(Bloomberg) -- Sixth Street Partners Chief Executive Officer Alan Waxman said his firm is ready to capitalize as banks grapple with stress in their real estate portfolios.

“We don’t think this is systemic risk, but there are obviously large exposures, particularly in some of the small and regional-sized banks, and that’s something we’re looking out for,” Waxman said in an interview airing Tuesday on Bloomberg Television. “If rates stay higher, that will obviously create additional stresses.” 

Sixth Street, which manages about $75 billion, is leaning into real estate after solidifying its standing as one of the most active dealmakers in the booming private credit market. The firm is better known for landing high-profile financings on private equity buyouts and for committing capital to sports teams, including those in European football and the National Basketball Association.

More recently, San Francisco-based Sixth Street has added talent with experience investing in real estate, hiring former Goldman Sachs Group Inc. partner Julian Salisbury as Waxman’s co-chief investment officer, and Marcos Alvarado from Safehold Inc. to lead US real estate. 

Waxman, 49, said his firm is looking across the sector for new investments, including more beaten down areas such as office and commercial real estate.

“The last few years, we haven’t really done that much because we thought valuations got way too speculative,” he said, adding that he now sees commercial real estate opportunities not just in the US, but also in Europe. “We’re sitting with a pretty clean portfolio.” 

Many investors, meanwhile, aren’t accounting for the possibility that the Federal Reserve may actually raise rates further rather than cutting them — something he said is more likely than people expect.

“The economy’s pretty strong right now and, arguably, getting too strong,” Waxman said. 

If rates remain high, “anything that is a levered asset class that has floating rate liabilities is at risk,” he said. “It will create additional stresses in the system.”

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