New Star UK fund sells London office for EUR 170m

UK asset manager New Star has sold the office property at 60 Gracechurch Street in the City of London for £127.5 mln (EUR 170 mln), reflecting an initial yield of about 5.5%. The fund manager declined to name the buyer but said it received a number of offers for the 11,150 m² office property. UK private equity group Evans Randall is rumoured to be the buyer of the property which houses the UK headquarters of German bank Commerzbank.

New Star said that the deal reflected 'good value for the City office market' and is 'a promising sign that liquidity and transaction levels have picked up in the UK commercial property market'. The asset manager bought the building in November 2006 for £146 mln.

The sale follows a strategic review of the New Star UK Property Unit Trust and a decision to reduce single asset exposure in the portfolio. The company said that part of the proceeds from the sale - the fund's largest holding - will be invested in listed property shares to take advantage of the significant discounts they trade at. As a result of the sale, the fund's liquidity position has risen to in excess of 25% of the fund's total assets under management - one of the highest liquidity positions in the industry.

'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', said Roger Dossett, chief executive, property fund management.

New Star was founded in June 2000 by John Duffield, who previously established Jupiter Asset Management. New Star has 39 UK retail funds and employs more than 400 people in London, Dublin, Bermuda, Madrid, Zurich, Milan and Hong Kong. At end-2007, the group had £23.1 bn of assets under management.