UPDATE 1-LandSecs sells London block to Libyan-backed firm

* Sells Oxford St building to Libyan state-backed firm

* Purchase price reflects annual income yield about 7 pct

(Adds detail, background)

LONDON, July 1 (Reuters) - Britain's biggest property company, Land Securities (LAND.L), has sold its Portman House retail and office building on London's Oxford Street to a Libyan state-backed investor for 155 million pounds ($254.8 million).

The multi-let 146,550 square foot (13,615 square metre) building in the heart of the West End shopping district has been bought by Kinloss Property Limited, a wholly owned subsidiary of the Libyan Foreign Investment Company (LAFICO).

The asset generates a total rent of 11.5 million pounds a year and is held on a long lease from The Portman Estate on a term expiring in 2152.The purchase price reflects an annual income yield of just over 7 percent.

The acquisition of Portman House comes about six months after the Libyan Investment Authority agreed to buy a 172,000 square foot office building in London's City financial district for 120 million pounds.

London is fast becoming a favourite destination for sovereign wealth fund capital after a near-45 percent fall in average property prices since June 2007. (Reporting by Sinead Cruise; Editing by Andrew Macdonald) ($1=.6083 Pound) (See www.reutersrealestate.com for the global service for real estate professionals from Reuters)