“Real Estate in the Crosshairs: Congressional Calls to Step Up Scrutiny of Foreign Investment”
In January of 2017, the GAO released a report highlighting the risk of espionage, cyber-attack, and money laundering that could arise when high-security federal tenants lease space in buildings owned or controlled by foreign entities. Newly proposed legislation (H.R. 2426) would change the process by which federal leasing agencies, such as the GSA, gather information on the beneficial owners of foreign owned real estate. Separately, on May 16, a request was sent to the GAO by Senators Ron Wyden (D-OR), Sherrod Brown (D-OH) and Claire McCaskill (D-MO) to assess vulnerabilities in the review process followed by the Committee on Foreign Investment in evaluating foreign acquisitions of real estate transactions. All of this promises increased scrutiny of foreign investment in real estate, an issue we first flagged in a January 2016 Special Bulletin.
This Stroock Special Bulletin addresses the potential changes to the GSA procurement process that lessors may face and the increased scrutiny anticipated for real estate transactions involving foreign parties.