Mapping Risk: New CFIUS Tool for Real Estate Investors
The Committee on Foreign Investment in the United States (“CFIUS” or the “Committee”) has published a much-needed web-based tool to help investors and their advisors analyze new CFIUS rules governing the foreign purchase, lease or concession of real estate in proximity to sensitive government installations.
The Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”) significantly broadened the authority of CFIUS to review the national security implications of foreign investments in the United States. For the first time, Congress explicitly authorized CFIUS to review the purchase, lease or concession of certain real estate (“covered real estate”) by or to foreign persons (“covered real estate transactions”). One of several key jurisdictional factors is the proximity of the covered real estate to sensitive government facilities, including – but not limited to – military installations. Prior to FIRRMA, real estate investments could only be reviewed in connection with the controlling acquisition of a U.S. business (for example, where operating commercial properties were being acquired).
February 13, 2020, marked the effective date of CFIUS regulations implementing these new authorities (“real estate regulations”). The real estate regulations define “covered real estate” to include, among other things, airports and seaports, as well as real estate in close proximity to four categories of military installations and other sensitive facilities, each as identified in an appendix to the regulations. Depending on the category, “proximity” could be anywhere from 1 mile to 100 miles from the relevant location. The Department of the Treasury has now published a new mapping tool to assist the public in understanding the geographic areas that are subject to CFIUS jurisdiction. The tool can be accessed at the following link: Part 802 Geographic Reference Tool.
The mapping tool allows users to input an address and determine the distance to certain sensitive facilities to help determine whether a transaction in proximity to that facility involves “covered real estate.” Key features include the identification of urbanized areas and urban clusters, for which an exception may be available. The tool also incorporates a publicly available dataset of all Department of Defense properties and is not limited to the territorial military installations identified in the appendix to the real estate regulations. As a consequence, not all facilities displayed in an individual search are also listed in the appendix to the regulations. The appendix to the regulations is the definitive list of covered installations. Nevertheless, knowing what other military installations have been identified will be relevant when assessing CFIUS risk associated with the acquisition of nearby businesses. The list employed in the mapping tool can also help investors and their advisors understand the general sensitivity of a particular location, regardless of proximity, and whether a transaction warrants a filing with CFIUS.
CFIUS takes pains to emphasize that the mapping tool is provided for reference only and “should not be interpreted as guidance or an advisory opinion by CFIUS with respect to any particular transaction.” It is also important to note that the mapping tool does not necessarily represent the legal or surveyed land parcel boundaries. As a consequence, distances may not be exact. The tool also does not display air and maritime ports nor offshore ranges, both of which are also covered by the regulations. CFIUS has also noted that the list of sensitive government properties is not static, and may be revised at a later date to include other facilities or properties of the U.S. Government. Additional information on offshore areas and covered air and maritime ports can be found here: CFIUS Real Estate Instructions (Part 802).
Publication of this tool so soon after the regulations came into effect seems to show that, although CFIUS has broadly expanded its power, it remains dedicated to making CFIUS a more investor-friendly process by providing investors with tools needed to plan their investments and make informed decisions about whether to file a transaction with the Committee.
The mapping tool is helpful in determining only some of the factors in the analysis of whether a CFIUS filing should be made. The application of the regulations to any specific transaction must be determined based upon consideration of the regulations in their entirety and the facts of each case. Stroock’s National Security/CFIUS/Compliance group has acted as advisor to foreign and domestic clients in hundreds of CFIUS reviews.
For additional information on the mapping tool or the CFIUS process, please contact us.
For more information:
 “Foreign Investment Risk Review Modernization Act of 2018,” Title XVII, Subtitle A of P.L. 115-232 (Aug. 13, 2018).
 Office of Investment Security, Department of the Treasury, “Provisions Pertaining to Certain Transactions by Foreign Persons Involving Real Estate in the United States,” 85 Fed. Reg. 3158 (Jan. 17, 2020), available at: https://www.federalregister.gov/documents/2020/01/17/2020-00187/provisions-pertaining-to-certain-transactions-by-foreign-persons-involving-real-estate-in-the-united.
This Stroock publication offers general information and should not be taken or used as legal advice for specific situations, which depend on the evaluation of precise factual circumstances. Please note that Stroock does not undertake to update its publications after their publication date to reflect subsequent developments. This Stroock publication may contain attorney advertising. Prior results do not guarantee a similar outcome.