11 December 2009

Equest Balkan Properties plc 
("EBP" or the "Company")

New investment management arrangements

The Board of EBP announces that the Company and Equest Property Management Limited ("EPML"), the Company's investment manager, on 11 December 2009 entered into new investment management arrangements that replaced the previous agreement between the Company and EPML.

Under the new arrangements, investment management services will now be provided to the Company directly by companies in the Balkans all of whom are, or will be, companies associated with EPML. These companies will also provide further support to the Company in relation to its current property disposal programme.  

The Board of EBP believes that these arrangements, which will take effect from 1st January 2010, will result in significant cost savings for the Company. The new fees are largely on a fixed fee per property basis and are expected to result in savings in excess of 50% compared with the current year management fees of approximately EUR 2.6 million.

EBP and EPML have entered into a transitional agreement for the continuation of certain asset management services in relation to the Company's portfolio of assets until 31 March 2010, including the preparation of the 2009 annual accounts. In addition, a new asset management agreement has been entered into between the Company and Blue Water Property S.R.L. (an affiliated company of EPML) dealing with the provision of certain services in relation to the Company's Romanian property portfolio with effect from 1 January 2010. The Company (or its subsidiaries) will be entering into similar asset and/or property management agreements with other local companies affiliated with EPML.

The entry into the new investment management arrangements with EPML is classified as a transaction with a related party for the purposes of the AIM Rules. In accordance with the AIM Rules, the directors of the Company, having consulted with the Company's nominated adviser, Arbuthnot Securities Limited, consider that the terms of the new investment management arrangements are fair and reasonable insofar as the Company's shareholders are concerned.

Commenting, Donald Lake, Chairman of the Board of Directors of EBP, said: 

"These arrangements are a very positive step towards EBP achieving one of its key strategic objectives, which is to return the company to profitability by reducing ongoing costs. 

"We thank EPML for its co-operation in this matter and look forward to a continued and positive working relationship with the various property teams in the Balkan region."

-Ends-

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