Another investment firm is circling distress in the commercial property market, on the lookout for opportunities.
Alan Waxman, chief executive officer of San Francisco-based Sixth Street Partners, spoke about his strategy in a recent interview with Bloomberg. Waxman said the firm is keeping an eye on exposure risks held by small and regional-sized banks, a sector where there’s been noteworthy tightening of lending practices.
Waxman specified areas where Sixth Street was looking to invest, including the beleaguered office market in the States as well as commercial real estate opportunities in Europe.
Waxman also stated that the strength of the economy could lead to a curveball from the Federal Reserve, which is largely expected to cut interest rates this year. If it does the opposite, Sixth Street is at the ready for, as “anything that is a levered asset class that has floating rate liabilities is at risk.”
Sixth Street manages $75 billion in assets and focuses much of its attention on the private credit market. Its dive into real estate was crystalized by a couple of recent hires: former Goldman Sachs partner Julian Salisbury was brought in as co-chief investment officer, while Marcos Alvarado was poached from Safehold to lead Sixth Street’s U.S. real estate division.
As commercial property distress spread during the pandemic and interest rate hike, firms have been making noise in preparing themselves to take advantage of the situation. Borrowers wanting to extend or modify loans increasingly need to find alternatives from the traditional banking route.
RXR, Artemis and SL Green are among those deploying dry powder and rescue capital in the market. Goldman Sachs, Cohen & Steers, EQT Exeter and BGO are also among the major firms raising funds to acquire distressed properties.
Canadian asset manager Brookfield has been trying to raise $15 billion for a real estate fund that could take advantage of the commercial property fund. It’s about halfway to its fundraising target.
— Holden Walter-Warner
