(Bloomberg News) Tom Toomey, chief executive officer of real estate investment firm UDR Inc., is betting the best rental deal in Manhattan is owning the whole building.

The nation's third-largest apartment real estate investment trust bought a five-tower apartment complex on Columbus Avenue between West 97th and 100th streets for about $630 million last month, with rents from $2,500 for a studio or one-bedroom apartment to more than $10,000 a month for a penthouse suite. It's Toomey's fifth purchase in Manhattan in the past year as rents soar and financing difficulties make it harder for individuals to buy.

"Financing and underwriting are much tighter," Toomey said in a telephone interview. With purchases requiring larger down payments, "people are going to stay renters for a long time," said Toomey, who's based in Highlands Ranch, Colorado.

Strict lending standards for so-called jumbo mortgages have contributed to declining home buying across the U.S. by even the most creditworthy borrowers as issuance of the loans has dropped 68 percent since 2007. Nowhere is that more evident than in Manhattan, where the median price of a two-bedroom apartment is about $1.2 million, almost twice the limit backed by government- supported mortgage companies Fannie Mae and Freddie Mac.

Manhattan rents rose 9.5 percent last quarter to an average $3,121, Miller Samuel Inc. and Prudential Douglas Elliman Real Estate said in a report last month. That's about three times the rate for the 44 largest apartment markets in the U.S., according to Marcus & Millichap, a real estate brokerage firm. Manhattan rental apartment vacancy rates fell to a four-year low of 0.96 percent last year, down from 1.2 percent a year earlier and 1.9 percent in 2009, according to brokerage Citi Habitats. Vacancy bottomed in 2006 at 0.76 percent.

Wall Street Pay

"The key to the strength of the rental market is tightness of credit," Jonathan Miller, president of appraiser Miller Samuel, said in a telephone interview. "It takes quadruple-A bizarre credit requirements to get approved."

Jumbo loans exceed limits set for government-controlled mortgage companies by congress. For New York that's $625,500.

Wall Street's pay practices are also making it harder to buy, as financial firms increasingly pay bonuses in stock and deferred cash, said Alan Johnson, managing director of compensation consultant Johnson Associates Inc.

Morgan Stanley, Credit Suisse Group AG and Citigroup Inc. have all reduced senior investment bankers' pay for last year as revenue slows. Morgan Stanley is capping immediate cash bonuses at $125,000, people with knowledge of the move said last month.

Shorter Commitment

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