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ECHO POLSKA PROPERTIES N.V. - Acquisition of retail property portfolio and withdrawal of cautionary

Release Date: 01/02/2017 15:30
Code(s): EPP     PDF:  
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Acquisition of retail property portfolio and withdrawal of cautionary

ECHO POLSKA PROPERTIES N.V.
(Incorporated in the Netherlands)
(Company number 64965945)
JSE share code: EPP
ISIN: NL0011983374
(“EPP” or “the company”)


ACQUISITION OF RETAIL PROPERTY PORTFOLIO AND WITHDRAWAL OF CAUTIONARY


Shareholders are advised that EPP has concluded a preliminary acquisition agreement (the “preliminary acquisition
agreement”) with Buffalo Poland Holdco S.a.r.l, Buffalo Poland Holdco II S.a.r.l and Factory Poland Holdco S.a.r.l,
(the “sellers”), real estate funds managed by Blackstone, to acquire, as a composite transaction, 4 retail properties (the
“properties”) for an aggregate consideration of € 166.57 million (“the transaction” or “the acquisition/s”). To this
end, EPP will acquire:

-     100% of the equity in Klodzko Retail LLC (“Klodzko Retail”), which holds the legal title (in the form of
      ownership rights) to the Galeria Twierdza Shopping Centre situated in Klodzko, Poland (“Twierdza Klodzko”)
      for an aggregate purchase consideration of €40.67 million. Prior to the closing of the transaction Klodzko
      Retail will also acquire the perpetual ususfruct right to the plot adjacent to Twierdza Klodzko on which a
      Broaster Chicken Drive restaurant is located;
-     100% of the equity in Zamosc Retail LLC which holds the legal title (partly in the form of ownership rights and
      partly as the holder of perpetual usufruct rights) to the Galeria Twierdza Shopping Centre situated in Zamosc,
      Poland for an aggregate purchase consideration of €53.51 million;
-     100% of the equity in Kalisz Retail LLC which holds the legal title (in the form of a co-ownership right) to the
      Galeria Tecza Shopping Centre situated in Kalisz, Poland for an aggregate purchase consideration of
      €23.21 million. The remaining co-owner is Spolem Supermarket that owns the premises from which it operates
      within the Galeria Tecza Shopping Centre; and
-     100% of the equity in Wloclawek Retail LLC (“Wzorcownia Retail”) which holds legal title to the
      Wzorcownia Shopping Centre situated in Wloclawek, Poland (“Wzorcownia”) for an aggregate purchase
      consideration of € 49.17 million. Wzorcownia is spread across 16 different plots, with different forms of
      ownership rights. Wzorcownia Retail has ownership rights in respect of 2 plots and perpetual usufruct rights in
      respect of 1 plot, comprising the majority of Wzorcownia. Wzorcownia Retail owns 11 separate premises with
      a 25.27% share in the co-ownership right of the plots and 2 separate premises with a 60.19% share in the
      co-ownership right of the plots. The remaining co-ownership rights are held by individuals and Budizol Sp. z o.
      o. Property S.K.A. respectively.

Prior to the conclusion of the final sale agreement in respect of the transaction, a Cypriot subsidiary of EPP will
assume all of EPP’s rights and obligations in respect of the transaction.

RATIONALE FOR THE TRANSACTION

The transaction is in line with EPP’s stated strategy of acquiring quality retail assets in strategic locations. The
properties comprise recently developed modern retail centers that are regionally dominant, each with a balanced tenant
mix of predominately institutional quality tenants (including those representing leading international brands).
Twierdza Klodzko and Wzorcownia are the only large modern retail properties in their respective cities. All four
properties have easy access by road and public transport (with three of them located in the city centre) and are located
in cities which are commercial, tourist or industrial hubs. The purchase consideration of €166.57 million represents an
acquisition yield of approximately 7.5%.

SALIENT TERMS OF THE TRANSACTION

The transaction is expected to close no earlier than 1 May 2017 and no later than 30 September 2017. The purchase
consideration for the transaction will be paid in cash on the closing date of the transaction. The acquisitions will be
funded through a combination of debt, potential proceeds from the recycling of assets and the issuance of new shares.
The transaction remains conditional upon:

-     EPP obtaining competition clearance from the President of the Polish Office of Competition and Consumer
      Protection;
-     the issuance of an insurance policy in favour of EPP to cover any liability of the sellers under the sellers’
      warranties and representations furnished in terms of the transaction agreements;
-     the issuance of an insurance policy in favour of EPP to cover any liability of the sellers in respect of the sellers’
      title to the equity in Klodzo Retail, Zamosc Retaill LLC, Kalisz Retail LLC and Wloclawek Retail LLC (“the
      companies”) and the companies’ title to the properties;
-     the completion of certain internal corporate restructuring of the companies to ensure a positive net asset position
      and a reduction of the companies’ liabilities under intra-group loans, to meet certain contractual criteria;
-     EPP obtaining debt finance in respect of circa 55% of the total purchase consideration payable for the
      acquisitions.

Upon the fulfilment of the conditions precedent set out above, an unconditional final share purchase agreement will be
concluded on the same terms as the preliminary acquisition agreement.

The preliminary acquisition agreement includes warranties, indemnities and undertakings which are normal for a
transaction of this nature.

PROPERTY SPECIFIC INFORMATION

The property specific information required in terms of the JSE Listings Requirements in relation to the properties
including property name and address, geographical location, rentable area, weighted average rental per square metre
and value attributable to the property is set out below.

Property name and address                 Galeria Twierdza, Klodzko, Noworuda 2 St., Klodzko, Poland
Sector                                    Retail
Geographic location                       Klodzko, Poland
Gross lettable area (m2)                  23 359
Weighted average rental per m2            €11.52
Value attributed to the property          €40.67 million

Property name and address                 Galeria Twierdza, Zamosc, Przemyslowa 10 St, Zamosc, Poland
Sector                                    Retail
Geographic location                       Zamosc, Poland
Rentable area (m2)                        23 796
Weighted average rental per m2            €12.66
Value attributed to the property          €53.51 million

Property name and address                 Galeria Tecza, 3 Maja 1 St, Kalisz, Poland
Sector                                    Retail
Geographic location                       Kalisz, Poland
Rentable area (m2)                        16 002
Weighted average rental per m2            €10.94
Value attributed to the property          €23.21 million

Property name and address                 Galeria Wzorcownia, Kilinskiego 3 St, Wloclawek, Poland
Sector                                    Retail
Geographic location                       Wloclawek, Poland
Rentable area (m2)                        25 589
Weighted average rental per m2            €12.13
Value attributed to the property          €49.17 million

The board is satisfied that the value of each of the properties is in line with the purchase prices being paid for the
properties by EPP. The directors of EPP are are not registered as independent professional valuers or as professional
associate valuers in terms of the Property Valuers Profession Act, No 47 of 2000.
CATEGORISATION OF THE TRANSACTION AND WITHDRAWAL OF CAUTIONARY

The transaction is classified as a category 2 transaction in terms of paragraph 9.5(a) of the JSE Listing Requirements
of the JSE Limited. The transaction is not subject to approval by EPP shareholders.

Following the release of this announcement, the cautionary announcement released on SENS on 25 January 2017 is
withdrawn and caution is no longer required to be exercised by shareholders when dealing in their EPP shares.

About EPP

EPP is a Dutch dual listed real estate investment company that follows the REIT formula, investing in retail, office
and industrial properties throughout Poland. With a current portfolio that includes 10 office, 10 retail projects and one
retail development site in the centre of Warsaw totaling 636 170 m², EPP’s portfolio is highly diversified. The
buildings are located in 13 major cities across the country, characterized by their strong economy, purchasing power
and ability to attract international investment interests. EPP’s goal is to create Poland’s leading cash-generating
platform of well-performing office, retail and industrial assets that will deliver consistently high returns to EPP
shareholders. Further information on EPP is available on EPP’s website www.echo-pp.com.

1 February 2017


JSE sponsor and Corporate Advisor
Java Capital


LuxSE Listing Agent
M Partners


More information:

Magda Cieliczko, Marketing Director Echo Polska Properties,
Mobile: +48 603 203 619
magda.cieliczko@echo-pp.com

Java Capital, JSE Sponsor
Phone: +27 11 722 3050

M Partners, Luxembourg Listing Agent
Phone: +352 263 868 602

Jacques de Bie, South Africa, Investor Relations, Singular Systems IR
Mobile: +27 (0)82 691 5384

Date: 01/02/2017 03:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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