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

This CLE course will examine the Foreign Investment Risk Review Modernization Act (FIRRMA) and how it has affected real estate development, leasing, financing, and investment. The panel will discuss what constitutes "critical infrastructure" and "proximity," and the steps that should be taken to comply with the law. The panel will also discuss concerns for real estate investment funds that include foreign investors.

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. In November 2018, the committee launched a pilot program to require mandatory filings for non-U.S. investments in certain U.S. critical technology companies. Final CFIUS regulations implementing FIRRMA took effect in February 2020.

CFIUS review has become a necessary hurdle for a substantial share of real estate and critical infrastructure transactions involving foreign direct investment. This impact extends beyond acquisitions to include financing, leases, and the formation of investment funds. Any transaction 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.