On July 8, 2024, the U.S. Department of the Treasury issued a proposed rule to expand the Committee on Foreign Investment in the United States’ jurisdiction over certain categories of foreign investment in U.S. real estate. This proposed rule is significant as it would broaden the scope of sites that can trigger CFIUS’s real estate jurisdiction.
In addition to its current authority to review investments in U.S. businesses, CFIUS would now have the power to review “real estate” investments in locations that are in proximity to specified military bases, ports, and other government installations. The proposed rule aims to address the growing calls for increased government oversight of foreign real estate investments.
The Biden administration’s recent imposition of the first real estate-related CFIUS divestment order set the stage for this proposed rule. The administration’s decision was based on a Chinese-led acquisition of property near Warren Air Force Base, which was deemed to pose a threat to U.S. national security interests.
The proposed rule would result in the addition of 40 new military installations to the list of sites that would fall under CFIUS jurisdiction within one mile of the installation. Additionally, 19 new military installations would be added to the list of sites within 100 miles of which real estate transactions would be subject to CFIUS review. Some installations would also be moved from the one-mile range to the 100-mile range.
Following the implementation of this proposed rule, CFIUS would have the authority to review covered real estate transactions near approximately 200 sites. Investors involved in projects with foreign investment in U.S. real estate are advised to carefully assess these changes to determine if their assets or projects may be affected.
It is important to note that the views expressed here do not constitute legal advice and should not be taken as such. This information is intended for general knowledge and should not be used as a reference in any other publication or legal proceedings without prior written consent.
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