Information for shareholders in East Capital Baltic Property Investors AB (publ) SE

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1 Information for shareholders in East Capital Baltic Property Investors AB (publ) SE Information for shareholders ahead of the annual general meeting on 9 November 2017 regarding the Board's proposal for a share split and mandatory redemption procedure This document has been prepared in order to provide the shareholders of East Capital Baltic Property Investors AB (publ) with information ahead of the decision at the annual general meeting. This document is not a prospectus or an offer. The Board s complete proposal is available at the Company s premises from 9 November 2017 and will be sent to shareholders upon request. This document is a translation of the Swedish version. East Capital Box 1364, Stockholm, Sweden Tel: info@eastcapital.com

2 Contents Background 3 Outline of share split and redemption of shares 4 Timetable 4 Conditions for redeemable shares 5 OTC trading via Carnegie 5 Tax consequences 6 Questions and answers 7 Brief particulars 7 2

3 Background At an extraordinary general meeting of East Capital Baltic Property Investors AB on 9 June 2017, consent was given to the extension of the term of the shareholders agreement of East Capital Baltic Property Fund AB, for up to five years, until July During the extended term, the investment team will aim to maximize cashflow to the fund holders. The Board therefore proposes that the annual general meeting resolves to distribute EUR 25 per share to shareholders through a share split in combination with a mandatory redemption procedure. This proposal means that each share will be divided into two shares, where the new share will be referred to as a redeemable share. The redemption procedure for the redemption share is automatic, in other words, no action is required from the shareholders in order to receive the redemption payment. Altogether, the proposal means that approximately EUR 2.0 million will be paid to the shareholders. Provided that the annual general meeting on 9 November 2017 approves the proposal of the Board, the redeemable shares will be possible to trade during the period between 27 November up to and including 11 December Shareholders who wish to trade their redeemable shares are asked to refer to the attached information under "OTC trading via Carnegie." After 13 December, the redeemable shares will be redeemed automatically, and shareholders will receive the redemption payment of EUR 25 per redeemable share around 20 December The Board of Directors' proposal The Board of Directors' proposal to the annual general meeting is available at under the heading Real Estate/East Capital Baltic Property Fund. Shareholders who wish to obtain these documents by post may order them by calling or by sending an to info@eastcapital.com For further questions, contact your sales representative at East Capital: Private clients: Institutional clients: info@eastcapital.com Stockholm, October 2017 East Capital Baltic Property Investors AB (publ) Board of Directors 3

4 Outline of share split and redemption of shares This outline is based on a theoretical example where the share is traded for EUR 310 before the split. The market's actual pricing is subject to deviation and will be published on under Baltic Property Fund after the share split. The redemption settlement is EUR 25. BEFORE SHARE SPLIT PAYMENT ACQUISITION COST 23 November 2017 On the record day for the share split, one (1) existing share in East Capital Baltic Property Investors AB (publ) will be divided into two (2) shares, of which one (1) will be a redeemable share. 20 December 2017 Shareholders who own redeemable shares in East Capital Baltic Property Investors AB (publ) on the record day for the redemption of the redeemable shares on 13 December will receive EUR 25 per redeemable share. The redemption settlement will be paid from Euroclear Sweden (Swedish Central Security Depository). The redeemable share gets an acquisition cost corresponding to its value relative to the ordinary share s market price before the share split, multiplied by the ordinary share s acquisition cost. N.B. EUR 310 to be changed to actual market price before share split (will be made available on East Capital web page) 1 ordinary share EUR 310 Market price before split 1 ordinary share EUR 285 (310-25) Theoretical market price after split 1 ordinary share Acquisition cost of 1 ordinary share shall be reduced by the acquisition cost attributed to 1 redemption share 1 redeemable share EUR 25 Payment redemption settlement EUR 25 Acquisition cost of 1 redeemable share: 25/310=8.06% of 1 ordinary share s acquisition cost Timetable November Annual general meeting to resolve on a share split and redemption of shares 21 November Last day of trading before the share split, including the right to redeemable shares 23 November Record day for the share split and the right to redeemable shares 27 November-11 December Trading in redeemable shares possible 13 December Record date for redemption of redeemable shares 20 December Payment of redemption settlement, EUR 25 per redeemable share 4

5 Conditions for redeemable shares An existing share will be divided into two shares by a share split. One of these shares will be what is referred to as a redeemable share, and the remaining share will be an ordinary share. Each redeemable share will be redeemed for a cash consideration of EUR 25 per redeemable share. Financial effects of the redemption procedure If the annual general meeting resolves on the automatic redemption procedure, approximately EUR 2.0 million will be paid to the shareholders in East Capital Baltic Property Investors AB (publ). The proposed repayment is equivalent to approximately 6.15 percent of the Company's total equity according to the most recently adopted balance sheet. Receipt of redeemable shares The final day for trading in East Capital Baltic Property Investors AB (publ), including the right to redeemable shares, is 21 November. The record day for the share split and thus for the receipt of redeemable shares is 23 November. The receipt of redeemable shares requires no action on the part of the shareholder. Voluntary trading in redeemable shares The final day for buying or selling redeemable shares is 11 December. Redeemable shares will be offered for OTC trading during the period from 27 November to 11 December. Please note that it is not mandatory to sell redeemable shares. Instead, they may be retained and automatically redeemed for redemption settlement after the end of the trading period. The record day for determining which holders of redeemable shares will receive redemption settlement is 13 December. Payment of the redemption settlement of EUR 25 per redeemable share is expected to be made on 20 December. Payment will be effected automatically from Euroclear Sweden to the shareholder s yield account. OTC trading via Carnegie Carnegie intends to purchase redeemable shares for a price equal to EUR per redeemable share during the period from 27 November to 7 December under certain conditions. Shareholders that wish to sell redeemable shares to Carnegie are asked to contact their regular bank or stockbroker and instruct the same to contact Carnegie according to the contact details below: Contact: Carnegie Equity Capital Markets Telephone: ecmsweden@carnegie.co.uk Shareholders that are already clients of Carnegie are asked to contact Carnegie through their regular contact person or securities broker, or via the above contact details. Shareholding registered in the name of an authorized agent Shareholders with a shareholding in East Capital Baltic Property Investors AB (publ) registered in the name of an authorized agent will not receive any notification from Euroclear Sweden. Information about the redemption procedure will be provided by the authorized agent concerned. Foreign shareholders Shareholders who are not tax resident in Sweden who participate in the redemption procedure and have shares redeemed are normally obliged to pay Swedish withholding tax. Withholding tax will thus be withheld from foreign shareholders in connection with payment of the redemption settlement. Such withholding tax will, however, be possible for the shareholder to reclaim by filing an application with the Swedish Tax Agency in case the redemption amount is less than the acquisition cost of the redeemable shares, see page 6. However, no Swedish withholding tax will be levied on the sales proceeds received if the redeemable shares are disposed of during the trading period. 5

6 Tax consequences A split of the shares in East Capital Baltic Property Investors AB (publ) and the subsequent redemption, or sale, of redeemable shares may result in tax consequences for the Company's shareholders. Below you will find a summary of essential tax consequences for shareholders who are resident in Sweden for tax purposes. In addition, there is also a summary of certain withholding tax consequences which are relevant for shareholders who are resident outside of Sweden for tax purposes. The summaries however do not constitute tax advice for the individual shareholder. Instead, each shareholder should seek their own tax advice before reporting transactions at the time of the next income tax return for the 2017 tax year. Calculating capital gains The share split in and of itself does not constitute a transaction liable to tax for holders of the shares. The tax consequences instead are incurred when the shares are disposed of or redeemed. Redemption of shares is considered equivalent to a disposal of shares for tax purposes and therefore results in a capital gain or a capital loss being incurred. The gain or loss on the redemption share is calculated as the difference between the redemption share's acquisition cost and the redemption price of EUR 25. In situations where redemption is not made, where the redeemable share is disposed of on the market, the capital gain or capital loss will instead be calculated as the difference between the share's acquisition cost and the sale price. How capital gains or capital losses are treated with regard to tax must be assessed on a case by case basis depending on the shareholder's status for tax purposes (limited liability company, investment fund, private person etc.) How the acquisition cost of shares is calculated The acquisition cost of shares is normally determined according to what is referred to as the average method, which means that the acquisition cost of a single share is deemed to be the cumulative cost of all shares divided by the number of shares. In other situations, i.e. situations where there are different types of shares, the average method, in accordance with legal custom and the Swedish Tax Agency's recommendations, shall however not be applied. In these situations, the acquisition cost for all shares shall instead be divided up between two different types of shares in proportion to the shares' respective market values. The acquisition cost of the ordinary shares shall thus in the present situation be divided up between ordinary shares and redeemable shares in proportion to the market value of the ordinary shares immediately prior to the redeemable share split and the value of redeemable shares immediately following said share split. The following example illustrates this: Assume that an ordinary share was acquired for EUR 500 Assume for the 2017 share split and redemption program that the market value of the ordinary share immediately prior to the share split is EUR 310. A share split is made where one redeemable share is issued for every ordinary share. The redeemable shares are entitled to a redemption amount of EUR 25. Acquisition cost of the redeemable shares is thus EUR 25 / 310 * 500 = Consequently, new acquisition cost for the remaining ordinary share becomes EUR = This example results in a capital loss 2017 amounting to EUR = for the redemption share. Further information regarding market prices will be made available on under Baltic Property Fund when such prices are available. Withholding tax (only applicable for shareholders who are resident outside of Sweden for tax purposes) Withholding tax shall be levied on all dividends from a Swedish company to shareholders resident outside of Sweden for tax purposes. Withholding tax is levied pursuant to the Swedish Withholding Tax Act at 30 percent of the dividend's amount and is withheld by central securities depository (Euroclear or the bank that holds the share on behalf of the shareholder). The withholding tax may however be reduced, in full or in part, either due to the applicability of double taxation treaties or due to certain exceptions enumerated in the Swedish Withholding Tax Act. A redemption of shares is considered equivalent to a dividend for withholding tax purposes, which means that a redemption amount paid will normally be assessed with a 30 percent withholding tax (or where applicable reduced as per above), which is paid to the Swedish Tax Agency by Euroclear or by the bank that holds the share on behalf of the shareholder. In a redemption procedure of the present type, withholding tax shall however only be levied if the redemption of shares results in a gain for the shareholder. The withholding tax shall then be calculated on an amount equivalent to the difference between the acquisition cost for the shares and the redemption amount. Euroclear or the shareholder's bank will however be liable for withholding the withholding tax on the redemption amount when paying to the shareholder, regardless whether a capital gain or a capital loss has been incurred. An application to reclaim excessive withheld withholding tax may then be made with the Swedish Tax Agency by the person or entity that is entitled to the dividend. Each of the shareholders affected is responsible for applying for repayment of withholding tax with the Swedish Tax Agency. 6

7 Questions and answers Brief particulars As a shareholder, do I need to do anything? As a shareholder, you will not need to do anything actively. East Capital Baltic Property Investors AB (publ) will automatically redeem your redeemable shares, and you will then receive EUR 25 per redeemable share. What are my options in connection with the redemption procedure? You can either choose to: 1. do nothing. You will then automatically receive settlement for your redeemable shares when they are redeemed, or 2. sell all or part of your redeemable shares during the trading period from 27 November up to and including 11 December. See "OTC trading via Carnegie" for information on selling redeemable shares to Carnegie until 7 December. ISIN codes Redemption share: SE Ordinary share: SE (ISIN until 23 November 2017) Ordinary share after 23 November 2017: SE Please note that the ordinary share automatically will change ISIN code in connection to the record day for the share split and the right to redeemable shares on 23 November. Redemption settlement EUR 25. Acquisition cost for the redemption share Each shareholder s acquisition cost * 25 / market price of the ordinary share prior to the share split. What will be the tax consequences for shareholders when shares are redeemed? Shareholders are liable to declare disposal and/or redemption of redeemable shares. For a large group of shareholders, such as private persons in Sweden, the shareholder, simply put, deducts a part of the acquisition cost of the original share. That is also the case if the shareholder chooses to sell redeemable shares. Acquisition cost for the remaining ordinary share Each shareholder s acquisition cost less the acquisition cost for the redemption share. Date for automatic payment of redemption settlement Around 20 December What will the tax consequences be for foreign shareholders? For shareholders who are not tax resident in Sweden and participate in the redemption procedure and have shares redeemed, the shareholder s bank is obliged to withhold Swedish withholding tax. Withholding tax will thus be withheld from foreign shareholders in connection with payment of the redemption settlement. Such withholding tax will, however, be possible for the shareholder to reclaim by filing an application with the Swedish Tax Agency in case the redemption amount is less than the shareholder s acquisition cost of the redemption shares. On the other hand, withholding tax will not be levied if redeemable shares are disposed of. What EUR exchange rates are used? In order to calculate acquisition cost for the ordinary shares, the EUR exchange rates at time of each shareholder s acquisitions have to be used. SEK/EUR exchange rate for the redemption will be made available on the East Capital web site under Baltic Property Fund after the payment date 20 December. 7

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