New Star Asset Management has sold its largest London office building in its UK property fund to Evans Randall for £127.5m at an initial yield of around 5.5%.

As tipped by Property Week the high-profile fund manager has sold 60 Gracechurch Street to the west-end based investment bank following a strategic review of its UK Property Unit Trust which reviewed its large lot sizes in London and sought to reduce single asset exposure in the portfolio.

The high profile manager said the deal ‘reflects good value for the City office market’ however it bought the building, which is Commerzbank’s HQ, in November 2006 for around £147m which reflecting a yield of 4.75%.

New Star said part of the proceeds from the sale will be invested in listed property shares to take advantage of their significant discounts. It said following the sale the fund’s liquidity has risen to more than 25% - one of the highest liquidity positions in the industry.

Roger Dossett, chief executive, property fund management, said: ‘The sale of 60 Gracechurch Street in the City of London is a positive sign that liquidity and transaction levels have improved in 2008. To have achieved good value and to have received a high level of interest from active buyers is an encouraging sign for the UK commercial property market.’

CB Richard Ellis advised New Star and Evans Randall.