The Treasury Department issued new rules expanding the federal government’s ability to scrutinize and block commercial real estate transactions near certain military bases.
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The rules expand the Treasury Department's authority as chair of the Committee on Foreign Investment in the United States to review real estate transactions involving foreign persons near more than 60 military bases in 30 states. The addition of the sites marks a broad expansion of a list first created in part to combat fears about Chinese espionage operations.
“This final rule will significantly increase the ability of CFIUS to thoroughly review real estate transactions near bases and will allow us to deter and stop foreign adversaries from threatening our Armed Forces, including through intelligence gathering,” Treasury Secretary Janet Yellen said in a statement.
U.S. officials are now empowered to look into real estate transactions within a mile of 40 new military installations and within 100 miles of 27 others. The agency’s oversight over the area surrounding eight sites already on the list was also expanded.
Congress first gave the Treasury Department authority to review real estate transactions involving foreign nationals near sensitive sites in 2018, and a senior White House official told The Wall Street Journal that the expansion of the program was part of its first large-scale review since 2020.
The rules primarily target commercial transactions, with broad exemptions for single-family homes and urban apartments, and they have mostly been enforced around corporate deals, according to the WSJ.
The commercial real estate industry has expressed concerns about enforcement, with legal debates about what qualifies as ownership when pools of investors create entities that invest with other entities in a real estate venture.
While no specific countries are named in the federal rules, they were passed largely because of fears that Chinese nationals were buying property around military sites.
President Joe Biden in May ordered the cryptocurrency company MineOne Partners, which was principally owned by Chinese nationals, to sell real estate it had bought within a mile of a Wyoming nuclear site without approval from the Treasury Department program.
The latest update to federally enforced rules around foreign ownership of real estate sits atop a patchwork of statewide efforts to restrict some landownership that began in earnest in late 2022.
Florida passed a law in May 2023 that bans Chinese nationals, along with people from six other countries, from buying commercial land within 10 miles of a military installation or critical infrastructure.
Florida Gov. Ron DeSantis signed the law despite opposition from real estate heavy hitters, including Blackstone, Starwood Capital and Related Cos. It is the subject of a federal court case challenging its constitutionality.
Texas considered a similar law in early 2023 that ultimately died in the legislature.
Lawmakers have vowed to bring it back in the 2025 session.
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