Impact of FIRRMA on Real Estate Transactions: Concerns for Developers, Lessors, Lenders and Fund Managers

Description

CFIUS is an inter-agency committee authorized to review the national security implications of foreign investments in U.S. businesses and to block transactions or impose measures to mitigate any threats to U.S. national security. The Foreign Investment Risk Review Modernization Act (FIRRMA), enacted in August 2018, expanded the scope of transactions subject to the Committee’s review to include certain non-controlling investments in U.S. businesses that deal with critical infrastructure, critical technology, or the personal data of U.S. citizens.

FIRRMA also provided CFIUS with authority to review real estate transactions—including leases, sales, and concessions—involving air or maritime ports or in close proximity to sensitive U.S. government facilities. Furthermore, in November 2018 the Committed launched a pilot program to require mandatory filings for non-U.S. investments in certain U.S. critical technology companies. Counsel must understand the new filing obligations and the Committee’s expanded authority under FIRRMA.

CFIUS review will become a necessary hurdle for a substantial share of real estate and critical infrastructure transactions involving foreign direct investment. This impact will extend beyond acquisitions to include financing, leases and formation of investment funds. Any transactions relating to critical infrastructure, property proximate to U.S. government facilities and facilities near sensitive U.S. national security installations will attract scrutiny.

Listen as our authoritative panel examines the expanded review powers of CFIUS under FIRRMA and how they must be addressed in real estate transactions. The panel will discuss property-level issues such as the meaning of "proximity" and "critical infrastructure," and issues fund managers must consider in soliciting or vetting foreign investors.