San Francisco–PCCP, LLC and the Ohio Public Employees Retirement System have teamed up to form a new venture that will originate first mortgages. The venture will take advantage of the lack of liquidity in the floating-rate commercial mortgage debt space.
The venture will leverage PCCP’s team of investment professionals and established lending platform, which has originated in excess of $3.5 billion of floating-rate loans over the past 12 years. The venture will make loans secured by all major asset types (office, multifamily, retail, industrial and hospitality), all over the country.
Greg Eberhardt, partner of PCCP, tells MHN, “The loans we originate will be floating rate, not fixed, and we view there to be an opportunity in multifamily for assets that don’t qualify for agency financing. There is a tremendous appetite for floating rate bridge debt in the multifamily space.”
According to Don Kuemmeler, founding partner of PCCP, “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. The PCCP and OPERS venture intends to offer a shorter-term, flexible first mortgage product for owners with a value-added business plan. We expect to hold these loans to maturity, and service our customers with creative solutions, as PCCP has done over the past 12 years.”
While there are no specifically allocated loan amounts set aside, the average mortgage will be in the range of $25 to $45 million. “We could do larger ones, and we would probably have to syndicate the loan to get to that size,” explains Eberhardt.
PCCP’s credit committee will decide which properties get the loans but it will be properties in transition, that don’t qualify for agency financing or somebody buying back their debt.
“We are excited to be teamed up with the Ohio Public Employees Retirement System. OPERS recognized a need in the market, and we expect to have many opportunities to make excellent investments in the coming year,” said Adam Zoger, a principal in PCCP’s San Francisco office.
Eberhardt says that the floating rate-market has recovered but there is still a lot of demand and a tremendous opportunity to put this capital out.