FIRRMA's Expansion of Jurisdiction
Historically, CFIUS only reviewed transactions that could result in foreign control of a US business. However, the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) explicitly expanded CFIUS jurisdiction to include the purchase, lease, or concession of certain real estate by foreign persons—even if no US business is involved.
The Proximity Triggers
For real estate transactions, CFIUS jurisdiction is primarily triggered geographically. A transaction may be covered if the property is located within, or will function as part of, a specified port or military installation.
Close Proximity
Properties within 1 mile of specific military installations or other facilities listed in Appendix A of the regulations.
Extended Range
Properties within 99 miles of select military installations listed in part 2 of Appendix A.
Exceptions and Safe Harbors
Not all real estate is covered. Critical exceptions include:
- Urbanized Areas: Real estate within an "urbanized area" or "urban cluster" as defined by the Census Bureau (unless in close proximity to specific facilities).
- Single Housing Units: Purchase of a single housing unit (e.g., a single-family home or condo).
- Retail/Commercial Leases: Leases in commercial office buildings where the foreign person does not represent more than 10% of total square footage.
The Passive Investment Strategy
For GCC institutional capital looking to deploy into sensitive areas (e.g., data centers in Northern Virginia or logistics hubs near ports), structuring the investment as purely passive can mitigate CFIUS risk. If the foreign investor has no control rights, no access to nonpublic technical information, and no board representation, the transaction may fall outside CFIUS jurisdiction.