The Ohio Public Employees Retirement System and real estate private equity firm PCCP LLC have formed a new venture that will originate first mortgages nationally for owners with a value-add business plan. The venture seeks to take advantage of the lack of liquidity in the floating-rate commercial mortgage debt space.

The venture will make loans secured by all major asset types, including office, industrial, retail, hotel and multifamily properties. “The great recession has reduced the number of skilled, entrepreneurial lenders who understand fundamental real estate value and who make and hold commercial real estate mortgages on their balance sheets,” says Don Kuemmeler, founding partner of San Francisco-based PCCP.

The private equity firm has more than $6 billion under management in multiple closed-end funds and joint ventures with institutional investors. “[This] venture intends to offer a shorter-term, flexible first mortgage for owners with a value-added business plan. We expect to hold these loans to maturity and service our customers with creative solutions,” adds Kuemmeler.

PCCP has originated in excess of $3.5 billion of floating-rate loans over the past 12 years. “The Ohio Public Employees Retirement System recognized a need in the market, and we expect to have many opportunities to make excellent investments in the coming year,” says Adam Zoger, a principal in PCCP’s San Francisco office.

With assets of $68.3 billion, the Ohio Public Employees Retirement System is the largest public pension fund in Ohio and the 12th largest public pension fund in the United States.