UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

       9,305,363 shares of Common Stock, $.001 par value, were outstanding as of August 13, 2002.

PARKWAY PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)

PARKWAY PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)

See notes to consolidated financial statements.

PARKWAY PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)

See notes to consolidated financial statements.

See notes to consolidated financial statements.

       The consolidated financial statements include the accounts of Parkway Properties, Inc. ("Parkway" or "the Company") and its 100% owned subsidiaries. All significant intercompany transactions and accounts have been eliminated.

       The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

       The accompanying unaudited condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal recurring nature. Operating results for the three months and six months ended June 30, 2002 are not necessarily indicative of the results that may be expected for the year ended December 31, 2002. The unaudited condensed consolidated financial statements should be read in conjunction with the annual report and the notes thereto.

       The consolidated balance sheet at December 31, 2001 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

(2)   Reclassifications

       Certain reclassifications have been made in the 2001 consolidated financial statements to conform to the 2002 classifications.

(3)   Supplemental Cash Flow Information

       The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

       Prior to the Joint Venture, the subsidiary that owned 233 North Michigan Avenue was capitalized with equity of approximately $72 million and a 10-year first mortgage with a balance of approximately $105 million as of May 30, 2002. The first mortgage remained in place as an obligation of the Joint Venture. Parkway received net cash proceeds of approximately $55 million from the sale and used the proceeds to purchase new properties and to reduce short-term borrowings under the Company's line of credit. The Joint Venture is accounted for using the equity method of accounting.

       On May 22, 2002, Parkway purchased the Park on Camelback (the "Park"), a 103,000 square foot office project in Phoenix, Arizona. Parkway acquired the Park at a purchase price of $12.4 million plus $318,000 for closing costs and estimated capital items in year one, for a total acquisition price of $12.7 million. The purchase was funded using proceeds from bank borrowings on a line of credit with JPMorgan Chase Bank at a rate equal to the 30-day Libor rate plus 137.5 basis points. The Park, a five-building two-story office project located in the Camelback Corridor sub-market, was constructed in 1981.

       On May 31, 2002, Parkway purchased the Viad Corporate Center (the "Viad Purchase"), a 484,000 square foot office building in Phoenix, Arizona. Parkway acquired the Viad Purchase for $58 million. The purchase was funded using a combination of proceeds from the Joint Venture and bank borrowings on a line of credit with JPMorgan Chase Bank at a rate equal to the 30-day Libor rate plus 137.5 basis points. The Viad Purchase is a 24-story class A office tower located in the Downtown North sub-market.

       On June 5, 2002, Parkway purchased a three-building suburban office portfolio consisting of 412,000 square feet in Houston, Texas (the "Houston Purchase"). The properties were acquired for a purchase price of $27.2 million plus an additional $941,000 in estimated first year improvements raising the total acquisition price to $28.1 million. The purchase was funded using proceeds from a new term loan with JPMorgan Chase Bank at a rate equal to the 30-day Libor rate plus 137.5 basis points.

       The Houston Purchase portfolio consists of 1717 St. James Place, 5300 Memorial and Town & Country Central One. The 1717 St. James property is located in the Tanglewood sub-market, 5300 Memorial property is located in the Midtown sub-market and Town & Country Central One is located in the Katy Freeway/Energy Corridor sub-market.

       On May 31, 2002, the Company closed on the cash sale of its 96,000 square foot office property in Indianapolis, Indiana for net proceeds of $3,192,000. The Company recorded a gain for financial reporting purposes of $770,000 on the sale in the second quarter. The net proceeds from the sale were used to reduce amounts outstanding on the Company's lines of credit.

       As of June 30, 2002, the Company is invested in two joint ventures with unrelated investors. We have retained a minority interest of 30% in one joint venture and 50% in the other. As required by generally accepted accounting principles, we have accounted for our joint venture activity using the equity method of accounting, as we do not control either of these joint ventures. As a result, the assets and liabilities of the joint ventures are not included on Parkway's consolidated balance sheet as of June 30, 2002. Information relating to these consolidated joint ventures is detailed below.

       On May 30, 2002, Parkway sold a 70% interest in its investment in Parkway 233 North Michigan LLC (the "Joint Venture"), a subsidiary limited liability company that owns the 233 North Michigan Avenue building in Chicago, to an affiliate of Investcorp International, Inc. ("Investcorp") for a price equal to approximately 70% of the Company's original purchase price of the property plus all capital costs since it acquired the property in June 2001. Parkway will continue to provide management and leasing for the building on a day-to-day basis. In connection with the sale, Parkway recognized a $250,000 acquisition fee in accordance with the terms of the joint venture agreement signed in October 2000 with Investcorp. The Company recorded a loss on the sale of the 70% interest in the Joint Venture of $269,000. The carrying amount of the joint venture interest at June 30, 2002 is $16,155,000.

       In addition, the Company owns a 50% interest in an office property in New Orleans, Louisiana known as the Wink Building. The building is 100% leased and occupied by the other 50% partner. The carrying amount of the joint venture interest at June 30, 2002 is $397,000.

       Balance sheet information for the unconsolidated joint ventures is summarized below as of June 30, 2002 and December 31, 2001 (in thousands):

       Income statement information for the unconsolidated joint ventures is summarized below for the three months and six months ended June 30, 2002 (in thousands):

       In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 62, Amendment of FASB Statement No. 13, and Technical Corrections". SFAS No. 145 will require gains and losses on extinguishments of debt to be classified as income or loss from continuing operations rather than as extraordinary items as previously required under SFAS No. 4 unless the extinguishment qualifies as an extraordinary item under the provisions of APB Opinion No. 30. SFAS No. 145 also amends SFAS No. 13 to require certain modifications to capital leases be treated as a sale-leaseback and modifies the accounting for sub-leases when the original lessee remains a secondary obligor (or guarantor). In addition, the FASB rescinded SFAS No. 44 which addressed the accounting for intangible assets of motor carriers and made numerous technical corrections. The Company is required to adopt SFAS No. 145 in the first quarter of 2003. Management does not anticipate that the adoption of SFAS No. 145 will have a significant effect on the Company's consolidated results of operations or financial position.

       On July 24, 2002, the Company purchased 14,100 shares of its common stock at a average price of $30.08. Since June 1998, the Company has purchased a total of 2,141,593 shares if its common stock, which represents approximately 19% of the common stock outstanding when the buyback program was initiated on June 30, 1998. The Company has the authority to purchase an additional 485,900 shares under its existing authorization from its Board of Directors.

Comments are for the balance sheet dated June 30, 2002 compared to the balance sheet dated December 31, 2001

       During the six months ending June 30, 2002, total assets decreased $72,457,000 and office properties (before depreciation) decreased $76,437,000 or 8.7%.

       Parkway's direct investment in office and parking properties decreased $84,212,000 net of depreciation to a carrying amount of $711,648,000 at June 30, 2002, and consisted of 54 operating properties. During the six months ending June 30, 2002, the Company also capitalized building improvements and additional purchase expenses of $7,019,000 and recorded depreciation expense of $13,038,000 related to its operating property portfolio.

       The primary reason for the decrease in assets is the May 30, 2002, sale of a 70% interest in our investment in Parkway 233 North Michigan LLC (the "Joint Venture"), a subsidiary limited liability company that owns the 233 North Michigan Avenue building in Chicago, to an affiliate of Investcorp International, Inc. ("Investcorp") for a price equal to approximately 70% of the Company's original purchase price of the property plus all capital costs since it acquired the property in June 2001. Parkway will continue to provide management and leasing for the building on a day-to-day basis. In connection wit the sale, Parkway recognized a $250,000 acquisition fee in accordance with the terms of the joint venture agreement signed in October 2000 with Investcorp. The Company recorded a loss on the sale of the 70% interest in the Joint Venture of $269,000.

       Prior to the Joint Venture, the subsidiary that owned 233 North Michigan Avenue was capitalized with equity of approximately $72 million and a 10-year first mortgage with a current balance of approximately $105 million as of May 30, 2002. The first mortgage remained in place as an obligation of the Joint Venture. Parkway received net cash proceeds of approximately $55 million from the sale and used the proceeds to purchase new properties and to reduce short-term borrowings under the Company's line of credit. The Joint Venture is accounted for using the equity method of accounting.

       On May 22, 2002, Parkway purchased the Park on Camelback (the "Park"), a 103,000 square foot office project in Phoenix, Arizona. Parkway acquired the Park at a purchase price of $12.4 million plus $318,000 for closing costs and estimated capital items in year one, for a total acquisition price of $12.7 million. The purchase was funded using proceeds from bank borrowings on a line of credit with JPMorgan Chase Bank at a rate equal to the 30-day Libor rate plus 137.5 basis points. The Park, a five-building two-story office project located in the Camelback Corridor sub-market, was constructed in 1981.

       On May 31, 2002, Parkway purchased the Viad Corporate Center (the "Viad Purchase"), a 484,000 square foot office building in Phoenix, Arizona. Parkway acquired the Viad Purchase for $58 million. The purchase was funded using a combination of proceeds from the Joint Venture and bank borrowings on a line of credit with JPMorgan Chase Bank at a rate equal to the 30-day Libor rate plus 137.5 basis points. The Viad Purchase is a 24-story class A office tower located in the Downtown North sub-market.

       On June 5, 2002, Parkway purchased a three building suburban office portfolio consisting of 412,000 square feet in Houston, Texas (the "Houston Purchase"). The properties were acquired for a purchase price of $27.2 million plus an additional $941,000 in estimated first year improvements raising the total acquisition price to $28.1 million. The purchase was funded using proceeds from a new term loan with JPMorgan Chase Bank at a rate equal to the 30-day Libor rate plus 137.5 basis points.

       The Houston Purchase portfolio consists of 1717 St. James Place, 5300 Memorial and Town & Country Central One. The 1717 St. James property is located in the Tanglewood sub-market, 5300 Memorial property is located in the Midtown sub-market and Town & Country Central One is located in the Katy Freeway/Energy Corridor sub-market.

       On May 31, 2002, the Company closed on the cash sale of its 96,000 square foot office property in Indianapolis, Indiana for net proceeds of $3,192,000. The Company recorded a gain for financial reporting purposes of $770,000 on the sale in the second quarter. The net proceeds from the sale were used to reduce amounts outstanding on the Company's lines of credit.

       Notes payable to banks totaled $137,718,000 at June 30, 2002, and resulted from advances under bank lines of credit to purchase additional office properties, make improvements to office properties and fund redevelopment costs.

       Mortgage notes payable without recourse decreased $81,883,000 during the six months ended June 30, 2002, as a result of the following (in thousands):

       On April 11, 2002, the Company closed a $20,450,000 non-recourse first mortgage on the Bank of America Plaza building in Nashville, Tennessee. The loan was funded by New York Life Insurance Company at a fixed rate of 7.10% and matures May 10, 2012. On May 30, 2002, the Company closed a $9,525,000 non-recourse first mortgage on the One Park Ten building in Houston, Texas. The loan was funded by Wachovia Securities at a fixed rate of 7.10% and matures June 1, 2012.

       During the six months ended June 30, 2002, the Company recognized an extraordinary loss on the early extinguishment of a mortgage note payable in the amount of $18,000. The extraordinary loss represents the prepayment penalty paid on the loan.

       The Company expects to continue seeking fixed rate, non-recourse mortgage financing at terms ranging from ten to thirty years on select office building investments as additional capital is needed. The Company plans to maintain a ratio of debt to total market capitalization from 25% to 50% although such ratio may from time to time temporarily exceed 50%, especially when the Company has incurred significant amounts of short-term debt in connection with acquisitions. In addition, volatility in the price of the Company's common stock may result in a debt to total market capitalization ratio exceeding 50% from time to time. In addition to this debt ratio, the Company also monitors interest and fixed charge coverage ratios. The interest coverage ratio is computed by comparing the cash interest accrued to earnings before interest, taxes, depreciation and amortization. This ratio for the six months ending June 30, 2002 and 2001 was 3.28 and 3.18 times, respectively. The fixed charge coverage ratio is computed by comparing the cash interest accrued, principal payments made on mortgage loans and preferred dividends paid to earnings before interest, taxes, depreciation and amortization. This ratio for the six months ending June 30, 2002 and 2001 was 1.79 times for each period.

       Stockholders' equity increased $2,494,000 during the six months ended June 30, 2002, as a result of the following (in thousands):

       Net income available to common stockholders for the three months ended June 30, 2002, was $5,196,000 ($.56 per basic common share) as compared to $4,796,000 ($.51 per basic common share) for the three months ended June 30, 2001. Net income available to common stockholders for the six months ended June 30, 2002 was $10,706,000 ($1.15 per basic common share) as compared to $11,213,000 ($1.20 per basic common share) for the six months ended June 30, 2001. Net income included a net gain from the sale of a joint venture interest and real estate from discontinued operations in the amount of $501,000 for the six months ended June 30, 2002. Net income included a net gain from the sale of land, an office property and real estate equity securities in the amount of $1,611,000 for the six months ended June 30, 2001.

       The primary reason for the change in the Company's net income from office and parking properties for 2002 as compared to 2001 is the net effect of the operations of the following properties purchased, properties sold or joint venture interest sold:

Properties Purchased:

Properties Sold:

       Operations of office and parking properties are summarized below (in thousands):

       Dividend income decreased $495,000 for the six months ending June 30, 2002, compared to the six months ending June 30, 2001. The decrease is due to the Company's sale of all the equity securities of real estate investment trusts held through the Company's RSVP Program.

           The $2,232,000 increase in interest expense on office properties for the six months ended June 30, 2002 compared to the six months ended June 30, 2001 is primarily due to the mortgage loans placed in 2001 and 2002. The average interest rate on mortgage notes payable as of June 30, 2002 and 2001 was 7.4% for each period.

       The $330,000 increase in interest expense on bank notes for the six months ending June 30, 2002, compared to the six months ending June 30, 2001, is primarily due to the increase in the average balance of borrowings outstanding under bank lines of credit from $73,015,000 during 2001 to $122,388,000 during 2002. In addition, weighted average interest rates on bank lines of credit decreased from 6.85% during 2001 to 4.76% during 2002.

       General and administrative expenses were $2,581,000 and $2,351,000 for the six months ended June 30, 2002 and 2001, respectively. The net increase of $230,000 is primarily due to the increase in amortization expense pertaining to the Company's restricted shares.

       Cash and cash equivalents were $1,833,000 and $2,458,000 at June 30, 2002 and December 31, 2001, respectively. The Company generated $29,939,000 in cash flows from operating activities during the six months ending June 30, 2002 compared to $22,396,000 for the same period of 2001. The Company used $49,775,000 in investing activities during the six months ending June 30, 2002. Proceeds from the sales of a joint venture interest and real estate from discontinued operations were $58,603,000 for the six months ending June 30, 2002. In implementing its investment strategy, the Company used $97,761,000 to purchase operating properties. The Company also spent $9,617,000 to make capital improvements at its office properties and $230,000 toward the Toyota Center Garage real estate development project. Cash dividends of $17,504,000 ($1.26 per common share, $1.09 per Series A preferred share and $1.46 per Series B preferred share) were paid to stockh olders. Proceeds from long-term financing were $29,975,000, scheduled principal payments were $5,463,000 and principal payments on the early extinguishment of debt were $1,781,000 on mortgage notes payable during the six months ending June 30, 2002. During the six months ended June 30, 2002, the Company recognized an extraordinary loss on the early extinguishment of debt in the amount of $18,000.

       The Company plans to continue pursuing the acquisition of additional investments that meet the Company's investment criteria and intends to use bank lines of credit, proceeds from the sale of non-core assets and office properties, proceeds from the sale of portions of owned assets through joint ventures, possible sales of securities and cash balances to fund those acquisitions. At June 30, 2002, the Company had $137,718,000 outstanding under two bank lines of credit and a Term Loan.

       The Company's cash flows are exposed to interest rate changes primarily as a result of its lines of credit used to maintain liquidity and fund capital expenditures and expansion of the Company's real estate investment portfolio and operations. The Company's interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows and to lower its overall borrowing costs. To achieve its objectives, the Company borrows at fixed rates, but also has a three-year $135 million secured revolving credit facility with a consortium of 13 banks with J.P. Morgan Chase & Co. serving as the lead agent (the "$135 million line") and a one-year $12.5 million unsecured line of credit with PNC Bank (the "$12.5 million line").

     On June 4, 2002, Parkway entered into a Credit Agreement (the "Credit Agreement") with JP Morgan Chase Bank, as Administrative Agent, Wachovia Bank, National Association, as Syndication Agent, and other banks as participants. The Credit Agreement, among other things, provides for a new $35 million one-year term loan facility (the "Term Loan") of which $35 million was drawn upon and paid to Parkway as of June 4, 2002. Excluding bank fees and closing costs, the Term Loan bears interest at a rate equal to LIBOR plus an applicable margin ranging from 1.125% to 1.375% depending on Parkway's leverage. Accrued and unpaid interest under the Term Loan is payable monthly with the final interest payment as well as the entire principal amount outstanding thereunder due and payable on June 4, 2003.

       Effective June 28, 2001, the Company amended and renewed the previous $150 million unsecured revolving credit facility with J.P. Morgan Chase & Co. and reduced it to $135 million. Effective August 5, 2001, the Company replaced the previous $10 million line with AmSouth Bank with the $12.5 million line with PNC Bank. The interest rates on the lines of credit are equal to the 30 day LIBOR rate plus 112.5 to 137.5 basis points, depending upon overall Company leverage. The weighted average interest rate on the $12.5 million line, the $135 million line and the Term Loan was 3.14 %, 5.14% and 3.37% at June 30, 2002, respectively.

       During the quarter ending June 30, 2002, the Company entered into a $65 million interest rate swap agreement with JPMorgan Chase Bank effectively locking the interest rate on this portion of outstanding unsecured, floating rate bank debt at 3.365% through December 23, 2002. The interest rate swap reduces the Company's interest rate risk while it pursues placement of non-recourse, long-term secured mortgages on certain of its recent acquisitions.

       The Company designated the swaps as a hedge of the variable interest rates on $81 million of the Company's borrowings under the $135 million line and $35 million of the Company's borrowings under the Term Loan. Accordingly, changes in the fair value of the swap are recognized in accumulated other comprehensive income until the hedged item is recognized in earnings.

       During the six months ended June 30, 2002, the Company entered into a reverse swap interest rate contract. The effect of the reverse swap is to convert a fixed rate mortgage note payable to a variable rate. The Company does not hold or issue these types of derivative contracts for trading or speculative purposes.

       The $12.5 million line is unsecured and is expected to fund the daily cash requirements of the Company's treasury management system. This line of credit matures August 5, 2002 and has an interest rate equal to the 30-day LIBOR rate plus 112.5 to 137.5 basis points, depending upon overall Company leverage, with the current rate set at LIBOR plus 130 basis points. The Company paid a facility fee of $12,500 (10 basis points) upon closing of the loan agreement. Under the $12.5 million line, the Company does not pay annual administration fees or fees on the unused portion of the line.

       The $135 million line is also unsecured and is expected to fund acquisitions of additional investments. This line of credit matures June 28, 2004 and has an interest rate equal to the LIBOR rate plus 112.5 to 137.5 basis points, depending upon overall Company leverage, with the current rate set at LIBOR plus 137.5 basis points. The Company paid a facility fee of $225,000 (16.67 basis points) and origination fees of $565,000 (41.85 basis points) upon closing of the loan agreement and pays an annual administration fee of $37,500. The Company also pays fees on the unused portion of the line based upon overall Company leverage, with the current rate set at 25 basis points.

       The Term Loan is unsecured and is expected to fund acquisitions of additional investments. The Term Loan matures June 4, 2003 and has an interest rate equal to the LIBOR rate plus 112.5 to 137.5 basis points, depending upon overall Company leverage, with the current rate set at LIBOR plus 137.5 basis points. The Company paid facility and origination fees of $170,000 (48.57 basis points) upon closing of the loan agreement. The Company does not pay annual administration fees or fees on the unused portion of the Term Loan.

       At June 30, 2002, the Company had $223,102,000 of non-recourse fixed rate mortgage notes payable with an average interest rate of 7.4% secured by office properties and $137,718,000 drawn under bank lines of credit and the Term Loan. Based on the Company's total market capitalization of approximately $872,477,000 at June 30, 2002 (using the June 30, 2002 closing price of $36.38 per common share), the Company's debt represented approximately 45% of its total market capitalization. The Company plans to maintain a ratio of debt to total market capitalization from 25% to 50% although such ratio may from time to time temporarily exceed 50%, especially when the Company has incurred significant amounts of short-term debt in connection with acquisitions. In addition, volatility in the price of the Company's common stock may result in a debt to market capitalization exceeding 50% from time to time. In addition to this debt ratio, the Company also monitors interest and fixed charge coverage ratios. The interest coverage ratio is computed by comparing the cash interest accrued to earnings before interest, taxes, depreciation and amortization. This ratio for the six months ending June 30, 2002 and 2001 was 3.28 and 3.18 times, respectively. The fixed charge coverage ratio is computed by comparing the cash interest accrued, principal payments made on mortgage loans and preferred dividends paid to earnings before interest, taxes, depreciation and amortization. This ratio for the six months ending June 30, 2002 and 2001 was 1.79 times for each period.

       The table below presents the principal payments due and weighted average interest rates for the fixed rate debt.

*Remaining six months

       The Company presently has plans to make additional capital improvements at its office properties in 2002 of approximately $8,848,000. These expenses include tenant improvements, capitalized acquisition costs and capitalized building improvements. Approximately $725,000 of these improvements relate to upgrades on properties acquired in recent years that were anticipated at the time of purchase. All such improvements are expected to be financed by cash flow from the properties and advances on the bank lines of credit.

       The Company anticipates that its current cash balance, operating cash flows, proceeds from the sale of office properties held for sale, proceeds from the sale of portions of owned assets through joint ventures, possible sales of securities and borrowings (including borrowings under the working capital line of credit and the Term Loan) will be adequate to pay the Company's (i) operating and administrative expenses, (ii) debt service obligations, (iii) distributions to shareholders, (iv) capital improvements, and (v) normal repair and maintenance expenses at its properties both in the short and long term.

Funds From Operations

       Management believes that funds from operations ("FFO") is an appropriate measure of performance for equity REITs. Funds from operations is defined by the National Association of Real Estate Investment Trusts (NAREIT) as net income (computed in accordance with generally accepted accounting principles), excluding gains or losses from sales of property and extraordinary items under GAAP, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis. In 2002, NAREIT clarified that FFO related to assets held for sale, sold or otherwise transferred and included in results of discontinued operations should continue to be included in consolidated FFO. This clarification is effective January 1, 2002, and calculation of FFO based on this clarification should be shown for all periods presented in financial statements or tables. Funds from operations do not represent cash generated from operating activities in accordance with accounting principles generally accepted in the United States and is not an indication of cash available to fund cash needs. Funds from operations should not be considered an alternative to net income as an indicator of the Company's operating performance or as an alternative to cash flow as a measure of liquidity.

       The following table presents the Company's FFO for the three months and six months ended June 30, 2002 and 2001 (in thousands):

      NAREIT has recommended supplemental disclosure concerning capital expenditures, leasing costs and straight-line rents which are given below (in thousands):

       In addition to historical information, certain sections of this Form 10-Q may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, such as those that are not in the present or past tense, that discuss the Company's beliefs, expectations or intentions or those pertaining to the Company's capital resources, profitability and portfolio performance and estimates of market rental rates. Forward-looking statements involve numerous risks and uncertainties. The following factors, among others discussed herein and in the Company's filings under the Securities Exchange Act of 1934, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: defaults or non-renewal of leases, increased interest rates and operating costs, failure to obtain necessary outside financing, difficulties in identifying properties to acquire and in effecting acquisitions, failure to qualify as a real estate investment trust under the Internal Revenue Code of 1986, as amended, environmental uncertainties, risks related to natural disasters, financial market fluctuations, changes in real estate and zoning laws and increases in real property tax rates. The success of the Company also depends upon the trends of the economy, including interest rates, income tax laws, governmental regulation, legislation, population changes and those risk factors discussed elsewhere in this Form 10-Q and in the Company's filings under the Securities Exchange Act of 1934. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management's analysis only as the date hereof. The Company assumes no obligation to update forward-looking statements.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk.

       See information appearing under the caption "Liquidity" in Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations.

PART II. OTHER INFORMATION

         On May 9, 2002, the Company held its Annual Meeting of Stockholders. At the Annual Meeting, the following seven directors were elected to serve until the next Annual Meeting.

         In addition, the following item was also approved at the May 9, 2002 meeting:

         Approval for the proposal to ratify the adoption of the Company's 2001 Directors' Stock Option Plan.