Author: Abigail Grenadier

NEWS: The Real Estate Roundtable Announces FY 2025 Leadership

Posted on by Abigail Grenadier

Kathleen McCarthy Takes Over As New Chair Of The Roundtable’s Board Of Directors; John Fish Commended For Three Years As Roundtable Chair

(WASHINGTON, D.C.) — The Real Estate Roundtable announced its FY2025 leadership today, with Kathleen McCarthy (Global Co-Head of Blackstone Real Estate) beginning a three-year term as Roundtable Chair on July 1, 2024. Ms. McCarthy succeeds John Fish (Chairman & Chief Executive Officer, Suffolk) who has served as Roundtable Chair since 2021. The Roundtable’s membership also approved a 26-member Board of Directors.

Kathleen McCarthy, Chair of the Real Estate Roundtable, said, “I am incredibly honored to step into the role of Chair of the Real Estate Roundtable. The real estate industry touches every aspect of our economy—from affordable housing and shopping centers to warehouses and data centers. Strong collaboration between the public and private sectors will enable the country to meet the challenges we face and capitalize on the opportunities ahead. John, Jeff, and the entire Roundtable team have advocated for policies to help drive growth and innovation across communities in the U.S., and I look forward to building on their important work.”

“The Real Estate Roundtable and its members have always risen to meet the challenges of the times, and I am confident that under Kathleen’s leadership, we will continue to make impactful strides,” said Jeffrey D. DeBoer, Roundtable President and CEO. “The real estate industry is a cornerstone of economic vitality, job creation, and community development. Kathleen’s extensive experience and strategic vision will be invaluable as we address critical policy issues and advocate for a shared, prosperous future.”

John Fish, the Immediate Past Chair, stated, “It has been a privilege to serve as Chair during such a pivotal period for our industry. I am pleased to hand over the reins to Kathleen. Her expertise and leadership, along with Jeff DeBoer’s vision and guidance, will undoubtedly guide The Roundtable to new heights. The focus on recovery, resilience, and innovation remains crucial as this important organization works with our partners in government to advance our shared interests and strengthen the American economy.”

About Kathleen McCarthy

Kathleen McCarthy is the Global Co-Head of Blackstone Real Estate. Blackstone is the largest owner of commercial real estate globally with a nearly $600 billion real estate portfolio and $339 billion in investor capital under management (as of March 31, 2024), owning and operating assets across every major geography and sector, including logistics, residential, office, hospitality and retail. Ms. McCarthy focuses on driving performance and growth for Blackstone’s Real Estate business.

Ms. McCarthy previously served as Global Chief Operating Officer of Blackstone Real Estate. Before joining Blackstone in 2010, Ms. McCarthy worked at Goldman Sachs, where she focused on investments for the Real Estate Principal Investment Area. Ms. McCarthy began her career at Goldman Sachs in the Mergers & Acquisitions Group.

Ms. McCarthy received a BA in Ethics, Politics and Economics from Yale University. She serves on the Boards of City Harvest and the Blackstone Charitable Foundation, is Chair of the Board of Directors of the Real Estate Roundtable and is the President of the Board of Trustees of The Nightingale-Bamford School.

About John Fish

The Real Estate Roundtable’s Board of Directors was chaired by John Fish, who is Chairman and CEO of Suffolk. Under his vision and leadership, Suffolk has grown into one of the leading privately held general building contractors in the country with $5.6 billion in annual revenue; main offices throughout the country; and experience in high-growth sectors including healthcare, higher education, life sciences, data centers, aviation, gaming, government and commercial. Suffolk is ranked #25 on the Engineering News-Record national list of “Top 400 Contractors.”

He serves on numerous Boards focused on improving the economy, strengthening business, and creating jobs. He is a member of the Business Roundtable, serves on the Executive Committee of the Real Estate Board of New York, and is a member of the Partnership for New York City.

Mr. Fish is a graduate of Bowdoin College in Brunswick, Maine with a Bachelor’s Degree in Political Science. He received an Honorary Doctorate of Engineering Technology Degree from Wentworth Institute of Technology. He is also the recipient of honorary degrees from Regis College and Curry College.

About The Real Estate Roundtable

The Real Estate Roundtable brings together leaders of the nation’s top publicly-held and privately-owned real estate ownership, development, lending, and management firms with leaders of major national real estate trade organizations to jointly address key national policy issues relating to real estate and its important role in the global economy.

The collective value of assets held by Roundtable members exceeds $4 trillion. The Roundtable’s membership represents more than 3 million people working in real estate; 12 billion square feet of office, retail, and industrial space; over 4 million apartments; and more than 5 million hotel rooms. It also includes the owners, managers, developers, and financiers of senior, student, and manufactured housing—as well as medical offices, life science campuses, data centers, cell towers, and self-storage properties.

The Roundtable’s policy news and more are available on The Roundtable website.

Other Roundtable Leadership Changes

Joining The Roundtable’s Board of Directors as of July 1 are:

  • Conor Flynn, CEO, Kimco Realty Corporation; First Vice Chair, Nareit
  • Michelle Herrick, Head of Real Estate Banking, J.P. Morgan
  • Diane Hoskins, Global Co-Chair, Gensler; Chairman, The Urban Land Institute
  • Michael H. Lowe, Co-CEO, Lowe
  • Andrew P. Power, President & CEO, Digital Realty

See the complete list of the FY2025 Roundtable’s Board of Directors here.

Stepping down from The Roundtable Board as of July 1 are:

  • Michael D. Brown, Travel & Leisure Co. President & CEO, Immediate Past Chair, American Resort Development Association
  • Debra A. Cafaro, Chairman and Chief Executive Officer, Ventas, Inc., Immediate Past Chair, The Real Estate Roundtable
  • W. Matthew Kelly, CEO, JBG Smith, Chair, Nareit

# # #

Supreme Court Rules in Case of Federal Taxation of Unrealized Income

Posted on by Abigail Grenadier

On Thursday, the Supreme Court ruled 7-2 to uphold the constitutionality of mandatory repatriation tax (MRT) enacted in 2017, but chose to sidestep and not rule on the issue of whether the Constitution imposes a realization requirement on the taxation of income. (Moore v. United States)

Background & The Decision

  • The petitioners in Moore argued that the MRT exceeds Congress’s authority under the 16th Amendment to lay and collect taxes on income. The Moore’s were shareholders of a foreign corporation. The corporation never distributed its earnings, but the MRT taxed the Moore’s on their deemed share of the corporation’s income. The Moore’s argued that the federal government could not tax them on income they never realized. (Roundtable Weekly, Oct. 13)
  • A decision in favor of the Moore’s could have important consequences for both legislative proposals to tax unrealized gains, but also existing aspects of the tax code and pass-through taxation. 
  • The Ninth Circuit ruled against the Moore’s on the grounds that there is no realization requirement in the Constitution. 
  • The Roundtable has consistently opposed proposals to tax unrealized gains on several grounds, including their constitutionality and the damage they would cause to the economy, entrepreneurship, and productive investment. 
  • The Supreme Court, in a decision authored by Justice Brett Kavanaugh, stepped back from the sweeping holding by Ninth Circuit and concluded that it did not need to rule on the realization question because the foreign company’s operating income was clearly “realized” by the foreign company. In passing the MRT, Congress was simply attributing (or passing through) that income to its U.S. shareholders. 
  • The 7-2 opinion by Justice Kavanagh was accompanied by two concurring opinions, one from Justice Jackson and one from Justice Barrett (joined by Justice Alito). Justices Thomas and Gorsuch dissented. 
  • While the Real Estate Roundtable’s Tax Policy Advisory Committee (TPAC) and its members are still parsing the language of the various opinions to understand the broader implications, at the end of the day, there appear to be at least four justices willing to uphold a realization requirement (Barrett, Alito, Thomas, and Gorsuch), one justice prepared to hold that realization is not required (Jackson), and four justices who have not yet tipped their hand (Kavanaugh, Roberts, Sotomayor, and Kagan).  See analysis of Moore decision by TPAC member Don Susswein (Principal, RSM US LLP)

The Moore ruling is unlikely the last word in the heated debate over the constitutionality of taxing unrealized gains.

IRS and Treasury Unveil New Rules Aimed at Partnership “Basis-Shifting” Transactions

Posted on by Abigail Grenadier

This week, the IRS and Treasury Department announced a multistage regulatory initiative aimed at regulating certain partnership transactions that shift the tax basis of assets and generate additional depreciation deductions, reduce taxable gains, or increase deductible losses. (IRS-Treasury Press Release, June 17)

Guidance Package

IRS building in Washington DC
  • In Notice 2024-54, Treasury and the IRS indicated they intend to issue proposed regulations governing certain transactions that affect the basis of property held by a partnership or distributed by a partnership. The guidance will focus on partnerships that involve related parties or tax-indifferent parties. 
  • Related parties could include family members, corporations and their shareholders, and other entities and businesses with common or overlapping ownership.  It is unclear from the guidance where the administration believes the targeted abuses generating inappropriate tax benefits are most likely to arise (e.g., corporate mergers, family offices, real estate, etc.). 
  • The rules will apply to cost recovery deductions and gain/loss calculations for tax years ending after June 17, 2024, thus covering deductions, gains, or losses attributable to transactions completed in prior years. 

Roundtable Concerns

  • A principal concern voiced at this week’s RER Tax Policy Advisory Committee meeting is related to the broad scope of the new rules. Rather than focusing specifically on identifiable, abusive transactions, Notice 2024-54 states that the forthcoming regulations will provide “mechanical rules applicable to all covered transactions without regard to the taxpayer’s intent and without regard to whether the transactions could be abusive or lacking in economic substance.”
  • Moreover, the Notice states that the regulations will only apply if the transaction results in a basis increase for the relevant property.  “If, and to the extent, property has been allocated a basis decrease, the proposed rules would not apply.”
  • The new rules thus apply to a transaction regardless of whether the transaction is abusive or lacking in economic substance, but only if they result in a negative outcome for the taxpayer.  If the same mechanical rules would generate a positive result for another taxpayer, they are disregarded.  In sum: Heads, IRS wins; tails, taxpayer loses. 

Additional Developments:

Other elements of the regulatory initiative include:

  • Proposed regulations (REG-124593-23) identifying some partnership-related-party basis adjustment transactions as transactions of interest and requiring disclosures by participants and material advisers. 
  • Revenue Ruling 2024-14 notifying taxpayers that it will apply the codified economic substance doctrine to challenge certain basis-shifting transactions. 
  • The IRS Office of Chief Counsel also announced the formation of a new associate office focused exclusively on partnerships, S corporations, trusts, and estates. (TaxNotes, June 17)

The Roundtable’s Tax Policy Advisory Committee will continue its discussion of the partnership basis-shifting issue and how best to respond on its next TPAC Zoom meeting.

Public Officials and Industry Leaders Discuss National Policy Challenges Affecting CRE

Posted on by Abigail Grenadier

The Real Estate Roundtable’s 2024 Annual Meeting this week included discussions with key public officials and industry leaders on issues affecting commercial real estate, including market conditions, the upcoming elections, affordable housing solutions, tax policy, sustainability issues, rebuilding cities, and evolving security threats.

Roundtable Leadership

  • During the meeting, Roundtable Chair Emeritus Robert Taubman (Chairman, President & CEO, Taubman Centers, Inc.) presented outgoing Chair John Fish (Chairman & CEO, SUFFOLK) with a gift from The Roundtable Board of Directors and membership, for his outstanding leadership and successful time as Chair.
  • In his outgoing speech as now-Immediate Past Chair, Fish thanked Jeffrey DeBoer, The Roundtable Board of Directors, membership, and staff for their hard work, and reiterated a key lesson from his time as Chair: “What’s good for America is good for our business.”
  • Kathleen McCarthy (Global Co-Head of Blackstone Real Estate) will begin her three-year term as Roundtable Chair on July 1, 2024.

Meeting Speakers

  • (L-R): Kenneth T. Rosen (Chairman of the Fisher Center for Real Estate and Urban Economics at the Haas School of Business at the University of California, Berkeley; Chairman, Rosen Consulting Group) presented and led a panel discussion on the economy and market conditions with Scott Rechler (Chairman & CEO, RXR), Bryan McDonnell (Managing Director, Chair of Global Debt & Agriculture, PGIM Real Estate), and Andrew P. Power (President & CEO, Digital Realty).
  • The Honorable Elliot Doomes (Commissioner, Public Buildings Service, U.S. General Services Administration) discussed public-private partnership opportunities and sustainable building practices.
  • “We urge the Public Buildings Service to accelerate their process to catalogue and sell to the private sector underutilized federal buildings.  The private sector can convert those buildings to much needed housing, reduce unnecessary emissions, and help revitalize communities still struggling to recover from the pandemic,” said Roundtable President & CEO Jeffrey DeBoer.
  • Dr. Frank Luntz (Founder and President, FIL Inc.)
  • Bruce J. Katz (Director, Nowak Metro Finance Lab, Drexel University, former Inaugural Centennial Scholar and Vice President of the Brookings Institution)

Policy Advisory Committee Meetings

Joint Real Estate Capital Policy Advisory Committee (RECPAC) and Research Committee

  • During a joint meeting, Research Co-Chair Spencer Levy (Global Chief Client Officer & Senior Economic Advisor, CBRE) and Darin Mellot (CBRE) briefed members on current real estate market conditions. RECPAC Co-Chair Michael Lowe (Co-CEO, Lowe) led a discussion about real estate credit and capital markets with: Kathleen S. Briscoe (Dermody Properties); Christina Chiu (Empire State Realty Trust); John Kessler (Mitsui Fudosan America); and Rex Rudy (U.S. Bank).  Roundtable Senior Vice President Chip Rodgers moderated a discussion with Terry Haines (Pangea Policy) and Alex Sternhell (Sternhell Group) on key policy issues affecting the industry.  (Agenda & Speakers)

Tax Policy Advisory Committee (TPAC)

  • TPAC Vice Chair David Friedline (Partner, Deloitte Tax LLP) led panels on tax legislation at the forefront of policy debates in Washington, including the Revitalizing Downtowns Act 2.0, the Foreign Investment in Real Property Tax Act (FIRPTA), partnerships, and pass-throughs. (Agenda & Speakers)

Sustainability Policy Advisory Committee (SPAC)

  • SPAC Chair Anthony E. Malkin (Chairman and CEO, Empire State Realty Trust, Inc.) and Vice Chair Ben Myers (Vice President, Sustainability, BXP) led discussions on the recently announced national definition of a Zero Emissions Building (ZEB), the SEC’s climate risk reporting rule, US-EPA ENERGY STAR, and NextGen. (Agenda & Speakers)

Homeland Security Task Force (HSTF)

  • Co-Chairs Amanda S. Mason (Executive Director, Global Intelligence, Related Companies) and Keith Wallace (VP, Global Safety & Security, Marriott International) led a series of discussions on a number of key areas of concerns for the commercial facilities sector. Dr. Todd C. Helmus (Senior Behavioral Scientist, RAND) discussed issues related to the 2024 U.S. election; Dr. Michael Doran (Senior Fellow and Director, Center for Peace and Security in the Middle East at the Hudson Institute) discussed risks posed by Iran; and FBI special agent Matthew Drummond briefed the Task Force on the current threat picture. (Agenda & Speakers)

Next on The Roundtable’s FY 2025 meeting calendar is the Fall Meeting on October 8-9. The Fall Meeting is restricted to Roundtable-level members only. 

Federal Reserve Leaves Rates Unchanged

Posted on by Abigail Grenadier

The Federal Reserve’s Federal Open Market Committee voted unanimously this week to maintain the federal funds rate at the 5.25%-5.5% range where it has been since July of last year. (Federal Reserve Press Release)

Federal Open Market Committee (FOMC) Meeting

  • After the meeting Wednesday, Fed chair Jerome Powell said at a news conference that he saw either one or two rate cuts this year as “plausible” scenarios. (Axios, June 12)
  • “What everyone agrees on is it’s going to be data dependent,” Powell added.
  • The FOMC issued a statement indicating that lowering inflation to 2 percent is their primary objective before reductions can occur.
  • The FOMC currently anticipates making four quarter-point cuts next year, bringing the federal funds rate down by 1.25 percentage points from its current level.

Congressional Pushback

  • Senators Elizabeth Warren (D-MA), Jacky Rosen (D-NV), and John Hickenlooper (D-CO) wrote to Fed chair Jerome Powell, urging the Fed to cut the federal funds interest rates from its current, two-decade-high of 5.5 percent, citing that other major central banks around the globe have made cuts or are leaning toward lowering interest rates. (Press Release | Letter)
  • Their letter also raises concerns that high interest rates are increasing the costs of housing and insurance, continuing to hurt Americans as rates remain unchanged.
  • On housing prices, the senators wrote: “The country is already facing a severe housing shortage, and the Fed’s refusal to bring down interest rates is exacerbating this shortage and driving higher inflation rates…Lower mortgage rates would encourage more people to sell their homes, which would in turn increase housing supply, decrease prices, ease the costs of renting, and ultimately increase homeownership.”
  • Sen. Sheldon Whitehouse (D-RI), chairman of the Senate’s Budget Committee, and Rep. Brendan Boyle (D-PA), ranking member of the House Budget Committee, also wrote to Chairman Powell echoing their concerns that high interest rates are exacerbating the housing supply crisis. (Letter)

Next week, at The Roundtable’s all-member Annual Meeting, we will hear economic and market forecasts from a panel of Roundtable members and Kenneth T. Rosen, Chairman, Fisher Center for Real Estate and Urban Economics at the Haas School of Business at the University of California, Berkeley; Chairman, Rosen Consulting Group.

Housing Coalition Calls on Lawmakers to Address Rising Insurance Costs

Posted on by Abigail Grenadier

On Monday, The Roundtable as part of a broad housing coalition wrote to policymakers offering solutions to address rising insurance premiums across the nation’s housing market and its significant impact on all stakeholders throughout the commercial real estate industry. (Letter)

Coalition Policy Solutions

  • The lack of affordability and availability of insurance options has both short- and long-term implications for the real estate industry’s ability to address the housing crisis.
  • The letter suggests several measures to mitigate these issues, including regulatory reforms, public-private partnerships, and innovative insurance products tailored toward affordable housing projects.
    • Federal Backstop for Catastrophic Coverage: A federal backstop, similar to terrorism risk and national flood insurance, could help stabilize the market.
    • Adjust Operating Cost Adjustment Factor (OCAF) Methodology at HUD: Use industry data for property and casualty insurers to reflect actual insurance costs for rental housing.
    • Modernize Insurance Requirements: Revise stringent insurance requirements for federally-backed loans to provide more flexibility.
    • Expand Federal Grants and Programs: Leverage existing federal programs to subsidize insurance costs and support resiliency investments.

Unprecedented Insurance Rates

  • The volatility in the insurance market, driven by more frequent natural catastrophes and inflation, has led insurers to raise premiums, increase deductibles, and limit coverage.
  • Rising insurance premiums significantly impact housing providers, developers, and renters across the U.S., exacerbating housing affordability challenges and disincentivizing providers from participating in the affordable housing market.
  • Insurance rates have surged dramatically, with property insurance rates increasing for 25 consecutive quarters and casualty insurance rates for 17.
  • Over the past three years, affordable rental housing communities have seen premium increases ranging from 30% to 100%.

  • An October 2023 survey and report, commissioned by the National Leased Housing Association (NLHA), found that affordable housing providers are facing much higher premiums, with nearly one in every three policies experiencing rate increases of 25% or more in the most recent renewal period.

National Flood Insurance Program (NFIP)

  • A recent report by the Joint Economic Committee Democrats found that the total annual economic burden of flooding in the United States is between $179.8 and $496 billion—equivalent to 1-2% of U.S. GDP in 2023. (JEC Report on Flooding)
  • Congress has enacted 30 short-term extensions of the NFIP. The most recent stopgap spending bill extended the NFIP’s funding through September 2024. (PoliticoPro, June 10)
  • The Roundtable has been a long-standing supporter of a long-term reauthorization of the NFIP with appropriate reforms.
  • A long-term reauthorization of the NFIP is essential for residential markets, overall natural catastrophe insurance market capacity, and the broader economy.

The Roundtable, along with its industry partners, continues to work constructively with policymakers and stakeholders to address commercial insurance gaps and rising costs through targeted policy solutions that can help alleviate the burden on housing providers and ensure the availability of affordable housing nationwide.

US Appeals Court Vacates SEC’s Private Fund Rule

Posted on by Abigail Grenadier
Securities and Exchange Commission building

The Fifth Circuit Court of Appeals in New Orleans ruled in favor of six private equity and hedge fund groups, finding that the Securities and Exchange Commission (SEC) exceeded its authority by adopting the Private Fund Adviser rule in August 2023. (WSJ, June 5)

Court Ruling

  • The appellate panel stated in a 25-page opinion that the SEC had exceeded its authority by implementing the rule changes in a 3-0 decision.
  • The rules adopted by the SEC required fund managers to submit quarterly reports detailing performance, compensation, and other fees. They also restricted the ability of fund managers to provide more favorable terms or information access to investors. (WSJ, June 5)
  • The rule applied to private equity funds, hedge funds, venture capital funds, and fund managers for institutional investors.
  • The industry groups challenging the SEC rule argued it was burdensome and would harm investors by suppressing capital formation and make it harder for smaller advisers to compete. (CNBC, June 6)
  • The panel noted that the Dodd-Frank Act section used by the SEC to justify it “has nothing to do with private funds.” (Politico, June 6)
  • A spokeswoman said that the SEC is reviewing the decision and will determine its next steps. (Reuters, June 5)

Roundtable Advocacy

  • Since March 2022, The Roundtable has consistently advocated that the addition of reporting requirements presents significant compliance and operational challenges for private real estate fund sponsors with no added benefit to investors.
  • While we support efforts to protect investors and monitor risk, we believe these proposals are unnecessary and would curb the entrepreneurialism, flexibility, and investment returns that make real estate private equity an increasingly attractive option for investors. (April 2022 Comment Letter)
  • The Roundtable’s April 2022 letter stated, “As the real estate investment fund industry is required to bear more regulatory burdens and demands, the risk is that capital formation will be unduly hindered. We are therefore concerned that the Proposal, if finalized, could hinder real estate capital formation, the development and improvement of real properties, essential economic activity and jobs.”

The Roundtable’s Real Estate Capital Policy Advisory Committee (RECPAC) will continue to monitor and respond to the SEC’s various proposed regulatory initiatives with its industry and coalition partners.

Real Estate Organizations Urge Congress to Delay Filing Deadlines of the Corporate Transparency Act (CTA)

Posted on by Abigail Grenadier

The Real Estate Roundtable, along with eleven other national real estate organizations, wrote to the Senate Banking, Housing, and Urban Affairs Committee urging them to advance the Protect Small Business and Prevent Illicit Financial Activity Act (S.3625), which would extend the deadline for companies to report ownership information to the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).

Corporate Transparency Act (CTA) Delay Bills

  • Beneficial ownership regulations that took effect on Jan. 1 under the Corporate Transparency Act (CTA) pose burdensome compliance and material cost challenges for real estate and the small business community.
  • The Protect Small Business and Prevent Illicit Financial Activity Act (S.3625), introduced by Banking Committee Ranking Member Tim Scott (R-SC), would extend the deadline for companies to report beneficial ownership information to FinCEN to two years (current regulations require the report within 1 year).
  • Additionally, it would prohibit FinCEN from allowing companies to withhold information that would obscure their true owners. (Press Release, Jan. 18)
  • “Chinese shell companies cannot be allowed to operate discreetly in the United States – threatening our national security, harming our economy, and stealing sensitive information. At the same time, we must ensure U.S. small businesses have the time necessary to comply with new reporting requirements. This bill makes important changes to do both,” said Ranking Member Scott.
  • The bipartisan companion to this legislation (H.R. 5119), introduced by Representatives Zach Nunn (R-IA) and Joyce Beatty (D-OH), passed the House of Representatives by a decisive vote of 420-1 on December 12, 2023.
  • The coalition’s letter noted a one-year delay of the CTA’s filing deadline would:
    • Be consistent with congressional intent to give covered entities two years to comply with the CTA’s reporting requirements; and
    • Provide the business community and FinCEN additional time to educate millions of small business owners regarding the new reporting requirements and the onerous penalties resulting from non-compliance.

Roundtable Opposition

  • The Roundtable has consistently opposed the beneficial ownership rules, the burdensome reporting requirements, and the negative impact on real estate transactions.  (Coalition letter, April 29)
  • “Because there are more real estate partnerships in the U.S. than any other line of business, the beneficial ownership reporting requirements in the CTA have a considerable impact on the industry.  A one-year delay, as called for in S. 3625, would permit businesses much-needed time to fully understand these new reporting requirements,” said Clifton E. (Chip) Rodgers, Jr., Roundtable Senior Vice President.
  • The Roundtable also joined more than 120 other national business organizations in a March 19 letter that urged Senate Banking Committee leaders to support a one-year filing delay for the new CTA beneficial ownership regulation requirements.

The Roundtable’s Real Estate Capital Advisory Committee (RECPAC) will continue to monitor developments related to beneficial ownership requirements and legal outcomes.

Reports Show Single-Family Rentals Increase Housing Availability, Drive Educational Advancement

Posted on by Abigail Grenadier

Recent studies show major investments that grow the single-family rental (SFR) market increase housing supplies for low-income and middle-class households, and create more educational opportunities for families with improved access to quality school districts.

Positive SFR Research

  • A report released last month by the U.S. Government Accountability Office (GAO) highlights the positive impact of major SFR investors in the aftermath of the 2007—2009 financial crisis. Large investors leveraged capital and technology to convert foreclosed homes into rentals, stabilizing neighborhoods and increasing housing availability. (GAO Report Highlights | Full GAO Report)
  • Another study out of UNC Charlotte, also released in May, finds that children from low- and moderate-income households see improved achievements in school when they rent single-family homes in neighborhoods where they cannot afford to buy.  (UNC Study Highlights | Full UNC Report)

Key Findings

Apartments
  • Market Stabilization: The GAO explained that institutional investors bought foreclosed homes in bulk, converting them into rental properties, during the Great Financial Crisis. This helped stabilize neighborhoods and increased home values.
  • Technological Efficiency: Advanced digital platforms and online management tools enabled investors to efficiently manage large property portfolios, improving tenant experiences and reducing costs, according to the GAO.
  • Improved Housing Stock: Larger equity investors were able to underwrite substantial repairs and renovations to the units they purchase, “the cost of which is out of reach for many homebuyers,” according to a study cited by GAO.
  • Educational Achievement: According to the UNC-Charlotte study, “low-income parents [are] taking advantage of these newly available rental units” and “their children are experiencing substantial achievement gains from attending high-performing schools.”

Clear SFR Benefits

  • Expanding the supply of housing across the geographic and economic spectrum is essential for the nation’s economic vitality.
  • Large-scale SFR investments have helped revitalize distressed properties and communities, contributing to economic growth and stability.
  • “Changing lifestyles are driving people to seek more flexible housing options that also provide better education opportunities without the long-term financial commitment of homeownership. Large-scale single-family rental businesses are responding to meet this demand,” said Jeffrey DeBoer, Roundtable President and CEO.
  • As American households increasingly turn to the rental market for housing, a strong housing finance system should support homeowners and aid the expansion of affordable rental housing.

The Roundtable’s Annual Meeting on June 20-21 in Washington, DC, will feature discussions regarding the policies needed to help expand the supply of affordable and workforce housing.

White House Announces Guideline for a “Zero Emissions Building”

Posted on by Abigail Grenadier

The Biden administration on Thursday unveiled the “National Definition for a Zero Emissions Building,” or “ZEB.” This voluntary, long-term goal for commercial and residential buildings to slash carbon emissions has been anticipated for months. It is the first definition of its kind from the U.S. government and was developed with heavy input from The Real Estate Roundtable’s Sustainability Policy Advisory Committee (SPAC). (ZEB Definition | Press Release)

ZEB Criteria

  • Three criteria define a ZEB asset under the new definition from the U.S. Department of Energy (DOE). To meet the guideline, a building must be:
    • Highly energy efficient, such as having an ENERGY STAR score of “75” or higher;
    • Free of on-site emissions from energy use, with an exception for emergency backup power generation; and
    • Powered solely from clean energy, which can be achieved through on-site renewable energy measures or the purchase of verified renewable energy certificates that increase off-site supplies of clean power.
  • U.S. Energy Secretary Jennifer Granholm said, “With today’s announcement, DOE is helping bring clarity to our public and private sector partners to support decarbonization efforts and drive investment—paving the way for the cutting-edge clean energy technologies we need to make America’s buildings more comfortable and affordable.” (Press Release) 
  • The Roundtable and Nareit collaborated closely on comments in February when the ZEB definition was proposed to shape the final version. (Roundtable Weekly, February 2)  

A U.S. Definition for U.S. Real Estate

Department of Energy building in Washington, DC
  • A voluntary definition with standard minimum criteria for what it takes for a building to be “zero emissions” will drive innovation, attract investment capital, and support workforce development, according to DOE.
  • It is important for U.S. real estate to have energy and climate guidelines—like the ZEB definition—backed by the federal government that reflect building data, climate conditions, and the carbon intensity of the electric grid here at home.
  • Climate-related building standards “have to be granular enough to accurately reflect the power and buildings infrastructure located in the United States,” said Duane Desiderio, Senior Vice President and Counsel with The Roundtable.  “We’re not getting that from the EU and global climate advocates.” (Bloomberg, June 6).

EPA Offers the “Path to ZEB”

  • ZEB status is best considered a long-term aspiration. Few buildings will reach zero emissions levels today.
  • Buildings have ways to show more immediate progress, such as through the ENERGY STAR “NextGen” program, recently announced by the U.S. Environmental Protection Agency. “NextGen” building certifications will be available starting this fall. (Roundtable Weekly, March 22)
  • Investors need a market signal for buildings to indicate they are taking steps now to slash emissions and energy use. NextGen, a low-carbon building label, is the intermediate step before reaching ZEB’s zero emissions guideline.
  • “A building has to be ‘NextGen’ before it can be ‘ZEB.’ They work together,” Desiderio told Bloomberg.

Speakers from the White House, DOE, EPA, and other leaders will discuss the ZEB definition and NextGen program at the upcoming SPAC meeting in Washington, DC on June 21.