Strategic Review & Financing

19th December 2011

Public Service Properties Investments Limited

("the Company" or "the Group")

Strategic Review Update and New Financing

Strategic Review Update

On 30th September, the Company announced that in light of the discount to net asset value at which the Company's shares are trading, the Board would commence a review of the Group's assets and the Company as a whole, and the strategic options available to maximise shareholder value. Whilst the review is ongoing, the Directors wish to provide an update on their preliminary views and actions taken to date.

The Group's real estate portfolio, valued at £277 million at 30 June 2011, consists of 39 care home properties and related assets let to a single tenant in the United Kingdom, 14 care home properties on 10 sites with multiple tenants in Germany, the Etzelgut healthcare facility in Zurich, Switzerland, and 140 post offices in the United States let under a single master lease to the US Postal Service. The portfolio is fully let, with no voids, has a weighted average unexpired lease term of 21 years, and 92% of rents are subject to indexation. In the year to 31 December 2010, the Group's investments generated revenues of approximately £19 million and cash flow of £12 million after interest expense1, or approximately 12.0p per share, of which approximately 8.4p is from the UK portfolio and approximately 3.6p from the international portfolio2.

The Directors believe that the Company's current share price of 51.5p does not adequately recognise the value of the cash flows of the underlying assets, and are therefore considering whether other owners and/or corporate and financing structures could better reflect that value.

The Board has appointed local advisers to review the Company's options, including testing market appetite, in respect of its real estate assets located in Switzerland, Germany and the United States. The Board is also at a preliminary stage of considering all options for the Group's UK assets. In parallel the Board is reviewing the Group's distribution and dividend policy to shareholders.

There can be no assurances that the strategic review will result in any specific action or actions and no timetable has been set for its completion. Further announcements will be made in due course, as appropriate.

1 Based on audited results for the year ended 31 December 2010 before debt amortisation, corporate expenses, tax and assuming no rent capitalisation.

² Based on the segment information and using the number of shares in issue extracted from the audited results for the year ended 31 December 2010.

Debt Facilities

The Company is pleased to announce that it has completed an £11.5 million financing with Bank of London and the Middle East, a new lender to the Company, secured on four of the Group's UK property assets. The proceeds from the new financing are being used to partially repay £4.0 million of a facility to an existing debt provider and to repay a bridge loan of approximately £3.0 million ($4.5 million) which was announced on 15 August 2011. The balance of new funds augments working capital resources. The £83.0 million senior debt facility provided by the Lloyds Banking Group, which is secured on the majority of the Group's UK portfolio, matures in September 2012 and discussions are continuing regarding the refinancing of this facility.

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