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New Proposed Regulations Apply CFIUS to Certain Real Estate Transactions

October 9, 2019

Real estate professionals who work with foreign investors should become well-versed with the requirements of the Committee on Foreign Investment in the United States (CFIUS), based on the Treasury Department’s September 17, 2019 issuance of proposed regulations to implement the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA).[1]  Before FIRRMA’s passage, CFIUS could review an acquisition of real estate only if it was part of a transaction that could result in a foreign person controlling an entity engaged in US interstate commerce. Under the proposed regulations, however, real estate transactions involving any foreign party could fall within the scope of CFIUS. In these situations, a filing is not mandatory but can qualify the transaction for a “safe harbor,” preventing CFIUS from reviewing the transaction except in limited circumstances.

FIRRMA expanded CFIUS’s authorization to review the “purchase or lease by, or a concession to, a foreign person of private or public real estate”[2] that gives the foreign person at least three of these four property rights: the right to physically access the property, exclude other from the property, improve or develop the property, or attach structures or objects to the  property, AND involves property located:

  • Within, or functioning as part of, an airport or maritime port (as identified by the Department of Transportation);
  • in “close proximity” (within one mile) of a U.S. military installation or another U.S. Government facility/property that are specifically named in Appendix A of the proposed regulation, due to their national security relevance;
  • within an “extended range” (up to 100 miles or 12 nautical miles) of certain U.S. military installations or otherwise in the vicinity of certain facilities named in Appendix A; or
  • in an area that “could reasonably provide the foreign person the ability to surveil or collect intelligence on activities related to national security that are being conducted at such an installation, facility or property” (these are not specified).[3]

Not only do the many properties in the DC metro area that house U.S. Government facilities now fall within CFIUS’ scope, but the myriad properties that have potential national security implications or may be at “risk of foreign surveillance” include utility plants and transformers, electrical grids, water facilities, telecommunications towers and facilities, important bridges and access roads, police training facilities, and certain natural resources, it is possible that large portions of the area could be designated as CFIUS-applicable and therefore implicate CFIUS almost any time a foreign party is purchasing or leasing property.

Public comments on the proposed regulations are being accepted by the Treasury Department until October 17, 2020. The final regulations will be released by February 13, 2020 and will become effective immediately.

If you have questions about the subject of this article, contact Kimberly Reed, Chair of Shulman Rogers’ International Practice Group, at


[1] (“Proposed Reg. 802”).

[2] Exceptions are set out for single housing units, certain “urbanized areas,” and space in multi-unit commercial office buildings that does not result in a foreigner controlling over 10% of the square footage or comprising more than 10% of the building’s tenants. In the future, certain foreigners (“excepted real estate investors”) will be excepted from CFIUS’s jurisdiction but this remains undefined at present. Id. at 50218.

[3] “While the structure of the proposed rule provides for coverage around other facilities or properties of the U.S. Government that are sensitive for national security reasons, no such facilities or properties are identified at this time.”  Id. at 50216.