Conclusion of a sale agreement concerning real property 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 was made.

The Management Board of Echo Investment S.A. (the “Company”) hereby informs that on 28 March 2019, 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 Europa III S.a r.l. (an entity managed by GLL Real Estate Partners), as the buyer (the “Buyer”; the Buyer and the Seller will hereinafter jointly be referred to as the “Parties”) entered into a final sale agreement concerning the Seller’s real property (the “Final Agreement”) (the “Transaction”). 

Subject of the transaction
Pursuant to the Final Agreement the Buyer purchased the real property of the Seller as well as other assets including in particular:

(I)    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 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, 10th Land and Mortgage Register Department keeps the land and mortgage register no. WA4M/00459168/2.

(II)    the ownership right to relevant movables;
(III)    the rights and obligations stemming from the 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 purchase price amount to EUR 73,133,802 net of VAT. The building is fully leased. Based on completion of fit out works in leased premises and fulfilment of other conditions set in the Final Agreement the price can be increased to approx. EUR 76,100,000 net of VAT. Additionally, the Buyer is obliged to perform at its own cost fit-out works in not fitted-out premises, having the value of approx. EUR 700,000 net of VAT. The payment of the price increase is expected at the turn of the third and the fourth quarter of 2019. 
Rules of payment of the purchase price; security collateral

According to the Final Agreement, the purchase price will be paid in two tranches: first, in the amount of EUR 38,552,448.67 net of VAT payable immediately following the execution of the Final Agreement, and second, encompassing the remaining portion of the purchase price payable following fulfilment of the conditions agreed by the Parties, however not later than within 12 months from the execution of the Final Agreement. Together with the first tranche, the Buyer will pay to the Buyer the amount of the VAT due on the full purchase price.

As a security collateral for the payment of the second tranche of the purchase price as well as the payment of potential price increases, the Buyer established mortgages to the benefit of the Seller over the real property being subject of the Final Agreement as well as submitted itself to voluntary enforcement pursuant to art. 777 § 1 point 5 of the codes of civil proceedings. 

Other information concerning the Transaction
Together with execution of the Final Agreement, the Parties executed among other documents:
(I)    a quality guarantee agreement concerning the Building;
(II)    a rental guarantee agreements aimed at compensation to the Buyer of the shortfalls in operating income from the Building within the duration of the tenant’s incentives under the lease agreements.

Furthermore, the Company issued a guarantee securing the payment by the Seller to the Buyer of the obligations of the Buyer resulting from the Final Agreement and the abovementioned agreements.

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