Strategic Review Update - Sale of non-core assets

20 December 2012

Public Service Properties Investments Limited

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

Strategic Review Update - Sale of non-core assets

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

Sale of US portfolio

The Company is pleased to announce that it has signed a contract to dispose of the shares of the subsidiaries owning the 140 properties leased to the US Postal Service and net debt of $18.5 million for a gross price of $1.65 million. The transaction is scheduled to complete on or around 15 January 2013 after completion of updated title insurance for the buyer, but the completion date could in certain circumstances be deferred until no later than 28 February 2013. The transaction effectively values the properties at approximately $20.2 million, implying a gross rental yield of 10.1% and a discount of 13.4% to the independent valuation used in the Company's unaudited consolidated interim results for the six months ended 30 June 2012. Net proceeds, after transaction costs of approximately $0.6 million will be used to augment Group working capital.

After the release of deferred taxation and deduction of transaction expenses, the sale will result in a decrease in net assets of approximately £1.2 million. On completion of the sale, the Group will also remove approximately £11.9 million of debt from its consolidated balance sheet.

Sale of Swiss property

The Company is pleased to announce that it has completed the sale of its only investment property in Switzerland for a gross price of Chf 12.0 million, implying a gross rental yield of 10.2%. The sale price represents a 15.3% discount to the independent valuation used in the Company's unaudited consolidated interim results for the six months ended 30 June 2012. There will be minimal net proceeds released to the Company after repayment of debt secured against the property of Chf 10.7 million (Chf 6.0 million of which was guaranteed by the Company), taxation of Chf 0.4 million and transaction costs of Chf 0.9 million.

After the release of deferred taxation and deduction of transaction expenses the sale of this property will result in a decrease in net assets of approximately £2.4 million. The Board concluded that the sale was in the best interests of the Company since the asset has significantly declined in value over recent years due to poor trading results by the tenant resulting in negative cash flow after debt service, which was unlikely to change in the foreseeable future. The Company has also removed approximately £7.0 million of debt from its consolidated balance sheet.

Conclusion

The combination of these transactions with the sale of two properties in Germany and the seven-year debt refinancing announced on 13 December 2012, reflects the considerable progress the Company has made with its strategic review by reducing leverage and improving future operational cash flow. The Company will now focus on its remaining assets in the UK and Germany where the loan to value ratios are approximately 38% and 47%, respectively based on current debt as a percentage of the independent valuations reported at 30 June 2012, compared to the Group's pro forma consolidated loan to value of 49% as at 31 July 2012, after the sale of a majority of the Group's UK assets.

Patrick Hall, Chairman of PSPI, commented: "The US and Swiss assets have been identified as non-core to the Company's business for some while, in view of the increasingly negative outlook for revenue and capital values. A number of the US properties are subject to the threat of closure under Government proposals to reduce the US Postal Service deficit, and the net revenue will also diminish as a result of scheduled interest rate rises under the associated debt facility. The Swiss property has physical limitations for use as a modern care home, and these limitations have impacted negatively on operational revenues and the ability of the current operator to meet rental commitments in full.

Given that these assets were not central to our business, the Board took the decision to dispose of both before values and revenue deteriorated further."

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