Commercial real estate loans and debt defaults are some of the biggest worries for U.S. banks today in an economy faing high interest rates and a looming recession, according to billionaire investor Howard Marks, the co-founder and co-chairman of the world’s largest investor in distressed securities.

With a net worth of $2.2 billion, Marks heads Oaktree Capital Management, an asset management firm specializing in alternative investment strategies. He is famous for his “memos” which detail his investment strategies and insight into the economy and are posted publicly on the Oaktree website. He has also published three books on investing and counts Warren Buffett as a fan. “When I see memos from Howard Marks in my mail, they’re the first thing I open and read. I always learn something, and that goes double for his book,” Buffett said.

Marks sees trouble ahead in commercial real estate and anticipates a wave of mortgage debt defaults that will add stress to a financial system already jittery from the collapse of Silicon Valley Bank and other regional banks.

“Higher interest rates call for higher demanded capitalization rates, which will cause most real estate prices to fall,” Marks wrote Monday in his latest memo.

Marks is concerned about working from home and the hybrid work model, which threatens landlords’ business and possibly affects the occupancy levels lenders will assume in their refinancing calculation, CNBC reported.

“The possibility of a recession bodes ill for rental rates and occupancy, and thus for landlords’ income,” he wrote.

High borrowing costs and tighter credit conditions caused by the banking crisis could be challenging for big property owners who need to refinance. Almost $450 billion in commercial real-estate debt is maturing in 2023, making final payment due on those loans, according to data cited by JPMorgan, Markets Insider reported.

What’s coming for commercial real estate will be worse than the residential real estate meltdown of the Great Financial Crisis, wrote Lisa Shalett, the chief investment officer for Morgan Stanley Wealth Management, in a weekly Global Investment Committee note in early April. Shalett said she predicts a wipeout of office properties with vacancy rates close to a 20-year high.

If that happens, Shalett said, the trickle-down distress will hurt landlords, the bankers who lend to them, business communities, private capital funders, and owners of underlying securities.

“No one knows whether banks will suffer losses on their commercial real estate loans, or what the magnitude will be,” Marks wrote Monday. “But we’re very likely to see mortgage defaults in the headlines, and at a minimum, this may spook lenders, throw sand into the gears of the financing and refinancing processes, and further contribute to a sense of heightened risk. Developments along these lines certainly have the potential to add to whatever additional distress materializes in the months ahead.”