A frenzy of interest in buying New York-area apartments has caught the eye of local and national real estate investors as they look to buy residential rental apartment buildings.

“Investors, including pension funds, public/private REITs, foreign investors and leverage buyers want to purchase rental apartments in New York City. The end result is that prices are going against the economics of the marketplace,” as noted in a recent issue of Crittenden Pension Funds.

Last Friday, Englewood, Colo.-based, NYSE-traded real estate investment trust Archstone Smith closed on the purchase of the 302-unit Hudson Park residential rental tower located in Hoboken, N.J. The property was completed in 2000 by a major regional real estate residential developer. The New York Sun has learned that the original cost of the development was about $60 million and that Archstone paid $123.5 million, or $409,000 a unit.

Last December, Archstone purchased the 254-unit Sonoma apartment house at the corner of East 39th Street off Second Avenue. The building was built in 2001 by Related Companies. Related received $125.5 million, or $494,094 a unit, for the tower.

In 2002, Archstone made its entry into Manhattan when it purchased the Park Hudson at 101 West End Avenue and 64th Street. Archstone paid $209 million for the 507-unit building, or $412,228 a unit, to Tishman Speyer Properties, which developed the 35-unit, two-story tower. Tishman Speyer originally paid $40 million, or $80 for each buildable foot at the site, and spent an additional $10 million to renovate a community pool.

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The Dermot Organization and the AFL-CIO Building Investment Trust broke ground in March 2002 on the 13-story Hudson Crossing, a 259-unit rental building at 400 W. 37th St. at Ninth Avenue and the approach to the Lincoln Tunnel. This was the first project financed under the AFL-CIO Investment Program’s NYC Community Investment Initiative. The Housing Investment Trust provided $10 million for construction and permanent financing. The AFL-CIO Investment Trust provided a $25.4 million equity investment. The total cost for the project was $74.3 million, which included $45 million of taxable bonds issued by the New York City Housing Development Corporation. Last week, Equity Residential, the largest publicly traded owner, operator, and developer of multifamily housing in America, paid $93.1 million, or $359,459 a unit.

The Dermot Organization in partnership with the AFL-CIO Housing and Building Investment Trust is now developing Clinton Green, a $170 million development of 600 mixed-income housing units, retail space, and the new home of the Intar Theater and Ensemble Studio Theater on 10th Avenue between West 51st and West 53rd streets.

In 2001, the Brodsky Organization completed a residential tower on West 42nd Street between Ninth and Tenth avenues. This past November, the Principal Life Insurance Company purchased the residential rental tower at 420 W. 42nd St. The 41-story high-rise has a total of 264 units. The purchase price was about $109 million, or $412,878 an apartment.

The apartment buildings mentioned above – The Hudson Crossing, Sonoma, Park Hudson, and 420 West 42nd St. – were built as 80/20 projects, which require the landlord to provide 20% of the units at below-market rent. The income of tenants renting at below-market rates cannot exceed 60% of the average median income in

the area. The discount rents must remain in place for a period of 20 years from the original date of completion. In return, the developers received favorable bond financing and abatement on real estate taxes. Increases in rent for the other units are subject to rent-stabilization regulations.

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Last month, Apartment Investment and Management Company, a REIT that is the largest owner and operator of apartment communities in America, purchased five contiguous walk-up apartment buildings on the Upper East Side. The buildings were built in the 1880s and have a total of 72 units. The company paid $14.5 million to Rubin Pikus of Millbrook Properties, or $201,390 for each unit, for the properties at 167-173 E. 90th St. between Lexington and Third avenues. Since its first purchase in March 2003, Aimco has made three other acquisitions of apartment buildings on the Upper East and Upper West Sides that gave it 167 apartment units for a price of $104.6 million, or $62,676 a unit.

Two years ago, Vornado Realty Trust and the Allied Development Company of Hoboken completed the 41-story, 538-unit rental development at 100 Old Palisade Road in Fort Lee, N.J. In June, the partnership sold the building to Crescent Heights Development for $222.5 million, or $ 413,570 a unit. According to the trade, the price was the highest price per unit ever obtained for properties on the New Jersey waterfront. The company is in the process of marketing the conversion of the units into condominium residences. Crescent Heights pioneered the first conversions of turn-of-the century Manhattan office buildings in Lower Manhattan into luxury residences.

“We have purchased more than 10,000 rental apartments north of 96th and in Brooklyn, the Bronx, and Queens, and we continue to seek additional opportunities,” said the president of the Praedium Group LLC, Russell Appel. This June, his company purchased 2,576 rental apartments and 78 stores in 51 apartment buildings in the Bronx and north of 96th Street in Manhattan. Rental units are located in both walk-up and elevator apartment buildings.

Last month, the company Praedium, in a joint venture with partner Pinnacle Realty, bought 238 unsold rental units in a three-building cooperative apartment complex, Anita Terrace, in the Rego Park section of Queens. According to the trade, they paid about $14 million for each apartment building, as well as assuming their share of the underlying mortgage on the building.

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More than 40 investors submitted bids to purchase the apartment house located at 1200 Fifth Ave. Last month, Mount Sinai Hospital sold its luxury apartment house, which contains 59 residential units, for a price of $61.5 million, or $1,034,745 a unit. The purchasers included Lloyd Goldman, Joseph Chetrit, and Mann Realty. The hospital purchased the building in 1974.

In May, Ruby Schroen’s Cambry International purchased more than 8,000 residential rental units in Brooklyn, Queens, and Staten Island. The company bought the units from the estate of Fred Trump, the father of Donald Trump. The estate sold the portfolio for approximately $700 million. Financing was provided by Independence Community Savings Bank and New York Community Bank.

Last month, Ziel Feldman’s Property Markets group purchased the vacant 12-story apartment building located at 823-825 Park Ave. Each floor is 4,000 square feet in size, and the Sun has learned they will be marketed as full floor luxury condominiums. The purchase price for the 48,000-square-foot building was approximately $60 million, or $1,250 a developable foot.

In the summer of 2003, Property Markets Group purchased the 690 rental units in the Herald Towers Apartments located at 50 W. 34th St. for $115 million, or $166,670 a unit. Feldman purchased the units from Morris Bailey’s JEMB Realty. The apartment building and health club are located in the former Hotel McAlpirn.