Trading Update

31 August 2010

Public Service Properties Investments Limited

("PSPI" or "the Company")

Trading Update for the six months ended 30 June 2010

PSPI (AIM: PSPI), the specialist European real estate investment and financing company, announces a trading update for the six months ended 30 June 2010.

The Company successfully completed an Open Offer on 14 April 2010 raising net proceeds of £24.0 million from the issue of 35,631,326 new shares at 70p per share. The majority of the capital will be used to add bed capacity through expansion, re-configuration and refurbishment of a number of properties in the UK investment portfolio. The first four projects have been commissioned with aggregate expenditure of £6.7 million and an expected final completion date in the second quarter of 2011. The Company is also reviewing several other projects and expects to start work on these later this year. On completion of each project, it has been agreed that rent payable under the relevant lease will increase by 8% of the gross capital expenditure, including rent capitalised during the period of the work and post completion build up of occupancy.

The Company continues to perform in line with the Board's expectations, maintaining a fully-let investment property portfolio, primarily let on long-term indexed leases to several tenants in multiple jurisdictions. In the six month period ended 30 June 2010, cash rental income increased by 2.1% compared to the prior year, driven by rent increases in the UK portfolio but partially offset by adverse foreign exchange movements. Between 31 December 2009 and 30 June 2010, the value of the Company's investment properties decreased by 2.1% or approximately £4.8 million as a result of increased capitalisation rates¹.

The independent valuation of the UK portfolio, which represented 70% of the Company's portfolio at 30 June 2010, decreased by 2.6% during the first half of 2010 with the average capitalisation rate for the UK investment properties assessed at 6.6% at 30 June 2010 compared to 6.3% at 31 December 2009. Of the Company's 39 properties in the UK, the individual capitalisation rate was increased for 25 properties, including seven which are subject to extension or re-configuration projects and a further eight in the Wellcare portfolio which is the focus of the current capital expenditure programme. Subject to market conditions, it is expected that those properties in the capital expenditure programme will benefit from fair value gains following completion of the developments, in addition to increased annual revenue. This will also improve the loan to value cover of the Company's debt facilities, as anticipated at the time of the Open Offer.

The independent valuation of the German portfolio, which represented 18% of the Company's portfolio value at 30 June 2010, declined by 1.3% in constant currency during the first half of 2010. The average capitalisation rate for the German portfolio was 6.9% compared to 6.7% at 31 December 2009.

The independent valuation of the US and Swiss portfolios, representing 12% of the Company's portfolio at 30 June 2010, declined in value by 0.8% in constant currency during the first half of 2010.

The Company paid a second interim dividend to shareholders in May of 4.5p per share, making a total dividend for 2009 of 6.5p per share, compared to 6.0p per share for 2008.

The Company expects to announce its half year results for the six months ended 30 June 2010 and an interim dividend on 20 September 2010.

Patrick Hall

Chairman

¹ Capitalisation rate is represented by the net rental income receivable divided by the market value of the properties from which the rental income is derived

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