Tag: Jeffrey DeBoer

CRE’s Year of Transformation: Lessons from 2024 and Outlook for 2025

Posted on by Abigail Grenadier

As 2024 comes to a close, the commercial real estate industry has made significant strides in recovery and adaptation.

2024 Roundtable Highlights

  • Over the past year, industry confidence has rebounded. RER’s Q4 Sentiment Index reached 73—a three-year high—and a 12-point jump from Q1 of this year. Despite ongoing challenges, the industry has demonstrated resilience and emerged stronger.
  • RER President & CEO Jeffrey DeBoer spoke about the industry’s 2025 priorities in a recent episode of the Leading Voices in Real Estate podcast, saying, “Real estate cuts across all aspects of our economy, and it’s what makes cities strong. You can’t find a time in history where nations have been strong without healthy cities. Right now, cities are struggling, and we want to help them back.”
  • Looking ahead to 2025, RER remains focused onadvancing policies that support liquidity, innovation, and adaptive reuse to ensure CRE remains a pillar of economic growth and community development.
  • 2025 Policy Priorities Survey: Next week we will be distributing our Policy Issues Survey to all members to gather input on our policy priorities for 2025.

Top Takeaways from 2024

Construction skyline
  • Key drivers of the industry’s growing confidence include easing interest rates and improving financial conditions, which have helped to stabilize asset values and encourage investment activity. By year-end, easing monetary policy and growing investor confidence have started to open up capital availability, with more progress expected in 2025. (Roundtable Weekly, Nov. 8)

  • Office-to-residential conversions saw a banner year, with more than 70 projects completed in 2024. Bolstered by the growing number of state and local incentive programs, 71 million sq. ft. (1.7% of U.S. office inventory) was undergoing or planned for conversion​ as of Q3. Property conversions will continue to see growing momentum in 2025, helping to alleviate elevated vacancy rates. (CBRE, Nov. 11)

  • Loan modifications and extensions, encouraged by regulators and supported by RER, have helped many distressed owners stabilize properties and avoid defaults. While 2024 was a challenging year for the office sector, markets have started to reach an inflection point as capital becomes more available, vacancy rates start to peak, return-to-office momentum grows, and transaction activity picks up. (Roundtable Weekly, Nov. 15)

  • Meanwhile, multifamily and industrial assets—especially data centers—continued to demonstrate strength, benefiting from robust tenant demand and the rapid expansion of AI-driven technologies. (CBRE, Dec. 11)

Prospects for 2025 and Trends to Watch

  • Economic growth: The CRE sector is poised to benefit from moderate economic growth and a more favorable interest rate environment. Investors are cautiously optimistic about improving liquidity and stabilizing valuations, which could unlock much-needed capital. (Commercial Observer, Dec. 10, CBRE, Dec. 11)

  • Office recovery: In San Francisco, office vacancy rates have dropped for the first time in four years—a sign that the office sector is beginning to turn the corner on the pandemic-era economy. Conversion activity is also expected to remain robust, supported by state and local incentives. (S.F. Chronicle, Dec. 16, GlobeSt., Dec. 17)

    • As RER Chair Emeritus William C. Rudin (Co-Executive Chairman, Rudin) recently told Squawk Box, “the demise of office and New York City are greatly exaggerated…there is capital, the CMBS market is back, the banks are coming back to the market,” indicating a welcome trend that could help drive an office revival across America’s downtowns.

  • The data center market will likely see explosive growth driven by artificial intelligence and cloud computing, although power constraints may limit development. Demand for data centers is expected to grow 160% by 2030, driving the buildout of the physical infrastructure needed to support the next digital revolution. (Goldman Sachs, May 14) (McKinsey, Oct. 29)

  • Political and regulatory shifts following the 2024 election—including potential changes to trade, immigration, and fiscal policies with a new Congress and presidential administration—could pose new opportunities or risks in 2025.  Collaborating with and educating policymakers on the impact these policies have on real estate will be crucial to ensuring that public policies support economic growth, job creation, housing affordability, and industry stability.

Heading into 2025, RER will continue advocating for policies that strengthen economic growth and capital availability while addressing industry challenges, including expanded tax credits for affordable housing and property conversions, permitting reform, and other initiatives that support a vibrant and resilient CRE sector.

The Roundtable’s Jeffrey DeBoer Recognized as One of DC’s “Top Lobbyists” for 2024

Posted on by Abigail Grenadier

Real Estate Roundtable President and CEO Jeffrey DeBoer has been recognized as one of the “Top Lobbyists” in Washington, D.C. for 2024, according to the prominent policy news publication, The Hill. This marks the seventh consecutive year that DeBoer has received this honor. (The Hill, Dec. 5)

  • The Hill noted that their list details “some of the best in the business and those that have been “go-to advocates during a year defined by unprecedented political events, legislative logjams, federal spending cut crusades and big rulemaking swings by the outgoing Biden administration.”
  • DeBoer stated, “I am truly honored to be recognized by The Hill for my work, especially in a city with more than 12,000 lobbyists. This recognition, though, really is a testament to the overall Roundtable team, leadership, and membership.”

DeBoer added, “This acknowledgment underscores the importance of the fact-based advocacy work we do to advance policies that foster solid real estate asset values, spur job opportunities, economic growth and strengthen communities nationwide.”

View from the CEO: Priorities for the CRE Industry in 2025

Posted on by Abigail Grenadier

With control over the White House and both chambers of Congress decided, attention has turned to how President-elect Donald Trump’s second term will affect the commercial real estate industry.

Looking Ahead

  • As Roundtable President & CEO Jeff DeBoer noted to BisNow last week, the new administration represents a chance to strengthen policymakers’ understanding of the critical role CRE plays in the economy. (BisNow, Nov. 12)
  • “Anytime that there’s a turning of the page, there’s an opportunity to emphasize new issues, or to bring priority to older issues that maybe have been pushed out by previous leaders,” DeBoer told BisNow. DeBoer also highlighted key policy priorities for commercial real estate to move forward in the coming administration, including housing, tax, capital markets, and energy.

Housing Policy

  • Interagency task force: The Roundtable is calling for a federal task force focused on expanding the housing supply, particularly affordable housing. This task force would coordinate efforts across agencies to streamline building processes and reduce regulatory barriers, incentivizing new development across the U.S.
  • Property conversions: The administration should support federal incentives for (such as low interest loans) converting obsolete office buildings into residential housing. Modeled after tax credits for historic preservation, bipartisan legislation like the Revitalizing Downtowns and Main Streets Act could help relieve the national housing shortage. (Roundtable Weekly, July 12)
  • Tariff concerns: Proposed tariffs on materials like lumber, steel, concrete, glass and appliances could impact housing supply: “By putting tariffs on housing materials, you will be indirectly increasing costs for buyers and renters and making it more difficult to solve this housing crisis,” said DeBoer.

Tax Policy

  • With key provisions of the Tax Cuts and Jobs Act of 2017 (TCJA) expiring soon, tax legislation will likely be central to President-elect Trump’s first 100 days.
  • Capital gains: Long-standing elements of the tax code, including the reduced rate for capital gains, the ability to reinvest through like-kind exchanges, and step-up in basis of assets at death, are critical for real estate businesses and encourage productive investment and economic growth. RER will continue to advocate that these provisions be maintained.
  • Section 199A: The qualified business income deduction for pass-through businesses, known as Section 199A, ensures that small businesses can compete on a level playing field with public corporations. RER supports extending the deduction, which is currently set to expire.
  • Foreign investment: Restrictions on foreign investment discourage capital formation and could hinder growth in real estate at a time when increasing the supply and availability of capital is critical to the industry’s recovery. Policymakers should avoid imposing additional restrictions or tax burdens on foreign investors, and consider repealing or reforming the Foreign Investment in Real Property Tax Act (FIRPTA).

Capital Markets

  • Strengthening capital flows in real estate is a top priority, as lending and credit availability have remained relatively weak since the pandemic and are only recently starting to see improvement.
  • Interest rates: Policymakers should carefully consider the inflationary effects of fiscal policies to maintain a favorable interest rate environment. Avoiding increased capital requirements, such as Basel III Endgame proposal, is also necessary to prevent hindering growth.

Energy Policy

  • With the rise of data centers, AI and other energy-intensive sectors, addressing energy capacity and permitting is a critical bipartisan need and “very important” to RER’s agenda, as DeBoer noted.

RER is committed to working proactively and productively with President-elect Trump and the 119th Congress to support the needs of the economy and commercial real estate industry.

Roundtable Announces FY 2025 Leadership; Kathleen McCarthy Takes Over As New Chair

Posted on by Abigail Grenadier

Roundtable Leadership

  • Kathleen McCarthy, Chair of the Real Estate Roundtable (above), 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.” (Press Release)
  • John Fish, 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.”
  • “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 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.”

Roundtable Board of Directors

  • The 26-member FY2025 Roundtable Board of Directors is elected from the membership and includes three elected leaders of national real estate trade organizations from The Roundtable’s 18 partner associations.
  • 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

  • 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

The Roundtable will release its 2024 Annual Report: Dynamic Policy for Evolving Needs in the coming weeks, which highlights the organization’s advocacy efforts over the past year and future policy solutions.

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. 

Commerce Department Announces Voluntary Industry Pledge to Increase Women in Construction Workforce

Posted on by Abigail Grenadier

RER Chairman and Suffolk CEO John Fish, above, convened a meeting this week of leading construction company CEOS to sign on to the “Million Women in Construction Community Pledge,” led by U.S. Commerce Department Secretary Gina Raimondo. (UPI, May 21 and ConstructionDive, May 22)

Committed to Workforce Expansion

  • Fish said, “The construction industry continues to face significant labor challenges due to the aging workforce and dwindling number of young people entering the construction field. There is a critical need to attract more talent and diversify our workforce to ensure we have the resources to build our cities and grow our economy.” (Commerce Department news release)
  • He added, “Suffolk is honored and privileged to be one of the first companies to commit to Secretary Raimondo’s inspiring Million Women in Construction Pledge. As an organization that has long been committed to rebuilding the ratio of women in the construction industry, we are proud to play a leadership role in inspiring other organizations to commit to this effort and help position our American workforce for future growth and success.”
  • The Million Women in Construction Community Pledge is a nationwide call to action for the construction industry to commit to bold steps aimed at increasing the number of women in the construction workforce. Secretary Raimondo launched the initiative after participating in The Real Estate Roundtable’s Spring 2023 Meeting. (Roundtable Weekly, April 28, 2023)
  • In addition to Suffolk, other leading construction companies committed to the Pledge include Baker Construction, Gilbane Building Company, McKissack & McKissack, Mortenson, Power Design, and Shawmut Design and Construction.

Call for Greater Industry Participation

Left to Right: RER Chairman John Fish, Commerce Sec. Raimondo, RER President & CEO Jeffrey DeBoer
  • Secretary Raimondo is seeking more industry companies, unions, and training organizations to sign the Pledge. She emphasized the need for the industry to recruit, train, hire, and retain thousands of new and non-traditional workers as the next generation of skilled laborers and leaders—and prepare them to rebuild U.S. infrastructure and supply chains to complement the Federal government’s investment.
  • Secretary Raimondo said, “President Biden’s Investing in America agenda is creating a construction boom all over the country, and with that boom comes a huge increase in jobs and opportunities for workers in construction and the trades. But right now, women make up less than 11% of jobs in construction and only 4% in skilled trades.”
  • She added, “Many of these are good-paying, quality jobs you can get without a college degree, and women deserve equal opportunity for these jobs. I’m calling on everyone—contractors, labor unions, training organizations—to join our Community Pledge to commit to solutions and support proven strategies that help overcome barriers faced by women and underserved communities in construction and the trades.”

For questions about the program or to pledge, email WomenInConstruction@doc.gov

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Roundtable Members Featured in Commercial Observer’s “Power 100” List of 2024 Most Influential Leaders in CRE

Posted on by Abigail Grenadier
Commercial Observer's Power 100 list for 2024

This week, the publication Commercial Observer released their “Power 100” list of prominent industry influencers, which includes Real Estate Roundtable Chair-Elect Kathleen McCarthy (Global Co-Head of Blackstone Real Estate, Blackstone), Chairman Emeritus (2015-2018) William C. Rudin (Co-Executive Chairman, Rudin), Roundtable President and CEO Jeffrey DeBoer, and nearly 30 other Roundtable members. (Power 100 2024 – Commercial Observer)

CRE Industry Leadership

  • Commercial Observer notes that the industry has been through a great deal of turbulence this year. “For better or worse, the biggest cliché that seeped into the commercial real estate conversation over the last year was: ‘Survive until ’25.’ This year’s honorees have shown the pluck, the determination, and the fortitude to make their ways onto this list.” (Power 100 2024 – Commercial Observer)
  • The article also notes how The Roundtable effectively represents the industry while partnering with 18 national trade associations to educate Washington, D.C. policymakers on national issues impacting the industry.

The Roundtable’s Role

Commercial Observer's Top 100 Most Influential Leaders in CRE for 2024
  • DeBoer comments within his profile, “Helping federal regulators understand the whiplash of very quickly moving from the historically long period of artificially low interest rates to a much higher interest rate environment was critical to the flexibility they ultimately provided to banks to modify or extend a great deal of the roughly $1 trillion in maturing commercial real estate loans.”
  • He also notes that significant stress on CRE remains, especially the pressures of remote work. Yet, “a systemic crisis for the banking industry and real estate markets seems to have been averted,” DeBoer states. (See DeBoer’s listing)

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Roundtable’s William C. Rudin Discusses Public Policies to Strengthen CRE and the Economy

Posted on by Abigail Grenadier
Real Estate Roundtable Chairman Emeritus (2015-2018) William C. Rudin (Co-Executive Chairman, Rudin)

Real Estate Roundtable Chairman Emeritus (2015-2018) William C. Rudin (Co-Executive Chairman, Rudin) discussed commercial real estate conditions on CNBC’s Squawk Box this morning, emphasizing how public policies could help the industry meet significant challenges as it faces a wave of looming maturities in a high-interest rate environment.

Federal Action Needed

  • Rudin noted that unless a property owner has a top-tier asset with a stable long-term lease, liquidity is a major issue. “The federal government and the Federal Reserve have to keep giving the banks flexibility to be able to restructure some of the loans.” (Watch Rudin’s comments)
  • Rudin added, “The federal government should support legislation to help incentivize owners to convert obsolete office buildings to residential—and the federal government should be getting their employees back into the office space.” (Entire Rudin interview)
  • Rudin referenced recent testimony by Roundtable President and CEO Jeffrey DeBoer that addressed these issues during a House subcommitteeon the “Health of the Commercial Real Estate Markets and Removing Regulatory Hurdles to Ensure Continued Strength.” (Roundtable Weekly, May 3 and video of DeBoer’s testimony)

Roundtable Recommendations

Roundtable President and CEO Jeffrey DeBoer
  • The Roundtable’s testimony last week addressed a wide swath of concerns for owners, lenders, and local communities. DeBoer discussed specific issues with House policymakers, including market liquidity, the state of the office sector, remote work, affordable housing, and property conversions. (DeBoer’s oral statement and written testimony)
  • DeBoer also emphasized the need for lawmakers to stimulate the production of affordable housing by converting obsolete buildings into housing, increasing the Low Income Housing Tax Credit volume caps, incentivizing local zoning and permitting reforms, increasing efficiency in the Section 8 housing voucher program, and more. (Roundtable Weekly, May 3)
  • Separately, The Roundtable and a broad real estate coalition submitted a set of specific policy recommendations last week to Congress detailing a host of pending legislative and regulatory actions that would help provide housing to more Americans. (Roundtable Weekly, May 3)

The Roundtable’s all-member Annual Meeting on June 20-21 in Washington, DC will include speakers and policy advisor committee meetings focused on many of these topics.

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Roundtable Testifies on Health of CRE Markets and Recommended Policies

Posted on by Abigail Grenadier
House Oversight Committe hearing included testimony from Roundtable President and CEO Jeffrey DeBoer
Click to watch a compilation of select testimony by Roundtable President and CEO Jeffrey DeBoer

Roundtable President and CEO Jeffrey DeBoer testified this week before a House subcommittee on the “Health of the Commercial Real Estate Markets and Removing Regulatory Hurdles to Ensure Continued Strength.” (Videos of DeBoer’s testimony | Entire hearing | Select clips from the subcommittee’s wrap-up)

CRE Issues

  • The April 30 hearing before the House Oversight and Accountability Subcommittee on Health Care and Financial Services included The Roundtable’s views on market liquidity, the state of the office sector, remote work, affordable housing, and property conversions. (DeBoer’s oral statement and written testimony)
  • DeBoer emphasized that all stakeholders in the regulatory and private sectors should work together to ensure real estate continues to be a leading driver of the economy—and a primary way cities grow, business needs are met, and housing challenges are solved. (Transcript of entire hearing)
  • DeBoer also clarified, “The commercial real estate industry is not seeking a bailout of any sort.” (MarketWatch, April 30)
  • Subcommittee members heard testimony on how liquidity in CRE markets, particularly office, is an overriding industry concern. As nearly half the value of the $4.7 trillion property debt market is scheduled to mature by 2027, base interest rates have risen nearly 500 basis points in 24 months while lenders are considering reductions in their CRE portfolios. (RER’s written testimony and Mortgage Bankers Association testimony)
Real Estate Roundtable President and CEO Jeffrey DeBoer testifies before House Oversight Subcommittee on April 30, 2024
  • DeBoer urged policymakers and regulators to acknowledge that not all CRE is the same. “In the office market, there are notable differences. Some individual owners are facing considerable pressure, potentially leading to increases in mortgage defaults, foreclosures and large losses of equity. Many top-tier modern office buildings with strong ownership and workspace amenities are currently weathering the storm. There needs to be a better distinction and not a monolithic treatment of commercial real estate.”

Policy Solutions

  • The Roundtable’s policy recommendations submitted to the subcommittee address a wide swath of concerns for owners, lenders, and local communities, including:
  • Ensure federal employees return to the workplace. DeBoer testified, “The federal government should lead by example by highlighting the value of in-office work” as it is critical for the health of cities, local economies, tax bases, and small businesses. (GlobeSt, May 2)

    He also commended efforts by House Oversight Committee Chairman James Comer (R-KY) to bring federal workers back as the lead sponsor of the Stopping Home Office Work’s Unproductive Problems (SHOW UP) Act (H.R. 139). “This bill passed the House over a year ago and should be enacted into law,” Deboer said. (Roundtable Weekly, Oct. 20 and Feb. 3, 2023)
House Oversight Subcommittee wide shot
  • Encourage banks and loan servicers to extend maturing loans and restructure maturing loans with new equity—effectively making “cash-in refinances”—by converting non-performing and criticized loans to new performing loans.
  • Encourage foreign capital investment in U.S. real estate by amending or repealing the outdated Foreign Investment in Real Property Tax Act (FIRPTA).
  • Reject pro-cyclical measures such as the Basel III Endgame and other regulatory measures that will restrict credit and capital formation.
  • Stimulate the production of affordable housing. The Roundtable and a broad real estate coalition submitted a set of specific policy recommendations this week to Congress detailing a host of pending legislative and regulatory actions that would help provide housing to more Americans.

  • DeBoer informed the subcommittee that these solutions include converting obsolete buildings into housing, increasing the Low Income Housing Tax Credit volume caps, incentivizing local zoning and permitting reforms, increasing efficiency in the Section 8 housing voucher program, and more. (see Affordable Housing story below)
Left to right: Real Estate Roundtable President and CEO Jeffrey DeBoer with House Oversight Subcommittee Ranking Member Katie Porter (D-CA) and Subcommittee Chairwoman Lisa McClain (R-MI)
House Oversight Subcommittee Chairwoman Lisa McClain (R-MI), right, and Ranking Member Katie Porter (D-CA), center, with Jeffrey DeBoer
  • He added, “Rent control and eviction moratoriums are on first blush appealing concepts, but they’ve proven time and again, that they’re counterproductive to addressing the housing shortfall.”
  • Congress should also enact a time-limited tax incentive to convert older, underutilized commercial buildings to housing that would help revitalize America’s cities, accelerate the economic recovery of office buildings, and create new supplies of housing in close proximity to jobs.

Property Conversions

  • Separately, The Roundtable provided a list of specific agency actions to accelerate property conversion projects in a recent letter to Jared Bernstein, Chair of the White House Council of Economic Advisers. (Roundtable Weekly, April 19)
Doug Turner, Sr. Fellow, Housing, Center for American Progress
  • Turner stated in his written testimony and oral comments, “I want to compliment The Real Estate Roundtable for a second. They sent a letter to the Council of Economic Advisers in April and offered some very specific suggestions on how to improve the conversion process. Many of these are sensible. And they could help direct what is an evolving policy. We haven’t seen an attempt to convert this much real estate in a short period of time.” (Video clip of Turner’s full comment, or click on photo above)

The Roundtable’s all-member Annual Meeting on June 20-21 in Washington, DC will include speakers and policy advisor committee meetings focused on many of the topics discussed during this week’s House hearing. 

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Final Treasury Rules Expand Reach of FIRPTA Tax Regime

Posted on by Abigail Grenadier
The Treasury Department in Washington, DC

The Treasury Department issued final regulations this week that redefine what constitutes a domestically controlled REIT exempt from tax under the Foreign Investment in Real Property Tax Act (FIRPTA). The regulations create a new look-through rule that extends the reach of the discriminatory FIRPTA regime to common investment structures. (Final Regulations | Tax Notes, April 25 and Bloomberg Law, April 24)

New Look-Through Rule

  • By looking through a domestic C corporation to its shareholders, the new FIRPTA rules run counter to general tax principles, past IRS guidance, and historic precedent.  Moreover, the final regulations do not provide relief to widely held U.S. real estate funds with dispersed foreign ownership, even if the foreign investors are far removed and separate from the management and control of the U.S. funds’ activities. 
  • While the final rules increased the total percentage of foreign ownership of a C corp. necessary to trigger look-through treatment, the change offers little practical relief since participating U.S. investors typically will only invest in U.S. real estate through other channels (e.g., directly, through a partnership, or through a REIT).
  • Transition relief in the final regulations may offer some respite to certain foreign investors, depending on their facts and circumstances. The new look-through rule does not apply to preexisting business arrangements—but only if the entity does not acquire a significant amount of new real estate interests or undergo a significant change in its ownership during the 10-year transition period.

Roundtable Response

FIRPTA
  • Roundtable President and CEO Jeffrey DeBoer responded to the Treasury rules. “Foreign capital is badly needed to supplement domestically sourced capital in cities and downtowns that continue struggling to recover from the pandemic. The wide spread adoption of remote work, coupled with today’s high interest rates and decreased lending by banks is fueling a reinforcing cycle of declining investment, property values, and tax revenues that can only be countered through additional investment capital.”
  • “Unfortunately, the final Treasury rules on FIRPTA and domestically controlled REITs raise new barriers to passive foreign investment in U.S. real estate, including affordable housing and the conversion of underutilized office buildings,” DeBoer said.
  • The Real Estate Roundtable and some members of Congress had advocated for the withdrawal of the proposed regulations or significant changes. House Ways and Means Committee Members Darin LaHood (R-IL) and Carol Miller (R-WV) urged Treasury Secretary Janet Yellen to drop the FIRPTA proposal. (Letter to Yellen, July 28, 2023 and real estate industry coalition letter, March 1, 2023 | Roundtable Weekly: Jan. 6, March 4 and Aug. 4, 2023) 

A Roundtable Tax Policy Advisory Committee (TPAC) working group is reviewing the most recent changes and considering potential policy and tax planning strategies going forward. The next TPAC meeting will be held on June 21 in conjunction with the all-member Roundtable Annual Meeting in Washington, DC.

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