LAS VEGAS—Retail commercial real estate transaction momentum won't be impacted by the threat of rising interest rates as severely as many believe, according to Nicholas Coo, senior managing director and a founding member of Faris Lee Investments. But it's not because of the obvious reasons, suggests Coo. GlobeSt.com spoke with him in advance of the ICSC RECon event taking place here, to get his full reasoning behind the sector's resiliency, and where and how investors are spending their money in this retail real estate market.

GlobeSt.com: How is the threat of interest rates rising impacting the trading of retail real estate assets?

Nicholas Coo: In most cases, we believe the threat of rising interest rates is priced within investor underwriting we are seeing today. Lenders have widened their spreads (above the base index) to adjust for the market's view on yields required to transact loans and this ultimately filters back to the stated coupon rates quoted by various debt sources we are seeing today. In cases where investors are assuming low interest rate loans with less than 5 years remaining, the NOI growth and interest rate tolerance is considered when determining the ultimate value. With yields compressed to historical lows in the bond market and fears of sensitivity to interest rates in the stock market, the global view places real estate as the best hedge against the pending interest rate hikes.