Echo Investment S.A.

M&A Activity • Aug 21, 2018

Conclusionof a final purchase agreement concerning enterprise of a subsidiary ofEcho Investment S.A., including land in Wrocław concerning SagittariusBusiness House project

Withreference to the current report of Echo Investment S.A. (the "Company")no. 25/2017 dated 20 July 2017 (the "Report"), theManagement Board of the Company hereby informs that on 21 August 2018,the subsidiary of Echo Investment S.A., i.e. Sagittarius - Projekt Echo- 113 spółka z ograniczoną odpowiedzialnością spółka komandytowa withits registered office in Kielce, as the seller (the "Seller"),and a fund operating under the name "W-HIH Immo Invest", as the buyer(the "Buyer") represented by Warburg-HIH Invest Real EstateGmbH with its registered office in Germany, entered into a finalpurchase agreement concerning the Seller's enterprise (the "FinalAgreement") (the "Transaction").

TheFinal Agreement was concluded in performance of a preliminary purchaseagreement for the sale of the Seller's enterprise (the "Enterprise")described in the Report. The terms and conditions of the Final Agreementare generally similar to the terms and conditions generally applied insuch types of transactions. The Final Agreement contains representationsand warranties of the seller and the buyer and provisions relating tothe liability of the parties that are standard for such types oftransactions.

Termsnot defined in this report have the meaning as defined in the Report.

Informationon the Enterprise

TheEnterprise,inter alia, includes:

1.theright of perpetual usufruct of the land located in Wrocław at Sucha andBorowska streets (the "Land"), the right of ownership ofthe office and retail building being under construction located on theLand (the "Building") and known as the Sagittarius BusinessHouse (the "Sagittarius Project") and structures related tothe Land;

2.theright of ownership right to relevant movables;

3.therights and obligations stemming from the property management agreement;

4.therights and obligations stemming from key agreements (includingreceivables) concluded by the Seller;

5.thecopyrights to the construction designs concerning the SagittariusProject;

6.theintellectual property rights (including rights to internet domain andthe Sagittarius logo).

Price

Thevalue of the Transaction was determined as the quotient of the NOI ofthe Enterprise and the capitalisation rate of 6.175%. The value of theTransaction as of the date of the conclusion of the Final Agreement (the"Closing") equals to the amount of EUR74,455,635,which was further decreased by,inter alia, the value of"rent-free periods", costs of fit-out works and certain other costs andincreased by the lease receivables and cash. Consequently, the pricepaid at Closing was EUR 68,509,792.75.

Additionally,the payment of EUR844,729has been retaineddue to existence of the minor Building defects and certain as-builtdocumentation remaining to be delivered after the Closing (the "RetainedAmounts"). The Retained Amounts will be paid by the end of March2019 after the defects will be removed and the as-built documentationwill be delivered to the Buyer.

Otherinformation concerning the Transaction

AtClosing, the Seller and the Buyer concluded the Fit-Out Agreement whichstipulates remuneration for the Seller to be paid by the Buyer for theexecution of the finishing work after the conclusion of the FinalAgreement in the parts of the Building which are earmarked for lease andhave not been leased on the day of conclusion of the Final Agreement orhave been leased but the finishing work is not completed. Theremuneration will approximately amount to EUR2,127,897+VAT, i.e. to EUR 450 + VAT for each square metre of the area finishedby the Seller and it is to be paid until the end of September 2020 afterthe conditions under the Fit-Out Agreement will be satisfied.

Additionally,the Seller and the Buyer concluded,inter alia, the followingdocuments at Closing:

1.arental guarantee agreement (the "Rental Guarantee") underwhich the Seller granted to the Buyer a guarantee in particularregarding the Seller's coverage of rent payments and average servicefees for sections of the Building that are not leased out to thirdparties as at the date of signing the Final Agreement; and

2.aquality and construction guarantee agreement (the "QualityGuarantee") under which the Seller in particular granted to theBuyer a guarantee for the Building and the structures related to theLand (existing on the date of execution of the Final Agreement,including the fit-out works (prace wykończeniowe) consistingof an obligation to remove, at the Seller's cost, the defects on theterms and conditions of the Quality Guarantee).

Furthermore,"Echo - SPV 7" sp. z o.o. and "Echo - Aurus" sp. z o.o., the Company'ssubsidiaries, granted the Buyer a surety concerning the Seller'sobligations under the Final Agreement, the Fit-Out Agreement, the RentalGuarantee and the Quality Guarantee. Moreover, the German Pension Fundrelated with the Buyer granted the Seller a parent company guaranteeconcerning all of the obligations under the Final Agreement and underthe Fit-Out Agreement.

Legalbasis: Article 17 paragraph 1 of MAR - inside information