“December Shake-Up: CFIUS Broadens Its Real Estate Authority”

Client Alert  |  December 31, 2024

On December 9, 2024, the final regulations by CFIUS to enhance jurisdiction over real estate became enforceable. These rules greatly enlarged the range of real estate transactions subject to national security examination.

As of December 9, 2024, the Committee on Foreign Investment in the United States (“CFIUS”) commenced enforcing its final rule (published in the Federal Register on November 7, 2024), which broadens its authority over real estate dealings involving foreign entities. Previously, we provided our assessment about the rule’s implications when it was proposed earlier this year. Significantly, the list of expanded sites remained constant between the proposed and final rule.

I. Background: CFIUS’s Authority Over Real Estate Transactions

The “Part 802“ rules regarding real estate empower CFIUS to scrutinize acquisitions where a foreign entity is purchasing, leasing, or acquiring certain other land rights in properties near military bases and other sensitive zones. The regulations detail those sensitive zones subject to examination, categorized into four types outlined in an Appendix to the rules (“Appendix A”):

• Part 1 enumerates locations where a property may be evaluated based on its “close proximity” to a designated military installation (i.e., within one mile).
• Part 2 enumerates locations where a property may be assessed based on being within the “extended range” of a designated military installation (i.e., up to 99 miles).
• Part 3 details counties or other areas where properties, if situated within these areas, may be subject to CFIUS evaluation.
• Part 4 lists offshore training zones where properties, if located within these areas, may be subject to CFIUS evaluation.

II. Modifications to the Lists of Sensitive U.S. Military Installations

The Final Rule introduced the following modifications:

• Broadened CFIUS’s jurisdiction over real estate transactions to incorporate 40 new military installations (raising the total to 162) in Part 1;
• Broadened CFIUS’s authority over real estate transactions to include 19 new military installations (increasing the total to 65) in Part 2;
• Relocated eight military installations from Part 1 to Part 2;
• Removed one installation from Part 1 and two installations from Part 2 due to their placement within other listed areas;
• Adjusted the definition of “military installation” to standardize it with existing definitions and the locations covered; and
• Updated the names of 14 installations and the sites of seven others.

III. Insights for Transaction Participants

Participants in transactions should consider the following:

• Utilize the updated location list for due diligence. Parties should refer to the latest version of the list of sensitive areas located at 31 C.F.R. Part 802, Appendix A.
• The list of locations is expected to be updated annually. Each year, the U.S. Department of Defense and CFIUS review the installations in Appendix Part A and consider amendments to Part 802 authority.
• Be aware of other applicable regulations. Even when real estate is central to a transaction, many dealings involving real estate also engage CFIUS’s “Part 800“ authority over controlling and non-controlling transactions. Furthermore, transactions involving real estate may involve the increasing array of state and local restrictions on foreign investment discussed in our previous client alert, as well as other federal requirements such as the Agricultural Foreign Investment Disclosure Act (AFIDA).

IV. Upcoming Webinar

For those interested in gaining a clearer understanding of the scope and implementation of CFIUS’s broadened authority over real estate transactions, Gibson Dunn attorney Michelle Weinbaum will present on Tuesday, January 28th at 1:00pm ET at an upcoming Strafford live webinar, “Newly Expanded CFIUS Real Estate Jurisdiction“ where the final rule will be discussed; practical implications for foreign investors, firms, and developers; new state and federal measures that regulate foreign ownership of U.S. real estate; as well as key considerations to take into account when evaluating potential CFIUS issues and filings. Should this timing be inconvenient, the Gibson Dunn CFIUS team is available to discuss these regulations at an alternative time.

This update was prepared by the following lawyers from Gibson Dunn: Roxana Akbari, Mason Gauch, Chris Mullen, Michelle Weinbaum, and Stephenie Gosnell Handler.

The attorneys at Gibson Dunn are available to help with any inquiries you might have regarding these matters. For more details on how we can assist you, please get in touch with the Gibson Dunn lawyer you typically engage with, the authors, or the following leaders and members of the firm’s International Trade practice group:

United States:
Ronald Kirk – Co-Chair, Dallas (+1 214.698.3295, [email protected])
Adam M. Smith – Co-Chair, Washington, D.C. (+1 202.887.3547, [email protected])
Stephenie Gosnell Handler – Washington, D.C. (+1 202.955.8510, [email protected])
Christopher T. Timura – Washington, D.C. (+1 202.887.3690, [email protected])
David P. Burns – Washington, D.C. (+1 202.887.3786, [email protected])
Nicola T. Hanna – Los Angeles (+1 213.229.7269, [email protected])
Courtney M. Brown – Washington, D.C. (+1 202.955.8685, [email protected])
Amanda H. Neely – Washington, D.C. (+1 202.777.9566, [email protected])
Samantha

Sewall – Washington, D.C. (+1 202.887.3509, [email protected])
Michelle A. Weinbaum – Washington, D.C. (+1 202.955.8274, [email protected])
Hugh N. Danilack – Washington, D.C. (+1 202.777.9536, [email protected])
Mason Gauch – Houston (+1 346.718.6723, [email protected])
Chris R. Mullen – Washington, D.C. (+1 202.955.8250, [email protected])
Sarah L. Pongrace – New York (+1 212.351.3972, [email protected])
Anna Searcey – Washington, D.C. (+1 202.887.3655, [email protected])
Audi K. Syarief – Washington, D.C. (+1 202.955.8266, [email protected])
Scott R. Toussaint – Washington, D.C. (+1 202.887.3588, [email protected])
Shuo (Josh) Zhang – Washington, D.C. (+1 202.955.8270, [email protected])

Asia:
Kelly Austin – Hong Kong/Denver (+1 303.298.5980, [email protected])
David A. Wolber – Hong Kong (+852 2214 3764, [email protected])
Fang Xue – Beijing (+86 10 6502 8687, [email protected])
Qi Yue – Beijing (+86 10 6502 8534, [email protected])
Dharak Bhavsar – Hong Kong (+852 2214 3755, [email protected])
Felicia Chen – Hong Kong (+852 2214 3728, [email protected])
Arnold Pun – Hong Kong (+852 2214 3838, [email protected])

Europe:
Attila Borsos – Brussels (+32 2 554 72 10, [email protected])
Patrick Doris – London (+44 207 071 4276, [email protected])
Michelle M. Kirschner – London (+44 20 7071 4212, [email protected])
Penny Madden KC – London (+44 20 7071 4226, [email protected])
Irene Polieri – London (+44 20 7071 4199, [email protected])
Benno Schwarz – Munich (+49 89 189 33 110, [email protected])
Nikita Malevanny – Munich (+49 89 189 33 224, [email protected])
Melina Kronester – Munich (+49 89 189 33 225, [email protected])
Vanessa Ludwig – Frankfurt (+49 69 247 411 531, [email protected])

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