ATLANTA—As we ready to close the books on 2015 and head into 2016, everyone's eye is in the Federal Reserve. What will interest rates do? What is the biggest threat to investors in the months ahead? Where are the biggest challenges in the capital markets?

GlobeSt.com caught up with KC Conway, credit risk manager and chief valuation officer at SunTrust Bank, to get his thoughts on these questions in the final installment of our exclusive interview series. You can still catch past articles, including The Unintended Impacts of Basel Accords, What Could Disrupt the Southeast?, and What Makes the Southeast Different?.

GlobeSt.com: What are the biggest challenges you see in the capital markets currently?

Conway: The biggest challenge is twofold. First, there is too much capital searching for yield in commercial real estate, which is driving prices up to levels that will pose refinancing risk in three to five years. Second, overleverage could become a problem as sources of capital compete for deals.

These factors are putting pressure on underwriting. The CMBS market demonstrates this clearly: Half of all new issuance in 2015 involved loan structures with full or partial interest-only features.

If a loan can't amortize in this low interest and cap rate environment and needs an interest-only structure, then that is an early warning sign that pricing is disconnecting from the NOI fundamentals of commercial real estate. The unanswered question that will be answered over the next few years is whether rents and NOI can grow enough to offset the impact of higher interest and cap rates.

Globest.com: Do you expect much to change the rest of this year?

Conway: No, but there are three wild cards: the Fed; global events like Europe, Iran and Russia; and energy prices. What the Fed does with interest rates has material implications on currency prices and our GDP and exports.

If the Iran agreement is finalized and its oil flows into the open market, energy prices are likely to go lower, which is good for the consumer but harmful to energy-producing states. However, the fundamentals of the US and Southeast economy are finally intact: real job growth is occurring; demand fundamentals are in place for rent and NOI growth; housing demand is back; and manufacturing and industrial real estate demand is healthy and getting better.