(Read more on the multifamily market.)

SAN FRANCISCO-Beacon Capital Partners has sold for $143 million the 320-unit apartment component of the three-building Rincon Center commercial complex it acquired last June for $275 million. The units, which are more than one-third empty, are located on floors seven through 23 of 88 Beale St. Beacon continues to own floors one through six, which house 470,000 sf of office space and 60,000 sf of retail.

The new owner, Capital Properties of New York City, is planning extensive upgrades, including added tenant amenities and services. The property marks its first acquisition in California. More West Coast acquisitions are in the works, according to the privately held investment, development and management company’s founder and president, Richard Cohen.

The apartments were originally approved as condos when the building was constructed in 1989. The vacancy is due to the fact that Beacon, and the company from which it acquired the property, had been considering a condo conversion, according to a source with Capital Partners who says it is her understanding that no vacant units have been rented for the past two years. There are no plans to convert any units to condominiums, she says.

Instead, the existing vacancy will be used to upgrade the existing 50 corporate apartments in the building with luxury finishes, and to expand the number of corporate apartments to as many as 70 units. The existing corporate apartments, which had been operated by a third party, will be managed in-house going forward, according to the company source.

Including 76 below-market-rent units that will continue to exist under the new ownership, the weighted average rent in the building is $2.67 per sf; the range is approximately $2.00 per sf to $3.00 per sf depending on size and location within the building, according to RealFacts, a Novato, CA-based firm that tracks the market. Apartments higher up in the building have views of the Bay and the Golden Gate Bridge. The renovated apartments with the best views are expected to command $4 per sf, in line with the luxury apartment market.

The property currently does not have many amenities. There is no exercise room, pool or meeting room, according to the Tenants Association Web site, which says the property is generally in need of improvement. “The lobby carpet and elevators are seedy,” it says. “The entrance needs paint. The laundries need upgrading.”

The new ownership acknowledges the deficiencies and is planning an extensive renovation to the property, including a new lobby, an upgraded exterior, fully renovated units, a concierge and a rooftop exercise facility. “We are going to do really high-end units and operate it like a hotel,” says the source. “We’re looking into high-tech control systems where in people can control their shades, air conditioning and even door locks from a single console or their computer.”

Capital Partners says it has developed over eight million square feet of commercial space and 18,000 residential units, predominately on the East Coast in markets such as Boston, New York and Washington. Current holdings include four million sf of commercial space and 6,000 residential units.

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