Echo Investment S.A.

M&A Activity • Sep 11, 2019

Conclusionof a final agreement on the sale of real property - O3 Business CampusIII in Krakow

Withreference 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-OpolskaBusiness Park sp. z o.o. sp. k., acting as the seller, concluded a finalagreement on the purchase of real property constituting part of theoffice building complex (Stage III) O3 Business Campus situated inKrakow at ul. Opolska and al. 29 Listopada (the "Real Property")with a subsidiary of EPP N.V. ("EPP"), EPP Development 6sp. z o.o., acting as the buyer (the "Agreement").

Thegross leasable area (GLA) of the Real Property amounts to approximately18,900m2, the generated annual net operating income (NOI) ofthe Real Property amounts to approximately EUR 3.3million, andthe main tenants are City Space, Mota Engil, Epam Systems, Danish Crownand LuxMed.

TheAgreement was concluded in performance of the preliminary conditionalagreement concerning the sale of the property described in currentreport No. 31/2016 following the satisfaction or waiver of the relevantconditions precedent. The terms and conditions of the Agreement aresimilar to the terms and conditions generally applied in such types oftransactions. The Agreement contains representations and warranties ofthe seller and the buyer and relating to the liability of the parties,which are standard for such types of transactions.

Underthe transaction, the seller and the buyer concluded a rental guaranteeagreement ("RGA"). The principal terms of the RGA providefor a guarantee extended to the buyer of the seller's coverage of rentpayments and service fees for specific sections of the building whichare not leased out to third parties on the date of the signing of theAgreement and for those sections which have been leased, but withrespect to which rent discounts or rent-free periods were applied.

Moreover,in connection with the Agreement, the parties thereto concluded amongothers:

(i)anescrow account agreement;

(ii)afit-out agreement; and

(iii)anunderstanding regarding the repayment of the profit participation loanextended by a subsidiary of EPP.

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