Strategic review update

2 April 2012

Public Service Properties Investments Limited

("PSPI", or "the Company" or "the Group")

Strategic Review Update

PSPI (AIM: PSPI), the specialist European care home real estate investment and financing company, announces an update on its previously announced strategic review.

Further to its announcements on 30 September and 19 December 2011, the Company wishes to provide an update on the status of the strategic review being undertaken by the Company. The aim of the review is to maximise shareholder value and all options for the Group's assets and the Company as a whole continue to be considered.

As previously announced, the Group has appointed local advisers to test the appetite for its real estate assets in each of Germany, Switzerland, and the US. This is still on-going, and no timetable has been set for its completion.

The Group has continued its review into the strategic options available for its UK real estate assets, which consist of 39 care home properties which are let on long term indexed leases to a number of tenant operating companies which are under common ownership. These assets are owned by a number of individual Group property companies, which have raised senior secured debt under three different stand-alone facilities with three different financial institutions, the largest of which is a facility maturing in September 2012. As set out in its financial statements, the Group is exposed to property price and market rental risks, which are accentuated by concentrated exposure to a single tenant group for its UK properties, and capital risk management considerations which require conservative loan-to-value ratios in the context of external tenants whose operations and revenue streams are not under the Group's control.

Concurrent with separate stand-alone refinancing processes by the Company and its UK tenant, the parties are in discussions with banks about a joint refinancing as part of a potential combination of the majority of the Group's UK property assets and the owned and operated properties of the UK tenant. Such a refinancing would establish a solid financial platform for the combined businesses, but is unlikely to generate short term cash proceeds for the Group. Shareholders will be consulted before consummation of any transaction or series of transactions leading to a material change in the Group's business. Discussions are on-going and further announcements will be made in due course, if appropriate.

The Directors would also caution that in present market circumstances, with challenging conditions for the UK care home sector, particularly for operators with external landlords, and patchy demand in the investment market for healthcare properties, the likelihood of outright disposals for acceptable cash consideration in an acceptable timeframe is low. Consistent with this market backdrop, the Group has experienced increases in the capitalisation rates applied to its investments properties in all jurisdictions and consequently significantly reduced valuations of these investment properties, as reported by independent valuers, a trend which is expected to continue absent a material change in market circumstances.

As previously announced, the Company is reviewing its dividend and distribution policy as part of its strategic review. As set out above, the result of the review may lead to a material change in the nature of the Group's business and resultant recurring cash generation, but also in potential ad hoc cash generation as a result of transactional activity. The Directors would caution that a completed refinancing of short term debt facilities is likely to be a prerequisite before distributions can legally and properly be made.

In view of the strategic review and potentially material change in the Group's business, the Company has given notice to terminate the Asset Management Agreement with RP&C International. The asset manager will continue in its current role during the 24 month notice period.

The Company anticipates that it will release its final results for the financial year ended 31 December 2011 in late April.

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

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