Compulsory Partial Redemption

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

26 October 2015

Public Service Properties Investments Limited ("PSPI" or the "Company")

Compulsory Partial Redemption of approximately 15.2 million Shares

On 11 September 2015, the Company reported that the Board would consider making further distributions to shareholders following the return of £16.1 million in April 2015. The Board has now decided that the Company will use approximately £5.5 million of its available cash balances to effect a redemption (the Redemption) through a mandatory purchase for cancellation of approximately 15.2 million shares (representing 40 per cent. of the Company's issued share capital) on a pro-rata basis at a price of 36.5p¹ (the Redemption Price) per ordinary share of the Company (Share) from shareholders of the Company (Shareholders) on the register at 5.00pm on 6 November 2015 (the Record Date).

The Company is pleased to announce that a document (the Circular), setting out the formal notification to shareholders of the Redemption and the action (if any) which is required to be taken is today being posted to Shareholders, and is available at www.pspiltd.com.

An extract from the Circular is set out below.

For further information please visit www.pspiltd.com or contact:

¹ Being the closing market price of the Shares on 21 October 2015

1. Introduction

In my statement in the Company's interim results for the six months ended 30 June 2015 which were announced on 11 September 2015, I stated that the Board would consider further distributions to shareholders later this year. Earlier today, the Company announced that it would use approximately £5.5 million of available cash balances to effect a redemption (the Redemption) through a mandatory purchase for cancellation of approximately 15.2 million shares (representing 40 per cent. of the Company's issued share capital) on a pro-rata basis at a price of 36.5p per ordinary share of the Company (Share) (being the closing price of the shares on 21 October 2015) from shareholders of the Company (Shareholders) on the register on 6 November 2015 (the Record Date).

This document sets out the formal notification to Shareholders of the Redemption and the action which is required to be taken by Shareholders who hold their Share(s) in certificated form in order to receive the resultant consideration and a balance share certificate where applicable.

2. The Redemption process

The Redemption is being implemented by the Company pursuant to the Articles of Association of the Company as amended on 3 March 2015 (Articles). Under the Articles, the Board may, without further Shareholder approval, determine that Shares shall be redeemed pro-rata from each Shareholder (or if the Board so determines as nearly pro-rata as practical without giving rise to fractions).

The Company will use approximately £5.5 million of available cash balances to mandatorily purchase for cancellation approximately 15.2 million Shares (representing 40 per cent. of the Company's current issued share capital) on a pro-rata basis at a price of 36.5p per Share from Shareholders on the register on the Record Date.

Accordingly, the Company is redeeming 2 Shares for every 5 Shares held on the Record Date. No fractions of Shares will be redeemed and the number of Shares to be redeemed for each Shareholder and Depositary Interest Holder will be rounded down to the nearest whole number of Shares/Depositary Interests as appropriate. By way of example, if a Shareholder owns 100 Shares on the Record Date, 40 of their Shares will be redeemed and they will retain a holding of 60 Shares.

All of the Shares redeemed pursuant to the Redemption will be cancelled.

The existing ISIN number VGG729481058 (Old ISIN) for the Shares will expire at the close of business on the Record Date (6 November 2015). The new ISIN number VGG729641446 (New ISIN) in respect of the Shares (following the Redemption) will be enabled from 9 November 2015. Up to and on the Record Date, Shares will be traded under the Old ISIN. The Redemption will be effected pro-rata to holdings of Shares and Depositary Interests on the register(s) at the close of business on the Record Date. Purchases of Shares and Depositary Interests that are not reflected in the share register as at the close of business on the Record Date will not be taken into account in implementing the redemptions

Payments of redemption monies are expected to be effected

(i) in the case of shares held in uncertificated form through Depositary Interests on 9 November 2015 through CREST; or

(ii) in the case of Shares held in certificated form, subject to delivery by the relevant Shareholder to the Company of the share certificate(s) in respect of the Shares to be redeemed by no later than 5.00pm on 6 November 2015, or as otherwise agreed by the Company, by cheque drawn in favour of the registered Shareholder and sent to the registered address of the registered Shareholder on or around 9 November 2015. A balance certificate for the remaining Shares held will at the same time be issued in the same name(s) as the Shareholder(s) whose Shares are redeemed and despatched together with the cheque for the redemption proceeds. All documentation sent pursuant to these arrangements is sent at the risk of the recipient. If share certificates are not received by the Company's registrars on or before 6 November 2015 in accordance with the instructions set out below in paragraph "4 Action to be taken - Shares held in certificated form", the R edemptions will still be processed by reference to the share register on that date but despatch of the relevant redemption proceeds and balance certificate(s) will be delayed.

3. Taxation treatment

General treatment for UK tax paying Shareholders

The following summary of the UK tax treatment of Shareholders as result of redemption of part of their holding of Shares is intended as a general guide only and is based on United Kingdom tax law as well as the published practice of HMRC at the date of this document. It applies only to Shareholders who are resident in the UK (except where expressly stated) and who hold their Shares beneficially as an investment. It may not be applicable to certain Shareholders, such as investors who are exempt from UK tax or who hold Shares in an investment wrapper such as an ISA, dealers in securities and Shareholders who are not beneficial owners of the relevant Shares, such as trustees.

Shareholders who are in any doubt as to their tax position or who may be subject to tax in a jurisdiction other than the UK should consult an appropriate professional adviser. These comments are not exhaustive and do not constitute legal or tax advice.

Taxation of Chargeable Gains

A Shareholder whose Shares are redeemed should be treated, for the purposes of UK taxation of chargeable gains, as though he had sold them on-market to a third party at the Redemption Price per

Share redeemed. A charge to capital gains tax or, in the case of a corporate Shareholder, corporation

tax on chargeable gains could therefore arise depending on that Shareholder's particular circumstances (including the availability of any exemptions, reliefs and allowable losses).

A Shareholder who is not resident for tax purposes in the UK whose Shares are redeemed pursuant to the Redemption will not normally be liable for UK taxation on chargeable gains on any gain which is

realised. However, a liability to tax may arise in respect of a gain if such Shares are held for the purposes of a trade, profession or vocation in the UK through a branch or agency (or, in the case of a corporate Shareholder, a permanent establishment) or realised by an individual Shareholder who is temporarily non-resident who may be liable to capital gains tax under certain anti-avoidance rules, which can impose taxation when the non-resident returns to the United Kingdom.

The attention of investors is drawn to section 684 of the Income Tax Act 2007 (ITA) (for individuals) and section 731 of the Corporation Taxes Act 2010 (CTA) (for companies) under which HM Revenue & Customs may seek to cancel tax advantages from certain transactions in securities. No application for clearance under section 701 of the ITA or section 748 of the CTA has been made. In the event that HM Revenue & Customs did successfully apply section 684 of the ITA (and associated provisions) or section 731 of the CTA (and associated provisions) to payments in respect of the Redemption, HM Revenue & Customs might make such tax assessment on any of the Shareholders as they consider necessary in the circumstances, including the Shareholders as having received any payment as an income receipt.

Individual Shareholders - taxation of income

The redemption of Shares pursuant to the Redemption will not constitute a distribution for any Shareholder who is an individual provided the Company is, as is intended, not UK tax resident.

Corporate Shareholders - taxation of income

The Company has been advised that payments to Shareholders (to the extent that the payments represent repayment of capital and any premium payable on issue of the Shares constituting new consideration) in respect of the Redemption should not constitute income distributions for UK tax purposes.

To the extent that the Redemption Price exceeds the original subscription capital provided for the Shares, such amount may be treated as an income distribution (and excluded from the chargeable gains computation). However, generally any such distributions should be exempt from a charge to corporation tax on income and the tax treatment of this distribution will be as set out below. However, the tax treatment of the distribution element paid by the Company in respect of the Shares will depend upon the size of the recipient company - any corporate Shareholder which is not "small" will generally be exempt from corporation tax on income on the distribution element.

Certain small companies will be taxed at their marginal rate of corporation tax on all dividends and distributions, including the distribution element of the Redemption Price, received from the Company. In appropriate circumstances, a tax credit should also be given for any underlying tax that is paid on the profits out of which the dividend was paid, provided the relevant corporate Shareholder controls at least 10 per cent. of the voting rights in the Company and certain detailed conditions are satisfied. Corporate Shareholders should seek their own separate advice as to whether they are a small company for these purposes.

Corporate Shareholders - taxation of chargeable gains

Shareholders within the charge to UK corporation tax may be subject to corporation tax on chargeable

gains in respect of any gain arising on a disposal of Shares. Indexation allowance may apply to reduce any chargeable gain arising on a disposal of the Shares pursuant to the Redemption but will not create or increase an allowable loss.

Corporate Shareholders should take their own advice regarding the chargeable gains implications of the Redemption but, broadly, (a) where an amount treated as a distribution is taxable as income, this amount should be excluded from the computation of the chargeable gain and (b) where it is exempt, the distribution should be included in the disposal proceeds for the purposes of the computation of the

chargeable gain.

Offshore funds

The Company has been advised that it should not be regarded as a mutual fund for the purposes of section 356 Taxation (International and Other Provisions) Act 2010. On this basis a shareholding in the Company should not be regarded as a relevant interest in an offshore fund for tax purposes.

Stamp duty and stamp duty reserve tax

Shareholders will have no liability to UK stamp duty or stamp duty reserve tax in respect of the redemption of their Shares.

This information is provided for general guidance only. The tax treatment of the Redemption for particular Shareholders may depend on their particular circumstances. Any Shareholder who is uncertain as to the taxation treatment of redemption of their Shares should obtain appropriate specialist advice.

4. Action to be taken

Depositary Interest Holders

No action is required to be taken by Depositary Interest holders. On the Record Date the Old ISIN will be disabled and on 9 November 2015, holders will receive the new Depositary Interest under ISIN VGG729641446. Redemption proceeds due will be settled through CREST by means of a CREST payment in favour of the holder's payment bank in respect of the cash proceeds due, in accordance with CREST payment arrangements. The Company reserves the right to settle all or any part of the proceeds referred to in this paragraph, in the manner referred to in paragraph 2(ii) above, if, for any reason, it wishes to do so.

Shares held in certificated form

In order to receive payment for the redeemed Shares and the balance share certificate(s) for Shares remaining in issue, Shareholders should return to the Company's registrars the share certificate(s) for the Shares to be redeemed by no later than 5.00pm on 6 November 2015, or where any relevant share certificate has been lost, a form of indemnity (and other applicable documentation if required) duly completed and signed and returned in accordance with the instructions printed thereon to Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS99 6ZY.

If your completed documentation is not received by 5.00pm on 6 November 2015 this will delay receipt of the relevant holder's redemption consideration and issue of the share certificate(s) for the remaining Shares.

If you have any questions about this process or cannot locate your Share certificates and need to execute a form of indemnity you should contact Computershare on 0370 707 1438 if calling from the UK or +44 (0)370 707 1438 if calling from outside the UK. The helpline is available between the hours of 9.00am and 5.00pm excluding weekends and public holidays, calls may be recorded and monitored randomly for security and training purposes. The Registrar cannot provide advice on the merits of the transaction nor give any financial, legal or tax advice. If you are a CREST sponsored member, you should contact your CREST sponsor before taking any action.

Where a holding of a registered Shareholder or the same multiple Shareholders is represented by one or more Share Certificate(s), (i) this will be treated as a single holding for the purposes of determining the number of Shares to be redeemed, and (ii) it will only be necessary to surrender (a) Share certificate(s) representing the number of Shares to be redeemed. The number of Shares represented by any balance certificate will take into account the number of Shares represented by retained certificates.

A balance share certificate representing the retained shares and a cheque for payment of the redemption proceeds (on the basis described above) will be issued on or around 9 November 2015.

5. Further payments to Shareholders

The Board will continue to keep under review the return of additional funds to Shareholders in the light of the timing of further transactions in Germany, the receipt of additional consideration due from Embrace Group and the Group's contingent and actual liabilities.

Yours sincerely

Patrick Hall

Chairman

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

All times shown in this document are London times unless otherwise stated.

*NOTE: If share certificates are not received on or before 6 November 2015, the redemptions will still be processed by reference to the share register on that date but despatch of the relevant redemption proceeds and balance certificate(s) will be delayed

Overseas Shareholders

The distribution of this announcement in or into jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about, and observe, such restrictions. Any failure to comply with the applicable restrictions may constitute a violation of the securities laws of any such jurisdiction. Subject to certain exceptions, this announcement is not for release, publication or distribution, directly or indirectly, in or into the United States, Australia, Canada, the Republic of South Africa, Japan or any jurisdiction where to do so might constitute a violation of local securities laws or regulations.

Forward-looking statements

This announcement may include 'forward-looking statements'. All statements other than statements of historical fact included in this announcement, including without limitation, those regarding the Company's financial position, business strategy, plans and management objectives for future operations are forward-looking statements. Forward-looking statements are subject to risks and uncertainties and accordingly the Company's actual future financial results and operational performance may differ materially from the results and performance expressed in, or implied by, the statements. These factors include but are not limited to those described in the Circular.