Conclusion by a subsidiary of Echo Investment S.A. of a conditional agreement for the sale of ownership to the real property located at Al. J. Piłsudskiego 24 in Łódź, developed with the React office building

The Management Board of Echo Investment S.A. (Issuer) informs that on 27 November 2024 a subsidiary of the Issuer, i.e. React – Dagnall spółka z ograniczoną odpowiedzialnością – S.K.A. with its registered office in Kielce, as the seller (Seller), and Maggiora spółka z ograniczoną odpowiedzialnością with its registered office in Warsaw, as the buyer (Buyer, whereby the Buyer together with the Seller shall hereinafter be jointly referred to as the Parties),  concluded a conditional sale agreement concerning the real property located at Al. J. Piłsudskiego 24 in Łódź, owned by the Seller (Agreement).

On the basis of the concluded Agreement, the Buyer purchased the Seller's real property and other assets, including in particular:

1. 1. 1. the ownership right to the property located in Łódź at Al. J. Piłsudskiego 24, comprising (i) plots of land No. 427/13, 428/12 and 432/39, S-6 precinct, covered by the land and mortgage register number LD1M/00167804/8 maintained by the District Court for Łódź-Śródmieście in Łódź, 16th Land and Mortgage Department, and (ii) plot of land No. 427/15, S-6 precinct, covered by the land and mortgage register number LD1M/00213899/8 maintained by the District Court for Łódź-Śródmieście in Łódź, 16th Land and Mortgage Department, developed with the office building under the name "React" (Building) and all structures, installations and other facilities serving the Building (Property);
      2. the ownership of the movable property specified in the Agreement,

on the condition that the Mayor of Łódź does not exercise the pre-emption right to purchase the Property pursuant to art. 109 section 1 item 4a) of the Real Estate Management Act of 21 August 1997.

The Agreement stipulates that the agreement on transfer of the ownership of the Property (Transfer Agreement) will be concluded within 10 business days, calculated from the receipt of the Mayor of Łódź's statement on not exercising the pre-emption right or ineffective expiry of the deadline for submitting such a statement, whichever occurs earlier. The execution of the Transfer Agreement is subject to the Buyer obtaining an external financing.

The price payable under the Transfer Agreement (Price) will amount to approx. EUR 32.5 million plus VAT.

At the date of the Transfer Agreement, amount corresponding to 90% of the net Price will be paid to the Seller. The remaining part will be deferred for up to 12 months (Deferred Payment). The Deferred Payment will bear interest at the rate of 8.5% per annum, calculated up to the date of payment.

The Parties have also concluded a quality guarantee agreement with respect to the Building (Quality Guarantee Agreement) and a rental guarantee agreement (Rental Guarantee Agreement), which will enter into force on the date of conclusion of the Transfer Agreement. The basic provisions of the Quality Guarantee Agreement provide for granting the Buyer a quality guarantee for the Building and structures located on the Property. The basic provisions of the Rental Guarantee Agreement provide for (i) granting the Buyer a guarantee that the Seller will cover the rental payments and service charge payments for a part of the Building that is planned to be leased to a new tenant after the conclusion of the Agreement, and (ii) payment by the Seller to the Purchaser of the value of the unexpired rent-free periods and rent reductions granted to the tenants of the Building calculated as at the date of the Transfer Agreement. At the date of this report, the Building is leased up to 96%.

The provisions of the Agreement do not differ from the provisions used in these types of transactions. The Agreement contains standard provisions for this type of transaction regarding representations and warranties of the seller and the buyer and regarding the Parties’ liability as well as the provisions relating to appointment in the Transfer Agreement of the Seller as the contractor of certain fit-out works in the premises in the Building covered by the Rental Guarantee Agreement.

The Issuer will announce the conclusion of the Transfer Agreement in a separate report.