Internalisation of Management

17 June 2010

Speymill Deutsche Immobilien Company plc

("SDIC" or "the Company")

Internalisation of management

Further to the announcement on the update of the Company's bank facilities and internalisation of management made on 4 June 2010, the Board of SDIC is pleased to announce that it has reached final agreement on the heads of terms ("Heads of Terms") with Speymill plc in relation to the termination of the Investment Management Agreement ("IMA") and the acquisition of the Company's investment adviser, GOAL service GmbH ("GOAL").

The internalisation of the management, investment advisory and property management functions which is intended to be achieved through the termination of the IMA and acquisition of GOAL ("Internalisation"), is an important step towards achieving an overall funding solution as it is anticipated that it will enable the Company to realise a substantial level of cost saving, with an immediate impact on the level of monthly cash outflows.

The Internalisation has received the support of various stakeholders in the Company including the Company's key debt providers and shareholders.

The principal terms and conditions in relation to the Internalisation as stated in the Heads of Terms are as follows:

Termination of the IMA

SDIC has entered into an agreement to terminate the IMA with effect from 1 June 2010. Under the IMA, Speymill Property Group Limited ("SPG") is entitled to 12 months' notice.

The consideration to be paid, in lieu of notice, for the termination of the IMA is €7.851 million which is to be settled by the transfer to SPG of property assets owned by the Company, at the latest DTZ valuation. To cover the handover of services over the intervening period, the Company had agreed to pay SPG the fees due under the IMA for a period of six weeks from 1 June 2010, expected to be about €1.14 million, and such fees to be settled also by transfer to SPG of property assets.

The consideration for the termination of the IMA and the payment for the six week period as referred to above, will be satisfied by the transfer to SPG of shares in two separate special purpose vehicles ("SPVs"), which will include both the property assets and the associated loans. The first transfer is scheduled to take place within seven days from the date of termination of the IMA and the second by 15 August 2010. The agreement includes adjustment provisions so as to enable the Company to meet the level of agreed consideration for the termination of the IMA and the payment of the IMA fee for the six week period from 1 June 2010.

At the same time, the Company, SPG, GOAL and Speymill plc shall enter into a continuing services agreement ("Continuing Services Agreement") with effect from 1 June 2010. Under the terms of the Continuing Services Agreement, each of SPG and GOAL shall continue to provide similar services as they are currently obliged to do under the terms of the IMA until the earlier of the completion of the acquisition of GOAL by SDIC or 15 August 2010. These arrangements are intended to enable the Company and SPG to achieve an orderly handover of the services provided over an acceptable period.

Acquisition of GOAL

The Company has also agreed to acquire the entire issued share capital of GOAL from Speymill Property Group (UK) Limited ("SPGUK") at its net asset value. The net asset value of GOAL as at 31 December 2009 was €1.9 million and will be adjusted for any post balance sheet events as at completion. A key adjustment includes the exclusion of the GOAL's construction subsidiary, GOAL construction GmbH from the acquisition which is understood to have a net asset value of about €800,000. The acquisition of GOAL is subject to financial and legal due diligence which is being undertaken by the Company.

The consideration for the acquisition of GOAL will be satisfied by the issue of a convertible loan note to SPGUK. The terms of the convertible loan note will be as follows:

- Repayable or convertible at the Company's option;

- Conversion at the average closing price of the Company's shares over a 90 day period following the completion of the debt restructuring;

- Interest equal to the gross yield on the 2 year German Government bond plus margin of 1.5%; and

- Maturity on 31 May 2011.

Bank facilities update

The Board continues to be fully engaged in regular constructive discussions with the lending banks and is progressing these with a view to ensuring that a long term funding solution is agreed with its lenders and this, together with operational improvements that continue to be realised, is anticipated to secure the Company's future to the advantage of all stakeholders.

Further updates in this respect will be provided to the market, as appropriate.

For more information, please visit http://www.speymilldeutsche.com or contact:

Notes to Editors:

Speymill Deutsche Immobilien Company plc is a pan-German residential property investment company, which listed on the AIM market of the London Stock Exchange in March 2006, raising £170 million. In May 2007, SDIC raised a further €250 million through a C share placing. The Euro denominated fund aims to provide investors with an attractive level of income together with the prospect for long-term capital growth.

The German residential market is viewed as attractive to investors due to a number of factors including rising German economic activity and productivity, and the availability of assets at below replacement cost. Acquired properties should, through active management, also have the potential for increased rental rates and accordingly improved capital values and increased yield.

Speymill Property Group Limited is the appointed Manager of SDIC and, in conjunction with the Investment Adviser, Goal service GmbH, it identifies acquisition opportunities for the Company, which fit within its investment criteria.