    |         | 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 |
|                 |                    |         |                |                  |
| 10/01/10 to 10/31/10 | 1,465(1)                | $15.48  | -              | -                |
| 11/01/10 to 11/30/10 | -        | -       | -              | -                |
| 12/01/10 to 12/31/10 | -        | -       | -              | -                |
| Total                | 1,465    | $15.48  | -              | -                |

| (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 December 31, 2010, the Company did not have an authorized stock repurchase plan in place. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                         |     | Period Ending |     |
|------------------------------|----------|---------------|----------|
| Index                        | 12/31/05 | 12/31/06      | 12/31/07 | 12/31/08 | 12/31/09 | 12/31/10 |
| Parkway Properties, Inc.     | 100.00   | 134.46        | 103.17   | 54.11 | 68.69 | 58.84 |
| NAREIT All Equity REIT Index | 100.00   | 135.06        | 113.87   | 70.91 | 90.76 | 116.12 |
| S&P 500                  | 100.00   | 115.79        | 122.16   | 76.96 | 97.33 | 111.99 |

----

|                                                                                                      | Year Ended12/31/10                    | Year Ended12/31/09 | Year Ended12/31/08 | Year Ended12/31/07 | Year Ended12/31/06 |
|-----------------------------------------------------------------------------------------------------------|---------------------------------------|--------------------|--------------------|--------------------|--------------------|
|                                                                                                      | (In thousands, except per share data) |
| Operating Data:                                                                                           |                                  |               |               |               |               |
| Revenues                                                                                                  |                                  |               |               |               |               |
|      Income from office and parking properties                                   |  $                               | 254,611       |  $            | 262,951       |  $            | 260,229  |  $ | 230,180  |  $ | 195,092  |
|      Management company income                                                   | 1,652                            | 1,870         | 1,936         | 1,605         | 5,329         |
| Total revenues                                                                                            | 256,263                          | 264,821       | 262,165       | 231,785       | 200,421       |
| Expenses                                                                                                  |                                  |               |               |               |               |
|      Property operating expenses                                                 | 117,935                          | 126,343       | 124,409       | 106,368       | 91,605        |
|      Depreciation and amortization                                               | 92,190                           | 92,126        | 91,224        | 73,860        | 61,071        |
|      Impairment loss on real estate                                              | 4,120                            | -             | 2,542         | -             | -             |
|      Management company expenses                                                 | 3,961                            | 2,299         | 1,947         | 1,188         | 1,141         |
|      General and administrative                                                  | 7,382                            | 6,108         | 9,725         | 6,602         | 4,656         |
| Total expenses                                                                                            | 225,588                          | 226,876       | 229,847       | 188,018       | 158,473       |
| Operating income                                                                                          | 30,675                           | 37,945        | 32,318        | 43,767        | 41,948        |
| Other income and expenses                                                                                 |                                  |               |               |               |               |
|       Interest and other income                                             | 1,487                            | 1,609         | 1,332         | 526           | 39            |
|       Equity in earnings of unconsolidated joint ventures                   | 326                              | 445           | 894           | 1,008         | 751           |
|       Gain (loss) on real estate, joint venture interests,                  |                                  |               |               |               |               |
|            involuntary conversion and other assets | 40                               | (7,524)            | -             | 20,307        | 17,646        |
|       Interest expense                                                      | (54,647)                              | (55,044)           | (58,766)           | (51,879)           | (42,368)           |
|                                                                                                      |                                  |               |               |               |               |
| Income (loss) from continuing operations                                                                  | (22,119)                              | (22,569)           | (24,222)           | 13,729        | 18,016        |
|       Income (loss) from discontinued operations                            | 194                              | 404           | (461)              | 2,789         | 2,098         |
|       Gain on sale of real estate from discontinued operations              | 8,518                            | -             | 22,588        | -             | 5,083         |
| Total discontinued operations                                                                             | 8,712                            | 404           | 22,127        | 2,789         | 7,181         |
| Net income (loss)                                                                                         | (13,407)                              | (22,165)           | (2,095)            | 16,518        | 25,197        |
| Noncontrolling interest – real estate partnerships                                                  | 10,789                           | 10,562        | 11,369        | 3,174         | 485           |
| Net income (loss) for Parkway Properties, Inc.                                                            | (2,618)                               | (11,603)           | 9,274         | 19,692        | 25,682        |
| Dividends on preferred stock                                                                              | (6,325)                               | (4,800)            | (4,800)            | (4,800)            | (4,800)            |
| Dividends on convertible preferred stock                                                                  | -                                | -             | -             | -             | (1,773)            |
| Net income (loss) attributable to common stockholders                                                     |  $                               | (8,943)            |  $            | (16,403)           |  $            | 4,474  |  $ | 14,892  |  $ | 19,109  |
|                                                                                                      |                                  |               |               |               |               |
| Net income (loss) per common share attributable to                                                        |                                  |               |               |               |               |
|     Parkway Properties, Inc.                                                          |                                  |               |               |               |               |
|       Basic:                                                                |                                  |               |               |               |               |
|       Income (loss) from continuing operations attributable to              |                                  |               |               |               |               |
|            Parkway Properties, Inc.                |  $                               | (0.82)             |  $            | (0.87)             |  $            | (1.17) | $ | 0.78  |  $ | 0.84  |
|       Discontinued operations                                               | 0.40                             | 0.02          | 1.47          | 0.18          | 0.50          |
|       Net income (loss) attributable to Parkway Properties, Inc.            |  $                               | (0.42)             |  $            | (0.85)             |  $            | 0.30  |  $ | 0.96  |  $ | 1.34  |
|                                                                                                      |                                  |               |               |               |               |
|       Diluted:                                                              |                                  |               |               |               |               |
|       Income (loss) from continuing operations attributable to              |                                  |               |               |               |               |
|             Parkway Properties, Inc.          |  $                               | (0.82)             |  $            | (0.87)             |  $            | (1.17) |  $ | 0.77  |  $ | 0.82  |
|       Discontinued operations                                               | 0.40                             | 0.02          | 1.47          | 0.18          | 0.50          |
|       Net income (loss) attributable to Parkway Properties, Inc.            |  $                               | (0.42)             |  $            | (0.85)             |  $            | 0.30  |  $ | 0.95  |  $ | 1.32  |
|                                                                                                      |                                  |               |               |               |               |
| Book value per common share (at end of year)                                                              |  $                               | 17.50         |  $            | 18.32         |  $            | 22.83  |  $ | 25.09  |  $ | 27.42  |
| Dividends per common share                                                                                |  $                               | 0.30          |  $            | 1.30          |  $            | 2.275  |  $ | 2.60  |  $ | 2.60  |
| Weighted average shares outstanding:                                                                      |                                  |               |               |               |               |
|       Basic                                                                 | 21,421                           | 19,304        | 15,023        | 15,482        | 14,306        |
|       Diluted                                                               | 21,421                           | 19,304        | 15,023        | 15,648        | 14,487        |
| Balance Sheet Data:                                                                                       |                                  |               |               |               |               |
|       Office and parking investments, net of depreciation                   |  $                               | 1,389,767     |  $            | 1,401,890     |  $            | 1,455,239  |  $ | 1,314,602  |  $ | 1,303,213  |
|       Investment in unconsolidated joint ventures                           | 2,892                            | 2,512         | 11,057        | 11,236        | 11,179        |
|       Total assets                                                          | 1,603,682                        | 1,612,146     | 1,687,855     | 1,535,794     | 1,512,346     |
|       Notes payable to banks                                                | 110,839                          | 100,000       | 185,940       | 212,349       | 152,312       |
|       Mortgage notes payable                                                | 773,535                          | 852,700       | 869,581       | 714,501       | 696,012       |
|       Total liabilities                                                     | 983,192                          | 1,041,314     | 1,154,415     | 1,015,380     | 931,760       |
|       Preferred stock                                                       | 102,787                          | 57,976        | 57,976        | 57,976        | 57,976        |
|       Noncontrolling interest-real estate partnerships                      | 133,988                          | 116,687       | 127,192       | 80,506        | 90,280        |
|       Total stockholders’ equity attributable to Parkway              |                                  |               |               |               |               |
|             Properties, Inc.                  | 486,502                          | 454,145       | 406,248       | 439,908       | 490,306       |

----

----

| ·   | Fund and Fund-Like Investments.  The Company believes that fund and fund-like investments have the highest priority of the Company’s capital allocation, because it gives Parkway’s stockholders the highest risk adjusted return as measured by internal rate of return, capitalization rate and accretion per share. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Operator-Owner.  The Company plans to make a full transformation to an operator-owner, with the goal of being a majority operator/owner by the end of the Plan.  This has been a goal for several years and will continue to be a core strategy as Parkway seeks to increase fee income and maximize its return on equity and accretion per share.  Additionally, the Company will continue to expand PRS, which offers expert real estate management guidance, professional property management services and strategic marketing and leasing services aimed at increasing net operating income and maximizing profit upon exit. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Capital Allocation Discipline.  The Company’s overall capital structure goal is to achieve a net debt to gross asset value ratio of 50% or less, as determined by using a capitalization rate of 8.5% on recurring cash income, and a net debt to EBITDA multiple of 6.5 times or less.  Beyond the balance sheet, capital allocation refers to the Company’s goal to exit non-strategic markets through the continuation of its Asset Recycling program.  Most of the properties identified for sale are smaller assets or assets located in smaller markets where Parkway does not have a significant presence.  By the end of the FOCUS Plan, the Company’s goal is to be invested in larger, higher-quality properties located in higher-rent growth markets through fund and fund-like investments.  The Company will continue to maintain discipline as it relates to managing the balance sheet and the acquisition and disposition of assets. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Uncompromising Focus on Operations.  Parkway believes that its uncompromising focus on operations is what sets it apart from other office property owners.  An important goal of the FOCUS Plan is to move decision-making authority to the regional office level.  The Company’s market leaders already have the responsibility of setting rents, increasing net operating income margins and maintaining a consistent standard of operations and will be given more profit and loss responsibility and investment authority going forward.  It is important that we know our markets, which is best achieved when Parkway’s people live and work within the market.  An integral part of the FOCUS Plan is a program referred to as “We Know…City.”  These three words imply that Parkway employees know more than just how to manage real estate, but that they have a deep understanding of a city’s history, economics, infrastructure, politics and much more.  By truly knowing the cities where the Company is invested, we are better positioned for leasing, active asset management, recruitment and investments. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Shareholder Returns.  All of the previously mentioned goals funnel to the ultimate goal of the FOCUS Plan, which is to maximize total return to Parkway’s shareholders.  The Company has set a goal of achieving a 12% compounded annual total return to its shareholders for the three-year period starting July 1, 2010. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Reduced Parkway’s share of total debt by $64.6 million.  Parkway’s net debt to EBITDA multiple was reduced from 6.3 times at December 31, 2009 to 5.9 times at December 31, 2010.  Parkway’s net debt to gross asset value was reduced from 52.8% at December 31, 2009 to 49.8% at December 31, 2010. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Completed $45.0 million Series D Preferred stock offering.  Parkway received approximately $45.0 million in net proceeds by issuing 1.97 million shares of its 8.0% Series D Cumulative Redeemable Preferred Stock in August 2010. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Parkway and Fund II invested $200.0 million in office properties.  Parkway sold Carmel Crossing, Falls Pointe, and Lakewood II to Fund II for $33.0 million during the fourth quarter of 2010, and acquired 3344 Peachtree for $167.3 million (Fund II’s investment in the property was $160 million) in January 2011.  The Company’s total assets under management including the purchase of 3344 Peachtree now totals $2.1 billion, with 33% of these assets in fund or fund-like joint ventures. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Signed over 2.9 million square feet of leases.  Parkway had a significant amount of leasing activity during 2010 with over 2.9 million square feet of leases signed and reduced its 2011 expirations from 17.9% as of the fourth quarter of 2008 to 11.7% as of the fourth quarter of 2010. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Closed on new $200.0 million unsecured revolving credit facilities.  Parkway closed on the new credit facilities in January 2011.  The new credit facilities have an initial term of three years and replace the prior unsecured revolving credit facility, term loan and working capital facility that were scheduled to mature on April 27, 2011. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Selected for national best place to work list for third consecutive year.  Parkway ranked 20th on the medium list of Entrepreneur’s Great Place to Work® Rankings:  2010 Best Small & Medium Workplaces. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Parkway’s development property received LEED Gold certification.  The Pinnacle at Jackson Place in Jackson, Mississippi received LEED Gold certification for Core & Shell from the U.S. Green Building Council in December 2010. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|               |                | Parkway                   | Square | Date      | Purchase |
|--------------------|---------------------|---------------------------|--------|-----------|----------|
| Office Property    | Location            | Ownership                 | Feet   | Purchased | Price    |
|               |                |                      |   |      |     |
| Fund II Purchases: |                |                      |   |      |     |
|               | Falls Pointe (1)    | Atlanta, Georgia          | 30%    | 107       | 10/29/10 |  $ | 5,000  |
|               | Lakewood II (1)     | Atlanta, Georgia          | 30%    | 128       | 10/29/10 | 3,000  |
|               | Carmel Crossing (1) | Charlotte, North Carolina | 30%    | 326       | 12/14/10 | 25,000  |
|               |                |                      |   | 561       |     |  $ | 33,000  |

| (1)   | During the third quarter of 2010, the Company purchased the first mortgage loan associated with RubiconPark I, LLC (“Rubicon JV”), which owned Falls Pointe, Lakewood II, and Carmel Crossing, for a net purchase price of $33.0 million.  During the fourth quarter of 2010, the Company, as holder of the mortgage, foreclosed on the three properties that served as collateral for the associated loan.  Also, during the fourth quarter of 2010, the Company sold the three assets to Fund II.  Parkway recorded approximately $740,000 in management company expense on the consolidated statement of operations related to acquisition costs on these investments.  As a result of the sale to Fund II, Parkway’s ownership interest in these assets increased from 20% to 30%. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|            |                                                                          |                                                                                                                                                                                                                                                | Square | Date        | Gross   |         |
|-----------------|-------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|---------|--------------|
| Office Property | Location                                                                      | Feet                                                                                                                                                                                                                                                | Sold   | Sales Price | Gain    |
|            |                                                                          |                                                                                                                                                                                                                                                |   |        |    |
|            |            One Park Ten (1) |                                        Houston, Texas | 163    | 04/15/10    |  $ | 15,700  |  $ | 8,518  |

| (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. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                  | Increase   |
|-------------------------------------------------------|------------|
|                                                  | (Decrease) |
|                                                  |       |
| Placement of mortgage debt on wholly-owned properties |  $    | 70,000  |
| Principal paid on early extinguishment of debt        | (126,277)  |
| Transfer of mortgage to purchaser of One Park Ten     | (8,666)    |
| Scheduled principal payments                          | (14,222)   |
|                                                  |  $    | (79,165) |

----

----

|                                                                                                                     | Year Ended          |
|--------------------------------------------------------------------------------------------------------------------------|---------------------|
|                                                                                                                     | December 31         |
|                                                                                                                     | 2010                |   | 2009 |
| Net loss for Parkway Properties, Inc.                                                                                    |  $             | (2,618) |   |  $ | (11,603) |
| Adjustments to loss for Parkway Properties, Inc.:                                                                        |                |   |   |
|         Interest expense                                                         | 53,062         |   | 53,374  |
|         Amortization of financing costs                                          | 1,713          |   | 2,319  |
|         Prepayment expenses - early extinguishment of debt                       | 189            |   | -  |
|         Depreciation and amortization                                            | 92,311         |   | 92,726  |
|         Amortization of share-based compensation                                 | 1,319          |   | 2,581  |
|         Net (gain) loss on real estate investments and involuntary conversion         | (4,438)             |   | 7,524  |
|         Tax expense                                                              | 2              |   | 2  |
|         EBITDA adjustments - unconsolidated joint ventures                       | 488            |   | 1,358  |
|         EBITDA adjustments - noncontrolling interest in real estate partnerships | (29,939)            |   | (32,698) |
|                                                                                                                     |                |   |   |
| EBITDA (1)                                                                                                               |  $             | 112,089  |   |  $ | 115,583  |
|                                                                                                                     |                |   |   |
| Interest coverage ratio:                                                                                                 |                |   |   |
| EBITDA                                                                                                                   |  $             | 112,089  |   |  $ | 115,583  |
| Interest expense:                                                                                                        |                |   |   |
|         Interest expense                                                         |  $             | 53,062  |   |  $ | 53,374  |
|         Interest expense - unconsolidated joint ventures                         | 145            |   | 501  |
|         Interest expense - noncontrolling interest in real estate partnerships   | (12,000)            |   | (12,283) |
| Total interest expense                                                                                                   |  $             | 41,207  |   |  $ | 41,592  |
| Interest coverage ratio                                                                                                  | 2.72           |   | 2.78  |
|                                                                                                                     |                |   |   |
| Fixed charge coverage ratio:                                                                                             |                |   |   |
| EBITDA                                                                                                                   |  $             | 112,089  |   |  $ | 115,583  |
| Fixed charges:                                                                                                           |                |   |   |
|         Interest expense                                                         |  $             | 41,207  |   |  $ | 41,592  |
|         Preferred dividends                                                      | 6,325          |   | 4,800  |
|         Principal payments (excluding early extinguishment of debt)              | 14,222         |   | 13,615  |
|         Principal payments - unconsolidated joint ventures                       | 33             |   | 142  |
|         Principal payments - noncontrolling interest in real estate partnerships | (1,056)             |   | (981) |
| Total fixed charges                                                                                                      |  $             | 60,731  |   |  $ | 59,168  |
| Fixed charge coverage ratio                                                                                              | 1.85           |   | 1.95  |
|                                                                                                                     |                |   |   |
| Modified fixed charge coverage ratio:                                                                                    |                |   |   |
| EBITDA                                                                                                                   |  $             | 112,089  |   |  $ | 115,583  |
| Modified fixed charges:                                                                                                  |                |   |   |
|         Interest expense                                                         |  $             | 41,207  |   |  $ | 41,592  |
|         Preferred dividends                                                      | 6,325          |   | 4,800  |
| Total fixed charges                                                                                                      |  $             | 47,532  |   |  $ | 46,392  |
| Modified fixed charge coverage ratio                                                                                     | 2.36           |   | 2.49  |
|                                                                                                                     |                |   |   |
| Net Debt to EBITDA multiple:                                                                                             |                |   |   |
| EBITDA – trailing 12 months                                                                                        |  $             | 112,089  |   |  $ | 115,583  |
| Parkway’s share of total debt:                                                                                     |                |   |   |
| Mortgage notes payable                                                                                                   |  $             | 773,535  |   |  $ | 852,700  |
| Notes payable to banks                                                                                                   | 110,839        |   | 100,000  |
| Adjustments for unconsolidated joint ventures                                                                            | 2,474          |   | 2,507  |
| Adjustments for noncontrolling interest in real estate partnerships                                                      | (211,836)           |   | (215,604) |
| Parkway’s share of total debt                                                                                      |  675,012  |   |  739,603  |
| Less:  Parkway’s share of cash                                                                           | (9,652)             |   | (10,231) |
| Parkway’s share of net debt                                                                                        |  $             | 665,360  |   |  $ | 729,372  |
| Net Debt to EBITDA multiple                                                                                              | 5.9            |   | 6.3  |

----

|                                                       | Year Ended   |
|------------------------------------------------------------|--------------|
|                                                       | December 31  |
|                                                       | 2010         |   | 2009 |
|                                                       |         |   |   |
| Cash flows provided by operating activities                |  $      | 68,059  |   |  $ | 69,934  |
|                                                       |         |   |   |
| Amortization of (above) below market leases                | 566     |   | (51) |
| Amortization of mortgage loan discount                     | 710     |   | 607  |
| Operating distributions from unconsolidated joint ventures | -       |   | (392) |
| Interest expense                                           | 53,062  |   | 53,374  |
| Loss on early extinguishment of debt                       | 189     |   | -  |
| Tax expense                                                | 2       |   | 2  |
| Change in deferred leasing costs                           | 13,425  |   | 16,348  |
| Change in receivables and other assets                     | 4,194   |   | (3,678) |
| Change in accounts payable and other liabilities           | (9,782)      |   | (228) |
| Adjustments for noncontrolling interests                   | (19,150)     |   | (22,136) |
| Adjustments for unconsolidated joint ventures              | 814     |   | 1,803  |
| EBITDA                                                     |  $      | 112,089  |   |  $ | 115,583  |

|                                                                                                                                                  | Increase     |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|
|                                                                                                                                                  | (Decrease)   |
| Net loss attributable to Parkway Properties, Inc.                                                                                                     |  $      | (2,618) |
| Net loss attributable to noncontrolling interest                                                                                                      | (10,789)     |
| Net loss                                                                                                                                              | (13,407)     |
| Change in market value of interest rate swaps                                                                                                         | 1,889   |
| Comprehensive loss                                                                                                                                    | (11,518)     |
| Common stock dividends declared                                                                                                                       | (6,494)      |
| Preferred stock dividends declared                                                                                                                    | (6,325)      |
| Share-based compensation                                                                                                                              | 1,319   |
| Issuance of preferred stock                                                                                                                           | 44,811  |
| Shares issued in lieu of Director’s Fees                                                                                                        | 285     |
| Issuance costs for shelf registration                                                                                                                 | (14)         |
| Shares purchased to satisfy tax withholding obligation on vesting of restricted stock     and deferred incentive share units |  (821)  |
| Net shares distributed from deferred compensation plan                                                                                                | 503     |
| Contribution of capital by noncontrolling interest                                                                                                    | 27,912  |
|                                                                                                                                                  |  $      | 49,658  |

----

|                                                | Year Ended December 31 |
|-----------------------------------------------------|------------------------|
|                                                |                   |   | Increase | % |
|                                                | 2010                   | 2009 | (Decrease) | Change |
| Revenue from office and parking properties:         |                   |   |   |
|      Same-store properties |  $                | 254,609  |  $ | 261,886  |  $ | (7,277) | -2.8% |
|      Properties disposed   | 2                 | 1,065  | (1,063) | -99.8% |
| Total revenue from office and                       |                   |   |   |   |
|      parking properties    |  $                | 254,611  |  $ | 262,951  |  $ | (8,340) | -3.2% |

|                                                | Year Ended December 31 |
|-----------------------------------------------------|------------------------|
|                                                |                   |   | Increase | % |
|                                                | 2010                   | 2009 | (Decrease) | Change |
| Expense from office and parking properties:         |                   |   |   |
|      Same-store properties |  $                | 117,981  |  $ | 125,779  |  $ | (7,798) | -6.2% |
|      Properties disposed   | (46)                   | 564  | (610) | -108.2% |
| Total expense from office and                       |                   |   |   |   |
|      parking properties    |  $                | 117,935  |  $ | 126,343  |  $ | (8,408) | -6.7% |

----

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

----

----

|                                                          | Year Ended December 31 |
|---------------------------------------------------------------|------------------------|
|                                                          |                   |   | Increase | % |
|                                                          | 2010                   | 2009 | (Decrease) | Change |
| Interest expense:                                             |                   |   |   |   |
|      Mortgage interest expense       |  $                | 47,685  |  $ | 47,200  |  $ | 485  | 1.0 % |
|      Bank line interest expense      | 5,200             | 5,543  | (343) | -6.2 % |
|      Debt prepayment expense         | 53                | -  | 53  | 0.0 % |
|      Mortgage loan cost amortization | 894               | 1,274  | (380) | -29.8 % |
|      Bank loan cost amortization     | 815               | 1,027  | (212) | -20.6 % |
|                                                          |                   |   |   |   |
| Total interest expense                                        |  $                | 54,647  |  $ | 55,044  |  $ | (397) | -0.7 % |

----

|                                                                                     | Year Ended December 31 |
|------------------------------------------------------------------------------------------|------------------------|
|                                                                                     |                   |   | Increase | % |
|                                                                                     | 2010                   | 2009 | (Decrease) | Change |
| Discontinued operations:                                                                 |                   |   |   |   |
|      Income from discontinued operations                        |  $                | 194  |  $ | 404  |  $ | (210) | -52.0% |
|      Gain on sale of real estate                                |                   |   |   |   |
|           from discontinued operations |                   | 8,518  | -  | 8,518  | 100.0% |
|                                                                                     |                   |   |   |   |
|      Total discontinued operations                              |  $                | 8,712  |  $ | 404  |  $ | 8,308  | 2056.4% |

| Office Property |   | Location       |   | SquareFeet |   | Date ofSale |   | Net SalesPrice |         | Net BookValue ofReal Estate |    | Gain onSale |
|-----------------|--------|----------------|--------|------------|--------|-------------|--------|----------------|--------------|-----------------------------|---------|-------------|
| One Park Ten    |   | Houston, Texas |   | 163        |   | 04/15/10    |   |  $        | 14,924  |                        |  $ | 6,406  |   |  $ | 8,518  |

|                                                      | Year Ended December 31 |
|-----------------------------------------------------------|------------------------|
|                                                      |                   |   | Increase | % |
|                                                      | 2009                   | 2008 | (Decrease) | Change |
| Revenue from office and parking properties:               |                   |   |   |
|      Same-store properties       |  $                | 251,381  |  $ | 253,469  |  $ | (2,088) | -0.8% |
|      Properties acquired in 2008 | 7,315             | 3,763  | 3,552  | 94.4% |
|      Office property development | 3,673             | 166  | 3,507  | 2112.7% |
|      Properties disposed         | 582               | 2,831  | (2,249) | -79.4% |
| Total revenue from office and                             |                   |   |   |   |
|      parking properties          |  $                | 262,951  |  $ | 260,229  |  $ | 2,722  | 1.0% |

----

|                                                                        | Year Ended December 31 |
|-----------------------------------------------------------------------------|------------------------|
|                                                                        |                   |   | Increase | % |
|                                                                        | 2009                   | 2008 | (Decrease) | Change |
| Property operating expenses:                                                |                   |   |   |
|         Same-store properties       |  $                | 120,691  |  $ | 120,911  |  $ | (220) | -0.2% |
|         Properties acquired in 2008 | 3,686             | 1,768  | 1,918  | 108.5% |
|         Office property development | 1,667             | 183  | 1,484  | 810.9% |
|         Properties disposed              | 299               | 1,547  | (1,248) | -80.7% |
| Total property                                                              |                   |   |   |   |
| operating expenses                                                          |  $                | 126,343  |  $ | 124,409  |  $ | 1,934  | 1.6% |

----

|                                                          | Year Ended December 31 |
|---------------------------------------------------------------|------------------------|
|                                                          |                   |   | Increase | % |
|                                                          | 2009                   | 2008 | (Decrease) | Change |
| Interest expense:                                             |                   |   |   |   |
|      Mortgage interest expense       |  $                | 47,200  |  $ | 46,763  |  $ | 437  | 0.9 % |
|      Bank line interest expense      | 5,543             | 10,196  | (4,653) | -45.6 % |
|      Debt prepayment expense         | -                 | 13  | (13) | -100.0 % |
|      Mortgage loan cost amortization | 1,274             | 1,098  | 176  | 16.0 % |
|      Bank loan cost amortization     | 1,027             | 696  | 331  | 47.6 % |
|                                                          |                   |   |   |   |
| Total interest expense                                        |  $                | 55,044  |  $ | 58,766  |  $ | (3,722) | -6.3 % |

|                                                                                     | Year Ended December 31 |
|------------------------------------------------------------------------------------------|------------------------|
|                                                                                     |                   |   | Increase | % |
|                                                                                     | 2009                   | 2008 | (Decrease) | Change |
| Discontinued operations:                                                                 |                   |   |   |   |
|      Income (loss) from discontinued operations                 |  $                | 404  |  $ | (461) |  $ | 865  | 187.6% |
|      Gain on sale of real estate                                |                   |   |   |   |
|           from discontinued operations |                   | -  | 22,588  | (22,588) | -100.0% |
|                                                                                     |                   |   |   |   |
| Total discontinued operations                                                            |  $                | 404  |  $ | 22,127  |  $ | (21,723) | -98.2% |

----

|              |                           | Square | Date of  | Net Sales    | Net Book Value | Gain         |
|-------------------|--------------------------------|--------|----------|--------------|----------------|--------------|
| Office Property   | Location                       | Feet   | Sale     | Price        | of Real Estate | on Sale      |
|              |                           |   |     |         |           |         |
| Town Point Center |  Norfolk, Virginia        | 131    | 07/15/08 |  $      | 12,180    |  $      | 10,621  |  $ | 1,559  |
| Wachovia Plaza    |  St. Petersburg, Florida  | 186    | 08/18/08 | 25,492  | 16,154    | 9,338   |
| Capitol Center    |  Columbia, South Carolina | 460    | 09/05/08 | 46,792  | 35,101    | 11,691  |
| 2008 Dispositions |                           | 777    |     |  $      | 84,464    |  $      | 61,876  |  $ | 22,588  |
|              |                           |   |     |         |           |         |
| One Park Ten      | Houston, Texas                 | 163    | 04/15/10 |  $      | 14,924    |  $      | 6,406  |  $ | 8,518  |
| 2010 Dispositions |                           | 163    |     |  $      | 14,924    |  $      | 6,406  |  $ | 8,518  |

|                                                        |        |          |     | Outstanding  |
|-------------------------------------------------------------|-------------|---------------|----------|--------------|
| Credit Facilities                                           | Lender      | Interest Rate | Maturity | Balance      |
| $15.0 Million Unsecured Working Capital                     |        |
|      Revolving Credit Facility (1) | PNC Bank    | 2.3%          | 04/27/11 | $            | 1,839  |
| $236.0 Million Unsecured Revolving Credit                   |
|      Facility (1)                  | Wells Fargo | 4.2%          | 04/27/11 | 49,000  |
| $60.0 Million Unsecured Term Loan (1)                       | Wells Fargo | 4.8%          | 04/27/11 | 60,000  |
|                                                        |        | 4.6%          |     |  $      | 110,839  |

| (1)   | On January 31, 2011, the Company closed a new $190.0 million unsecured revolving credit facility and a new $10.0 million unsecured working capital revolving credit facility that replaced the existing unsecured revolving credit facility, term loan and working capital facility noted above.  Excluding the impact of the interest rate swap, the interest rate on the new credit facilities is based on LIBOR plus 275 to 350 basis points, depending upon overall Company leverage, with the current rate set at 325 basis points.   Additionally, the Company pays fees on the unused portion of the credit facilities ranging between 40 and 50 basis points based upon usage of the aggregate commitment, with the current rate set at 40 basis points. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|    |                                   |     |          |           |            | Fair Value  |
|---------|----------------------------------------|----------|---------------|----------------|-----------------|-------------|
|    | Balance                                |     |          |           |            | Liability   |
| Type of | Sheet                                  | Notional | Maturity      |           | Fixed           | December 31 |
| Hedge   | Location                               | Amount   | Date          | Reference Rate | Rate            | 2010        | 2009 |
| Swap    | Accounts Payable and Other Liabilities |  $  | 100,000  | 03/31/11       | 1 - Month LIBOR | 4.785%      |  $ | (836) |  $ | (3,585) |
| Swap    | Accounts Payable and Other Liabilities |  $  | 23,500   | 12/01/14       | 1 - Month LIBOR | 5.800%      | (2,167) | (1,307) |
|    |                                   |     |          |           |            |  $     | (3,003) |  $ | (4,892) |

----

|                                      | Total         |          |          |    | Recurring     |
|-------------------------------------------|---------------|---------------|---------------|---------|---------------|
|                                      | Mortgage      |          | Balloon       |    | Principal     |
|                                      | Maturities    |          | Payments      |    | Amortization  |
| Schedule of Mortgage Maturities by Years: |          |          |          |    |          |
| 2011                                      |  $       | 113,914  |          |  $ | 102,694  |   |  $ | 11,220  |
| 2012                                      | 58,034   |          | 48,408   |    | 9,626    |
| 2013                                      | 9,943    |          | -        |    | 9,943    |
| 2014                                      | 10,595   |          | -        |    | 10,595   |
| 2015                                      | 37,971   |          | 26,891   |    | 11,080   |
| 2016                                      | 398,695  |          | 393,875  |    | 4,820    |
| Thereafter                                | 144,383  |          | 136,029  |    | 8,354    |
| Total                                     |  $       | 773,535  |          |  $ | 707,897  |   |  $ | 65,638  |
| Fair value at 12/31/10                    |  $       | 734,637  |          |    |          |   |

----

|                                                |                    |            | Parkway's   |
|-----------------------------------------------------|-------------------------|-----------------|-------------|
|                                                |                    |            | Ownership   |
| Joint Ventures                                      | Property Name           | Location        | Interest    |
|                                                |                    |            |        |
| Wink-Parkway Partnership (“Wink JV”)(1) | Wink Building           | New Orleans, LA | 50.0 % |
| Parkway Joint Venture, LLC                          | UBS Building/River Oaks | Jackson, MS     | 20.0 % |
| RubiconPark II, LLC (2)                             | Maitland 200            | Orlando, FL     | 20.0 % |

| (1)   | On February 4, 2011, the Company purchased its partner’s 50% interest in the Wink JV for $250,000.  The Wink JV was established for the purpose of owning the Wink Building, a 32,000 square foot office property in New Orleans, Louisiana.  Upon completing the purchase of its partner’s interest, Parkway now owns 100% of the Wink Building. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | As a result of the Company’s partner, Rubicon US REIT, filing for Chapter 11 bankruptcy, new partners were admitted into the partnership.  They are JP Morgan Chase, Kaufman Jacobs, LLC and Starwood Capital Group Global, LP. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                      | Payments Due By Period |
|---------------------------|------------------------|
| Contractual Obligations   | Total                  | 2011 | 2012 | 2013 | 2014 | 2015 | Thereafter |
| Long-Term Debt            |  $                | 1,101,870  |  $ | 269,802  |  $ | 96,854  |  $ | 46,517  |  $ | 46,517  |  $ | 72,555  |  $ | 569,625  |
| Capital Lease Obligations | 6,659             | 198  | 191  | 171  | 138  | 113  | 5,848  |
| Operating Leases          | 1,138             | 646  | 371  | 121  | -  | -  | -  |
| Purchase Obligations      | 17,938            | 15,829  | 609  | 43  | 1,380  | 42  | 35  |
| Ground Lease Payments     | 15,519            | 184  | 184  | 184  | 184  | 184  | 14,599  |
| Total                     |  $                | 1,143,124  |  $ | 286,659  |  $ | 98,209  |  $ | 47,036  |  $ | 48,219  |  $ | 72,894  |  $ | 590,107  |

----

----

----

----

|                                                                                        | Year Ended   |
|---------------------------------------------------------------------------------------------|--------------|
|                                                                                        | December 31  |
|                                                                                        | 2010         |   | 2009 |
| Net loss for Parkway Properties, Inc.                                                       |  $      | (2,618) |   |  $ | (11,603) |
| Adjustments to derive funds from operations:                                                |         |   |   |
|      Depreciation and amortization                                 | 92,190  |   | 92,126  |
|      Depreciation and amortization – discontinued operations | 121     |   | 600  |
|      Noncontrolling interest depreciation and amortization         | (17,668)     |   | (20,138) |
|      Adjustments for unconsolidated joint ventures                 | 342     |   | 848  |
|      Preferred dividends                                           | (6,325)      |   | (4,800) |
|      Gain on sale of real estate                                   | (8,518)      |   | (470) |
| Funds from operations attributable to common shareholders (1)                               |  $      | 57,524  |   |  $ | 56,563  |

| (1)   | Funds from operations attributable to common shareholders for the years ended December 31, 2010 and 2009 include the following items (in thousands): |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

|                           | Year Ended December 31 |
|--------------------------------|------------------------|
|                           | 2010                   |   | 2009 |
| Gain on involuntary conversion |  $                | 40  |   |  $ | 823  |
| Non-cash impairment losses     | (4,120)                |   | (8,817) |
| Loss on extinguishment of debt | (189)                  |   | -  |
| Acquisition costs              | (266)                  |   | -  |
| Expenses related to litigation | (1,251)                |   | -  |
| Lease termination fee income   | 8,706             |   | 1,167  |

----

| Index to Consolidated Financial Statements                                                          | Page   |
|-----------------------------------------------------------------------------------------------------|--------|
|                                                                                                |   |
| Report of Independent Registered Public Accounting Firm                                             | 48     |
| Consolidated Balance Sheets - at December 31, 2010 and 2009                                         | 49     |
| Consolidated Statements of Operations - for the years ended December 31, 2010, 2009 and 2008        | 50     |
| Consolidated Statements of Changes in Equity - for the years ended December 31, 2010, 2009 and 2008 | 51     |
| Consolidated Statements of Cash Flows - for the years ended December 31, 2010, 2009 and 2008        | 52     |
| Notes to Consolidated Financial Statements                                                          | 53     |
| Schedule II - Valuations and Qualifying Accounts                                                    | 82     |
| Schedule III - Real Estate and Accumulated Depreciation                                             | 83     |
| Note to Schedule III - Real Estate and Accumulated Depreciation                                     | 86     |
| Schedule IV - Mortgage Loans on Real Estate                                                         | 87     |
| Note to Schedule IV – Mortgage Loans on Real Estate                                           | 87     |

----

----

|                                                                                       |
|--------------------------------------------------------------------------------------------|
|                                                                                       | December 31 |   | December 31 |
|                                                                                       | 2010 |   | 2009 |
| Assets                                                                                     |   |   |   |
| Real estate related investments:                                                           |   |   |   |
|      Office and parking properties                                |  $ | 1,755,310  |   |  $ | 1,738,040  |
|      Land held for development                                    | 609  |   | 609  |
|      Accumulated depreciation                                     | (366,152) |   | (336,759) |
|                                                                                       | 1,389,767  |   | 1,401,890  |
|                                                                                       |   |   |   |
|      Land available for sale                                      | 750  |   | 750  |
|      Mortgage loans                                               | 10,336  |   | 8,126  |
|      Investment in unconsolidated joint ventures                  | 2,892  |   | 2,512  |
|                                                                                       | 1,403,745  |   | 1,413,278  |
|                                                                                       |   |   |   |
| Rents receivable and other assets                                                          | 129,638  |   | 116,437  |
| Intangible assets, net                                                                     | 50,629  |   | 61,734  |
| Cash and cash equivalents                                                                  | 19,670  |   | 20,697  |
|                                                                                       |  $ | 1,603,682  |   |  $ | 1,612,146  |
|                                                                                       |   |   |   |
| Liabilities                                                                                |   |   |   |
| Notes payable to banks                                                                     |  $ | 110,839  |   |  $ | 100,000  |
| Mortgage notes payable                                                                     | 773,535  |   | 852,700  |
| Accounts payable and other liabilities                                                     | 98,818  |   | 88,614  |
|                                                                                       | 983,192  |   | 1,041,314  |
|                                                                                       |   |   |   |
| Equity                                                                                     |   |   |   |
| Parkway Properties, Inc. shareholders’ equity                                        |   |   |   |
| 8.00% Series D Preferred stock, $.001 par value,                                           |   |   |   |
|      4,374,896 and 2,400,000 shares authorized, issued and        |   |   |   |
|      outstanding in 2010 and 2009, respectively                   | 102,787  |   | 57,976  |
| Common stock, $.001 par value, 65,625,104 and 67,600,000                                   |   |   |   |
|      shares authorized in 2010 and 2009, respectively, 21,923,610 |   |   |   |
|      and 21,624,228 shares issued and outstanding in 2010 and     |   |   |   |
|      2009, respectively                                           | 22  |   | 22  |
| Common stock held in trust, at cost, 58,134 and 71,255                                     |   |   |   |
|      shares in 2010 and 2009, respectively                        | (1,896) |   | (2,399) |
| Additional paid-in capital                                                                 | 516,167  |   | 515,398  |
| Accumulated other comprehensive loss                                                       | (3,003) |   | (4,892) |
| Accumulated deficit                                                                        | (127,575) |   | (111,960) |
|      Total Parkway Properties, Inc. stockholders’ equity    | 486,502  |   | 454,145  |
| Noncontrolling interest – real estate partnerships                                   | 133,988  |   | 116,687  |
|      Total equity                                                 | 620,490  |   | 570,832  |
|                                                                                       |  $ | 1,603,682  |   |  $ | 1,612,146  |

----

|                                                                                                             | Year Ended December 31 |
|------------------------------------------------------------------------------------------------------------------|------------------------|
|                                                                                                             | 2010                   |   | 2009 |   | 2008 |
| Revenues                                                                                                         |                   |   |   |   |   |
| Income from office and parking properties                                                                        |  $                | 254,611  |   |  $ | 262,951  |   |  $ | 260,229  |
| Management company income                                                                                        | 1,652             |   | 1,870  |   | 1,936  |
|      Total revenues                                                                     | 256,263           |   | 264,821  |   | 262,165  |
|                                                                                                             |                   |   |   |   |   |
| Expenses                                                                                                         |                   |   |   |   |   |
| Property operating expenses                                                                                      | 117,935           |   | 126,343  |   | 124,409  |
| Depreciation and amortization                                                                                    | 92,190            |   | 92,126  |   | 91,224  |
| Impairment loss on real estate                                                                                   | 4,120             |   | -  |   | 2,542  |
| Management company expenses                                                                                      | 3,961             |   | 2,299  |   | 1,947  |
| General and administrative                                                                                       | 7,382             |   | 6,108  |   | 9,725  |
|      Total expenses                                                                     | 225,588           |   | 226,876  |   | 229,847  |
|                                                                                                             |                   |   |   |   |   |
| Operating income                                                                                                 | 30,675            |   | 37,945  |   | 32,318  |
|                                                                                                             |                   |   |   |   |   |
| Other income and expenses                                                                                        |                   |   |   |   |   |
| Interest and other income                                                                                        | 1,487             |   | 1,609  |   | 1,332  |
| Equity in earnings of unconsolidated joint ventures                                                              | 326               |   | 445  |   | 894  |
| Other-than-temporary impairment loss on investment in     unconsolidated joint ventures | -                 |   | (8,817) |   | -  |
| Gain on involuntary conversion                                                                                   | 40                |   | 823  |   | -  |
| Gain on sale of real estate                                                                                      | -                 |   | 470  |   | -  |
| Interest expense                                                                                                 | (54,647)               |   | (55,044) |   | (58,766) |
|                                                                                                             |                   |   |   |   |   |
| Loss from continuing operations                                                                                  | (22,119)               |   | (22,569) |   | (24,222) |
| Discontinued operations:                                                                                         |                   |   |   |   |   |
|      Income (loss) from discontinued operations                                         | 194               |   | 404  |   | (461) |
|      Gain on sale of real estate from discontinued operations                           | 8,518             |   | -  |   | 22,588  |
| Total discontinued operations                                                                                    | 8,712             |   | 404  |   | 22,127  |
|                                                                                                             |                   |   |   |   |   |
| Net loss                                                                                                         | (13,407)               |   | (22,165) |   | (2,095) |
|      Net loss attributable to noncontrolling interest – real estate partnerships  | 10,789            |   | 10,562  |   | 11,369  |
|                                                                                                             |                   |   |   |   |   |
| Net income (loss) for Parkway Properties, Inc.                                                                   | (2,618)                |   | (11,603) |   | 9,274  |
| Dividends on preferred stock                                                                                     | (6,325)                |   | (4,800) |   | (4,800) |
| Net income (loss) attributable to common stockholders                                                            |  $                | (8,943) |   |  $ | (16,403) |   |  $ | 4,474  |
|                                                                                                             |                   |   |   |   |   |
| Net income (loss) per common share attributable to Parkway Properties, Inc.:                                     |                   |   |   |   |   |
| Basic:                                                                                                           |                   |   |   |   |   |
|      Loss from continuing operations attributable to Parkway Properties, Inc.           |  $                | (0.82) |   |  $ | (0.87) |   |  $ | (1.17) |
|      Discontinued operations                                                            | 0.40              |   | 0.02  |   | 1.47  |
|      Basic net income (loss) attributable to Parkway Properties, Inc.                   |  $                | (0.42) |   |  $ | (0.85) |   |  $ | 0.30  |
|                                                                                                             |                   |   |   |   |   |
| Diluted:                                                                                                         |                   |   |   |   |   |
|      Loss from continuing operations attributable to Parkway Properties, Inc.           |  $                | (0.82) |   |  $ | (0.87) |   |  $ | (1.17) |
|      Discontinued operations                                                            | 0.40              |   | 0.02  |   | 1.47  |
|      Diluted net income (loss) attributable to Parkway Properties, Inc.                 |  $                | (0.42) |   |  $ | (0.85) |   |  $ | 0.30  |
|  Weighted average shares outstanding:                                                                       |                   |   |   |   |   |
|      Basic                                                                              | 21,421            |   | 19,304  |   | 15,023  |
|      Diluted                                                                            | 21,421            |   | 19,304  |   | 15,023  |

----

|                                                                                                                                                                                                                                                                                          | Parkway Properties, Inc. Shareholders |          |                |    |                |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------|---------------|---------------------|---------|---------------------|
|                                                                                                                                                                                                                                                                                          |                                  |          |                |    |                |   |   |   |  Accumulated |   |   |   |   |  Noncontrolling |   |   |
|                                                                                                                                                                                                                                                                                          |                                  |          |                |    | Common              |   | Additional |   | Other |   |   |   |   | Interest – |   |   |
|                                                                                                                                                                                                                                                                                          | Preferred                             |          | Common              |    | Stock Held          |   | Paid-In |   | Comprehensive |   | Accumulated |   |   | Real Estate |   | Total |
|                                                                                                                                                                                                                                                                                          | Stock                                 |          | Stock               |    | in Trust            |   | Capital |   | Loss |   | Deficit |   |   | Partnerships |   | Equity |
| Balance at December 31, 2007                                                                                                                                                                                                                                                                  |  $                               | 57,976   |                |  $ | 15             |   |  $ | (3,540) |   |  $ | 425,221  |   |  $ | (358) |   |  $ | (39,406) |   |   |  $ | 80,506  |   |  $ | 520,414  |
| Comprehensive loss                                                                                                                                                                                                                                                                            |                                  |          |                |    |                |   |   |   |   |   |   |   |   |   |   |   |
|      Net income (loss)                                                                                                                                                                                                                                               | -                                |          | -              |    | -              |   | -  |   | -  |   | 9,274  |   |   | (11,369) |   | (2,095) |
|      Change in fair value of interest rate swaps                                                                                                                                                                                                                     | -                                |          | -              |    | -              |   | -  |   | (7,370) |   | -  |   |   | -  |   | (7,370) |
| Total comprehensive loss                                                                                                                                                                                                                                                                      | -                                |          | -              |    | -              |   | -  |   | -  |   | -  |   |   | -  |   | (9,465) |
| Common dividends declared - $2.275 per share                                                                                                                                                                                                                                                  | -                                |          | -              |    | -              |   | -  |   | -  |   | (34,555) |   |   | -  |   | (34,555) |
| Preferred dividends declared - $2.00 per share                                                                                                                                                                                                                                                | -                                |          | -              |    | -              |   | -  |   | -  |   | (4,800) |   |   | -  |   | (4,800) |
| Share-based compensation                                                                                                                                                                                                                                                                      | -                                |          | -              |    | -              |   | 2,276  |   | -  |   | -  |   |   | -  |   | 2,276  |
| Stock options and warrants exercised – 25,436 shares                                                                                                                                                                                                                                    | -                                |          | -              |    | -              |   | 792  |   | -  |   | -  |   |   | -  |   | 792  |
| 3,600 shares issued in lieu of Directors’ fees                                                                                                                                                                                                                                          | -                                |          | -              |    | -              |   | 140  |   | -  |   | -  |   |   | -  |   | 140  |
| Issuance costs from shelf registration                                                                                                                                                                                                                                                        | -                                |          | -              |    | -              |   | (52) |   | -  |   | -  |   |   | -  |   | (52) |
| Purchase of Company stock – 447 shares withheld to                                                                                                                                                                                                                                      |                                  |          |                |    |                |   |   |   |   |   |   |   |   |   |   |   |
|      satisfy tax withholding obligation in connection with                                                                                                                                                                                                           |                                  |          |                |    |                |   |   |   |   |   |   |   |   |   |   |   |
|      the vesting of deferred incentive share units                                                                                                                                                                                                                   | -                                |          | -              |    | -              |   | (10) |   | -  |   | -  |   |   | -  |   | (10) |
| Distribution of 21,000 shares of common stock, deferred                                                                                                                                                                                                                                       |                                  |          |                |    |                |   |   |   |   |   |   |   |   |   |   |   |
|      compensation plan                                                                                                                                                                                                                                               | -                                |          | -              |    | 715            |   | -  |   | -  |   | -  |   |   | -  |   | 715  |
| Contribution of 1,800 shares of common stock, deferred                                                                                                                                                                                                                                        |                                  |          |                |    |                |   |   |   |   |   |   |   |   |   |   |   |
|      compensation plan                                                                                                                                                                                                                                               | -                                |          | -              |    | (70)                |   | -  |   | -  |   | -  |   |   | -  |   | (70) |
| Contribution of capital by noncontrolling interests                                                                                                                                                                                                                                           | -                                |          | -              |    | -              |   | -  |   | -  |   | -  |   |   | 60,596  |   | 60,596  |
| Distribution of capital to noncontrolling interests                                                                                                                                                                                                                                           | -                                |          | -              |    | -              |   | -  |   | -  |   | -  |   |   | (2,541) |   | (2,541) |
| Balance at December 31, 2008                                                                                                                                                                                                                                                                  | 57,976                           |          | 15             |    | (2,895)             |   | 428,367  |   | (7,728) |   | (69,487) |   |   | 127,192  |   | 533,440  |
| Comprehensive loss                                                                                                                                                                                                                                                                            |                                  |          |                |    |                |   |   |   |   |   |   |   |   |   |   |   |
|       Net loss                                                                                                                                                                                                                                                  | -                                |          | -              |    | -              |   | -  |   | -  |   | (11,603) |   |   | (10,562) |   | (22,165) |
|       Change in fair value of interest rate swaps                                                                                                                                                                                                               | -                                |          | -              |    | -              |   | -  |   | 2,836  |   | -  |   |   | -  |   | 2,836  |
| Total comprehensive loss                                                                                                                                                                                                                                                                      | -                                |          | -              |    | -              |   | -  |   | -  |   | -  |   |   | -   |   | (19,329) |
| Common dividends declared - $1.30 per share                                                                                                                                                                                                                                                   | -                                |          | -              |    | -              |   | -  |   | -  |   | (26,070) |   |   | -  |   | (26,070) |
| Preferred dividends declared - $2.00 per share                                                                                                                                                                                                                                                | -                                |          | -              |    | -              |   | -  |   | -  |   | (4,800) |   |   | -  |   | (4,800) |
| Share-based compensation                                                                                                                                                                                                                                                                      | -                                |          | -              |    | -              |   | 2,581  |   | -  |   | -  |   |   | -  |   | 2,581  |
| Stock offering – 6,250,000 shares of common stock                                                                                                                                                                                                                                       | -                                |          | 7              |    | -              |   | 84,450  |   | -  |   | -  |   |   | -  |   | 84,457  |
| 3,921 shares issued in lieu of Directors’ fees                                                                                                                                                                                                                                          | -                                |          | -              |    | -              |   | 58  |   | -  |   | -  |   |   | -  |   | 58  |
| Purchase of Company stock – 3,594 and 860 shares                                                                                                                                                                                                                                        |                                  |          |                |    |                |   |   |   |   |   |   |   |   |   |   |   |
|       withheld to satisfy tax withholding obligation in                                                                                                                                                                                                         |                                  |          |                |    |                |   |   |   |   |   |   |   |   |   |   |   |
|       connection with vesting of restricted stock and                                                                                                                                                                                                           |                                  |          |                |    |                |   |   |   |   |   |   |   |   |   |   |   |
|       deferred incentive share units, respectively                                                                                                                                                                                                              | -                                |          | -              |    | -              |   | (58) |   | -  |   | -  |   |   | -  |   | (58) |
| Distribution of 15,125 shares of common stock, deferred                                                                                                                                                                                                                                       |                                  |          |                |    |                |   |   |   |   |   |   |   |   |   |   |   |
|       compensation plan                                                                                                                                                                                                                                         | -                                |          | -              |    | 511            |   | -  |   | -  |   | -  |   |   | -  |   | 511  |
| Contribution of 1,080 shares of common stock, deferred                                                                                                                                                                                                                                        |                                  |          |                |    |                |   |   |   |   |   |   |   |   |   |   |   |
|       compensation plan                                                                                                                                                                                                                                         | -                                |          | -              |    | (15)                |   | -  |   | -  |   | -  |   |   | -  |   | (15) |
| Contribution of capital by noncontrolling interests                                                                                                                                                                                                                                           | -                                |          | -              |    | -              |   | -  |   | -  |   | -  |   |   | 57  |   | 57  |
| Balance at December 31, 2009                                                                                                                                                                                                                                                                  | 57,976                           |          | 22             |    | (2,399)             |   | 515,398  |   | (4,892) |   | (111,960) |   |   |  116,687  |   | 570,832  |
| Comprehensive loss     Net loss                                                                                                                                                                                                                                      |  -                          |          |  -        |    |  -        |   |  -  |   |  -  |   |  (2,618) |   |   |  (10,789) |   |  (13,407) |
|      Change in fair value of interest rate swaps                                                                                                                                                                                                                     | -                                |          | -              |    | -              |   | -  |   | 1,889  |   | -  |   |   | -  |   | 1,889  |
| Total comprehensive loss                                                                                                                                                                                                                                                                      | -                                |          | -              |    | -              |   | -  |   | -  |   | -  |   |   | -  |   | (11,518) |
| Common dividends declared - $0.30 per share                                                                                                                                                                                                                                                   | -                                |          | -              |    | -              |   | -  |   | -  |   | (6,494) |   |   | -  |   | (6,494) |
| Preferred dividends declared - $2.00 per share                                                                                                                                                                                                                                                | -                                |          | -              |    | -              |   | -  |   | -  |   | (6,325) |   |   | -  |   | (6,325) |
| Share-based compensation                                                                                                                                                                                                                                                                      | -                                |          | -              |    | -              |   | 1,319  |   | -  |   | -  |   |   | -  |   | 1,319  |
| Issuance of 1,974,896 shares of 8.0% Series D Preferred                                                                                                                                                                                                                                       | 44,811                           |          | -              |    | -              |   | -  |   | -  |   | -  |   |   | -  |   | 44,811  |
| 15,214 shares issued in lieu of Directors’ Fees                                                                                                                                                                                                                                         | -                                |          | -              |    | -              |   | 285  |   | -  |   | -  |   |   | -  |   | 285  |
| Issuance costs for shelf registration                                                                                                                                                                                                                                                         | -                                |          | -              |    | -              |   | (14) |   | -  |   | -  |   |   | -  |   | (14) |
| Purchase of Company stock – 42,618 and 1,465 shares     withheld to satisfy tax withholding obligation in     connection with the vesting of restricted stock and     deferred incentive units, respectively |   -                    |          |   -  |    |   -  |   |   (821) |   |   -  |   |   -  |   |   |   -  |   |   (821) |
| Distribution of 17,125 shares of common stock from     deferred compensation plan                                                                                                                                                                                    |  -                          |          |  -        |    |  578      |   |  -  |   |  -  |   |  -  |   |   |  -  |   |  578  |
| Contribution of 4,004 shares of common stock to deferred     compensation plan                                                                                                                                                                                       |  -                          |          |  -        |    |  (75)          |   |  -  |   |  -  |   |  -  |   |   |  -  |   |  (75) |
| Contribution of capital by noncontrolling interests                                                                                                                                                                                                                                           | -                                |          | -              |    | -              |   | -  |   | -  |   | -  |   |   | 27,912  |   | 27,912  |
| Purchase of noncontrolling interest’s share in Parkway     Moore, LLC                                                                                                                                                                                          |  -                          |          |  -        |    |  -        |   |  -  |   |  -  |   |  (178) |   |   |  178  |   |  -  |
|                                                                                                                                                                                                                                                                                          |                                  |          |                |    |                |   |   |   |   |   |   |   |   |   |   |   |
| Balance at December 31, 2010                                                                                                                                                                                                                                                                  | $                                     | 102,787  |                | $       | 22             |   | $ | (1,896) |   | $ | 516,167  |   | $ | (3,003) |   | $ | (127,575) |   |   | $ | 133,988  |   | $ | 620,490  |

----

|                                                                                                                                                                                                           | Year EndedDecember 31 |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------|
|                                                                                                                                                                                                           | 2010                  |   | 2009 |   | 2008 |
| Operating activities                                                                                                                                                                                           |                  |   |   |   |   |
|      Net loss                                                                                                                                                                         |  $               | (13,407) |   |  $ | (22,165) |   |  $ | (2,095) |
|      Adjustments to reconcile net loss to cash                                                                                                                                        |                  |   |   |   |   |
|         provided by operating activities:                                                                                                                              |                  |   |   |   |   |
|         Depreciation and amortization                                                                                                                                  | 92,190           |   | 92,126  |   | 91,224  |
|         Depreciation and amortization – discontinued operations                                                                                                  | 121              |   | 600  |   | 2,365  |
|         Amortization of (below) above market leases                                                                                                                    | (566)                 |   | 51  |   | 45  |
|         Amortization of loan costs                                                                                                                                     | 1,713            |   | 2,319  |   | 1,825  |
|         Amortization of mortgage loan discount                                                                                                                         | (710)                 |   | (607) |   | (518) |
|         Share-based compensation expense                                                                                                                               | 1,319            |   | 2,581  |   | 2,276  |
|         Operating distributions from unconsolidated                                                                                                                    |                  |   |   |   |   |
|              joint ventures                                                                                                                   | -                |   | 392  |   | 1,042  |
|           Net (gain) loss on real estate investments and             involuntary conversion | (4,438)               |   | 7,524  |   | (20,046) |
|           Equity in earnings of unconsolidated joint ventures                                                                                                | (326)                 |   | (445) |   | (894) |
|           Increase in deferred leasing costs                                                                                                                 | (13,425)              |   | (16,348) |   | (8,738) |
|           Changes in operating assets and liabilities:                                                                                                       |                  |   |   |   |   |
|               Change in receivables and other assets                                                                                     | (4,194)               |   | 3,678  |   | (1,474) |
|               Change in accounts payable and other liabilities                                                                           | 9,782            |   | 228  |   | (2,164) |
|                                                                                                                                                                                                           |                  |   |   |   |   |
|      Cash provided by operating activities                                                                                                                                            | 68,059           |   | 69,934  |   | 62,848  |
|                                                                                                                                                                                                           |                  |   |   |   |   |
| Investing activities                                                                                                                                                                                           |                  |   |   |   |   |
|      Distributions from unconsolidated joint ventures                                                                                                                                 | -                |   | -  |   | 38  |
|      (Investment in) reimbursements from real estate related investments                                                                                                              | (36,498)              |   | 1,033  |   | (229,707) |
|      Proceeds from sale of real estate                                                                                                                                                | 4,758            |   | 15,542  |   | 84,464  |
|      Proceeds from property insurance settlement                                                                                                                                      | -                |   | 1,984  |   | 1,200  |
|      Real estate development                                                                                                                                                          | -                |   | (5,329) |   | (28,981) |
|      Improvements to real estate related investments                                                                                                                                  | (36,335)              |   | (28,420) |   | (31,916) |
|                                                                                                                                                                                                           |                  |   |   |   |   |
|      Cash used in investing activities                                                                                                                                                | (68,075)              |   | (15,190) |   | (204,902) |
|                                                                                                                                                                                                           |                  |   |   |   |   |
| Financing activities                                                                                                                                                                                           |                  |   |   |   |   |
|      Principal payments on mortgage notes payable                                                                                                                                     | (140,499)             |   | (35,381) |   | (76,620) |
|      Proceeds from long-term financing                                                                                                                                                | 70,000           |   | 18,500  |   | 231,700  |
|      Proceeds from bank borrowings                                                                                                                                                    | 143,750          |   | 35,742  |   | 189,452  |
|      Payments on bank borrowings                                                                                                                                                      | (132,911)             |   | (121,682) |   | (215,861) |
|      Debt financing costs                                                                                                                                                             | (1,004)               |   | (406) |   | (2,183) |
|      Stock options exercised                                                                                                                                                          | -                |   | -  |   | 792  |
|      Purchase of Company stock                                                                                                                                                        | (821)                 |   | (58) |   | (10) |
|      Dividends paid on common stock                                                                                                                                                   | (6,448)               |   | (25,794) |   | (34,410) |
|      Dividends paid on preferred stock                                                                                                                                                | (5,787)               |   | (4,800) |   | (4,800) |
|      Contributions from noncontrolling interest partners                                                                                                                              | 27,912           |   | 57  |   | 60,593  |
|      Distributions from noncontrolling interest partners                                                                                                                              | -                |   | -  |   | (2,541) |
|      Proceeds (issuance costs) from stock offering                                                                                                                                    | 44,797           |   | 84,457  |   | (52) |
|                                                                                                                                                                                                           |                  |   |   |   |   |
|      Cash provided by (used in) financing activities                                                                                                                                  | (1,011)               |   | (49,365) |   | 146,060  |
|                                                                                                                                                                                                           |                  |   |   |   |   |
|      Change in cash and cash equivalents                                                                                                                                              | (1,027)               |   | 5,379  |   | 4,006  |
|                                                                                                                                                                                                           |                  |   |   |   |   |
|      Cash and cash equivalents at beginning of year                                                                                                                                   | 20,697           |   | 15,318  |   | 11,312  |
|                                                                                                                                                                                                           |                  |   |   |   |   |
|      Cash and cash equivalents at end of year                                                                                                                                         | $                     | 19,670  |   | $ | 20,697  |   | $ | 15,318  |

----

----

|                  |   |                                   |   | December 31     |            | December 31     |
|-----------------------|--------|----------------------------------------|--------|-----------------|-----------------|-----------------|
| Asset Category        |   | Estimated Useful Life                  |   | 2010            |            | 2009            |
| Land                  |   | Non-depreciable                        |   |  $         | 176,614    |            |  $ | 170,106  |
| Buildings and garages |   | 40 years                               |   | 1,278,275  |            | 1,280,779  |
| Building improvements |   | 7 to 40 years                          |   | 121,540    |            | 116,471    |
| Tenant improvements   |   | Lesser of useful life or term of lease |   | 178,881    |            | 170,684    |
|                  |   |                                   |   |  $         | 1,755,310  |            |  $ | 1,738,040  |

----

|   | Amount      |
|--------|-------------|
| 2011   |  $     | 1,058  |
| 2012   | 67     |
| 2013   | (274)  |
| 2014   | (139)  |
| 2015   | 54     |

|   | Amount      |
|--------|-------------|
| 2011   |  $     | 10,131  |
| 2012   | 6,564  |
| 2013   | 5,134  |
| 2014   | 3,987  |
| 2015   | 3,120  |

----

----

----

----

|                                                                                            | Year Ended December 31                |
|-------------------------------------------------------------------------------------------------|---------------------------------------|
|                                                                                            | 2010                                  | 2009 | 2008 |
|                                                                                            | (in thousands, except per share data) |
| Numerator:                                                                                      |                                  |   |   |
|      Basic and diluted net income (loss)                               |                                  |   |   |
|           attributable to common stockholders |  $                               | (8,943) |  $ | (16,403) |  $ | 4,474  |
| Denominator:                                                                                    |                                  |   |   |
|      Basic and diluted weighted average shares                         | 21,421                           | 19,304  | 15,023  |
| Diluted net income (loss) per share attributable to                                             |                                  |   |   |
|           Parkway Properties, Inc.            |  $                               | (0.42) |  $ | (0.85) |  $ | 0.30  |

----

----

|                      | Cost           |
|---------------------------|----------------|
| Market Location           | (in thousands) |
| Memphis, Tennessee        |  $        | 3  |
| Atlanta, Georgia          | 8,000     |
| Charlotte, North Carolina | 25,000    |
|                      |  $        | 33,003  |

|                 |              |        | Weighted       |
|----------------------|-------------------|-------------|----------------|
|                 | Amount            |        | Average Life   |
| Land                 |  $           | 7,248  |           | N/A |
| Building             | 17,027       |        | 40   |
| Tenant improvements  | 4,201        |        | 5              |
| Lease commissions    | 1,253        |        | 5              |
| Lease in place value |  4,431  |        | 4              |
| Above market leases  | 1,188        |        | 4              |
| Below market leases  | (861)             |        | 6              |
| Liabilities assumed  | (4,396)           |        | N/A            |

----

| 2011       |  $     | 15,829  |
|------------|-------------|--------------|
| 2012       | 609    |
| 2013       | 43     |
| 2014       | 1,380  |
| 2015       | 42     |
| Thereafter | 35     |
| Total      |  $     | 17,938  |

| 2011  |  $   | 646    |
|-------|-----------|-------------|
| 2012  | 371  |
| 2013  | 121  |
| Total |  $   | 1,138  |

----

| 2011       |  $       | 185,244  |
|------------|---------------|---------------|
| 2012       | 167,569  |
| 2013       | 152,050  |
| 2014       | 127,281  |
| 2015       | 99,294   |
| Thereafter | 264,337  |
|       |  $       | 995,775  |

| 2011       |  $      | 184     |
|------------|--------------|--------------|
| 2012       | 184     |
| 2013       | 184     |
| 2014       | 184     |
| 2015       | 184     |
| Thereafter | 14,599  |
|       |  $      | 15,519  |

|                                                  |           |            | Parkway’s | Square | Percentage |
|-------------------------------------------------------|----------------|-----------------|-----------------|--------|------------|
| Joint Venture Entity                                  | Property Name  | Location        | Ownership%      | Feet   | Occupied   |
| Wink-Parkway Partnership (“Wink JV”)      | Wink Building  | New Orleans, LA | 50.0%           | 32     | 7.6%       |
| Parkway Joint Venture, LLC (“Jackson JV”) | UBS/River Oaks | Jackson, MS     | 20.0%           | 167    | 84.4%      |
| RubiconPark II, LLC (“Maitland JV”) (1)   | Maitland 200   | Orlando, FL     | 20.0%           | 205    | 92.4%      |
|                                                  |           |            |            | 404    | 82.3%      |

| (1)   | As a result of the Company’s partner, Rubicon US REIT, filing for Chapter 11 bankruptcy, new partners were admitted into the partnership.  They are JP Morgan Chase, Kaufman Jacobs, LLC and Starwood Capital Group Global, LP. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Parkway’s Share of Unconsolidated Joint Ventures’ Debt |
|--------------------------------------------------------------------|
|                                                               |   |   |   | Parkway’s | Monthly | Loan | Loan |
|                                                               | Type of |   |   | Share | Debt | Balance | Balance |
| Description                                                        | Debt Service | Interest Rate | Maturity | of Debt | Service | 12/31/10 | 12/31/09 |
| Maitland JV                                                        | Amortizing | 4.390% | 06/01/11 | 0.00% |  $ | -  |  $ | -  |  $ | -  |
| Jackson JV                                                         | Amortizing | 5.840% | 07/01/15 | 20.00% | 12  | 2,474  | 2,507  |
|                                                               |   |   |   |   |  $ | 12  |  $ | 2,474  |  $ | 2,507  |
| Weighted Average Interest Rate at End of Year                      |   |   |   | 5.840% | 5.130% |

| Schedule of Mortgage Maturities by Year: | Maitland JV | JacksonJV   | Total       |
|------------------------------------------|-------------|-------------|-------------|
| 2011                                     |  $     | -      |  $     | 34  |  $ | 34  |
| 2012                                     | -      | 37     | 37     |
| 2013                                     | -      | 39     | 39     |
| 2014                                     | -      | 41     | 41     |
| 2015                                     | -      | 2,323  | 2,323  |
|                                     |  $     | -      |  $     | 2,474  |  $ | 2,474  |

----

| Credit Facilities                                           | Lender      | Interest Rate | Maturity | Outstanding Balance |
|-------------------------------------------------------------|-------------|---------------|----------|---------------------|
| 12/31/10                                                    | 12/31/09    |
| $15.0 Million Unsecured Working Capital                     |        |          |     |                |   |
|      Revolving Credit Facility (1) | PNC Bank    | 2.3%          | 04/27/11 | $                   | 1,839  |  $ | -    |
| $236.0 Million Unsecured Revolving Credit Facility (2)      | Wells Fargo | 4.2%          | 04/27/11 | 49,000         | 40,000 |
| $60.0 Million Unsecured Term Loan (3)                       | Wells Fargo | 4.8%          | 04/27/11 | 60,000         | 60,000 |
|                                                        |        | 4.6%          |     |  $             | 110,839  |  $ | 100,000   |

| (1)   | The interest rate on the $15.0 million unsecured working capital revolving credit with PNC Bank was LIBOR plus 200 basis points at December 31, 2010. The Company paid fees on the unused portion of the line of 25 basis points. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | The $236.0 million unsecured revolving credit facility was led by Wells Fargo and syndicated to eight other banks.  The interest rate on the line of credit interest rate was LIBOR plus 115 basis points or the Prime interest rate plus 25 basis points.  At December 31, 2010, all amounts outstanding under this credit facility not fixed by an interest rate swap agreement were borrowed at LIBOR plus 115 basis points.  The Company paid an annual administration fee of $35,000 and fees on the unused portion of the revolver ranging between 12.5 and 20 basis points based upon overall Company leverage, with the rate set at 20 basis points at December 31, 2010. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | The $60.0 million unsecured term loan was led by Wells Fargo and syndicated to eight other banks.  The interest rate on the term loan was fixed by an interest rate swap agreement.  Excluding the interest rate swaps, the interest rate on the term loan was LIBOR plus 115 basis points. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|    |                                   |     |     |            |   | Fair Value  |
|---------|----------------------------------------|----------|----------|-----------------|--------|-------------|
|    | Balance                                |     |     |            |   | Liability   |
| Type of | Sheet                                  | Notional | Maturity |            | Fixed  | December 31 |
| Hedge   | Location                               | Amount   | Date     | Reference Rate  | Rate   | 2010        | 2009 |
| Swap    | Accounts Payable and Other Liabilities | $100,000 | 03/31/11 | 1 - Month LIBOR | 4.785% |  $     | (836) |  $ | (3,585) |
| Swap    | Accounts Payable and Other Liabilities | $23,500  | 12/01/14 | 1 - Month LIBOR | 5.800% | (2,167)     | (1,307) |
|    |                                   |     |     |            |   |  $     | (3,003) |  $ | (4,892) |

|                                                              |          |   |        |        |                |          |
|-------------------------------------------------------------------|---------------|--------|-------------|-------------|---------------------|---------------|
|                                                              |          |   |        |        | Note Balance        |
|                                                              | Variable Rate | Fixed  | Monthly     | Maturity    | December 31         |
| Office Property                                                   | 12/31/10      | Rate   | Payment     | Date        | 2010                | 2009          |
| Wholly-Owned                                                      |          |   |        |        |                |          |
| John Hancock Facility (3 properties)(1)                           | -             | 5.270% |  $     | -      | 05/01/10            |  $       | -  |  $ | 17,346  |
| Capital City Plaza (2)                                            | -             | -      | -      | 05/01/10    | -              | 60,000   |
| One Jackson Place (3)                                             | -             | 7.850% | -      | 10/10/10    | -              | 8,526    |
| Squaw Peak (4)                                                    | -             | 4.920% | -      | 12/15/10    | -              | 32,423   |
| Forum I                                                           | -             | 5.250% | 91     | 06/01/11    | 10,194         | 10,734   |
| Wells Fargo                                                       | -             | 4.390% | 53     | 06/01/11    | 8,616          | 8,869    |
| 233 N. Michigan                                                   | -             | 4.940% | 763    | 07/11/11    | 86,711         | 91,459   |
| Bank of America Plaza                                             | -             | 7.100% | 146    | 05/10/12    | 16,939         | 17,466   |
| One Park Ten Plaza (5)                                            | -             | 7.100% | -      | 06/01/12    | -              | 8,714    |
| Teachers Insurance and                                            |          |   |        |        |                |          |
|     Annuity Association (5 properties)        | -             | 6.210% | 565    | 01/01/16    | 77,735         | 79,626   |
| John Hancock Facility (2 properties)                              | -             | 7.580% | 130    | 06/01/16    | 18,243         | 18,418   |
| 111 East Wacker, LLC                                              | -             | 6.290% | 804    | 07/11/16    | 148,500        | 148,500  |
| Capital City Plaza                                                | -             | 7.250% | 253    | 03/05/17    | 34,617         | -        |
| Morgan Keegan Tower                                               | -             | 7.620% | 163    | 10/01/19    | 12,578         | 13,540   |
| Citrus Center (6)                                                 | -             | 6.310% | 153    | 06/01/20    | 22,820         | -        |
| Stein Mart (7)                                                    | -             | 6.500% | 81     | 08/01/20    | 11,935         | -        |
| Pinnacle at Jackson Place – Subordinate NMTC Loan (8)       | -             | 3.000% | 15     | 12/27/47    | 6,000          | 6,000    |
| Pinnacle at Jackson Place – Sr NMTC Loan (8)                | 5.800%        | -      | 114    | 12/27/47    | 23,501         | 23,501   |
|     Total Wholly-Owned                        |          |   | 3,331  |        |  478,389  | 545,122  |
|                                                              |          |   |        |        |                |          |
| Consolidated Joint Ventures                                       |          |   |        |        |                |          |
| Moore Building Associates LP (9)                                  | -             | 7.895% | -      | 06/01/10    | -              | 10,858   |
| Parkway Properties Office Fund, LP:                               |          |   |        |        |                |          |
|      Renaissance Center                  | -             | 5.469% | 97     | 06/01/12    | 16,000         | 16,280   |
|      Maitland 100                        | -             | 4.920% | 36     | 10/07/12    | 8,798          | 8,820    |
|      555 Winderley Place                 | -             | 4.920% | 34     | 10/07/12    | 8,320          | 8,340    |
|      1401 Enclave                        | -             | 5.760% | 134    | 07/10/15    | 28,000         | 28,000   |
|      100 Ashford Center/Peachtree Ridge  | -             | 5.606% | 179    | 01/08/16    | 30,264         | 30,679   |
|      Gateway Center                      | -             | 5.920% | 163    | 02/10/16    | 33,000         | 33,000   |
|      Desert Ridge Corporate Center       | -             | 5.770% | 237    | 02/10/16    | 49,200         | 49,200   |
|      US Cellular Plaza                   | -             | 5.530% | 342    | 03/10/16    | 58,564         | 59,401   |
|      BellSouth Building/Centurion Centre | -             | 5.900% | 71     | 06/10/16    | 14,400         | 14,400   |
|      Chatham Centre                      | -             | 5.560% | 79     | 01/10/17    | 17,100         | 17,100   |
|      Overlook II                         | -             | 5.610% | 152    | 03/01/17    | 31,500         | 31,500   |
|      Total Consolidated Joint Ventures   |          |   | 1,524  |        | 295,146        | 307,578  |
|                                                              |          |   |        |        |                |          |
|     Total Secured Debt                        |          |   |  $     | 4,855  |                |  $       | 773,535  |  $ | 852,700  |

| (1)   | On April 30, 2010, the Company repaid a $17.2 million mortgage loan secured by two office properties in Houston, Texas, and one office property in Atlanta, Georgia, utilizing available proceeds under its credit facility. The mortgage loan had an interest rate of 5.3% and was scheduled to mature on May 1, 2010. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | On February 8, 2010, the Company completed a $35.0 million non-recourse, fixed-rate first mortgage loan related to the refinance of a $60.0 million recourse mortgage that was scheduled to mature in May 2010.  The loan bears interest at 7.25% and is secured by the Company’s Capital City Plaza building in Atlanta, Georgia.  The loan will mature in March 2017 and includes the option to be prepaid at the end of five years at a cost of 1% of the outstanding loan balance.  The Company used available proceeds under its credit facility to pay the $25.0 million difference on the maturing mortgage loan. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | On October 8, 2010, the Company repaid a $7.6 million mortgage loan secured by One Jackson Place, a 220,000 square foot office property in Jackson, Mississippi. The mortgage had an interest rate of 7.9% and was scheduled to mature on October 10, 2010. The Company repaid the mortgage loan using available proceeds under the credit facility. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (4)   | On December 15, 2010, the Company repaid a $31.0 million mortgage loan secured by Squaw Peak Corporate Center, a 290,000 square foot office complex in Phoenix, Arizona.  The mortgage loan had a fixed interest rate of 4.9%.  The Company repaid the mortgage loan using available proceeds under the credit facility. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5)   | On April 15, 2010, the Company sold One Park Ten, a 163,000 square foot office property in Houston, Texas, for a gross sales price of $15.7 million. Parkway received net cash proceeds from the sale of $4.8 million which were used to reduce amounts outstanding under the Company’s credit facility. The $8.7 million first mortgage loan was assumed by the buyer, and Parkway is also providing a $1.5 million seller-financing loan, which bears interest at 7.25% with interest-only payments through maturity in June 2012. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6)   | On May 28, 2010, the Company obtained a $23.0 million non-recourse, first mortgage loan secured by Citrus Center, a 261,000 square foot office property in Orlando, Florida. The mortgage loan had a fixed interest rate of 6.3% and a term of ten years. The proceeds were used to reduce amounts outstanding under the Company’s credit facility. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7)   | On July 8, 2010, the Company obtained a $12.0 million non-recourse first mortgage loan secured by the Stein-Mart building, a 196,000 square foot office property in Jacksonville, Florida. The mortgage loan had a fixed interest rate of 6.5% and a term of ten years. The proceeds were used to reduce amounts outstanding under the Company’s credit facility. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (8)   | The New Markets Tax Credit loans have a stated maturity of December 27, 2047, but contain an early repayment option whereby the lender may call the loans in December 2014.  In the event the lender exercises this option, the outstanding principal balance of the loans will be reduced by $3.0 million.  Additionally, the Company has entered into an interest rate swap agreement with US Bank for a $23.5 million notional amount that fixes the 30-day LIBOR interest rate at 4.05%, which equates to a total current interest rate of 5.8%, for the period January 1, 2009, through December 1, 2014.  The swap agreement serves as a hedge of the variable interest rates on the borrowings under the Pinnacle at Jackson Place Senior New Market Tax Credits mortgage loan.  The weighted average interest rate for the total New Markets Tax Credits loans is 5.2%. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (9)   | Upon maturity on June 1, 2010, the Company paid off its share and its partner’s share of a $10.6 million mortgage note payable secured by the Toyota Center, a 175,000 square foot office property in Memphis, Tennessee, utilizing available proceeds under the Company’s line of credit. The mortgage had an interest rate of 7.9%. The Toyota Center office property was previously owned by a consolidated joint venture, Moore Building Associates, LP, in which the Company served as the general partner. However, during the third quarter of 2010, Parkway purchased the partner’s interest, thereby placing Parkway’s ownership of the property at 100%. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|       | Total         |          | Recurring    |
|------------|---------------|---------------|--------------|
|       | Mortgage      | Balloon       | Principal    |
|       | Maturities    | Payments      | Amortization |
| 2011       |  $       | 113,914  |  $      | 102,694  | $ | 11,220  |
| 2012       | 58,034   | 48,408   | 9,626   |
| 2013       | 9,943    | -        | 9,943   |
| 2014       | 10,595   | -        | 10,595  |
| 2015       | 37,971   | 26,891   | 11,080  |
| 2016       | 398,695  | 393,875  | 4,820   |
| Thereafter | 144,383  | 136,029  | 8,354   |
|       |  $       | 773,535  |  $      | 707,897  |  $ | 65,638  |

----

|                                            |   |                      |   | Parkway’s |   | Square Feet    |
|-------------------------------------------------|--------|---------------------------|--------|-----------------|--------|----------------|
| Joint Venture Entity and Property Name          |   | Location                  |   | Ownership %     |   | (In thousands) |
| Parkway Properties Office Fund, LP              |   |                      |   |            |   |           |
|    Desert Ridge Corporate Center |   | Phoenix, Arizona          |   | 26.5%           |   | 293            |
|    Maitland 100                  |   | Orlando, Florida          |   | 25.0%           |   | 128            |
|    555 Winderley                 |   | Orlando, Florida          |   | 25.0%           |   | 101            |
|    Gateway Center                |   | Orlando, Florida          |   | 25.0%           |   | 228            |
|    BellSouth Building            |   | Jacksonville, Florida     |   | 25.0%           |   | 92             |
|    Centurion Centre              |   | Jacksonville, Florida     |   | 25.0%           |   | 88             |
|    100 Ashford Center            |   | Atlanta, Georgia          |   | 25.0%           |   | 160            |
|    Peachtree Ridge               |   | Atlanta, Georgia          |   | 25.0%           |   | 161            |
|    Overlook II                   |   | Atlanta, Georgia          |   | 25.0%           |   | 260            |
|    U.S. Cellular Plaza           |   | Chicago, Illinois         |   | 40.0%           |   | 607            |
|    Chatham Centre                |   | Schaumburg, Illinois      |   | 25.0%           |   | 206            |
|    Renaissance Center            |   | Memphis, Tennessee        |   | 25.0%           |   | 190            |
|    1401 Enclave Parkway          |   | Houston, Texas            |   | 25.0%           |   | 209            |
| Total Parkway Properties Office Fund, LP        |   |                      |   |            |   | 2,723          |
|                                            |   |                      |   |            |   |           |
| Parkway Properties Office Fund II, LP (1)       |   |                      |   |            |   |           |
|    Falls Pointe                  |   | Atlanta, Georgia          |   | 30.0%           |   | 107            |
|    Lakewood II                   |   | Atlanta, Georgia          |   | 30.0%           |   | 128            |
|    Carmel Crossing               |   | Charlotte, North Carolina |   | 30.0%           |   | 327            |
| Total Parkway Properties Office Fund II, LP     |   |                      |   |            |   | 562            |
| Total Consolidated Joint Ventures               |   |                      |   |            |   | 3,285          |

| (1)   | On January 21, 2011, the Company and Fund II purchased 3344 Peachtree located in the Buckhead submarket of Atlanta, Georgia.  3344 Peachtree contains approximately 484,000 square feet of office and retail space.  Upon the completion of the purchase of 3344 Peachtree, the Company had a total of approximately 3.8 million square feet of joint ventures included in its consolidated financial statements of which, Fund II had approximately 1.0 million square feet. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|              |                     | Square | Date of  | Net Sales    | Net Book Value | Gain         |
|-------------------|--------------------------|--------|----------|--------------|----------------|--------------|
| Office Property   | Location                 | Feet   | Sale     | Price        | of Real Estate | on Sale      |
|              |                     |   |     |         |           |         |
| Town Point Center | Norfolk, Virginia        | 131    | 07/15/08 |  $      | 12,180    |  $      | 10,621  |  $ | 1,559  |
| Wachovia Plaza    | St. Petersburg, Florida  | 186    | 08/18/08 | 25,492  | 16,154    | 9,338   |
| Capitol Center    | Columbia, South Carolina | 460    | 09/05/08 | 46,792  | 35,101    | 11,691  |
| 2008 Dispositions |                     | 777    |     |  $      | 84,464    |  $      | 61,876  |  $ | 22,588  |
|              |                     |   |     |         |           |         |
| One Park Ten      | Houston, Texas           | 163    | 04/15/10 |  $      | 14,924    |  $      | 6,406  |  $ | 8,518  |
| 2010 Dispositions |                     | 163    |     |  $      | 14,924    |  $      | 6,406  |  $ | 8,518  |

|                                                     | Year Ended December 31 |
|----------------------------------------------------------|------------------------|
|                                                     | 2010                   |   | 2009 |   | 2008 |
| Revenues                                                 |                   |   |   |   |   |
| Revenue from office and parking properties               |  $                | 994  |   |  $ | 3,394  |   |  $ | 12,294  |
|                                                     | 994               |   | 3,394  |   | 12,294  |
| Expenses                                                 |                   |   |   |   |   |
| Office and parking properties:                           |                   |   |   |   |   |
| Operating expense                                        | 362               |   | 1,741  |   | 6,563  |
| Interest expense                                         | 317               |   | 649  |   | 3,828  |
| Depreciation and amortization                            | 121               |   | 600  |   | 2,364  |
|                                                     | 800               |   | 2,990  |   | 12,755  |
| Income (loss) from discontinued operations               | 194               |   | 404  |   | (461) |
| Gain on sale of real estate from discontinued operations | 8,518             |   | -  |   | 22,588  |
| Total discontinued operations                            |  $                | 8,712  |   |  $ | 404  |   |  $ | 22,127  |

----

|                                                                     | 2010         | 2009         | 2008         |
|--------------------------------------------------------------------------|--------------|--------------|--------------|
|                                                                     | Estimate     | Actual       | Actual       |
| GAAP net income (loss) from REIT operations (1)                          |  $      | (2,618)      |  $      | (11,603) |  $ | 9,274  |
| GAAP to tax adjustments:                                                 |         |         |         |
|      Depreciation and amortization              | 12,226  | 19,113  | 19,485  |
|      Gains and losses from capital transactions | (138)        | 5,487   | 342     |
|      Share-based compensation expense           | 1,319   | 2,581   | 2,276   |
|      Stock options exercised                    | -       | -       | (88)         |
|      Deferred compensation distributions        | (687)        | (446)        | (1,107)      |
|      Amortization of mortgage loan discount     | (772)        | (607)        | (519)        |
|      Allowance for doubtful accounts            | 283     | 1,491   | 235     |
|      Vesting of restricted shares and dividends | (4,523)      | (704)        | (278)        |
|      Deferred revenue                           | 3,241   | -       | -       |
|      Other differences                          | (61)         | (456)        | (97)         |
| Taxable income before adjustments                                        | 8,270   | 14,856  | 29,523  |
| Less:  NOL carryforward                                        | -       | -       | -       |
| Adjusted taxable income subject to 90% dividend requirement              |  $      | 8,270   |  $      | 14,856  |  $ | 29,523  |

| (1)   | GAAP net income from REIT operations is net of amounts attributable to noncontrolling interest. |
|-----------------|-------------------------------------------------------------------------------------------------|

|                                                                | 2010     | 2009         | 2008    |
|---------------------------------------------------------------------|----------|--------------|---------|
|                                                                | Estimate | Actual       | Actual  |
| Cash dividends paid                                                 |  $  | 13,197  |  $ | 30,475  |  $ | 38,977  |
| Less:  Dividends on deferred compensation plan shares     | (17)     | (94)         | (194)   |
| Less:  Dividends absorbed by current earnings and profits | (4,765)  | (3,938)      | (4,163) |
| Less:  Return of capital                                  | (145)    | (11,587)     | (5,097) |
| Dividends paid deduction                                            |  $  | 8,270   |  $ | 14,856  |  $ | 29,523  |

|                           | 2010   | 2009       | 2008   |
|--------------------------------|--------|------------|--------|
|                           | Amount | Percentage | Amount | Percentage | Amount | Percentage |
| Ordinary income                | $0.23  | 76.7%      | $0.71  | 54.6% | $0.844 | 37.1% |
| Post May 5, 2003 capital gain  | 0.00   | 0.0%       | 0.00   | 0.0% | 0.197 | 8.7% |
| Unrecaptured Section 1250 gain | 0.06   | 20.0%      | 0.00   | 0.0% | 0.893 | 39.2% |
| Return of capital              | 0.01   | 3.3%       | 0.59   | 45.4% | 0.341 | 15.0% |
|                           | $0.30  | 100.0%     | $1.30  | 100.0% | $2.275 | 100.0% |

----

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

----

|                             |          | Weighted          | Deferred     | Weighted     |
|----------------------------------|---------------|-------------------|--------------|--------------|
|                             | Restricted    | Average           | Incentive    | Average      |
|                             | Shares        | Price             | Share Units  | Price        |
| Outstanding at December 31, 2007 | 220,999  |  $           | 40.72   | 21,835  |  $ | 45.96  |
| Granted                          | 38,017   | 32.39        | 6,385   | 15.69   |
| Vested                           | -        | -            | (1,815)      | 46.72   |
| Forfeited                        | (38,375)      | 39.54        | (3,600)      | 44.73   |
| Outstanding at December 31, 2008 | 220,641  | 39.49        | 22,805  | 37.62   |
| Granted                          | 120,500  | 15.77        | 1,500   | 12.69   |
| Vested                           | (30,416)      | 43.08        | (2,615)      | 44.61   |
| Forfeited                        | (1,750)       | 30.85        | (3,635)      | 39.93   |
| Outstanding at December 31, 2009 | 308,975  |  29.94  | 18,055  | 34.08   |
| Granted                          | 345,120  | 7.30         | 3,805   | 14.83   |
| Vested                           | (152,941)     | 33.06        | (4,355)      | 47.78   |
| Forfeited                        | (21,224)      | 26.69        | (1,865)      | 32.99   |
| Outstanding at December 31, 2010 | 479,930  | $                 | 12.81   | 15,640  | $ | 25.71  |

----

|   | TimeBasedAwards | MarketConditionAwards (1) | TotalRestrictedShares | DeferredIncentiveShare Units |
|--------|-----------------|---------------------------|-----------------------|------------------------------|
| 2011   | 60,405          | -                         | 60,405                | 5,570                        |
| 2012   | 61,160          | -                         | 61,160                | 4,955                        |
| 2013   | 32,280          | 159,870                   | 192,150               | 1,310                        |
| 2014   | 6,345           | 159,870                   | 166,215               | 3,805                        |
|   | 160,190         | 319,740                   | 479,930               | 15,640                       |

| (1)   | The market condition restricted shares will vest in the years noted above subject to achievement of the market condition goals described in connection with the FOCUS Plan. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                            | 1994 Stock    | 1991 Directors    | 2001 Directors    |
|-------------------------------------------------|---------------|-------------------|-------------------|
|                                            | Option Plan   | Stock Option Plan | Stock Option Plan |
|                                            |          | Weighted          |              | Weighted |   | Weighted |
|                                            |          | Average           |              | Average |   | Average |
|                                            | Shares        | Price             | Shares            | Price | Shares | Price |
| Outstanding at December 31, 2007                | 121,615  |  $           | 31.38        | 13,500  |  $ | 31.10  | 30,300  |  $ | 37.88  |
| Exercised                                       | (25,436)      | 31.15        | -            | -  | -  | -  |
| Forfeited                                       | (500)         | 33.65        | (7,500)           | 29.94  | (8,800) | 35.24  |
| Outstanding at December 31, 2008                | 95,679   | 31.43        | 6,000        | 32.56  | 21,500  | 38.96  |
| Forfeited                                       | (9,399)       | 31.10        | (6,000)           | 32.56  | (9,000) | 35.26  |
| Outstanding at December 31, 2009                | 86,280   | 31.46        | -            | -  | 12,500  | 41.63  |
| Forfeited                                       | (56,319)      | 30.28        | -            | -  | (3,000) | 38.95  |
| Outstanding at December 31, 2010                | 29,961   |  $           | 33.69        | -  |  $ | -  | 9,500  |  $ | 42.47  |
| Vested and Exercisable at                       |          |              |              |   |   |   |
|      December 31, 2010 | 29,961   |  $           | 33.69        | -  |  $ | -  | 9,500  |  $ | 42.47  |

|                             | Outstanding and Exercisable Options |
|----------------------------------|-------------------------------------|
|                             |                                | Weighted |   |   |
|                             |                                | Average | Weighted | Aggregate |
|                             |                                | Remaining | Average | Intrinsic |
|                             |                                | Contractual | Exercise | Value |
| Exercise Price Range             | Number                              | Life | Price | (in thousands) |
| 1994 Stock Option Plan           |                                |   |   |   |
| $31.43 - $36.65                  | 29,961                         | 0.7 years |  $ | 33.69  |  $ | -  |
|                             | 29,961                         | 0.7 years |  $ | 33.69  |  $ | -  |
| 2001 Directors Stock Option Plan |                                |   |   |   |
| $36.53 - $41.89                  | 3,000                          | 2.4 years |  $ | 38.95  |  $ | -  |
| $41.90 - $47.12                  | 6,500                          | 2.8 years | 44.10  |  -  |
|                             | 9,500                          | 2.7 years |  $ | 42.47  |  $ | -  |

----

----

|                                                                                                               | Year Ended December 31 |
|--------------------------------------------------------------------------------------------------------------------|------------------------|
|                                                                                                               | 2010                   | 2009 | 2008 |
|                                                                                                               | (In thousands)         |
| Supplemental cash flow information:                                                                                |                   |   |   |
|           Interest paid, net of amount capitalized               |  $                | 53,352  |  $ | 53,728  |  $ | 60,919  |
| Supplemental schedule of non-cash investing                                                         |                   |   |   |
|           and financing activity:                                |                   |   |   |
|           Mortgage note payable transferred                      |                   |   |   |
|                to purchaser             | (8,666)                | -  | -  |
|           Mortgage loan issued to purchaser                      | (1,500)                | -  | -  |
|           Restricted shares and deferred incentive share         |                   |   |   |
|                units issued (forfeited) | 1,949             | 3,030  | (201) |
|           Shares issued in lieu of Directors' fees               | 285               | 58  | 140  |

|                                                             | December 31    |
|------------------------------------------------------------------|----------------|
|                                                             | 2010           | 2009 |
|                                                             | (In thousands) |
|                                                             |           |   |
| Rents receivable                                                 |  $        | 3,962  |  $ | 4,990  |
| Allowance for doubtful accounts                                  | (2,810)        | (2,951) |
| Straight-line rent receivable                                    | 35,037    | 31,556  |
| Other receivables                                                | 6,458     | 8,713  |
| Lease costs (net of accumulated amortization of                  |           |   |
|      $42,497 and $38,323, respectively) | 46,378    | 42,518  |
| Loan costs (net of accumulated amortization of                   |           |   |
|      $5,478 and $5,966, respectively)   | 3,815     | 4,212  |
| Escrow and other deposits                                        | 27,475    | 23,166  |
| Prepaid items                                                    | 7,486     | 2,034  |
| Other assets                                                     | 1,837     | 2,199  |
|                                                             |  $        | 129,638  |  $ | 116,437  |

|                                             | December 31    |
|--------------------------------------------------|----------------|
|                                             | 2010           | 2009 |
|                                             | (In thousands) |
|                                             |           |   |
| Lease in place value                             |  $        | 77,269  |  $ | 82,684  |
|     Accumulated amortization | (39,895)       | (35,510) |
| Above market lease value                         | 29,361    | 30,982  |
|     Accumulated amortization | (16,106)       | (16,422) |
|                                             |  $        | 50,629  |  $ | 61,734  |

----

|                                                                                                             | December 31    |
|------------------------------------------------------------------------------------------------------------------|----------------|
|                                                                                                             | 2010           | 2009 |
|                                                                                                             | (In thousands) |
| Office property payables:                                                                                        |           |   |
|      Accrued expenses and accounts payable                                              |  $        | 24,250  |  $ | 13,222  |
|      Accrued property taxes                                                             | 27,946    | 30,636  |
|      Prepaid rents                                                                      | 12,070    | 10,807  |
|      Deferred revenues                                                                  | 5,202     | -  |
|      Security deposits                                                                  | 4,616     | 4,677  |
|      Below market lease value                                                           | 22,639    | 23,116  |
|           Accumulated amortization -- below market lease value | (16,306)       | (14,585) |
| Capital lease obligations                                                                                        | 3,760     | 3,850  |
| Corporate payables                                                                                               | 4,090     | 7,462  |
| Deferred compensation plan liability                                                                             | 2,953     | 3,623  |
| Dividends payable                                                                                                | 2,187     | 1,200  |
| Accrued payroll                                                                                                  | 2,344     | 1,489  |
| Interest payable                                                                                                 | 3,067     | 3,117  |
|                                                                                                             |  $        | 98,818  |  $ | 88,614  |

----

----

|                                                                               | At or for the year ended December 31, 2010 |
|------------------------------------------------------------------------------------|--------------------------------------------|
|                                                                               |  Office                               |  Unallocated |   |
|                                                                               |  Properties                           |  and Other |  Consolidated |
|                                                                               |  (in thousands)                       |
|                                                                               |                                       |   |   |
| Income from office and parking properties (a)                                      |  $                                    | 254,611  |  $ | -  |  $ | 254,611  |
| Management company income                                                          | -                                     | 1,652  | 1,652  |
| Property operating expenses (b)                                                    | (117,935)                                  | -  | (117,935) |
| Depreciation and amortization                                                      | (92,190)                                   | -  | (92,190) |
| Management company expenses                                                        | -                                     | (3,961) | (3,961) |
| General and administrative expenses                                                | -                                     | (7,382) | (7,382) |
| Other income                                                                       | -                                     | 1,487  | 1,487  |
| Equity in earnings of unconsolidated joint ventures                                | 326                                   | -  | 326  |
| Gain on involuntary conversion                                                     | 40                                    | -  | 40  |
| Interest expense (c)                                                               | (48,632)                                   | (6,015) | (54,647) |
| Adjustment for noncontrolling interest -  real estate partnerships       | 10,789                                | -  | 10,789  |
| Income from discontinued operations                                                | 194                                   | -  | 194  |
| Gain on sale of real estate from discontinued operations                           | 8,518                                 | -  | 8,518  |
| Impairment loss on real estate                                                     | (4,120)                                    | -  | (4,120) |
| Dividends on preferred stock                                                       | -                                     | (6,325) | (6,325) |
| Net income (loss) attributable to common stockholders                              | 11,601                                | (20,544) | (8,943) |
|                                                                               |                                       |   |   |
| Depreciation and amortization                                                      | 92,190                                | -  | 92,190  |
| Depreciation and amortization - discontinued operations                            | 121                                   | -  | 121  |
| Depreciation and amortization - noncontrolling interest - real estate partnerships | (17,668)                                   | -  | (17,668) |
| Adjustment for depreciation and amortization - unconsolidated joint ventures       | 342                                   | -  | 342  |
| Gain on sale of real estate                                                        | (8,518)                                    | -  | (8,518) |
| Funds from operations attributable to common stockholders                          |  $                                    | 78,068  |  $ | (20,544) |  $ | 57,524  |
|                                                                               |                                       |   |   |
| Total assets                                                                       |  $                                    | 1,590,546  |  $ | 13,136  |  $ | 1,603,682  |
|                                                                               |                                       |   |   |
| Office and parking properties                                                      |  $                                    | 1,389,767  |  $ | -  |  $ | 1,389,767  |
|                                                                               |                                       |   |   |
| Investment in unconsolidated joint ventures                                        |  $                                    | 2,892  |  $ | -  |  $ | 2,892  |
|                                                                               |                                       |   |   |
| Capital expenditures (d)                                                           |  $                                    | 49,760  | $ | -  |  $ | 49,760  |
|                                                                               |

| (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 credit facility, which is included in “Unallocated and Other”. |
|                                                                                                                                                                                                                                                                                           |
| (d)      Capital expenditures include building improvements, tenant improvements and deferred leasing costs.                                                                                                                                                     |

----

|                                                                               |  At or for the year ended December 31, 2009 |
|------------------------------------------------------------------------------------|--------------------------------------------------|
|                                                                               |  Office                                     |  Unallocated |   |
|                                                                               |  Properties                                 |  and Other |  Consolidated |
|                                                                               |  (in thousands)                             |
|                                                                               |                                             |   |   |
| Income from office and parking properties (a)                                      |  $                                          | 262,951  |  $ | -  |  $ | 262,951  |
| Management company income                                                          | -                                           | 1,870  | 1,870  |
| Property operating expenses (b)                                                    | (126,343)                                        | -  | (126,343) |
| Depreciation and amortization                                                      | (92,126)                                         | -  | (92,126) |
| Management company expenses                                                        | -                                           | (2,299) | (2,299) |
| General and administrative expenses                                                | -                                           | (6,108) | (6,108) |
| Other income                                                                       | -                                           | 1,609  | 1,609  |
| Equity in earnings of unconsolidated joint ventures                                | 445                                         | -  | 445  |
| Gain on involuntary conversion                                                     | 823                                         | -  | 823  |
| Gain on sale of real estate                                                        | 470                                         | -  | 470  |
| Interest expense (c)                                                               | (48,474)                                         | (6,570) | (55,044) |
| Adjustment for noncontrolling interest - real estate partnerships                  | 10,562                                      | -  | 10,562  |
| Income from discontinued operations                                                | 404                                         | -  | 404  |
| Other-than-temporary impairment loss on investment in                              |                                             |   |   |
|      unconsolidated joint ventures                        | (8,817)                                          | -  | (8,817) |
| Dividends on preferred stock                                                       | -                                           | (4,800) | (4,800) |
| Net loss attributable to common stockholders                                       | (105)                                            | (16,298) | (16,403) |
|                                                                               |                                             |   |   |
| Depreciation and amortization                                                      | 92,126                                      | -  | 92,126  |
| Depreciation and amortization - discontinued operations                            | 600                                         | -  | 600  |
| Depreciation and amortization - noncontrolling interest - real estate partnerships | (20,138)                                         | -  | (20,138) |
| Adjustment for depreciation and amortization - unconsolidated joint ventures       | 848                                         | -  | 848  |
| Gain on sale of real estate                                                        | (470)                                            | -  | (470) |
| Funds from operations attributable to common stockholders                          |  $                                          | 72,861  |  $ | (16,298) |  $ | 56,563  |
|                                                                               |                                             |   |   |
| Total assets                                                                       |  $                                          | 1,597,316  |  $ | 14,830  |  $ | 1,612,146  |
|                                                                               |                                             |   |   |
| Office and parking properties                                                      |  $                                          | 1,401,890  |  $ | -  |  $ | 1,401,890  |
|                                                                               |                                             |   |   |
| Investment in unconsolidated joint ventures                                        |  $                                          | 2,512  |  $ | -  |  $ | 2,512  |
|                                                                               |                                             |   |   |
| Capital expenditures (d)                                                           |  $                                          | 44,768  |  $ | -  |  $ | 44,768  |
|                                                                               |

| (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 other 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 credit facility, which is included in “Unallocated and Other”. |
|                                                                                                                                                                                                                                                                                           |
| (d)      Capital expenditures include building improvements, tenant improvements and deferred leasing costs.                                                                                                                                                     |

----

|                                                                               |  At or for the year ended December 31, 2008 |
|------------------------------------------------------------------------------------|--------------------------------------------------|
|                                                                               |  Office                                     |  Unallocated |   |
|                                                                               |  Properties                                 |  and Other |  Consolidated |
|                                                                               |  (in thousands)                             |
|                                                                               |                                             |   |   |
| Income from office and parking properties (a)                                      |  $                                          | 260,229  |  $ | -  |  $ | 260,229  |
| Management company income                                                          | -                                           | 1,936  | 1,936  |
| Property operating expenses (b)                                                    | (124,409)                                        | -  | (124,409) |
| Depreciation and amortization                                                      | (91,224)                                         | -  | (91,224) |
| Management company expenses                                                        | -                                           | (1,947) | (1,947) |
| General and administrative expenses                                                | -                                           | (9,725) | (9,725) |
| Other income                                                                       | -                                           | 1,332  | 1,332  |
| Equity in earnings of unconsolidated joint ventures                                | 894                                         | -  | 894  |
| Interest expense (c)                                                               | (47,874)                                         | (10,892) | (58,766) |
| Adjustment for noncontrolling interest - real estate partnerships                  | 11,369                                      | -  | 11,369  |
| Income from discontinued operations                                                | (461)                                            | -  | (461) |
| Gain on sale of real estate from discontinued operations                           | 22,588                                      | -  | 22,588  |
| Impairment loss on real estate                                                     | (2,542)                                          | -  | (2,542) |
| Dividends on preferred stock                                                       | -                                           | (4,800) | (4,800) |
| Net income (loss) attributable to  common stockholders                   | 28,570                                      | (24,096) | 4,474  |
|                                                                               |                                             |   |   |
| Depreciation and amortization                                                      | 91,224                                      | -  | 91,224  |
| Depreciation and amortization - discontinued operations                            | 2,365                                       | -  | 2,365  |
| Depreciation and amortization - noncontrolling interest - real estate partnerships | (20,644)                                         | -  | (20,644) |
| Adjustment for depreciation and amortization - unconsolidated joint ventures       | 750                                         | -  | 750  |
| Gain on sale of real estate                                                        | (22,588)                                         | -  | (22,588) |
| Funds from operations attributable to common stock holders                         |  $                                          | 79,677  | $ | (24,096) |  $ | 55,581  |
|                                                                               |                                             |   |   |
| Total assets                                                                       |  $                                          | 1,671,459  |  $ | 16,396  |  $ | 1,687,855  |
|                                                                               |                                             |   |   |
| Office and parking properties                                                      |  $                                          | 1,455,239  |  $ | -  | $ | 1,455,239  |
|                                                                               |                                             |   |   |
| Investment in unconsolidated joint ventures                                        |  $                                          | 11,057  |  $ | -  |  $ | 11,057  |
|                                                                               |                                             |   |   |
| Capital expenditures (d)                                                           |  $                                          | 40,654  |  $ | -  |  $ | 40,654  |
|                                                                               |

| (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 other 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 credit facility, which is included in “Unallocated and Other”. |
|                                                                                                                                                                                                                                                                                           |
| (d)      Capital expenditures include building improvements, tenant improvements and deferred leasing costs.                                                                                                                                                     |

----

|                                                                                             | 2010         |
|--------------------------------------------------------------------------------------------------|--------------|
|                                                                                             | First        |   | Second |   | Third |   | Fourth |
|                                                                                             |         |   |   |   |   |   |   |
| Revenues (other than gains)                                                                      |  $      | 69,321  |   |  $ | 62,472  |   |  $ | 62,152  |   |  $ | 62,318  |
| Expenses                                                                                         | (56,325)     |   | (53,557) |   | (53,133) |   | (62,573) |
| Operating income (loss)                                                                          | 12,996  |   | 8,915  |   | 9,019  |   | (255) |
| Interest and other income                                                                        | 385     |   | 365  |   | 355  |   | 382  |
| Interest expense                                                                                 | (13,695)     |   | (13,687) |   | (13,669) |   | (13,596) |
| Equity in earnings of unconsolidated joint ventures                                              | 105     |   | 87  |   | 61  |   | 73  |
| Gain on involuntary conversion                                                                   | -       |   | -  |   | 40  |   | -  |
| Loss from continuing operations                                                                  | (209)        |   | (4,320) |   | (4,194) |   | (13,396) |
| Income from discontinued operations                                                              | 165     |   | 23  |   | 6  |   | -  |
| Gain on sale of real estate from discontinued operations                                         | -       |   | 8,518  |   | -  |   | -  |
| Net income (loss)                                                                                | (44)         |   | 4,221  |   | (4,188) |   | (13,396) |
| Noncontrolling interest - real estate partnerships                                               | 2,587   |   | 2,638  |   | 2,356  |   | 3,208  |
| Net income (loss) attributable to Parkway Properties, Inc.                                       | 2,543   |   | 6,859  |   | (1,832) |   | (10,188) |
| Dividends on preferred stock                                                                     | (1,200)      |   | (1,200) |   | (1,737) |   | (2,188) |
| Net income (loss) attributable to common stockholders                                            |  $      | 1,343  |   |  $ | 5,659  |   |  $ | (3,569) |   |  $ | (12,376) |
|                                                                                             |         |   |   |   |   |   |   |
| Net income (loss) per common share:                                                              |         |   |   |   |   |   |   |
| Basic:                                                                                           |         |   |   |   |   |   |   |
| Income (loss) from continuing operations attributable to                                         |         |   |   |   |   |   |   |
| Parkway Properties, Inc.                                                                         | $            | 0.05  |   | $ | (0.14) |   | $ | (0.17) |   | $ | (0.58) |
| Discontinued operations                                                                          | 0.01    |   | 0.40  |   | -  |   | -  |
| Basic net income (loss) attributable to Parkway Properties, Inc.                                 | $            | 0.06  |   | $ | 0.26  |   | $ | (0.17) |   | $ | (0.58) |
| Diluted:                                                                                         |         |   |   |   |   |   |   |
|      Income (loss) from continuing operations attributable to           |         |   |   |   |   |   |   |
|      Parkway Properties, Inc.                                           | $            | 0.05  |   | $ | (0.14) |   | $ | (0.17) |   | $ | (0.58) |
|      Discontinued operations                                            | 0.01    |   | 0.40  |   | -  |   | -  |
|      Diluted net income (loss) attributable to Parkway Properties, Inc. | $            | 0.06  |   | $ | 0.26  |   | $ | (0.17) |   | $ | (0.58) |
| Dividends per common Share                                                                       | $            | 0.075  |   | $ | 0.075  |   | $ | 0.075  |   | $ | 0.075  |
| Weighted average shares outstanding:                                                             |         |   |   |   |   |   |   |
|      Basic                                                              | 21,390  |   | 21,410  |   | 21,438  |   | 21,443  |
|      Diluted                                                            | 21,509  |   | 21,515  |   | 21,438  |   | 21,443  |
|                                                                                             |         |   |   |   |   |   |   |
|                                                                                             |         |   |   |   |   |   |   |
|                                                                                             |         |
|                                                                                             | 2009         |
|                                                                                             | First        |   | Second |   | Third |   | Fourth |
| Revenues (other than gains)                                                                      |  $      | 67,340  |   |  $ | 66,399  |   |  $ | 65,957  |   |  $ | 65,125  |
| Expenses                                                                                         | (59,006)     |   | (54,679) |   | (56,772) |   | (56,419) |
| Operating income                                                                                 | 8,334   |   | 11,720  |   | 9,185  |   | 8,706  |
| Interest and other income                                                                        | 302     |   | 309  |   | 672  |   | 326  |
| Interest expense                                                                                 | (13,890)     |   | (13,888) |   | (13,672) |   | (13,594) |
| Equity in earnings (loss) of unconsolidated joint ventures                                       | 200     |   | 227  |   | 48  |   | (30) |
| Gain (loss) on sale of real estate                                                               | (70)         |   | 540  |   | -  |   | -  |
| Gain on involuntary conversion                                                                   | 463     |   | 279  |   | -  |   | 81  |
| Other-than-temporary impairment loss on investment in                                            |         |   |   |   |   |   |   |
|      unconsolidated joint ventures                                      | -       |   | -  |   | -  |   | (8,817) |
| Loss from continuing operations                                                                  | (4,661)      |   | (813) |   | (3,767) |   | (13,328) |
| Income from discontinued operations                                                              | 108     |   | 96  |   | 105  |   | 95  |
| Gain on sale of real estate from discontinued operations                                         | -       |   | -  |   | -  |   | -  |
| Net loss                                                                                         | (4,553)      |   | (717) |   | (3,662) |   | (13,233) |
| Noncontrolling interest - real estate partnerships                                               | 3,764   |   | 1,637  |   | 2,107  |   | 3,054  |
| Net income (loss) attributable Parkway Properties, Inc.                                          | (789)        |   | 920  |   | (1,555) |   | (10,179) |
| Dividends on preferred stock                                                                     | (1,200)      |   | (1,200) |   | (1,200) |   | (1,200) |
| Net loss attributable to common stockholders                                                     |  $      | (1,989) |   |  $ | (280) |   |  $ | (2,755) |   |  $ | (11,379) |
|                                                                                             |         |   |   |   |   |   |   |
| Net loss per common share:                                                                       |         |   |   |   |   |   |   |
| Basic:                                                                                           |         |   |   |   |   |   |   |
| Loss from continuing operations attributable to                                                  |         |   |   |   |   |   |   |
| Parkway Properties, Inc.                                                                         | $            | (0.14) |   | $ | (0.02) |   | $ | (0.13) |   | $ | (0.53) |
| Discontinued operations                                                                          | 0.01    |   | 0.01  |   | -  |   | -  |
| Basic net loss attributable to Parkway Properties, Inc.                                          | $            | (0.13) |   | $ | (0.01) |   | $ | (0.13) |   | $ | (0.53) |
| Diluted:                                                                                         |         |   |   |   |   |   |   |
| Loss from continuing operations attributable to                                                  |         |   |   |   |   |   |   |
| Parkway Properties, Inc.                                                                         | $            | (0.14) |   | $ | (0.02) |   | $ | (0.13) |   | $ | (0.53) |
| Discontinued operations                                                                          | 0.01    |   | 0.01  |   | -  |   | -  |
| Diluted net loss attributable to Parkway Properties, Inc.                                        | $            | (0.13) |   | $ | (0.01) |   | $ | (0.13) |   | $ | (0.53) |
| Dividends per common share                                                                       | $            | 0.325  |   | $ | 0.325  |   | $ | 0.325  |   | $ | 0.325  |
| Weighted average shares outstanding:                                                             |         |   |   |   |   |   |   |
| Basic                                                                                            | 15,043  |   | 19,457  |   | 21,313  |   | 21,315  |
| Diluted                                                                                          | 15,043  |   | 19,457  |   | 21,313  |   | 21,315  |

----

|                             | Balance     | Additions           | Deductions     | Balance     |
|----------------------------------|-------------|---------------------|----------------|-------------|
|                             | Beginning   | Charged to          | Written Off as | End         |
| Description                      | of Year     | Cost & Expenses | Uncollectible  | of Year     |
|                             |        |                |           |        |
| Allowance for Doubtful Accounts: |        |                |           |
| Year Ended:                      |        |                |           |        |
| December 31, 2010                |  $     | 2,951          |  $        | 1,223  |  $ | (1,364) |  $ | 2,810  |
| December 31, 2009                | 1,122  | 2,957          | (1,128)        | 2,951  |
| December 31, 2008                | 1,004  | 1,871          | (1,753)        | 1,122  |

----

| SCHEDULE III – REAL ESTATE AND ACCUMULATED DEPRECIATIONDECEMBER 31, 2010(In thousands) |
|----------------------------------------------------------------------------------------------|
|                                                                                         |   |   |   |   |
|                                                                                         |   | Initial Cost to the Company | Subsequent |   |
|                                                                                         |   |   | Building and | Capitalized | Total |
| Description                                                                                  | Encumbrances | Land | Improvements | Costs | Real Estate |
| Office and Parking Properties:                                                               |   |   |   |   |   |
| Arizona                                                                                      |   |   |   |   |   |
| Desert Ridge Corporate Center                                                                |  $ | 49,200  |  $ | -  |  $ | 60,642  |  $ | 5,078  |  $ | 65,720  |
| Squaw Peak Corporate Center                                                                  | -  | 5,800  | 35,144  | 5,568  | 46,512  |
| Mesa Corporate Center                                                                        | -  | 3,353  | 15,243  | 1,212  | 19,808  |
| Florida                                                                                      |   |   |   |   |   |
| Hillsboro Center V                                                                           | 9,943  | 1,325  | 12,249  | 3,176  | 16,750  |
| Hillsboro Center I-IV                                                                        | 6,779  | 1,129  | 7,734  | 1,873  | 10,736  |
| Bellsouth Building                                                                           | 8,027  | 3,477  | 7,826  | 1,674  | 12,977  |
| Centurion Centre                                                                             | 6,373  | 2,951  | 6,013  | 1,147  | 10,111  |
| Stein Mart Building                                                                          | 11,935  | 1,653  | 16,636  | 4,401  | 22,690  |
| Riverplace South                                                                             | -  | 2,316  | 5,412  | 2,451  | 10,179  |
| Maitland 100                                                                                 | 8,798  | 2,667  | 10,162  | 2,333  | 15,162  |
| 555 Winderley Place                                                                          | 8,320  | 2,100  | 9,459  | 1,463  | 13,022  |
| Gateway Center                                                                               | 33,000  | 14,281  | 35,035  | 3,666  | 52,982  |
| Citrus Center                                                                                | 22,820  | 4,000  | 26,712  | 7,833  | 38,545  |
| Georgia                                                                                      |   |   |   |   |   |
| 100 Ashford Center                                                                           | 15,087  | 6,258  | 15,599  | 2,839  | 24,696  |
| Peachtree Ridge                                                                              | 15,177  | 2,203  | 19,534  | 2,286  | 24,023  |
| Overlook II                                                                                  | 31,500  | 5,393  | 33,851  | 2,892  | 42,136  |
| Falls Pointe                                                                                 | -  | 1,512  | 3,092  | 1,128  | 5,732  |
| Lakewood II                                                                                  | -  | 1,195  | 642  | 197  | 2,034  |
| Waterstone                                                                                   | -  | 859  | 7,207  | 2,045  | 10,111  |
| Meridian                                                                                     | -  | 994  | 9,547  | 3,251  | 13,792  |
| Peachtree Dunwoody Pavilion                                                                  | 28,473  | 9,373  | 24,579  | 5,847  | 39,799  |
| Capital City Plaza                                                                           | 34,617  | 3,625  | 57,218  | 5,253  | 66,096  |
| Illinois                                                                                     |   |   |   |   |   |
| Chatham Centre                                                                               | 17,100  | 3,358  | 20,064  | 4,519  | 27,941  |
| US Cellular Plaza                                                                            | 58,564  | 10,010  | 66,389  | 16,478  | 92,877  |
| 233 North Michigan                                                                           | 86,711  | 18,181  | 133,552  | 25,484  | 177,217  |
| 111 East Wacker                                                                              | 148,500  | 23,285  | 123,804  | 55,957  | 203,046  |
| Mississippi                                                                                  |   |   |   |   |   |
| One Jackson Place                                                                            | -  | 1,799  | 19,730  | 5,567  | 27,096  |
| City Centre                                                                                  | -  | 1,707  | 19,935  | 10,446  | 32,088  |
| 111 Capitol Building                                                                         | -  | 915  | 10,830  | 4,243  | 15,988  |
| The Pinnacle at Jackson Place                                                                | 29,501  | 1,275  | 36,994  | 7,558  | 45,827  |
| Parking at Jackson Place                                                                     | -  | -  | 4,129  | 3,763  | 7,892  |
| North Carolina                                                                               |   |   |   |   |   |
| Carmel Crossing                                                                              | -  | 4,541  | 13,698  | 2,902  | 21,141  |
| South Carolina                                                                               |   |   |   |   |   |
| Tower at 1301 Gervais                                                                        | -  | 237  | 10,124  | 10,316  | 20,677  |
| Atrium at Stoneridge                                                                         | -  | 506  | 5,041  | 1,909  | 7,456  |
| Tennessee                                                                                    |   |   |   |   |   |
| Renaissance Center                                                                           | 16,000  | 4,255  | 29,727  | 2,424  | 36,406  |
| Forum II & III                                                                           | -  | 2,634  | 13,886  | 3,113  | 19,633  |
| Morgan Keegan Tower                                                                          | 12,578  | -  | 36,549  | 4,281  | 40,830  |
| Falls Building                                                                               | -  | -  | 7,628  | 3,067  | 10,695  |
| Moore Building                                                                               | -  | 190  | 22,718  | 88  | 22,996  |
| Toyota Garage                                                                                | -  | 727  | 7,939  | 253  | 8,919  |
| Forum I                                                                                      | 10,194  | 4,737  | 12,485  | 2,382  | 19,604  |
| Bank of America Plaza                                                                        | 16,939  | 1,464  | 28,712  | 10,592  | 40,768  |
| Texas                                                                                        |   |   |   |   |   |
| 1401 Enclave                                                                                 | 28,000  | 5,160  | 36,015  | 3,079  | 44,254  |
| 400 North Belt                                                                               | -  | 419  | 10,022  | 3,787  | 14,228  |
| Woodbranch                                                                                   | -  | 303  | 3,805  | 2,507  | 6,615  |
| Sugar Grove                                                                                  | -  | 364  | 7,515  | 3,635  | 11,514  |
| Honeywell                                                                                    | -  | 856  | 15,235  | 3,541  | 19,632  |
| Schlumberger                                                                                 | -  | 1,013  | 11,102  | 4,128  | 16,243  |
| One Commerce Green                                                                           | 18,982  | 489  | 37,307  | 5,218  | 43,014  |
| Comerica Bank Building                                                                       | 13,558  | 1,921  | 21,222  | 2,668  | 25,811  |

----

| SCHEDULE III – REAL ESTATE AND ACCUMULATED DEPRECIATION - (Continued)DECEMBER 31, 2010(In thousands) |
|------------------------------------------------------------------------------------------------------------|
|                                                                                                       |   |   |   |   |
|                                                                                                       |   | Initial Cost to the Company | Subsequent |   |
|                                                                                                       |   |   | Building and | Capitalized | Total |
| Description                                                                                                | Encumbrances | Land | Improvements | Costs | Real Estate |
| Office and Parking Properties:                                                                             |   |   |   |   |   |
| Texas (con’t)                                                                                        |   |   |   |   |   |
| 550 Greens Parkway                                                                                         | -  | 1,006  | 8,061  | 416  | 9,483  |
| 5300 Memorial Building                                                                                     | 11,635  | 682  | 11,744  | 2,667  | 15,093  |
| Town and Country                                                                                           | 6,608  | 436  | 8,205  | 3,143  | 11,784  |
| Wells Fargo                                                                                                | 8,616  | 2,600  | 8,264  | 2,974  | 13,838  |
| Virginia                                                                                                   |   |   |   |   |   |
| Greenbrier Towers I & II                                                                               | -  | 1,157  | 14,857  | 5,677  | 21,691  |
| Glen Forest                                                                                                | -  | 483  | 5,189  | 2,346  | 8,018  |
| Moorefield II                                                                                              | -  | 469  | 4,752  | 1,286  | 6,507  |
| Moorefield III                                                                                             | -  | 490  | 5,135  | 1,629  | 7,254  |
| Boulders Center                                                                                            | -  | 1,265  | 11,825  | 4,346  | 17,436  |
| Winchester Building                                                                                        | -  | 956  | 10,852  | 3,016  | 14,824  |
| Moorefield I                                                                                               | -  | 260  | 3,698  | 1,403  | 5,361  |
|                                                                                                       | 773,535  | 176,614  | 1,278,275  | 300,421  | 1,755,310  |
| Real Estate Development:                                                                                   |   |   |   |   |   |
| Mississippi                                                                                                |   |   |   |   |   |
| Land Held for Development                                                                                  | -  | 609  | -  | -  | 609  |
| Total Real Estate Owned                                                                                    |  $ | 773,535  |  $ | 177,223  | $ | 1,278,275  |  $ | 300,421  |  $ | 1,755,919  |

----

| SCHEDULE III – REAL ESTATE AND ACCUMULATED DEPRECIATION – (Continued)DECEMBER 31, 2010(In thousands) |
|------------------------------------------------------------------------------------------------------------------|
|                                                                                                             |   |   |   |   |   |   |
|                                                                                                             | Gross Amount at Which |   |   |   |   |   |
|                                                                                                             | Carried at Close of Period |   |   |   |   |   |
|                                                                                                             |   | Bldg. and |   | Accum. | Net Book Value | Year | Year | Depreciable |
| Description                                                                                                      | Land | Imprv. | Total | Depr. | of Real Estate | Acquired | Constructed | Lives (Yrs.) |
| Office and Parking Properties:                                                                                   |   |   |   |   |   |   |   |   |
| Arizona                                                                                                          |   |   |   |   |   |   |   |   |
| Desert Ridge Corporate Center                                                                                    |  $ | -  |  $ | 65,720  |  $ | 65,720  |  $ | 6,910  |  $ | 58,810  | 2008 | 2006/2007 | (3) |
| Squaw Peak Corporate Center                                                                                      | 5,800  | 40,712  | 46,512  | 8,553  | 37,959  | 2004 | 1999/2000 | (3) |
| Mesa Corporate Center                                                                                            | 3,353  | 16,455  | 19,808  | 2,554  | 17,254  | 2005 | 2000 | (3) |
| Florida                                                                                                          |   |   |   |   |   |   |   |   |
| Hillsboro Center V                                                                                               | 1,325  | 15,425  | 16,750  | 5,643  | 11,107  | 1998 | 1985 | (3) |
| Hillsboro Center I-IV                                                                                            | 1,129  | 9,607  | 10,736  | 3,320  | 7,416  | 1998 | 1985 | (3) |
| Bellsouth Building                                                                                               | 3,477  | 9,500  | 12,977  | 2,377  | 10,600  | 2006 | 1996 | (3) |
| Centurion Centre                                                                                                 | 2,951  | 7,160  | 10,111  | 1,629  | 8,482  | 2006 | 1993 | (3) |
| Stein Mart Building                                                                                              | 1,653  | 21,037  | 22,690  | 4,806  | 17,884  | 2005 | 1985 | (3) |
| Riverplace South                                                                                                 | 2,316  | 7,863  | 10,179  | 2,245  | 7,934  | 2005 | 1981 | (3) |
| Maitland 100                                                                                                     | 2,667  | 12,495  | 15,162  | 2,768  | 12,394  | 2005 | 1981 | (3) |
| 555 Winderley Place                                                                                              | 2,100  | 10,922  | 13,022  | 1,920  | 11,102  | 2005 | 1985 | (3) |
| Gateway Center                                                                                                   | 14,281  | 38,701  | 52,982  | 3,813  | 49,169  | 2008 | 1989 | (3) |
| Citrus Center                                                                                                    | 4,000  | 34,545  | 38,545  | 8,303  | 30,242  | 2003 | 1971 | (3) |
| Georgia                                                                                                          |   |   |   |   |   |   |   |   |
| 100 Ashford Center                                                                                               | 6,258  | 18,438  | 24,696  | 2,679  | 22,017  | 2006 | 1987 | (3) |
| Peachtree Ridge                                                                                                  | 2,203  | 21,820  | 24,023  | 3,013  | 21,010  | 2006 | 1986 | (3) |
| Overlook II                                                                                                      | 5,393  | 36,743  | 42,136  | 4,945  | 37,191  | 2006 | 1985 | (3) |
| Falls Pointe                                                                                                     | 1,512  | 4,220  | 5,732  | 46  | 5,686  | 2010 | 1990 | (3) |
| Lakewood II                                                                                                      | 1,195  | 839  | 2,034  | 11  | 2,023  | 2010 | 1986 | (3) |
| Waterstone                                                                                                       | 859  | 9,252  | 10,111  | 4,063  | 6,048  | 1995 | 1987 | (3) |
| Meridian                                                                                                         | 994  | 12,798  | 13,792  | 4,875  | 8,917  | 1997 | 1985 | (3) |
| Peachtree Dunwoody Pavilion                                                                                      | 9,373  | 30,426  | 39,799  | 8,427  | 31,372  | 2003 | 1976/1980 | (3) |
| Capital City Plaza                                                                                               | 3,625  | 62,471  | 66,096  | 11,331  | 54,765  | 2004 | 1989 | (3) |
| Illinois                                                                                                         |   |   |   |   |   |   |   |   |
| Chatham Centre                                                                                                   | 3,358  | 24,583  | 27,941  | 4,826  | 23,115  | 2006 | 1989 | (3) |
| US Cellular Plaza                                                                                                | 10,010  | 82,867  | 92,877  | 12,391  | 80,486  | 2008 | (2)1980/1982/2006 | (3) |
| 233 North Michigan                                                                                               | 18,181  | 159,036  | 177,217  | 37,362  | 139,855  | 2005 | 1972 | (3) |
| 111 East Wacker                                                                                                  | 23,285  | 179,761  | 203,046  | 38,760  | 164,286  | 2006 | 1970 | (3) |
| Mississippi                                                                                                      |   |   |   |   |   |   |   |   |
| One Jackson Place                                                                                                | 1,799  | 25,297  | 27,096  | 12,630  | 14,466  | 1986 | 1986 | (3) |
| City Centre                                                                                                      | 1,707  | 30,381  | 32,088  | 13,212  | 18,876  | 1995 | (2)1987/2005 | (3) |
| 111 Capitol Building                                                                                             | 915  | 15,073  | 15,988  | 5,042  | 10,946  | 1998 | 1983 | (3) |
| The Pinnacle at Jackson Place                                                                                    | 1,275  | 44,552  | 45,827  | 3,456  | 42,371  | 2008 | 2008 | (3) |
| Parking at Jackson Place                                                                                         | -  | 7,892  | 7,892  | 842  | 7,050  | 2007 | 1980 | (3) |
| North Carolina                                                                                                   |   |   |   |   |   |   |   |   |
| Carmel Crossing                                                                                                  | 4,541  | 16,600  | 21,141  | 112  | 21,029  | 2010 | 1990/1997/1998 | (3) |
| South Carolina                                                                                                   |   |   |   |   |   |   |   |   |
| Tower at 1301 Gervais                                                                                            | 237  | 20,440  | 20,677  | 3,167  | 17,510  | 1997 | 1973 | (3) |
| Atrium at Stoneridge                                                                                             | 506  | 6,950  | 7,456  | 1,178  | 6,278  | 1998 | 1986 | (3) |
| Tennessee                                                                                                        |   |   |   |   |   |   |   |   |
| Renaissance Center                                                                                               | 4,255  | 32,151  | 36,406  | 4,284  | 32,122  | 2006 | 2000 | (3) |
| Forum II & III                                                                                               | 2,634  | 16,999  | 19,633  | 6,576  | 13,057  | 1997 | 1985 | (3) |
| Morgan Keegan Tower                                                                                              | -  | 40,830  | 40,830  | 14,172  | 26,658  | 1997 | 1985 | (3) |
| Falls Building                                                                                                   | -  | 10,695  | 10,695  | 3,620  | 7,075  | 1998 | (2)1982/1984/1990 | (3) |
| Moore Building                                                                                                   | 190  | 22,806  | 22,996  | 6,223  | 16,773  | 2000 | 2000 | (3) |
| Toyota Garage                                                                                                    | 727  | 8,192  | 8,919  | 2,277  | 6,642  | 2000 | 2000 | (3) |
| Forum I                                                                                                          | 4,737  | 14,867  | 19,604  | 3,102  | 16,502  | 2005 | 1982 | (3) |
| Bank of America Plaza                                                                                            | 1,464  | 39,304  | 40,768  | 11,036  | 29,732  | 2001 | 1977 | (3) |
| Texas                                                                                                            |   |   |   |   |   |   |   |   |
| 1401 Enclave                                                                                                     | 5,160  | 39,094  | 44,254  | 4,671  | 39,583  | 2007 | 1999 | (3) |
| 400 North Belt                                                                                                   | 419  | 13,809  | 14,228  | 3,988  | 10,240  | 1996 | 1982 | (3) |
| Woodbranch                                                                                                       | 303  | 6,312  | 6,615  | 2,632  | 3,983  | 1996 | 1982 | (3) |
| Sugar Grove                                                                                                      | 364  | 11,150  | 11,514  | 4,447  | 7,067  | 1997 | 1982 | (3) |
| Honeywell                                                                                                        | 856  | 18,776  | 19,632  | 6,294  | 13,338  | 1997 | 1983 | (3) |
| Schlumberger                                                                                                     | 1,013  | 15,230  | 16,243  | 6,636  | 9,607  | 1998 | 1983 | (3) |
| One Commerce Green                                                                                               | 489  | 42,525  | 43,014  | 14,965  | 28,049  | 1998 | 1983 | (3) |
| Comerica Bank Building                                                                                           | 1,921  | 23,890  | 25,811  | 8,363  | 17,448  | 1998 | 1983 | (3) |

----

| SCHEDULE III – REAL ESTATE AND ACCUMULATED DEPRECIATION – (Continued)DECEMBER 31, 2010(In thousands) |
|------------------------------------------------------------------------------------------------------------------|
|                                                                                                             | Gross Amount at Which |   |   |   |   |   |   |
|                                                                                                             | Carried at Close of Period |   |   |   |   |   |   |
|                                                                                                             |   | Bldg. and |   | Accum. | Net Book Value | Year | Year | Depreciable |   |
| Description                                                                                                      | Land | Imprv. | Total | Depr. | Of Real Estate | Acquired | Constructed | Lives (Yrs.) |   |
| Office and Parking Properties:                                                                                   |   |   |   |   |   |   |   |   |   |
| Texas (con’t)                                                                                              |   |   |   |   |   |   |   |   |   |
| 550 Greens Parkway                                                                                               | 1,006  | 8,477  | 9,483  | 2,159  | 7,324  | 2001 | 1999 | (3) |   |
| 5300 Memorial Building                                                                                           | 682  | 14,411  | 15,093  | 3,946  | 11,147  | 2002 | 1982 | (3) |   |
| Town and Country                                                                                                 | 436  | 11,348  | 11,784  | 2,825  | 8,959  | 2002 | 1982 | (3) |   |
| Wells Fargo                                                                                                      | 2,600  | 11,238  | 13,838  | 2,478  | 11,360  | 2003 | 1978 | (3) |   |
| Virginia                                                                                                         |   |   |   |   |   |   |   |   |   |
| Greenbrier Towers I & II                                                                                     | 1,157  | 20,534  | 21,691  | 7,538  | 14,153  | 1997 | 1985/1987 | (3) |   |
| Glen Forest                                                                                                      | 483  | 7,535  | 8,018  | 841  | 7,177  | 1998 | 1985 | (3) |   |
| Moorefield II                                                                                                    | 469  | 6,038  | 6,507  | 1,960  | 4,547  | 1998 | 1985 | (3) |   |
| Moorefield III                                                                                                   | 490  | 6,764  | 7,254  | 2,309  | 4,945  | 1998 | 1985 | (3) |   |
| Boulders Center                                                                                                  | 1,265  | 16,171  | 17,436  | 5,108  | 12,328  | 1998 | 1986 | (3) |   |
| Winchester Building                                                                                              | 956  | 13,868  | 14,824  | 4,879  | 9,945  | 1998 | 1987 | (3) |   |
| Moorefield I                                                                                                     | 260  | 5,101  | 5,361  | 1,614  | 3,747  | 1999 | 1984 | (3) |   |
|                                                                                                             | 176,614  | 1,578,696  | 1,755,310  | 366,152  | 1,389,158  |   |   |   |   |
| Real Estate Development:                                                                                         |   |   |   |   |   |   |   |   |   |
| Mississippi                                                                                                      |   |   |   |   |   |   |   |   |   |
| Land Held for Development                                                                                        | 609  | -  | 609  | -  | 609  |   |   |   |   |
| Total Real Estate Owned                                                                                          |  $ | 177,223  |  $ | 1,578,696  |  $ | 1,755,919  |  $ | 366,152  |  $ | 1,389,767  |   |   |   |   |

|         (1)   The aggregate cost for federal income tax purposes was approximately $1.9 billion. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)   The dates of major renovations.                                                                                                    |
| (3)   Depreciation of buildings and improvements is calculated over lives ranging from the life of the lease to 40 years.                |

|                                           | December 31  |
|------------------------------------------------|--------------|
|                                           | 2010         |   | 2009 |   | 2008 |
| Real Estate:                                   |         |   |   |   |   |
| Office and Parking Properties:                 |         |   |   |   |   |
| Balance at beginning of year                   |  $      | 1,738,649  |   |  $ | 1,738,158  |   |  $ | 1,566,393  |
| Additions:                                     |         |   |   |   |   |
| Acquisitions and improvements                  | 64,968  |   | 27,370  |   | 241,851  |
| Office property development                    | -       |   | 1,498  |   | 29,686  |
| Cost of real estate sold or disposed           | (47,698)     |   | (28,377) |   | (99,772) |
| Balance at close of year                       |  $      | 1,755,919  |   |  $ | 1,738,649  |   |  $ | 1,738,158  |
|                                           |         |   |   |   |   |
| Accumulated Depreciation:                      |         |   |   |   |   |
| Balance at beginning of year                   |  $      | 336,759  |   |  $ | 282,919  |   |  $ | 251,791  |
| Depreciation expense                           | 67,553  |   | 67,077  |   | 65,213  |
| Depreciation expense - discontinued operations | 94      |   | 475  |   | 2,058  |
| Real estate sold or disposed                   | (38,254)     |   | (13,712) |   | (36,143) |
| Balance at close of year                       |  $      | 366,152  |   |  $ | 336,759  |   |  $ | 282,919  |

----

| SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE                                                                                  |
|------------------------------------------------------------------------------------------------------------------------------|
| DECEMBER 31, 2010                                                                                                            |
| (In thousands)                                                                                                               |
|                                                                                                                         |   |   |   |   |   |   | Principal |
|                                                                                                                         |   |   |   |   |   |   | Amount of |
|                                                                                                                         |   | Final | Periodic |   | Face | Carrying | Loan Subject to |
|                                                                                                                         | Interest | Maturity | Payment | Prior | Amount of | Amount of | Delinquent Principal |
| Description                                                                                                                  | Rate | Date | Term | Liens | Mortgage | Mortgage (4) | and Interest |
| 2100 Ross Avenue (1)                                                                                                         | 6.065% | May 2012 | Interest only (2) | None |  $ | 10,000  | $8,836  |  $ | -  |
| One Park Ten                                                                                                                 | 7.250% | June 2012 | Interest only (3) | None |   | 1,500  | 1,500  |   | -  |
|                                                                                                                         |   |   |   |   |   |   |   |
| (1) This is a B participation piece of first mortgage secured by an 844,000 square foot office building in Dallas, Texas.    |
| (2) The note requires interest only payments until maturity, at which time a principal payment of $10.0 million will be due. |
| (3) The note requires interest only payments until maturity, at which time a principal payment of $1.5 million will be due.  |
| (4) The cost for federal tax purposes is $8.4 million.                                                                       |

| NOTE TO SCHEDULE IVAt December 31, 2010, 2009 and 2008(In thousands) |
|----------------------------------------------------------------------|
|                                                                 |
|                                                                 | December 31 |
|                                                                 | 2010 |   | 2009 |   | 2008 |
| Balance at beginning of year                                         |  $ | 8,126  |   |  $ | 7,519  |   |  $ | 7,001  |
| Additions:                                                           |   |   |   |   |   |
|         New Mortgage Loan    | 1,500  |   | -  |   | -  |
|        Amortization of discount   | 710  |   | 607  |   | 518  |
| Balance at end of year                                               |  $ | 10,336  |   |  $ | 8,126  |   |  $ | 7,519  |

----

----

----

|                      |                    |                 | (c)                     |
|---------------------------|-------------------------|----------------------|-------------------------|
|                      |                    |                 | Number of securities    |
|                      |                    |                 | remaining available for |
|                      | (a)                     | (b)                  | future issuance under   |
|                      | Number of securities to | Weighted-average     | equity compensation     |
|                      | be issued upon exercise | exercise price of    | plans (excluding        |
|                      | of outstanding options, | outstanding options, | securities reflected in |
| Plan category             | warrants and rights     | warrants and rights  | column (a))             |
| Equity compensation plans |                    |                 |                    |
| approved by security      |                    |                 |                    |
| holders                   | 55,101             | $25.64          | 235,861            |
|                      |                    |                 |                    |
| Equity compensation plans |                    |                 |                    |
| not approved by security  |                    |                 |                    |
| holders                   | -                  | -               | -                  |
|                      |                    |                 |                    |
| Total                     | 55,101             | $25.64          | 235,861            |

| 2   |          Consolidated Financial Statement Schedules |
|---------------|---------------------------------------------------------------------------------------------|

|   | All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3   |          Form 10-K Exhibits required by Item 601 of Regulation S-K: |
|---------------|-------------------------------------------------------------------------------------------------------------|

----

| Exhibit |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| No.     | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 3.1     | Articles of Incorporation, as amended, of the Company (incorporated by reference to Exhibit B to the Company's proxy material for its July 18, 1996 Annual Meeting).                                                                                                                                                                                                                                                                                                                                                                                                              |
| 3.2     | Bylaws of the Company, as amended through August 5, 2010 (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on August 6, 2010).                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 3.3     | Articles Supplementary creating the Company’s 8.00% Series D Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 4 to the Company’s Form 8-A filed May 29, 2003).                                                                                                                                                                                                                                                                                                                                                                             |
| 3.4     | Articles Supplementary reclassifying and designating an additional 1,974,896 shares of common stock as 8.00% Series D Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3 to the Company’s Form 8-K filed August 12, 2010).                                                                                                                                                                                                                                                                                                                       |
| 10      | Material Contracts (*Denotes management contract or compensatory plan or arrangement):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 10.1    | Amended and Restated Agreement of Limited Partnership of Parkway Properties LP (incorporated by reference to Exhibit 99(a) to the Company's Form 8-K filed July 15, 1998).                                                                                                                                                                                                                                                                                                                                                                                                        |
| 10.2    | Amendment to Exhibit A dated August 9, 2010 of the Amended and Restated Agreement of Limited Partnership of Parkway Properties LP (incorporated by reference to Exhibit 10 to the Company’s Form 8-K filed August 12, 2010).                                                                                                                                                                                                                                                                                                                                                |
| 10.3    | Limited Partnership Agreement of Parkway Properties Office Fund, L.P. by and among PKY Fund, LLC, Parkway Properties L.P. and PERS Holding Company Limited, L.L.C. (incorporated by reference to Exhibit 10 to the Company's Form 8-K filed July 7, 2005).                                                                                                                                                                                                                                                                                                                        |
| 10.4    | First Amendment to Limited Partnership Agreement of Parkway Properties Office Fund, L. P. by and among, PKY Fund, LLC, Parkway Properties LP and PERS Holding Company Limited, L.L.C. (incorporated by reference to Exhibit 10.14 to the Company’s Form 10-K for the year ended December 31, 2007).                                                                                                                                                                                                                                                                         |
| 10.5    | Second Amendment to Limited Partnership Agreement of Parkway Properties Office Fund, L. P. by and among, PKY Fund, LLC, Parkway Properties LP and PERS Holding Company Limited, L.L.C. (incorporated by reference to Exhibit 10.15 to the Company’s Form 10-K for the year ended December 31, 2007).                                                                                                                                                                                                                                                                        |
| 10.6    | Limited Partnership Agreement of Parkway Properties Office Fund II, L.P. by and among PPOF II, LLC, Parkway Properties, LP and Teacher Retirement System of Texas (incorporated by reference to Exhibit 10 to the Company’s Form 8-K filed May 19, 2008).                                                                                                                                                                                                                                                                                                                   |
| 10.7    | Promissory Note between Parkway Properties LP and Teachers Insurance and Annuity Association of America (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed December 22, 2005).                                                                                                                                                                                                                                                                                                                                                                            |
| 10.8    | Form of Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing by and between Parkway Properties LP as borrower and Jack Edelbrock as trustee for the benefit of Teachers Insurance and Annuity Association of America as lender (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed December 22, 2005).                                                                                                                                                                                                                     |
| 10.9    | Indenture of Mortgage, Security Agreement Financing Statement Fixture Filing and Assignment of Leases, Rents and Security Deposits dated June 22, 2001 made by Parkway 233 North Michigan, LLC to German American Capital Corporation (incorporated by reference to Exhibit 4(a) to the Company's Form 8-K filed July 3, 2001).                                                                                                                                                                                                                                                   |
| 10.10   | Promissory Note made as of June 22, 2001 by Parkway 233 North Michigan, LLC in favor of German American Capital Corporation (incorporated by reference to Exhibit 4(a) to the Company's Form 8-K filed July 3, 2001).                                                                                                                                                                                                                                                                                                                                                             |
| 10.11   | Mortgage, Security Agreement, Assignment of Rents and Fixture Filing by 111 East Wacker LLC to Wachovia Bank, National Association (incorporated by reference to Exhibit 10.4 to the Company’s Form 8-K filed July 14, 2006).                                                                                                                                                                                                                                                                                                                                               |
| 10.12   | Promissory Note by 111 East Wacker LLC to Wachovia Bank, National Association (incorporated by reference to Exhibit 10.5 to the Company’s Form 8-K filed July 14, 2006).                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.13   | Credit Agreement by and among Parkway Properties LP, a Delaware limited partnership; Parkway Properties, Inc., a Maryland corporation; Wells Fargo Securities, LLC and J.P. Morgan Securities LLC, as Joint Lead Arrangers and Joint Bookrunners; Wells Fargo Bank, N.A., as Administration Agent; JPMorgan Chase Bank, N.A., as Syndication Agent; PNC Bank, N.A., Bank of America, N.A., and U.S. Bank, N.A., as Documentation Agents; and the Lenders dated January 31, 2011 (incorporated by reference to Exhibit 10 to the Company’s Form 8-K filed January 31, 2011). |
| 10.14*  | Parkway Properties, Inc. 1994 Stock Option and Long-Term Incentive Plan (incorporated by reference to Appendix A to the Company’s proxy material for its June 3, 1999 Annual Meeting).                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.15*  | Parkway Properties, Inc. 2001 Non-employee Directors Equity Compensation Plan, as amended (incorporated by reference to Exhibit 10.5 to the Company’s Form 10-K for the year ended December 31, 2006).                                                                                                                                                                                                                                                                                                                                                                      |
| 10.16*  | Parkway Properties, Inc. 2003 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 10.6 to the Company’s Form 10-K for the year ended December 31, 2006).                                                                                                                                                                                                                                                                                                                                                                                                |
| 10.17*  | Parkway Properties, Inc. Amended and Restated 2010 Omnibus Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed May 18, 2010)                                                                                                                                                                                                                                                                                                                                                                                                   |
| 10.18*  | Parkway Properties, Inc. 2006 Employee Stock Purchase Plan, as amended (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed August 24, 2006).                                                                                                                                                                                                                                                                                                                                                                                                         |
| 10.19*  | Adoption Agreement for the Executive Nonqualifed Excess Plan (incorporated by reference to Exhibit 10.25 to the Company’s Form 10-K for the year ended December 31, 2006).                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.20*  | Appendix to Adoption Agreement for Parkway Properties, Inc Deferred Compensation Plan, as amended (incorporated by reference to Exhibit 10.26 to the Company’s Form 10-K for the year ended December 31, 2006).                                                                                                                                                                                                                                                                                                                                                             |
| 10.21*  | Form of Incentive Restricted Share Agreement for Time-Based Awards (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed June 29, 2006).                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.22*  | Form of Incentive Restricted Share Agreement for 2009 Long-Term Equity Compensation Program (incorporated by reference to Exhibit 10 to the Company’s Form 8-K filed February 4, 2009).                                                                                                                                                                                                                                                                                                                                                                                     |

----

| 10.23* | Form of Restricted Share Agreement for FOCUS Plan Time-Based Awards (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on July 15, 2010).                                                                                                                                                                                                                                              |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.24* | Form of Restricted Share Agreement for FOCUS Plan Performance-Based Awards (Absolute Return Goal) (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on July 15, 2010).                                                                                                                                                                                                                |
| 10.25* | Form of Restricted Share Agreement for FOCUS Plan Performance-Based Awards (Relative Return Goal) (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed on July 15, 2010).                                                                                                                                                                                                                |
| 10.26* | Parkway Properties, Inc. FOCUS Plan Long-Term Cash Incentive (incorporated by reference to Exhibit 10.4 to the Company’s Form 8-K filed on July 15, 2010).                                                                                                                                                                                                                                                     |
| 10.27* | Parkway Properties, Inc. FOCUS Plan Long-Term Cash Incentive Participation Agreement (incorporated by reference to Exhibit 10.5 to the Company’s Form 8-K filed on July 15, 2010)                                                                                                                                                                                                                              |
| 10.28* | Performance measures for the Company's 2011 non-equity incentive awards for executive officers of the Company (a written description thereof is set forth in Item 5.02 of the Company’s Form 8-K filed February 16, 2011).                                                                                                                                                                                     |
| 10.29* | Form of Change in Control Agreement with each of the Company’s Executive Officers (the Change in Control Agreements are identical in substance for each of the Named Executive Officers, and provide for a multiple of “2.99” in calculating the severance payment under each officer's Agreement) (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed May 14, 2008). |
| 10.30  | Equity Distribution Agreement, dated as of December 23, 2009, among the Company, Parkway Properties LP and Wells Fargo Securities, LLC (incorporated by reference to Exhibit 1.1 to the Company’s Form 8-K filed December 28, 2009).                                                                                                                                                                           |
| 10.31  | Equity Distribution Agreement, dated as of December 23, 2009, among the Company, Parkway Properties LP and Merrill Lynch, Pierce, Fenner & Smith Incorporated (incorporated by reference to Exhibit 1.2 to the Company’s Form 8-K filed December 28, 2009).                                                                                                                                                |
| 10.32  | Equity Distribution Agreement, dated as of December 23, 2009, among the Company, Parkway Properties LP and J.P. Morgan Securities Inc (incorporated by reference to Exhibit 1.3 to the Company’s Form 8-K filed December 28, 2009).                                                                                                                                                                            |
| 10.33  | Equity Distribution Agreement, dated as of December 23, 2009, among the Company, Parkway Properties LP and Morgan Keegan & Company, Inc (incorporated by reference to Exhibit 1.4 to the Company’s Form 8-K filed December 28, 2009).                                                                                                                                                                      |
| 21     | Subsidiaries of the Company (filed herewith).                                                                                                                                                                                                                                                                                                                                                                        |
| 23.1   | Consent of KPMG LLP (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                |
| 31.1   | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                  |
| 31.2   | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                  |
| 32.1   | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                  |
| 32.2   | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                  |

----

|   |                                                  |
|--------|-------------------------------------------------------|
|   | PARKWAY PROPERTIES, INC.                              |
|   | Registrant                                            |
|   |                                                  |
|   |                                                  |
|   | /s/ Steven G. Rogers                                  |
|   | Steven G. Rogers                                      |
|   | President, Chief Executive                            |
|   | Officer and Director                                  |
|   | March 4, 2011                                         |
|   |                                                  |
|   |                                                  |
|   | /s/ Richard G. Hickson IV                             |
|   | Richard G. Hickson IV                                 |
|   | Executive Vice President and Chief Financial Officer  |
|   | March 4, 2011                                         |
|   |                                                  |
|   |                                                  |
|   | /s/ Mandy M. Pope                                     |
|   | Mandy M. Pope                                         |
|   | Executive Vice President and Chief Accounting Officer |
|   | March 4, 2011                                         |

|                         |   |                                            |
|------------------------------|--------|-------------------------------------------------|
| /s/ Charles T. Cannada       |   | /s/ Steven G. Rogers                            |
| Charles T. Cannada, Director |   | Steven G. Rogers                                |
| March 4, 2011                |   | President, Chief Executive Officer and Director |
|                         |   | March 4, 2011                                   |
|                         |   |                                            |
| /s/ Laurie L. Dotter         |   | /s/ Leland R. Speed                             |
| Laurie L. Dotter, Director   |   | Leland R. Speed                                 |
| March 4, 2011                |   | Chairman of the Board and Director              |
|                         |   | March 4, 2011                                   |
|                         |   |                                            |
| /s/ Daniel P. Friedman       |   | /s/ Troy A. Stovall                             |
| Daniel P. Friedman, Director |   | Troy A. Stovall, Director                       |
| March 4, 2011                |   | March 4, 2011                                   |
|                         |   |                                            |
|                         |   |                                            |
| /s/ Michael J. Lipsey        |   | /s/ Lenore M. Sullivan                          |
| Michael J. Lipsey, Director  |   | Lenore M. Sullivan, Director                    |
| March 4, 2011                |   | March 4, 2011                                   |
|                         |   |                                            |
|                         |   |                                            |
| /s/ Brenda J. Mixson         |   |                                            |
| Brenda J. Mixson, Director   |   |                                            |
| March 4, 2011                |   |                                            |

----