SAN FRANCISCO-Rincon Center has sold for $275 million. The mixed-use property here includes 757,000 sf of office space in two buildings, 320 apartment units and 381 subterranean parking spaces. Rincon I is a five-story renovated historic U. S. Post Office facility. Rincon II comprises two 22-story towers built in the late 1980′s.

The seller is a joint venture of Blackstone Real Estate Partners II and Glenborough Realty Trust, a San Mateo-based REIT. Blackstone owned a 90% stake in the property and Glenborough the remainder. A source at Blackstone confirmed for that Boston-based Beacon Capital is the new owner. Beacon Capital senior managing director Jeremy Fletcher was on a plane and unavailable for comment.

Glenborough CEO Andrew Batinovich tells the sale was prompted by the renewal of the largest office tenant, SBC/Pac Bell, which signed a long-term lease, and the potential to convert the multifamily units to condominiums. Glenborough’s share of the gain from the June sale was approximately $9.5 million, which equates to an internal rate of return in excess of 20% to all investors, according to a statement issued Monday.

The property was developed in 1988. In April 1999, Glenborough purchased a 10% interest in a joint venture holding the fee simple title to the land under Rincon Center I & II. The land was purchased from the United States Post Office for a purchase price of $80.5 million, according to SEC filings. At that time, the land had a triple net ground lease with a remaining term of 51 years with minimum 30% rental increases every six years.

In October 1999, the joint venture purchased the leasehold improvements comprising Rincon Center I & II. Glenborough took over management and leasing of the project on Nov. 1, 1999 and thereafter was entitled to receive property management fees of 1.75% of cash receipts.

Glenborough currently owns approximately 45 multi-tenant office properties encompassing approximately 8 million sf . The properties are concentrated in Washington, DC, Southern California, Northern New Jersey, Boston and Northern California.

With the sale of Rincon Center, it’s only San Francisco asset is 33 New Montgomery, a 234,000-sf, 20-story class A office properrty completed in 1986. In nearby San Mateo, CA, the company owns a 10% interest 101 Ellsworth (86,000 sf)and 100% of 400 S. El Camino Real (146,000 sf). In Dublin, CA, it owns Creekside Business Park (171,000 sf) and in Burlingame, CA, it owns a 255,000-sf industrial property on Rollins Road.

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