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11.09.2019
Current report No. 32 / 2019
Current report No. 32 / 2019

Conclusion of a final agreement on the sale of real property – O3 Business Campus III in Krakow

With reference to the information disclosed in current report No. 31/2016, the Management Board of Echo Investment S.A. (the “Issuer”) reports that on 11 September 2019, the Issuer’s subsidiary, Echo-Opolska Business Park sp. z o.o. sp. k., acting as the seller, concluded a final agreement on the purchase of real propertyconstituting part of the office building complex (Stage III) O3 Business Campus situated in Krakow at ul. Opolska and al. 29 Listopada (the “Real Property”) with a subsidiary of EPP N.V. (“EPP”), EPP Development 6 sp. z o.o., acting as the buyer (the “Agreement”).

The gross leasable area (GLA) of the Real Property amounts to approximately 18,900m2, the generated annual net operating income (NOI) of the Real Property amounts to approximately EUR 3.3million, and the main tenants are City Space, Mota Engil, Epam Systems, Danish Crown and LuxMed.

The Agreement was concluded in performance of the preliminary conditional agreement concerning the sale of the property described in current report No. 31/2016 following the satisfaction or waiver of the relevant conditions precedent. The terms and conditions of the Agreement are similar to the terms and conditions generally applied in such types of transactions. The Agreement contains representations and warranties of the seller and the buyer and relating to the liability of the parties, which are standard for such types of transactions. 

Under the transaction, the seller and the buyer concluded a rental guarantee agreement (“RGA”). The principal terms of the RGA provide for a guarantee extended to the buyer of the seller’s coverage of rent payments and service fees for specific sections of the building which are not leased out to third parties on the date of the signing of the Agreement and for those sections which have been leased, but with respect to which rent discounts or rent-free periods were applied. 

Moreover, in connection with the Agreement, the parties thereto concluded among others: 

  1. an escrow account agreement;
  2. a fit-out agreement; and
  3. an understanding regarding the repayment of the profit participation loan extended by a subsidiary of EPP.

The purchase price was EUR 40,333,806plus VAT, which amount accounted for a reduction by (i) the value of certain fit-out works remaining to be completed within the tenants’ areas as stated in the signed lease agreements; (ii) the value of technical defects; and (iii) the value of transaction costs. The seller may obtain additional payments related to the completion of fit-out works within the tenants’ areas and with the removal of technical defects in the total amount of EUR 6,987,886plus VAT.

Legal grounds: Article 17(1) of the MAR – inside information.

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