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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[X] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.

Parkway Properties, Inc.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)

Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies: .......

(2) Aggregate number of securities to which transaction applies: ..........

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............

(4) Proposed maximum aggregate value of transaction: ......................

(5) Total fee paid: .......................................................

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid: ...............................................

(2) Form, Schedule or Registration Statement No.: .........................

(3) Filing Party: .........................................................

(4) Date Filed: ...........................................................

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PARKWAY PROPERTIES, INC.
ONE JACKSON PLACE
SUITE 1000
188 EAST CAPITOL STREET
JACKSON, MISSISSIPPI 39201-2195
WWW.PKY.COM

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 15, 2001

To the Stockholders:

Notice is hereby given that the 2001 Annual Meeting of Stockholders (the
"Meeting"), of Parkway Properties, Inc. (the "Company"), will be held at the
Suncom Building, 111 East Capitol Street, Jackson, Mississippi, at 1:30 p.m.,
Jackson time, on May 15, 2001 for the following purposes:

1. To elect eight directors to serve until the next Annual Meeting of
Stockholders and until their successors are elected and qualified.

2. To approve the issuance of shares of Series B Convertible Cumulative
Preferred Stock of the Company that is convertible into shares of Common
Stock of the Company to Five Arrows Realty Securities III L.L.C.

3. To consider and take action upon such other matters as may properly come
before the Meeting or any adjournment thereof.

Only stockholders of record at the close of business on March 26, 2001 are
entitled to notice of and to vote at the Meeting or any adjournment thereof.

BY ORDER OF THE BOARD OF DIRECTORS

MARSHALL A. LOEB
Senior Vice President, Chief Financial
Officer and Secretary

Dated: April , 2001

STOCKHOLDERS ARE URGED TO VOTE BY SIGNING, DATING AND RETURNING THE ENCLOSED
PROXY IN THE ENCLOSED ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN
THE UNITED STATES
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April , 2001

PARKWAY PROPERTIES, INC.
ONE JACKSON PLACE
SUITE 1000
188 EAST CAPITOL STREET
JACKSON, MISSISSIPPI 39201-2195
WWW.PKY.COM
------------------------

PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 15, 2001

The following information is furnished in connection with the Annual
Meeting of Stockholders (the "Meeting"), of Parkway Properties, Inc. (the
"Company"), to be held on May 15, 2001 at 1:30 p.m., Jackson time, at the Suncom
Building, 111 East Capitol Street, Jackson, Mississippi. A copy of the Company's
Annual Report to Stockholders for the fiscal period ended December 31, 2000
accompanies this Proxy Statement. Additional copies of the Annual Report,
Notice, Proxy Statement and Form of Proxy may be obtained from the Company's
Secretary, P.O. Box 24647, Jackson, Mississippi 39225-4647. A COPY OF THE
COMPANY'S FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ("SEC") IS
AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY'S INVESTOR
RELATIONS DEPARTMENT AT THE COMPANY'S CORPORATE OFFICES, VIA E-MAIL ADDRESSED TO
mail@pky.com, OR FROM THE SECURITIES AND EXCHANGE COMMISSION'S WEB SITE AT
www.sec.gov. This Proxy Statement, Annual Report, and Form of Proxy will first
be sent to stockholders on or about April 9, 2001.

SOLICITATION AND REVOCABILITY OF PROXIES

The enclosed proxy for the Meeting is being solicited by the directors of
the Company. The proxy may be revoked by a stockholder at any time prior to the
exercise thereof by filing with the Secretary of the Company a written
revocation or duly executed proxy bearing a later date. The proxy may also be
revoked by a stockholder attending the Meeting, withdrawing such proxy and
voting in person. The cost of soliciting the proxies on the enclosed form will
be paid by the Company. In addition to the use of the mails, proxies may be
solicited by the directors and their agents (who will receive no additional
compensation therefor) by means of personal interview, telephone, facsimile,
e-mail or other electronic means and it is anticipated that banks, brokerage
houses and other institutions, nominees or fiduciaries will be requested to
forward the soliciting material to their principals and to obtain authorization
for the execution of proxies. The Company may, upon request, reimburse banks,
brokerage houses and other institutions, nominees and fiduciaries for their
expenses in forwarding proxy material to their principals. The Company has
retained Beacon Hill Partners, Inc. ("Beacon Hill") to assist with the
solicitation of proxies and will pay Beacon Hill a fee of $3,000 plus
reimbursement of out-of-pocket expenses for its services.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

The record date for determining shares of Common Stock, par value $0.001
per share, of the Company ("Common Stock"), and shares of Series B Cumulative
Convertible Preferred Stock, par value $0.001 per share, of the Company ("Series
B Preferred Stock") entitled to vote at the Meeting has been fixed at the close
of business on March 26, 2001. On such date there were shares of
Common Stock outstanding and no shares of Series B Preferred Stock outstanding.
The holders of Common Stock are generally entitled to one vote for each share of
Common Stock on each matter submitted to a vote at a meeting of stockholders.
The holders of Series B Preferred Stock are generally entitled to one vote for
each share of Series B Preferred Stock on each matter submitted to a vote at a
meeting of stockholders. Pursuant to the Company's Bylaws, directors will be
elected by a plurality of the votes with each share being voted for as many
individuals as there are directors to be elected and for whose election the
share is entitled to vote.

The presence, in person or by properly executed proxy, of the holders of
shares of Common Stock and Series B Preferred Stock entitled to cast a majority
of all the votes entitled to be cast at the Meeting is necessary to constitute a
quorum. Shares of Common Stock and Series B Preferred Stock represented by a
properly signed, dated and returned proxy card will be treated as present at the
Meeting for purposes of determining a quorum. Proxies relating to "street name"
shares that are voted by brokers will be counted as shares present for purposes
of determining the presence of a quorum, but will not be treated as shares
having voted at the Meeting as to any proposal as to which the broker does not
vote.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

To the best of the Company's knowledge, no person or group (as those terms
are used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), beneficially owned, as of March 7, 2001 more than five
percent of the Common Stock, except as set forth in the following table.

AMOUNT OF
COMMON
STOCK PERCENT
NAME AND ADDRESS BENEFICIALLY OF COMMON
OF BENEFICIAL OWNER OWNED STOCK (1)
- ------------------- ------------ ---------

T. Rowe Price Associates, Inc. ............................. 959,000(2) 10.3%
100 E. Pratt Street
Baltimore, Maryland 21202
Perkins, Wolf, McDonnell & Company.......................... 676,800(3) 7.3
53 W. Jackson Boulevard, Suite 722
Chicago, Illinois 60604

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(1) Based on the number of shares of Common Stock outstanding on March 7, 2001
which was 9,306,449 shares.

(2) Based upon a Statement on Schedule 13G filed with the SEC, which indicated
that these securities are owned by various individual and institutional
investors, including T. Rowe Price Small-Cap Stock Fund, Inc. (which owns
672,000 shares, representing 7.2% of the shares of Common Stock
outstanding), which T. Rowe Price Associates, Inc. ("Price Associates")
serves as investment adviser with power to direct investments and/or sole
power to vote the securities. For purposes of the reporting requirements of
the

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Exchange Act, Price Associates is deemed to be a beneficial owner of such
securities; however, Price Associates expressly disclaims that it is, in
fact, the beneficial owner of such securities.

(3) Based upon a Statement on Schedule 13G filed with the SEC, which indicated
that Perkins, Wolf, McDonnell & Company had shared voting and dispositive
power with respect to such shares.

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth the shares of Common Stock beneficially
owned, as of January 2, 2001, by each director, nominee for director and
executive officer of the Company. Unless otherwise stated, each person has sole
voting and investment power with respect to the shares of Common Stock set forth
in the table.

NUMBER OF SHARES PERCENT
OF COMMON STOCK OF COMMON
NAME BENEFICIALLY OWNED STOCK (1)
---- ------------------ ---------

Daniel C. Arnold......................................... 48,502(2) *
Roger P. Friou........................................... 39,351(3) *
Martin L. Garcia......................................... 16,400(4) *
Matthew W. Kaplan........................................ 7,677(5) *
Michael J. Lipsey........................................ 17,716(6) *
Joe F. Lynch............................................. 73,817(7) *
C. Herbert Magruder...................................... 71,452(8) *
W. Lincoln Mossop, Jr.................................... 48,550(9) *
Leland R. Speed.......................................... 210,986(10) 2.3%
Steven G. Rogers......................................... 185,210(11) 2.0%
Sarah P. Clark........................................... 60,208(12) *
Marshall A. Loeb......................................... 6,000(13) *
David R. Fowler.......................................... 32,933(14) *
James M. Ingram.......................................... 36,904(15) *
G. Mitchel Mattingly..................................... 42,765(16) *
Regina P. Shows.......................................... 20,830(17) *
Jack R. Sullenberger..................................... 26,392(18) *
Directors, nominees and executive officers as a group.... 945,693(19) 9.8%

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* Less than 1%.

(1) Based on the number of shares of Common Stock outstanding on March 7, 2001
which was 9,306,449 shares.

(2) Includes 26,250 shares of Common Stock Mr. Arnold has the right to acquire
under the 1991 Directors Stock Option Plan, as amended (the "Directors
Plan"). Mr. Arnold also owns 6,000 shares of 8.75% Series A Cumulative
Redeemable Preferred Stock, par value $0.001 per share, of the Company
("Series A Preferred Stock"), that do not have voting rights at the
Meeting.

(3) Includes 7,000 shares of Common Stock Mr. Friou has the right to acquire
under the 1991 Directors Plan.
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(4) Includes 13,500 shares of Common Stock Mr. Garcia has the right to acquire
under the 1991 Directors Plan and 1,000 shares of Common Stock held in
trust for Mr. Garcia's children, of which Mr. Garcia is the trustee.

(5) Includes 7,500 shares of Common Stock Mr. Kaplan has the right to acquire
under the 1991 Directors Plan.

(6) Includes 16,500 shares of Common Stock Mr. Lipsey has the right to acquire
under the 1991 Directors Plan. Mr. Lipsey also owns 625 shares of Series A
Preferred Stock that do not have voting rights at the Meeting.

(7) Includes 26,250 shares of Common Stock Mr. Lynch has the right to acquire
under the 1991 Directors Plan. Mr. Lynch also owns 2,300 shares of Series A
Preferred Stock that do not have voting rights at the Meeting.

(8) Includes 18,750 shares of Common Stock Dr. Magruder has the right to
acquire under the 1991 Directors Plan and 2,013 shares of Common Stock held
in a trust of which Dr. Magruder is a trustee. Does not include 450 shares
of Common Stock beneficially owned by Dr. Magruder's wife, as to which he
disclaims beneficial ownership. Dr. Magruder also owns 8,000 shares of
Series A Preferred Stock that do not have voting rights at the Meeting.

(9) Includes 26,250 shares of Common Stock Mr. Mossop has the right to acquire
under the 1991 Directors Plan.

(10) Includes 44,742 shares of Common Stock Mr. Speed has the right to acquire
pursuant to exercisable options granted under the 1994 Stock Option Plan
and 20,000 shares of Common Stock granted as incentive restricted shares
under the 1994 Stock Option Plan. Does not include 21,157 shares of Common
Stock owned by Mr. Speed's wife, as to all of which Mr. Speed disclaims
beneficial ownership.

(11) Includes 59,110 shares of Common Stock Mr. Rogers has the right to acquire
pursuant to exercisable options granted under the 1994 Stock Option Plan
and 39,000 shares of Common Stock granted as incentive restricted shares
under the 1994 Stock Option Plan. Does not include 12,040 shares of Common
Stock beneficially owned by Mr. Rogers' wife as to which he disclaims
beneficial ownership. Mr. Rogers also owns 770 shares of Series A Preferred
Stock that do not have voting rights at the Meeting.

(12) Includes 28,258 shares of Common Stock Ms. Clark has the right to acquire
pursuant to exercisable options granted under the 1994 Stock Option Plan,
18,000 shares granted as incentive restricted shares under the 1994 Stock
Option Plan and 500 shares of Common Stock Ms. Clark owns as custodian for
her children. Ms. Clark also owns 220 shares of Series A Preferred Stock
that do not have voting rights at the Meeting.

(13) Includes 6,000 shares of Common Stock granted as incentive restricted
shares under the 1994 Stock Option Plan.

(14) Includes 11,704 shares of Common Stock Mr. Fowler has the right to acquire
pursuant to exercisable options granted under the 1994 Stock Option Plan
and 12,000 shares of Common Stock granted as incentive restricted shares
under the 1994 Stock Option Plan.

(15) Includes 17,904 shares of Common Stock Mr. Ingram has the right to acquire
pursuant to exercisable options granted under the 1994 Stock Option Plan
and 12,000 shares of Common Stock granted as incentive restricted shares
under the 1994 Stock Option Plan.

(16) Includes 9,079 shares of Common Stock Mr. Mattingly has the right to
acquire pursuant to exercisable options granted under the 1994 Stock Option
Plan and 12,000 shares of Common Stock granted as
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incentive restricted shares under the 1994 Stock Option Plan. Mr. Mattingly
also owns 1,560 shares of Series A Preferred Stock and his wife owns 280
shares of Series A Preferred Stock that do not have voting rights at the
Meeting.

(17) Includes 7,830 shares of Common Stock Ms. Shows has the right to acquire
pursuant to exercisable options granted under the 1994 Stock Option Plan
and 8,000 shares of Common Stock granted as incentive restricted shares
under the 1994 Stock Option Plan.

(18) Includes 13,304 shares of Common Stock Mr. Sullenberger has the right to
acquire pursuant to exercisable options granted under the 1994 Stock Option
Plan and 12,000 shares of Common Stock granted as incentive restricted
shares under the 1994 Stock Option Plan.

(19) Includes 142,000 shares of Common Stock that the directors of the Company
have the right to acquire under the 1991 Directors Plan, 191,931 shares of
Common Stock that officers of the Company have the right to acquire
pursuant to exercisable options granted under the 1994 Stock Option Plan
and 139,000 shares of Common Stock granted to officers as incentive
restricted shares under the 1994 Stock Option Plan.

PROPOSAL 1 -- ELECTION OF DIRECTORS

NOMINEES

In accordance with the Bylaws of the Company, the Board of Directors has by
resolution fixed the number of directors to be elected at the Meeting at eight.
All eight positions on the Board are to be filled by the vote of the
stockholders at the Meeting. Each person so elected shall serve until the next
Annual Meeting of Stockholders and until his successor is elected and qualified.

The directors of the Company recommend a vote FOR the nominees listed
below. All nominees are currently serving as directors of the Company and,
except Mr. Kaplan, were elected at the 2000 Annual Meeting of Stockholders.
Messrs. Arnold and Mossop, presently directors of the Company, are retiring and
therefore are not standing for reelection.

Unless instructed otherwise, proxies will be voted FOR the nominees listed
below. Although the directors do not contemplate that any of the nominees will
be unable to serve prior to the Meeting, if such a situation arises, the
enclosed proxy will be voted in accordance with the best judgment of the person
or persons voting the proxy.

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The table below sets forth certain information regarding the nominees for
election to the Company's Board of Directors.

NAME, POSITION AND PRINCIPAL OCCUPATION AND BUSINESS
TENURE WITH THE COMPANY AGE EXPERIENCE FOR PAST FIVE YEARS (1)
----------------------- --- ----------------------------------

Roger P. Friou....................... 66 Private investor; President of Jitney Jungle Stores
Director since 1995 of America, Inc. (a regional supermarket chain) from
1996 to 1997, and its Vice Chairman and Chief
Financial Officer until 1996.
Martin L. Garcia..................... 45 Managing Director of Pinehill Capital Partners
Director since 1998 (investment company) since 2000; Director and
President of Garcia Enterprises (real estate holding
company) since 1988; Partner in the law firm of Hill,
Ward & Henderson, P.A. until 1999 and Of Counsel
thereafter; Managing Director of Garcia, Meyers & Co.
(a real estate service company) from 1993 to 1998.
Matthew W. Kaplan.................... 38 Managing Director of Rothschild Realty, Inc.
Director since 2000 (investment bank) and Portfolio Manager of Five
Arrows Realty Securities LLC, Five Arrows Realty
Securities II LLC, Five Arrows Realty Securities III
LLC, and Five Arrows Realty Securities IV LLC (each,
a real estate investment fund).
Michael J. Lipsey.................... 51 President of The Lipsey Company (designs and delivers
Director since 1997 training programs concerning the commercial real
estate marketplace).
Joe F. Lynch......................... 68 Chairman of the Board and Chief Executive Officer of
Director since 1994 First Continental Corporation (a real estate company)
since 1994; Limited Partner and Manager of the
General Partner of First Continental Investment Co.,
Ltd. since 1996.
C. Herbert Magruder.................. 68 Private investor since 1998; Physician and a partner
Director since 1988 in the medical firm of Carolina Pathology Associates
until 1998.
Steven G. Rogers..................... 46 Chief Executive Officer of the Company since 1997,
Director since 1996; President President since 1993, Director since 1996, Chief
since 1993; Chief Executive Operating Officer from 1993 until 1997, and Senior
Officer since 1997 Vice President of the Company from 1988 to 1993.
Leland R. Speed...................... 68 Chairman of the Board of the Company and EastGroup
Director since 1978 and Properties, Inc.; Chief Executive Officer of the
Chairman since 1980 Company and EastGroup Properties, Inc. until 1997.

- ---------------

(1) Unless otherwise stated, each nominee has held the position indicated for at
least the past five years.

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OTHER DIRECTORSHIPS AND TRUSTEESHIPS

Members of, and nominees to, the Board of Directors serve on the Boards of
Directors or the Boards of Trustees of the following publicly held companies:

NOMINEE COMPANY
------- -------

Matthew W. Kaplan................................... CNL Hospitality Properties, Inc.
Leland R. Speed..................................... ChemFirst Inc.
EastGroup Properties, Inc.
Farm Fish, Inc.

COMMITTEES AND MEETING DATA

The Audit Committee of the Board of Directors currently consists of Messrs.
Friou, Garcia, Kaplan and Lynch. The functions performed by this committee
consist principally of conferring with and reviewing the reports of the
Company's independent accountants and bringing to the entire Board of Directors
for review those items relating to audits or accounting practices which the
Audit Committee believes merit such review. The Audit Committee met twice during
the year ended December 31, 2000. See "-- Audit Committee Report" below.

The Compensation Committee of the Board, which currently consists of
Messrs. Arnold, Kaplan, Mossop and Magruder, met once during the year ended
December 31, 2000. The committee's function is to review compensation levels for
officers and recommend compensation levels for officers and administer the 1994
Stock Option Plan.

The Investment Committee of the Board currently consists of Messrs. Kaplan,
Lipsey, Lynch and Magruder. Its function is to act on behalf of the full Board
of Directors to authorize property purchases between regularly scheduled
quarterly Board of Directors meetings. The Investment Committee met once during
the year ended December 31, 2000.

The Company does not have a standing nominating committee or any committee
performing a similar function.

During the year ended December 31, 2000, the full Board of Directors met on
six occasions. Each director, other than Mr. Mossop, attended at least 75% of
the aggregate of the total number of meetings of the Board and meetings held by
all committees of the Board on which he served.

Audit Committee Report. The Audit Committee of the Board of Directors is
responsible for providing independent, objective oversight of the Company's
accounting functions and internal controls. The Audit Committee is composed of
four directors, Messrs. Friou, Garcia, Kaplan and Lynch, each of whom is
independent as defined by the New York Stock Exchange listing standards. The
Audit Committee operates under a written charter approved by the Board of
Directors. A copy of the charter is attached to this Proxy Statement as Appendix
A.

Management is responsible for the Company's internal controls and financial
reporting process. The independent accountants are responsible for performing an
independent audit of the Company's consolidated financial statements in
accordance with accounting principles generally accepted in the United States
and to issue a report thereon. The Audit Committee's responsibility is to
monitor and oversee these processes.

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10

In this context, the Audit Committee has met and held discussions with
management and the independent accountants. Management represented to the Audit
Committee that the Company's consolidated financial statements were prepared in
accordance with generally accepted accounting principles, and the Audit
Committee has reviewed and discussed the consolidated financial statements with
management and the independent accountants. The Audit Committee also discussed
with the independent accountants the matters required by Statement on Auditing
Standards No. 61 (Communication with Audit Committees). The Audit Committee
received written disclosures from the independent accountants required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), and the Audit Committee discussed with the independent accountants
that firm's independence.

Based upon the Audit Committee's discussions with management and the
independent accountants, and the Audit Committee's review of the representations
of management and the report of the independent accountants to the Audit
Committee, the Audit Committee recommended that the Board of Directors include
the audited consolidated financial statements in the Company's Annual Report on
Form 10-K for the year ended December 31, 2000, to be filed with the Securities
and Exchange Commission.

THE AUDIT COMMITTEE

ROGER P. FRIOU, CHAIR
MARTIN L. GARCIA
MATTHEW W. KAPLAN
JOE F. LYNCH

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires that directors, officers and
more than 10 percent stockholders of the Company file reports with the SEC
within the first 10 days of the month following any purchase or sale of shares
of Common Stock. During 2000, no officer or director of the Company was late in
filing a report under Section 16(a).

EXECUTIVE OFFICERS

The following is a list of the Company's executive officers:

NAME AND POSITION PRINCIPAL OCCUPATION AND BUSINESS
WITH THE COMPANY AGE EXPERIENCE FOR PAST FIVE YEARS (1)
----------------- --- ----------------------------------

Leland R. Speed................... 68 See table under "Nominees."
Chairman
Steven G. Rogers.................. 46 See table under "Nominees."
President and
Chief Executive Officer
Marshall A. Loeb.................. 38 Chief Financial Officer since 2000; Senior Vice
Senior Vice President, Chief President -- Western Region of EastGroup Properties,
Financial Officer and Secretary Inc. from 1991 until 2000; Consultant with Investment
Development Services in 2000.

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NAME AND POSITION PRINCIPAL OCCUPATION AND BUSINESS
WITH THE COMPANY AGE EXPERIENCE FOR PAST FIVE YEARS (1)
----------------- --- ----------------------------------

Sarah P. Clark.................... 41 Senior Vice President of the Company since 1997,
Senior Vice President of Assistant Secretary since 2000, Vice President from
Administration and Strategic 1992 until 1997, Chief Financial Officer and
Planning and Assistant Secretary Secretary of the Company from 1994 to 2000, Treasurer
from 1996 to 1999 and Controller from 1986 to 1992.
David R. Fowler................... 43 Senior Vice President of the Company since 1997, Vice
Senior Vice President of President from 1995 to 1997 and an Asset Manager
Operations since 1983; Vice President of Parkway Realty
Services, LLC ("Parkway Realty") since 1998.
James M. Ingram................... 44 Senior Vice President of the Company since 1997, Vice
Senior Vice President President from 1994 to 1997 and an Asset Manager
since 1989; President of Parkway Realty since 1998.
G. Mitchel Mattingly.............. 45 Senior Vice President of the Company since 1997 and
Senior Vice President Vice President from 1996 to 1997; President of
Parkway Texas Corporation from 1994 to 1997; Vice
President of Parkway Realty since 1998.
Regina P. Shows................... 34 Senior Vice President and Treasurer of the Company
Senior Vice President, since 1999, Vice President from 1998 to 1999 and
Treasurer and Controller Controller since 1992.
Jack R. Sullenberger.............. 47 Senior Vice President of the Company since 1997, Vice
Senior Vice President of President from 1996 to 1997 and an Asset Manager from
Technical Services 1986 to 1996.

- ---------------

(1) Unless otherwise stated, the indicated person has held the position
indicated for at least the past five years.

Ms. Clark, Senior Vice President of Administration and Strategic Planning
and Assistant Secretary of the Company, is the sister of Ms. Shows, Senior Vice
President, Treasurer and Controller of the Company. There are no other family
relationships between any of the directors or executive officers of the Company.

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12

EXECUTIVE COMPENSATION

The following table summarizes, for the fiscal years ended December 31,
2000, 1999 and 1998, the amount of compensation paid by the Company to its Chief
Executive Officer and six other executive officers whose cash compensation
during the year ended December 31, 2000 exceeded $100,000 (the "Named
Officers").

LONG TERM COMPENSATION
-----------------------------
AWARDS
-----------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
NAME AND PRINCIPAL ------------------- STOCK UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS AWARDS (1) OPTIONS/SARS (2) COMPENSATION (3)
------------------ ---- -------- -------- ---------- ---------------- ----------------

Leland R. Speed......... 2000 $147,000 $ 88,200 $ 0 12,500 $13,825
Chairman 1999 140,000 84,000 567,506 0 14,746
1998 141,077 84,000 0 15,000 15,792
Steven G. Rogers........ 2000 220,500 220,500 0 24,375 13,880
President and Chief 1999 210,000 210,000 1,106,625 0 13,966
Executive Officer 1998 196,500 195,000 0 37,000 13,714
Marshall A. Loeb........ 2000(4) 24,749 0 171,378 20,000 2,291
Senior Vice President,
Chief Financial
Officer and Secretary
Sarah P. Clark.......... 2000 150,000 105,000 0 11,250 13,670
Senior Vice President 1999 130,000 91,000 510,750 0 13,501
and Assistant
Secretary 1998 115,885 80,500 0 28,000 13,367
(former CFO)
David R. Fowler......... 2000 120,750 51,765 0 7,500 13,670
Senior Vice President 1999 115,000 59,305 340,500 0 13,449
of Operations 1998 105,808 45,000 0 13,000 34,793(5)
James M. Ingram......... 2000 120,750 51,765 0 7,500 13,670
Senior Vice President 1999 115,000 59,302 340,500 0 22,015(6)
1998 105,808 45,000 0 13,000 47,769(7)
G. Mitchel Mattingly.... 2000 135,285 50,082 0 7,500 13,880
Senior Vice President 1999 128,843 47,700 340,500 0 13,426
1998 122,485 45,000 0 13,000 13,153

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(1) On March 4, 1999, a committee of the Board of Directors granted restricted
shares to the Named Officers. Under these grants of restricted shares,
employees' rights to the restricted shares are conditioned on the Company's
achievement of specified performance goals set forth in the Company's 5 IN
50 PLAN and, alternatively, the employee's continued employment. The 5 IN 50
PLAN is the Company's strategic plan to increase funds from operations
("FFO") per basic share from $3.05 for 1998 to $5.00 per basic share for the
year ended December 31, 2002 before expense accruals for the restricted
share grants (a compounded annual growth in FFO per basic share of
approximately 13%). In early 2001 the employees' agreements were revised to
increase the minimum FFO per basic share from $5.00 to $5.23. The agreements
now provide that if the Company achieves FFO per basic share before taking
into account any expense accruals for grants of incentive restricted shares
of $5.23 for any year ended on or prior to December 31, 2002, the employees'
interest in 100 percent of the restricted shares will become nonforfeitable
as of December 31 of the year in which that goal is met. Alternatively, if
the Company's FFO per basic share before taking into account any expense
accruals for grants of incentive restricted shares for the year 2002 is at
least $4.75 but not more than $5.22, the employees' interest in 50 percent
of

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the restricted shares will become nonforfeitable; or, if the FFO per basic
share before taking into account any expense accruals for grants of
incentive restricted shares for 2002 is at least $4.50 but not more than
$4.74, 25 percent will become nonforfeitable. If an employee remains
employed on March 4, 2009 or ten years from the date of grant, the
employee's interest in all restricted shares will become nonforfeitable, to
the extent they are not already nonforfeitable. If an employee's employment
terminates before March 4, 2009 or ten years from the date of grant, by
reason of death or disability, the employee's interest in any forfeitable
restricted shares will become nonforfeitable according to a graduated
schedule based on years elapsed after the date of grant. Dividends on the
restricted shares will be retained by the Company, to be paid only when the
related shares become nonforfeitable.

(2) The options granted in 1998 were granted on June 5, 1998 and the options
granted in 2000 were granted on May 31, 2000, all under the 1994 Stock
Option Plan. One-third of the options granted in 1998 and 2000 vest on the
second anniversary of the date of grant, one-third on the third anniversary
of the date of grant and one-third on the fourth anniversary of the date of
grant. No options were granted in 1999.

(3) This is the Company's contribution to its 401(k) Plan for the Named
Officer's benefit and the amount of premium paid by the Company for group
term life insurance on the Named Officer's life.

(4) Mr. Loeb joined the Company as an executive officer on November 1, 2000.

(5) For 1998, includes $21,563 Mr. Fowler earned in commissions.

(6) For 1999, includes $8,541 Mr. Ingram earned in commissions.

(7) For 1998, includes $27,802 paid pursuant to Mr. Ingram's agreement with
Parkway Realty and $6,270 Mr. Ingram earned in commissions.

Option Grants. The following table gives information with respect to
options granted to the Named Officers during the year ended December 31, 2000.
The "Potential Realizable Value" columns assume that the price of the shares of
Common Stock will appreciate at annual rates of 5% and 10%, respectively, during
the term of the options. There can be no assurance that such appreciation will
take place.

INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
- -------------------------------------------------------------------------------------- AT ASSUMED ANNUAL RATES
NUMBER OF PERCENT OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS/SARS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS/SARS EMPLOYEES OF BASE EXPIRATION ---------------------------
NAME GRANTED (#) IN FISCAL YEAR PRICE ($/SH) DATE 5% ($) 10% ($)
---- ------------ ---------------- ------------ ---------- ----------- -------------
(a) (b) (c) (d) (e) (f) (g)

Leland R. Speed.......... 12,500 5.3% $30.125 5/30/10 $237,234 $ 598,734
Chairman
Steven G. Rogers......... 24,375 10.4% $30.125 5/30/10 462,607 1,167,532
President and Chief
Executive Officer
Marshall A. Loeb......... 20,000 8.5% $28.563 10/31/10 359,894 908,303
Senior Vice President,
Chief Financial Officer
and Secretary
Sarah P. Clark........... 11,250 4.8% $30.125 5/30/10 213,511 538,861
Senior Vice President
and Assistant Secretary
David R. Fowler.......... 7,500 3.2% $30.125 5/30/10 142,341 359,241
Senior Vice President
of Operations

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James M. Ingram.......... 7,500 3.2% $30.125 5/30/10 142,341 359,241
Senior Vice President
G. Mitchel Mattingly..... 7,500 3.2% $30.125 5/30/10 142,341 359,241
Senior Vice President

Option Exercises and Year End Values. The following table shows the value
realized by the Named Officers upon the exercise of options and the year end
value of unexercised in-the-money options held by the Named Officers. Year end
values are based upon the closing price of shares of Common Stock on the New
York Stock Exchange, Inc., on December 29, 2000 ($29.6875).

AGGREGATED OPTIONS/SAR EXERCISES WITH LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES

VALUE OF
NUMBER OF UNEXERCISED UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT FY-END (#) OPTIONS AT FY-END ($)
ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------- ------------------------- -------------------------

Leland R. Speed.............. 0 N/A 44,742/22,505 $508,403/$0
Chairman
Steven G. Rogers............. 0 N/A 59,110/49,054 $634,828/$0
President and Chief
Executive Officer
Marshall A. Loeb............. 0 N/A 0/20,000 $ 0/$22,490
Senior Vice President,
Chief Financial Officer
and Secretary
Sarah P. Clark............... 650 $ 9,168 28,258/29,917 $160,358/$0
Senior Vice President,
Chief Financial Officer
and Assistant Secretary
David R. Fowler.............. 0 N/A 11,704/16,171 $ 63,824/$0
Senior Vice President of
Operations
James M. Ingram.............. 1,000 $18,250 17,904/16,171 $186,263/$0
Senior Vice President
G. Mitchel Mattingly......... 0 N/A 9,079/16,171 $ 22,706/$0
Senior Vice President

Compensation Committee Report. The Compensation Committee of the Board of
Directors consists of Messrs. Arnold, Kaplan and Mossop and Dr. Magruder. The
Compensation Committee believes that the main purpose of base compensation is to
provide sufficient base compensation to the executive officers of the Company in
relation to salary levels for other real estate companies and the officer's
level of responsibility. The Compensation Committee considered a number of
factors in setting the compensation of Mr. Rogers, the Company's Chief Executive
Officer, the most important of which were the level of compensation paid to the

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chief executive officers of other real estate companies the same relative size
as the Company, the success of the Company's program of increasing profitability
and funds from operations and his importance in delineating and implementing the
Company's strategic plans. In setting the base compensation of Mr. Speed for
2000, the Compensation Committee took account of the fact that Mr. Speed was
also a salaried officer of EastGroup Properties, Inc., another real estate
investment trust.

The Compensation Committee has determined that the primary goals of the
Company's compensation policies should be as follows:

- To provide total compensation opportunities for executive officers which
are competitive with those provided to persons in similar positions with
which the Company competes for employees.

- To align the interests of management and stockholders through the use of
incentive compensation directly related to corporate performance and
through the use of stock-based incentives that result in increased Common
Stock ownership by executive officers.

The Compensation Committee believes that incentive compensation payable to
the executive officers of the Company should be based upon the Company's
performance and align the interests of management and the Company's
stockholders. In 2000, the Compensation Committee formulated targets for FFO per
share, upon which the executive officers' incentive compensation would be based.
In 2000, the targets were FFO of $3.89 per basic share of Common Stock before
accrual for bonuses for the executive officers to earn the target bonus set
forth below (a 5% increase over 1999 FFO of $3.71 per basic share) and FFO of
$4.07 per basic share of Common Stock before accrual for bonuses for the
executive officers to earn a bonus of two times the target bonus amount (a 10%
increase over 1999 FFO of $3.71 per basic share). The target bonus amounts were
30% of total base salary for Mr. Speed, 50% of base salary for Mr. Rogers and
35% of base salary for Ms. Clark. The Compensation Committee determined the FFO
targets based upon an analysis of the Company's internal projected financial
results for 2000 and the estimates of 2000 FFO prepared by independent
securities analysts who followed the Company. The Compensation Committee
believed that the stockholders of the Company would be benefitted significantly
if the FFO goal were met and would be further benefitted if such goal were
exceeded, and that management should be compensated for the benefits derived by
the Company's stockholders.

The bonus targets for the Company's other executive officers (Messrs.
Fowler, Ingram and Mattingly) were based upon FFO. The FFO targets were the same
as those set forth above, and the target bonus to be paid Messrs. Fowler and
Ingram was $25,882.50 and Mr. Mattingly was $25,041 if the FFO target of $3.89
was achieved and for Messrs. Fowler and Ingram was $51,765 and for Mr. Mattingly
was $50,082 if the FFO target of $4.07 was achieved.

The Company's 2000 FFO per basic share of Common Stock was $4.12 before
taking account of bonus accruals. After consideration, the Compensation
Committee believed that each of the Company's executive officers should be paid
the amount of incentive compensation provided by the above formula, under which
Messrs. Speed, Rogers, Fowler, Ingram and Mattingly and Ms. Clark received
bonuses with respect to 2000 of $88,200, $220,500, $51,765, $51,765, $50,082 and
$105,000, respectively.

In 1999 the Compensation Committee approved a new incentive compensation
plan to reward the Company's officers if the Company attains the goals of its 5
IN 50 PLAN. The 5 IN 50 PLAN is the Company's plan whose goal is to increase the
Company's FFO per basic share to $5.00 by the year ended December 31, 2002
before expense accruals for the restricted share grants. The Company's officers
are provided incentives to the completion of the 5 IN 50 PLAN by the restricted
stock awards described in the Summary Compensation

13
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Table and footnote 1 to the table. As described in the footnote, the restricted
stock awards were amended in 2000 to increase the amount of FFO per basic share
that must be attained by December 31, 2002 before expense accruals for the
restricted share grants for complete vesting to take place from $5.00 to $5.23.
This was done because management and the Compensation Committee recognized that
the issuance of the Series B Preferred Stock made it easier to attain the $5.00
basic goal and wanted to remove this unintended benefit. The Compensation
Committee believes that these awards will give management additional incentives
to work to the attainment of the goals of the 5 IN 50 PLAN, which we believe
will create significant value for stockholders.

DANIEL C. ARNOLD
MATTHEW W. KAPLAN
W. LINCOLN MOSSOP, JR.
C. HERBERT MAGRUDER

This Compensation Committee Report shall not be deemed incorporated by
reference by any general statement incorporating by reference this document or
any portion thereof into any filing under the Securities Act of 1933, as
amended, or the Exchange Act and shall not otherwise be deemed filed under such
acts.

Performance Comparison. Set forth below is a line graph comparing the
percentage change in the cumulative return to stockholders on shares of Common
Stock over the five years ending December 31, 2000 against the cumulative return
of the Standard & Poor's 500 ("S&P 500"), and the Equity REIT Index prepared by
the National Association of Real Estate Investment Trusts ("NAREIT Equity").

[GRAPH] (in dollars)

- -------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000
- -------------------------------------------------------------------------------

Company 100.00 203.7l 279.82 268.29 263.17 290.82
- -------------------------------------------------------------------------------
S&P 500 100.00 122.96 163.99 210.86 255.20 231.96
- -------------------------------------------------------------------------------
NAREIT Equity 100.00 135.27 162.67 134.20 128.00 161.75
- -------------------------------------------------------------------------------

Directors' Fees. Under the Company's compensation arrangement with
directors (other than Mr. Speed and Mr. Rogers who are salaried officers),
directors receive an annual stock award of 300 shares of Common Stock (valued at
approximately $9,338 on the date of the 2000 award) on the date of the annual
meeting of stockholders as an annual retainer fee plus $1,000 and reimbursement
of expenses for each meeting of the

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Board of Directors attended and $750 and reimbursement of expenses for each
meeting of a committee established by the Board of Directors attended.

Directors Plan. The Company's 1991 Directors Plan authorizes the issuance
of options for up to 250,000 shares of Common Stock to directors of the Company
who are not, and have not been for at least one year prior to the date of
determination, employees of the Company ("Non-Employee Directors"). Under the
1991 Directors Plan, each Non-Employee Director of the Company on September 13,
1991 was automatically granted an option to purchase 7,500 shares of Common
Stock. Each person who first becomes a Non-Employee Director after September 13,
1991 will automatically be granted an option to purchase 7,500 shares of Common
Stock on the date the person becomes a Non-Employee Director, if such shares of
Common Stock are available. Each Non-Employee Director will also be granted an
option to purchase an additional 3,000 shares of Common Stock on the date of any
annual meeting at which such Non-Employee Director is re-elected to the Board.
The option exercise price is the closing price of a share of Common Stock if the
shares of Common Stock are listed on an exchange or the average between the bid
and the asked price for that date if the shares of Common Stock are traded
over-the-counter (or, if no shares of Common Stock were publicly traded on that
date, the next preceding date that such shares of Common Stock were so traded).
Such options are exercisable in full on the date of grant and expire ten years
after the date of grant or, if earlier, six months after the termination of the
optionee's service as a Non-Employee Director, unless such service is terminated
by reason of death, in which case the optionee's legal representative shall have
one year in which to exercise the option.

No director exercised options under the 1991 Directors Plan during 2000. On
May 10, 2000, Messrs. Arnold, Friou, Garcia, Lipsey, Lynch, Magruder and Mossop
were each granted options to purchase 3,000 shares of Common Stock at an
exercise price of $31.125 per share. On October 6, 2000, Mr. Kaplan was granted
options to purchase 7,500 shares of Common Stock at an exercise price of
$29.9375 per share.

CERTAIN TRANSACTIONS AND RELATIONSHIPS

Cost Sharing Arrangement with EastGroup Properties, Inc. EastGroup
Properties, Inc. and the Company currently share the services and expenses of
the Chairman of the Board of Directors and his administrative assistant.

Change in Control Agreement. The Company has entered into a Change in
Control Agreement (the "Change in Control Agreement") with each of the Company's
executive officers (the "Executives"). The Change in Control Agreement provides
that if an Executive's employment is terminated or the Executive leaves the
Company's employment for certain reasons during a defined period (30 months in
the case of Leland R. Speed, Steven G. Rogers, Marshall A. Loeb and Sarah P.
Clark and 20 months in the case of James Ingram, David Fowler and G. Mitchel
Mattingly) after a Change in Control (as hereinafter defined), the Company will
pay a lump sum benefit to the Executive equal to a multiple of (2.5 times in the
case of Messrs. Speed, Rogers, Loeb and Ms. Clark and 1.667 times in the case of
Messrs. Fowler, Ingram and Mattingly) the average of the Executive's salary and
accrued bonus for the three calendar year period ending on the December 31 prior
to the Change in Control. The Change in Control Agreement also gives the
Executive the ability to leave the employment of the Company at any time during
the six month period after the Change in Control in which case the Executive
will receive the lump-sum payment of one-half of the amount set forth above.
Change in Control is defined in such agreement as (i) any change in control of a
nature that would be required to be represented under the Exchange Act proxy
rules; (ii) any person acquiring beneficial ownership of securities representing
30 percent or more of the combined voting power of the Company's outstanding
securities; (iii) certain changes in the Company's Board of Directors; (iv)
certain mergers; or (v) the approval of a plan of liquidation by the Company.
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PROPOSAL 2 -- ISSUANCE OF SHARES TO FIVE ARROWS

At the Meeting, the stockholders of the Company will be asked to vote on a
proposal to approve the issuance of Series B Preferred Stock that is convertible
on a one for one basis into shares of Common Stock. This approval is required by
rule 312.03(c) of the New York Stock Exchange ("NYSE"), the exchange on which
the Company is listed. Rule 312.03(c) requires stockholders approval when Common
Stock, or securities convertible into Common Stock, is to be issued that have,
or will have upon issuance, voting power equal to or in excess of 20% of the
voting power outstanding prior to such issuance or, the number of shares of
Common Stock, or securities convertible into Common Stock, to be issued will be
in excess of 20% of the number of shares of Common Stock outstanding prior to
such issuance. Parkway has entered into an agreement with Five Arrows under
which Parkway may issue up to 2,142,857 shares of Series B Preferred Stock to
Five Arrows. Stockholder approval is required for the issuance of the last
269,394 shares of Series B Preferred Stock. Pursuant to rule 312.03(c) of the
NYSE, the affirmative vote of a majority of votes cast on the proposal is
required to adopt the proposal provided that the total vote cast on the proposal
represents over fifty percent in interest of all securities entitled to vote on
the proposal. If the stockholders fail to approve this proposal, a maximum of
1,873,463 shares of Series B Preferred Stock will be issued to Five Arrows and
the Company has agreed to pay Five Arrows a termination fee of $0.70 for each of
the 269,394 shares of Series B Preferred Stock that will not be issued.

The Board of Directors of the Company unanimously recommends a vote FOR
approval of the issuance of the shares of Series B Preferred Stock to Five
Arrows. Unless otherwise instructed, proxies will be voted FOR approval of this
proposal. Mr. Matthew Kaplan, an affiliate of Five Arrows and its nominee on the
Company's Board of Directors, has an interest in the matters covered by this
proposal. See "-- Conflicts of Interest" below.

The Transaction. Five Arrows is an investment fund managed by Rothschild
Realty, Inc. ("Rothschild Realty"), a member of the Rothschild Group. In October
2000, the Company entered into an agreement with Five Arrows that provides for
the sale of 2,142,857 shares of Series B Preferred Stock for a purchase price of
$34.30 per share (representing a 16.9% premium to the $29.94 closing sales price
for a share of Common Stock on October 6, 2000) and a Warrant for 75,000 shares
of Common Stock. On an as converted and exercised basis, the Series B Preferred
Stock and Warrant represent 19.2% of the Common Stock. The shares of Series B
Preferred Stock are generally convertible into Common Stock on a one for one
basis and are entitled to quarterly dividends in arrears equal to the greater of
$0.73 per share or the dividend on the number of shares of Common Stock into
which a share of Series B Preferred Stock is convertible. Under the terms of the
agreement with Five Arrows, the Company could sell 2,142,857 shares of Series B
Preferred Stock to Five Arrows in up to four closings, at our option, through
July 6, 2001. The Warrant gives Five Arrows the right to purchase 75,000 shares
of Common Stock at a purchase price, subject to adjustment, of $35.00 per share
and expires on October 6, 2007. In connection with the transaction, the Company
entered into certain related agreements with Five Arrows, providing, among other
things, for certain registration rights with respect to the Common Stock
issuable upon exercise of the Series B Preferred Stock and pursuant to the
Warrant and the right to designate a member of the Board of Directors as
described below. We plan to sell the Series B Preferred Stock to Five Arrows by
July 6, 2001.

Conflicts of Interest. Matthew W. Kaplan, a member of our Board of
Directors, is a Manager of Five Arrows and a Managing Director of Rothschild
Realty and is Five Arrow's nominee to the Board. Five Arrows has the right to be
represented on our Board pursuant to the terms of the Series B Preferred Stock.

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19

Description of Capital Stock. The following description is only a summary
of certain terms and provisions of the Company's capital stock. You should refer
to our Charter and Bylaws for the complete provisions thereof.

The total number of shares of capital stock of all classes that we are
authorized to issue is 100,000,000. Currently, the Charter authorizes the
issuance of 65,097,143 shares of Common Stock, par value $.001 per share,
2,760,000 shares of 8.75% Series A Cumulative Redeemable Preferred Stock, par
value $.00l per share, 2,142,857 shares of Series B Convertible Cumulative
Preferred Stock, par value $.001 per share, and 30,000,000 shares of Excess
Stock, par value $.001 per share. Only shares of Common Stock, Series A
Preferred Stock and Series B Preferred Stock are now outstanding. The Common
Stock and the Series A Preferred Stock are currently listed on the New York
Stock Exchange under the symbols "PKY" and "PKY PrA" respectively.

Our Board of Directors is authorized by the Charter, to classify and
reclassify any of our unissued shares of capital stock, by setting, altering or
eliminating the designation, preferences, conversion or other rights, voting
powers, qualifications and terms and conditions of redemption of, limitations as
to dividends and any other restrictions on, our capital stock. The power of the
Board of Directors to classify and reclassify any of the shares of capital stock
includes the authority to classify or reclassify such shares into a class of
Preferred Stock.

Pursuant to the provisions of the Charter, if a transfer of stock occurs
such that any person would own, beneficially or constructively, in excess of
9.8% of our outstanding capital stock (excluding shares of excess stock), then
the amount in excess of the 9.8% limit will automatically be converted into
shares of excess stock and any such transfer will be void ab initio. However,
such restrictions will not prevent the settlement of a transaction entered into
through the facilities of any interdealer quotation system or national
securities exchange upon which shares of our capital stock are traded.
Notwithstanding the prior sentence, certain transactions may be settled by
providing shares of excess stock.

The holders of Common Stock are entitled to one vote on all matters to be
voted upon by the stockholders. The holders of Common Stock have no cumulative
voting rights. Additionally, subject to the rights of holders of Preferred
Stock, holders of Common Stock are entitled to receive such dividends as may be
declared from time to time by the directors out of funds legally available
therefor. The holders of shares of excess stock have no voting rights or
dividend rights and shares of excess stock are not transferrable.

The Common Stock ranks junior to both the Series A Preferred Stock and the
Series B Preferred Stock, our only other capital stock outstanding. The Series A
Preferred Stock and the Series B Preferred Stock rank equally as to dividends
and upon liquidation, dissolution and winding up. The Series B Preferred Stock
also ranks pari passu with (i) any class or series of Preferred Stock with an
aggregate liquidation preference of $35 million and (ii) any other class or
series of Preferred Stock approved by the holders of the Series B Preferred
Stock as provided for in the Articles Supplementary creating the Series B
Preferred Stock.

Holders of Series A Preferred Stock receive dividends at the fixed rate of
8.75% per annum of their liquidation preference. The liquidation preference for
the Series A Preferred Stock is $25.00 per share plus all accrued and unpaid
dividends. Dividends on the Series A Preferred Stock are cumulative.

The Series A Preferred Stock is not redeemable prior to April 23, 2003
except as provided in our Charter. On and after April 23, 2003, the Series A
Preferred Stock may be redeemed, at our option, for $25.00 per share plus all
accrued and unpaid dividends, without interest. The redemption price (other than
the portion

17
20

consisting of accrued and unpaid dividends) is payable solely out of the
proceeds of other capital stock and from no other source.

Holders of Series A Preferred Stock generally have no voting rights.
However, under certain circumstances, such holders may elect a total of two
directors. In addition, certain changes to the terms of the Series A Preferred
Stock cannot be made without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series A Preferred Stock. Holders of
Series A Preferred Stock will have certain other voting rights under Maryland
law.

The Series A Preferred Stock is not convertible or exchangeable, except as
provided in our Charter. The Series A Preferred Stock has no stated maturity and
will not be subject to any sinking fund or mandatory redemption.

The Series B Preferred Stock, unless converted by the holder or redeemed by
us, has a perpetual term, with no maturity. Holders of Series B Preferred Stock
are entitled to dividends per share equal to the greater of (i) the quarterly
dividend payable for the applicable quarter per share of Common Stock into which
the shares of Series B Preferred Stock are convertible or (ii) $.73 (the
"Applicable Dividend Rate"). The dividends on Series B Preferred Stock are fully
cumulative and, with respect to unpaid dividends, will accrue interest equal to
the Applicable Dividend Rate divided by $34.30, compounded quarterly until such
dividends are paid.

We can redeem the Series B Preferred Stock following the fifth anniversary
of its original date of issuance (or earlier in the event of a change of control
or "put event," as described in the next paragraph), provided, the initial
redemption of the Series B Preferred Stock will not be less than 50% of the
outstanding Series B Preferred Stock. We must send a notice of redemption
containing specified information within certain time periods to the holders of
the Series B Preferred Stock in the event of a redemption. During the period
beginning on the date we mailed the notice and ending on the 60th day following
the date of such mailing, each holder of the Series B Preferred Stock may
exercise its conversion rights. Upon the 60th day following the mailing of the
redemption notice to the holder of Series B Preferred Stock, and unless such
holder of the Series B Preferred Stock has exercised its conversion rights, we
will purchase from such holder (upon surrender by such holder at our principal
office of the certificate representing such shares) such shares of Series B
Preferred Stock specified in the redemption notice, at a price per share equal
to the product of (i) $35.00 per share plus accrued and unpaid dividends
(whether or not declared and accrued through the date of payment for redemption
or the date payment is made available for payment to the holder thereof) plus a
premium equal to the following percentage of $35.00:

REDEMPTION OCCURS
ON OR AFTER: BUT PRIOR TO: % PREMIUM
- ----------------- ------------- ---------

October 6, 2005 October 5, 2006 5.0
October 6, 2006 October 5, 2007 4.0
October 6, 2007 October 5, 2008 3.0
October 6, 2008 October 5, 2009 2.0
October 6, 2009 October 5, 2010 1.0
October 6, 2010 0.0

and (ii) the number of shares of Series B Preferred Stock to be redeemed as
provided in the redemption notice.

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21

Each holder of Series B Preferred Stock is entitled to require us to redeem
the shares for 102% of its liquidation value, plus accrued and unpaid
distributions whether or not declared, if any (the "Put Payment") upon our
voluntary act, omission or participation in our change of control or a "put
event." If a change of control or "put event" occurs that is not the result of
our voluntary act, omission or participation, we may elect to make the Put
Payment but may, in our discretion, elect not to make the Put Payment, in which
event the conversion ratio will be revised to the greater of (i) 125% of the
then current conversion ratio so that each share of Series B Preferred Stock
will be convertible into 125% of the number of shares of Common Stock into which
it would otherwise have been convertible and (ii) a fraction the denominator of
which is 80.00% of the current market price and the numerator of which is
$35.00. Notwithstanding the foregoing, if the SEC or its staff, by written
communication to us, indicates that the provisions regarding redemption on a
voluntary change of control or "put event" would preclude us from treating the
shares of Series B Preferred Stock as equity on our financial statements, then
we will have the right, in lieu of application of such provisions, to apply the
conversion ratio revision alternative set forth in the provisions regarding an
involuntary change of control or "put event."

Each share of Series B Preferred Stock is convertible, at any time after
December 31, 2002, into 1.0 share of Common Stock (subject to adjustment). The
Series B Preferred Stock has a liquidation preference of $35.00 per share plus
any accrued and unpaid dividends (whether or not declared).

Holders of Series B Preferred Stock are entitled to (i) vote on all matters
submitted to the holders of Common Stock together with the holders of Common
Stock as a single class and (ii) to vote or consent on all matters affecting the
Series B Preferred Stock as a separate class. In certain circumstances, the
Board will be expanded by two seats and the holders of Series B Preferred Stock
will be entitled to elect these two directors (the "Preferred Directors").

So long as shares of Series B Preferred Stock are outstanding, without the
consent of the holders of at least a majority of the outstanding Series B
Preferred Stock voting separately as a class or by unanimous written consent of
all of the holders of the Series B Preferred Stock (in addition to any other
vote or consent of stockholders required by law or by the Charter), we may not
(i) amend, alter or repeal the Articles Supplementary creating the Series B
Preferred Stock; (ii) amend, alter or repeal any provision of the Charter which
would adversely effect the rights of the holders of Series B Preferred Stock as
such; (iii) amend, alter or repeal any provision of the Charter which would
increase in any respect the restrictions or limitations on ownership applicable
to the Series B Preferred Stock; (iv) amend, alter or repeal our Charter or
Bylaws to limit the right of indemnification provided to any Preferred Director;
(v) issue additional shares of Series B Preferred Stock (or a series of
Preferred Stock that would vote as a class with the shares of Series B Preferred
Stock with respect to the election of any Preferred Director) or shares of stock
ranking senior or pari passu to the Series B Preferred Stock (as to dividends or
upon liquidation, dissolution or winding up), provided that we may sell
Preferred Stock ranking pari passu with the Series B Preferred Stock up to an
aggregate liquidation preference of $35 million; or (vi) amend, alter or repeal
any provision of the Charter or Bylaws to increase the number of directors on
the Board beyond nine (not including any Preferred Directors).

PROPOSAL 3 -- OTHER MATTERS

So far as management of the Company is aware, no matters other than those
outlined in this Proxy Statement will be presented to the Meeting for action on
the part of the stockholders. If any other matters are properly brought before
the Meeting, it is the intention of the persons named in the accompanying proxy
to vote thereon the shares of Common Stock to which the proxy relates in
accordance with their best judgment.

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22

APPOINTMENT OF INDEPENDENT ACCOUNTANTS

The Board of Directors has appointed Ernst & Young LLP, independent public
accountants, to act as auditors for the fiscal year ending December 31, 2001.
Ernst & Young LLP has audited the accounts of the Company since 1986. A
representative of Ernst & Young LLP is expected to be present at the Meeting and
will have an opportunity to make a statement, if he so desires, and will be
available to respond to appropriate questions.

During the fiscal year ending December 31, 2000, Ernst & Young LLP provided
various audit and non-audit services to the Company as follows:

Audit Fees. The aggregate fees billed to the Company by Ernst & Young LLP
during the fiscal year 2000 for review of the Company's annual financial
statements and those financial statements in the Company's quarterly reports on
Form 10-Q totaled $110,000.

Financial Information Systems Design and Implementation Fees. Our
independent auditors did not render information technology services to us during
the fiscal year ending December 31, 2000.

All Other Fees. The aggregate fees billed by Ernst & Young LLP for
professional services rendered to us during fiscal year 2000, other than the
audit services referred to above, were $210,525, of which $120,525 were billed
for services rendered to us in connection with tax return preparation, preferred
stock offering, audit related services and other consulting services. It also
includes a fee of $90,000 for tax credit consulting services rendered in
connection with obtaining a tax credit investor for the Moore Building in
Memphis, Tennessee. This amount was paid directly by Parkway on behalf of the
limited partnership that owns the Moore Building and has been added to loans due
Parkway from that limited partnership. We own a majority interest in the limited
liability company that is the general partner of that limited partnership.

The Audit Committee of the Board has considered whether provision of the
services described above is compatible with maintaining the independent
accountants' independence and has determined that those services have not
adversely affected Ernst & Young LLP's independence.

STOCKHOLDER PROPOSALS

PROPOSALS IN THE COMPANY'S PROXY STATEMENT

Stockholder proposals submitted for inclusion as a stockholder proposal in
the Company's proxy materials for the 2002 Annual Meeting of Stockholders must
be received at the Company's offices no later than , 2001.

PROPOSALS TO BE INTRODUCED AT THE MEETING BUT NOT INTENDED TO BE INCLUDED IN THE
COMPANY'S PROXY MATERIAL

For any stockholder proposal to be presented in connection with the 2002
Annual Meeting of Stockholders, including any proposal relating to the
nomination of a director to be elected to the Board of Directors of the Company,
a stockholder must give timely written notice thereof in writing to the
Secretary of the Company in compliance with the advance notice and eligibility
requirements contained in the Company's Bylaws. To be timely, a stockholder's
notice must be delivered to the Secretary at the principal executive offices of
the Company not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting; provided, however, that in
the event that the date of the annual meeting is advanced by more than 30 days
or delayed by more than 60 days from such anniversary date, notice by the

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stockholder to be timely must be so delivered not earlier than the 90th day
prior to such annual meeting and not later than the close of business on the
later of the 60th day prior to such annual meeting or the 10th day following the
day on which public announcement of the date of such meeting is first made. The
notice must contain specified information about each nominee or the proposed
business and the stockholder making the nomination or proposal.

In the event that the number of directors to be elected to the Board of
Directors is increased and there is no public announcement naming all of the
nominees for director or specifying the size of the increased Board of Directors
made by the Company at least 70 days prior to the first anniversary of the
preceding year's annual meeting, a stockholder's notice will be considered
timely, but only with respect to nominees for any new positions created by such
increase, if the notice is delivered to the Secretary at the principal executive
offices of the Company not later than the close of business on the 10th day
following the day on which such public announcement is first made by the
Company.

Based upon a meeting date of May 15, 2002 for the 2002 Annual Meeting of
Stockholders, a qualified stockholder intending to introduce a proposal or
nominate a director at the 2002 Annual Meeting of Stockholders should give
written notice to the Company's Secretary not later than March 16, 2002 and not
earlier than February 14, 2002.

The advance notice provisions in the Company's Bylaws also provide that in
the case of a special meeting of stockholders called for the purpose of electing
one or more directors, a stockholder may nominate a person or persons (as the
case may be) for election to such position if the stockholder's notice is
delivered to the Secretary at the principal executive offices of the Company not
earlier than the 90th day prior to the special meeting and not later than the
close of business on the later of the 60th day prior to the special meeting or
the 10th day following the day on which public announcement is first made of the
date of the special meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting.

The specific requirements of these advance notice and eligibility
provisions are set forth in Article II, Section 11 of the Company's Bylaws, a
copy of which is available upon request. Such requests and any stockholder
proposals should be sent to the Secretary of the Company at One Jackson Place,
Suite 1000, 188 East Capitol Street, Jackson, Mississippi 39201.

BY ORDER OF THE BOARD OF DIRECTORS

MARSHALL A. LOEB
Senior Vice President, Chief
Financial Officer
and Secretary

Jackson, Mississippi

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APPENDIX A

PARKWAY PROPERTIES, INC.

AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

CHARTER

I. PURPOSE

The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing the
financial reports and other financial information provided by the Corporation to
any governmental body or the public, reviewing the Corporation's systems of
internal controls regarding finance and accounting that management and the Board
has established and reviewing the Corporation's auditing, accounting and
financial reporting processes generally. Consistent with this function, the
Audit Committee should encourage continuous improvement of, and should foster
adherence to, the Corporation's policies, procedures and practices at all
levels. The Audit Committee's primary duties and responsibilities are to:

Serve as an independent and objective party to monitor the Corporation's
financial reporting process and internal control system.

Review and appraise the audit efforts of the Corporation's independent
accountants.

Provide an open avenue of communication among the independent accountants,
management and the Board of Directors.

The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.

II. COMPOSITION

The Audit Committee shall be comprised of three or more directors as
determined by the Board each of whom shall be independent directors and free
from any relationship that, in the opinion of the Board, would interfere with
the exercise of his or her independent judgment as a member of the Committee. In
determining whether a director is independent, the Board shall use the
guidelines set forth by the New York Stock Exchange. All members of the Audit
Committee shall have a working familiarity with basic finance and accounting
practices, and at least one member of the Audit Committee shall have accounting
or related financial management expertise, as determined by the Board in its
business judgment.

The members of the Audit Committee shall be elected by the Board at the
annual organizational meeting of the Board or until their successors shall be
duly elected and qualified. Unless a Chair is elected by the full Board, the
members of the Committee may designate a Chair by majority vote of the full
Audit Committee membership.

III. MEETINGS

The Audit Committee shall meet as frequently as circumstances dictate. As
part of its job to foster open communication, the Audit Committee should meet at
least annually with management and the independent accountants in separate
executive sessions to discuss any matters that the Audit Committee, management
or the independent accountants believe should be discussed privately.

A-1
25

IV. RESPONSIBILITIES AND DUTIES

To fulfill its responsibilities and duties the Audit Committee shall:

Documents/Reports Review

1. Review and, if it deems necessary, update this Charter periodically, at
least annually, as conditions dictate.

2. Review the Corporation's annual financial statements and any reports or
other financial information submitted to any governmental body or the public
including any certification, report, opinion or review rendered by the
independent accountants.

Independent Accountants

3. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness and approve the fees and
other compensation to be paid to the independent accountants. The Corporation's
independent accountants are to be ultimately accountable to the Board of
Directors and the Audit Committee. Periodically, the Audit Committee will
require a formal written statement from the accountants, delineating all
relationships between the accountants and the Corporation. The Audit Committee
will review and discuss with the accountants all significant relationships the
accountants have with the Corporation to determine the accountants'
independence.

4. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances warrant.

5. Periodically consult with the independent accountants out of the
presence of management about internal controls and the fullness and accuracy of
the Corporation's financial statements.

Financial Reporting Processes

6. In consultation with the independent accountants, review the integrity
of the Corporation's financial reporting processes.

7. Consider the independent accountants' judgements about the quality and
appropriateness of the corporation's accounting principles as applied in its
financial reporting.

8. Consider and approve, if appropriate, major changes to the Corporation's
auditing and accounting principles and practices as suggested by the independent
accountants or management.

Process Improvement

9. Establish regular and separate systems of reporting to the Audit
Committee by each of management and the independent accountants regarding any
significant judgments made in management's preparation of the financial
statements and the view of each as to appropriateness of such judgments.

10. Following completion of the annual audit, review separately with
management and the independent accountants any significant difficulties
encountered during the course of the audit, including any restrictions on the
scope of work or access to required information.

11. Review any significant disagreement among management and the
independent accountants in connection with the preparation of the financial
statements.
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12. Review with the independent accountants, and management the extent to
which changes or improvements in financial or accounting practices, as approved
by the Audit Committee, have been implemented.

Legal Compliance and Other

13. Review with the Corporation's counsel any legal matter that could have
a significant impact of the Corporation's financial statements.

14. Perform any other activities consistent with this Charter, the
Corporation's Bylaws and Charter, and governing law, as the Audit Committee or
the Board deems necessary or appropriate.

A-3
27
[Parkway logo] PROXY
-----

PARKWAY PROPERTIES, INC.
One Jackson Place, Suite 1000
188 East Capitol Street
Jackson, Mississippi 39201

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Leland R. Speed and Steven G. Rogers,
and each or either of them, Proxies for the undersigned, with full power of
substitution, to vote all shares of common stock, $0.001 par value per share
("Shares"), of Parkway Properties, Inc. (the "Company") which the undersigned
would be entitled to vote at the Annual Meeting of Stockholders (the "Meeting")
to be held at the Suncom Building, 111 East Capitol Street, Jackson, Mississippi
on May 15, 2001, at 1:30 p.m., Jackson time, and directs that the Shares
represented by this Proxy shall be voted as indicated on the reverse side.

PLEASE SIGN, DATE AND RETURN THIS PROXY CARD IN THE
ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES.

(continued and to be signed on the reverse side)

(FRONT)
28
1. ELECTION OF DIRECTORS

[ ] FOR ALL [ ] WITHHOLD ALL [ ] FOR ALL EXCEPT

Nominees: Roger P. Friou; Martin L. Garcia; Matthew W. Kaplan; Michael J.
Lipsey; Joe F. Lynch; C. Herbert Magruder; Steven G. Rogers; and Leland R.
Speed.

- --------------------------------------------------------------------------------
(Except Nominee(s) written above)

2. ISSUANCE OF SERIES B CONVERTIBLE CUMULATIVE PREFERRED STOCK OF THE
COMPANY THAT IS CONVERTIBLE INTO SHARES OF COMMON STOCK OF THE COMPANY
TO FIVE ARROWS REALTY SECURITIES III L.L.C.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Meeting or any adjournment
thereof.

THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED
BY THE STOCKHOLDER. THE BOARD OF DIRECTORS FAVORS A VOTE FOR PROPOSAL 1
AND PROPOSAL 2. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED FOR
PROPOSALS 1 AND 2 ABOVE AND WILL BE VOTED IN THE DISCRETION OF THE
PROXIES NAMED HEREIN WITH RESPECT TO ANY MATTER REFERRED TO IN 3 ABOVE.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE
BOX, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE
YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.

Dated: , 2001
---------------

Signature(s)
------------------------

------------------------------------
PLEASE SIGN EXACTLY AS NAME(S)
APPEAR ON STOCK CERTIFICATE(S). A
corporation is requested to sign its
name by its President or other
authorized officer, with the office
held so designated. A partnership
should sign in the partnership name
by an authorized person. Executors,
administrators, trustees, guardians
and corporate officers are requested
to indicate the capacity in which
they are signing. JOINT TENANTS
SHOULD BOTH SIGN.

YOUR VOTE IS IMPORTANT!

PLEASE SIGN, DATE AND RETURN THIS PROXY CARD IN THE
ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES.

(BACK)