Page 23 - The CFIUS Book
P. 23 Real estate investments proximate to sensitive sites
FIRRMA codifies what had been CFIUS practice, to examine the proximity of real estate in a transaction to sensitive military or other U.S. government sites as well as critical seaports or airports. FIRRMA specifically gives CFIUS jurisdiction to review the purchase or lease by, or concessions to, a foreign company of U.S. real estate that it considers any of the following:
l located within, or functions as part of, an air or maritime port;
l in close proximity to a U.S. military installation or facility or property of the
U.S. government that is sensitive for national security reasons;
l could reasonably provide the foreign person the ability to collect intelligence on activities being conducted at such an installation, facility, or property;
l could otherwise expose national security activities at such an installation, facility, or property to the risk of foreign surveillance; or
l meetssuchothercriteriaastheCommitteeprescribesbyregulation,exceptthat such criteria may not expand the categories of real estate laid out in FIRRMA.18 Friendly countries and investment funds exception
FIRRMA provides certain carveouts for these expanded covered transactions. First, FIRRMA allows CFIUS to define what countries will be considered to have “foreign persons” for the purposes of the special cases listed above. As discussed in Section 1.1, CFIUS will promulgate that list before February 2020. Our experience indicates it is likely that the list of countries will include the NATO countries as well as South Korea, Japan, Australia, and New Zealand.
FIRRMA also expressly excludes from the expanded special-case jurisdiction foreign investment through investment funds. CFIUS review will not be triggered where all of the following conditions apply:
l ThefundismanagedexclusivelybyaU.S.generalpartner,managingmember, or equivalent;
l The advisory board does not control the fund’s investment decisions or the investment decisions of the general partner, managing member, or equivalent; and
l The foreign person does not otherwise have the ability to control the fund or access to material non-public technical information as a result of its participation on the advisory board or committee.

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