COLONIAL First State Property’s listed Commonwealth Property Office Fund has agreed to sell a Sydney office tower for $395 million to a private investor.

Colonial said the 42-level building at 259 George Street sold at a 15.3 per cent premium to its June 30 book value of $342.5m and a yield of 6.3 per cent.

The fund’s manager, Charles Moore, said the asset was not specifically identified for sale.

“The approach from the purchaser was an opportunity to provide enhanced value to unitholders by divesting an asset at a significant premium to book value,” he said.

The sale proceeds will initially be used to retire debt, and is expected to reduce the fund’s gearing by about 9 per cent.

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