Current report 10/2020 of 1 February 2020

Preliminary agreements to acquire first investment target for logistics platform created with Issuer’s participation

The Management Board of REINO Capital S.A., based in Warsaw, (“Issuer”) announces that on 31 January 2020 an agreement was executed to purchase a logistics centre (“Centre”) situated in a strategic location near major national transportation routes. The Centre comprises properties with warehouses totalling over 100 000 sqm. The investment currently being implemented by the buyers includes further construction of warehouses. The Centre’s target area may exceed 400 000 sqm.

The Centre’s acquisition is divided into two stages. A final agreement on the sale of the existing facilities is expected to be signed by 30 April 2020, once conditions precedent are met (or waved by the buyers), including conditions related to an interpretation concerning the transaction’s tax effects.

Under the second stage, an agreement on the sale of a property on which a further part of the investment is to be implemented is expected to be signed by 7 September 2020 and is conditional upon the buyer obtaining, aside from a tax interpretation, a binding decision on environmental determinants green-lighting the construction of warehouses with GLA as expected by the buyer, along with positive results of soil analysis. The agreement stipulates that each of the parties may extend the deadline for each of the final agreements.

If the conditions precedent are not met by the deadlines specified in the agreement, the buyer will have the right to withdraw from the agreement.

The agreement includes a range of other circumstances in which the buyer has the right to withdraw from the agreement, including especially if the vendors provide false representations and warranties or breach other responsibilities specified in the agreement that can cause harm to the buyer in excess of EUR 1 000 000 as regards the transaction under stage one (or EUR 200 000 as regards the transaction under stage two).

The buyer can also withdraw from the agreement if the tax office does not confirm the parties’ stance on the transaction’s tax effects in reference to the properties indicated in the agreement.

Risk on the buyer’s part involves a commitment to pay a contractual penalty of EUR 1 000 000 if the buyer does not sign the sale agreement under stage one despite all conditions being met (or waived) or if the buyer fails to perform other activities necessary to execute this agreement. If the buyer SPV does not pay the contractual penalty, the Issuer will be obligated toward the vendors to rectify their damages through the payment of an amount corresponding to the amount of the contractual penalty due from the buyer.

Prior to signing the agreement, at the buyers’ request, due diligence was conducted with regard to legal, tax, commercial, technical and environmental matters, which did not identify any material risks related to the planned investment.

Risk associated with the effects of the buyers not holding a legal title to the properties and risk of false or unreliable representations and warranties will be hedged with appropriate insurance policies issued at the vendors’ request by renown insurance firms approved by the buyer.

The buyers are two limited partnerships owned by POLISH LOGISTICS (UK) LLP, an entity formed with the Issuer’s participation. Information on the execution of agreements governing cooperation rules for investments on the logistics property market and on management of the acquired logistics assets by a subsidiary of the Issuer – REINO IO Logistics Sp. z o.o. was disclosed on 20 January 2020 in current reports 2/2020 and 3/2020.

The target gross asset value (GAV), once the property development stage is completed, may reach EUR 750 000 000. This is a material parameter from the viewpoint of revenue generated from managing REINO IO Logistics Sp. z o.o.’s assets, and is a percentage of GAV, as specified in the agreement.

Due to the size of the transaction and its material impact on expected revenue from asset management and gains on investment, the Issuer considers the above information as compliant with the criteria for recognising it as material information in the meaning of art. 7 MAR.

Legal basis:

art. 17 sec. 1 MAR – inside information

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REINO Capital is a listed holding company that owns a group of entities engaged in investments and fund management on the commercial property market.

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