Conclusion of a preliminary sale agreement concerning an organized part of the enterprise of a subsidiary of Echo Investment S.A., including land in Warsaw on which the development of Gatehouse Offices - the first office building of the project Warsaw Brewery - is carried out.

The Management Board of Echo Investment S.A. (the “Company”) hereby informs that on 28 November 2018, the subsidiary of Echo Investment S.A., i.e. Dellia Investments – Projekt Echo – 115 spółka z ograniczoną odpowiedzialnością spółka komandytowa with its registered office in Kielce, as the seller (the “Seller”), and a company operating under the laws of Luxembourg, LUX III S.a r.l. (an entity managed by an institutional real estate investment manager), as the buyer (the “Buyer”; the Buyer and the Seller will hereinafter jointly be referred to as the “Parties”) entered into a preliminary sale agreement concerning organized part of the Seller’s enterprise (the “Preliminary Agreement”) (the “Transaction”).

Subject of the transaction

The Parties agreed that the Buyer will purchase the organized part of the Seller’s enterprise which will include and/or will include in particular:

1. the right of perpetual usufruct of the plot of land no. 73/2 located in Warsaw at Grzybowska and Wronia Street (the “Land”), the right of ownership of the office and retail building being under construction located on this land and known as Gatehouse Offices (the “Building”) and structures related to this land for which the District Court for Warsaw – Mokotów in Warsaw, 10^th Land and Mortgage Register Department keeps the land and mortgage register no. WA4M/00459168/2.
2. the ownership right to relevant movables;
3. the rights and obligations stemming from the property management agreement, maintenance agreements and service agreements.

The Transaction does not cover any land, rights or obligations other than those related to the office building Gatehouse Offices (Polish: Biura przy Bramie).

Price

The base price will amount to approx. EUR 74,300,000. Based on successful leasing up of the remaining space and fulfilment of other conditions set in the Preliminary Agreement the price can be increased to approximately EUR 76,500,000.

The above values are estimates as of the conclusion of the Preliminary Agreement and the final values will be known and provided once the Transaction will be completed.

Conditions Precedent

The Final Agreement will be concluded if the conditions precedent (“Conditions Precedent”) will be satisfied. Conditions Precedent include among others:

1. obtaining of final tax ruling concerning the Transaction;
2. completion of the construction of the Building and other construction works specified in the Preliminary Agreement;
3. issuance of a final occupancy permit for the Building;
4. leasing of at least 95% of lettable area in the Building;

The parties intend to conclude the Final Agreement once all of the Conditions Precedent are fulfilled or waived by the relevant Party (“Closing”) by 31 October 2019 (the “Final Date”).

Other information concerning the Transaction

At Closing or shortly after fulfilment of the Conditions Precedent, the Parties will sign, in addition to the Final Agreement, among other things:

1. a quality guarantee agreement;
2. a rental guarantee agreements.

Furthermore, the Company will issue a guarantee securing the payment by the Seller to the Buyer of the contractual penalty in the amount of 5% of the price, which will be payable in cases specified in the Preliminary Agreement. Following the execution of the Preliminary Agreement the Buyer will deposit the amount equal to 5% of the price at the escrow account securing the payment by the Buyer of the contractual penalty in the same amount, which will be payable in cases specified in the Preliminary Agreement.

Legal basis: Article 17 paragraph 1 of MAR - inside information.