EDISON, NJ-Ivy Realty and Urdang Capital Management have obtained $17.8 million in first mortgage financing for their jointly owned Raritan Plaza III office building here. The funding covers the recent acquisition of the six-story, 178,000-sf office building by the partners, who bought it from Lincoln Property Co. and the Archon Group for $25 million or about $140 per sf.

The financing was arranged on behalf of Ivy Realty and Urdang Capital by Jay Marshall, senior managing director in the New York City office of Holliday Fenoglio Fowler. The five-year, fixed-rate loan, which closed within a 30-day deadline, is an interest-only package with a modified pre-payment schedule, according to Marshall. The sale transaction was brokered by Cushman & Wakefield of New Jersey.

Aetna Life Insurance Co. provided the 65% loan-to-value financing, which will provide $16.8 million in actual acquisition funding. The remaining $950,000 will be utilized for tenant improvements and leasing commissions.

"Although the overall market vacancy is in excess of 15%, the lender agreed to an earn-out based on a 7% vacancy due to the quality of the building and the reputation of the borrower," Marshall says. "The lender also agreed to fix the interest rate on the earn-out funds for a period of 18 months."

Raritan Plaza III is currently within the range of the rest of the surrounding market in terms of vacancy. The building, located within Raritan Center, is 83% leased, with a tenant roster that includes Penn Mutual, Grubb & Ellis's Central New Jersey office, Computershare and Lipman Selznick & Wit. The 13.4-acre site is located at 101 Fieldcrest Ave. here.

"This acquisition reflects our focus on value-added opportunities and on sourcing such transactions in the marketplace," says Anthony DiTommaso Jr., CEO of Ivy Realty. His Montvale-based firm currently owns and manages more than $1.2 billion of office, retail and industrial properties in the New York/New Jersey metro area. Urdang Capital Management, meanwhile, is a Plymouth Meeting, PA-based group that has completed more than $4 billion worth of transactions, representing some 175 properties in 30 states.