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June 29, 2018

ROUNDTABLE LEADERSHIP
Ventas’ Debra A. Cafaro is New Chair of FY2019 Roundtable Board of Directors

HOMELAND SECURITY & CRE
House Follows Senate in Passing Bills Addressing Foreign Investment Risk; Includes Language Affecting Real Estate

OPPORTUNITY ZONES
Roundtable Comment Letter Addresses Productive Real Estate Investment in New Opportunity Zones

FOREIGN TOURISM AND THE U.S. ECONOMY
“VisitU.S.” Advocates Reauthorization of Brand USA Travel and Tourism Program; Improving Efficiency of Visa Application Process


ROUNDTABLE LEADERSHIP

Ventas’ Debra A. Cafaro is New Chair of FY2019 Roundtable Board of Directors  

The Real Estate Roundtable has elected Debra A. Cafaro (Chairman and Chief Executive Officer, Ventas, Inc.) as its new Chair for a three-year term starting July 1, 2018.  She succeeds William C. Rudin (Co-Chairman and CEO, Rudin Management Company, Inc.).  The Roundtable's membership also approved a 23-member Board of Directors for its 2019 fiscal year (July 1, 2018 - June 30, 2019).

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Left to Right: Roundtable President and CEO Jeffrey D. DeBoer; Roundtable Chair Debra A. Cafaro (Chairman and Chief Executive Officer, Ventas, Inc .); and Immediate Past Roundtable Chair William C. Rudin (Co-Chairman and CEO, Rudin Management Company, Inc .) 

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  • Ms. Cafaro leads Ventas, Inc., an S&P 500 company and real estate investment trust with a portfolio of more than 1,200 seniors housing, healthcare and research properties in the United States, Canada and the United Kingdom.

  • “For two decades, The Real Estate Roundtable has taken a non-partisan approach aimed at providing practical policy solutions to lawmakers in DC,” Cafaro said.  “I intend to carry this approach forward, by continuing to shape and articulate a unified real estate industry perspective for policymakers, and as the first woman elected to this role, to showcase the diversity of our highly respected membership on national public policies.”

  • The Roundtable’s Immediate Past Chair William Rudin noted, “I was honored to serve as the Roundtable Chair the past three years and pleased that Debra will succeed me.  She has an incredibly successful background, a sterling reputation, and the positive skills and qualities needed to successfully prioritize and advance the real estate industry’s policy agenda in Washington.”

  • Roundtable President and CEO Jeffrey D. DeBoer said, "The Roundtable now begins our 20th year of bringing together the leaders in our industry with the major industry trade associations to work positively with national lawmakers on policy issues related to our industry and the overall economy.  Our past success has been directly related to our high quality membership, our fact-based, nonpartisan problem-solving approach to policy issues, and the collective work with the overall industry. We look forward to Deb Cafaro as our new Chair, not only to carry on our traditional approach to Washington, but also to lead The Roundtable to a new, enhanced level of effectiveness.”

  • Also joining The Roundtable’s Board of Directors as of July 1 are: 
    · Thomas J. Baltimore, Jr., Chairman, President and CEO of Park Hotels & Resorts and Chair, Nareit®;
    · Tray E. Bates, CCIM SIOR CIPS, Principal, Bates Commercial LLC and Former Commercial Committee Chair, National Association of Realtors®;
    · Steven Hason, Managing Director and Head, Americas Real Estate & Infrastructure, APG Asset Management US Inc. and Chairman, Pension Real Estate Association;
    · Kathleen McCarthy, Global Co-Head of Blackstone Real Estate, Blackstone; and
    · Tara L. Piurko, Partner, Miller Thomson LLP and President, CREW Network

    See the complete list of the FY2019 Roundtable’s Board of Directors here
  • Stepping down from The Roundtable Board as of July 1 are: 
    · Kenneth F. Bernstein, President & Chief Executive Officer, Acadia Realty Trust and Immediate Past Chairman, International Council of Shopping Centers
    · Kevin Faxon, Managing Director – Head of Real Estate, Americas, J.P. Morgan Asset Management and Immediate Past Chairman, Pension Real Estate Association
    · Timothy J. Naughton, Chairman, CEO and President, AvalonBay Communities, Inc and Immediate Past Chair, Nareit®; and 
    · Robert S. Taubman, Chairman, President & CEO, Taubman Centers, Inc., and Chair Emeritus, The Real Estate Roundtable. 

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HOMELAND SECURITY & CRE

House Follows Senate in Passing Bills Addressing Foreign Investment Risk; Includes Language Affecting Real Estate

The House of Representatives on June 26 voted 400-2 to pass legislation (H.R. 5841) that overhauls federal review of transactions involving foreign companies or countries, including certain real estate transactions. The Senate on June 18 passed its version of the legislation (S. 2098).  (Dechert, June 2018) 

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Both the House and Senate FIRRMA bills would expand the list of covered transactions to include some foreign purchases and leases of real estate near military and other strategic facilities.

  • The bills would update the review authority of the Committee on Foreign Investment in the U.S. (CFIUS) to review national security implications of transactions that could result in control of a U.S. business by a foreign person – and to block transactions or impose measures to mitigate any threats to U.S. security.

  • Both the House and Senate bills would expand the list of covered transactions to include some foreign purchases and leases of real estate near military and other strategic facilities.  Responding to concerns raised by The Roundtable and other industry groups, each bill includes similar language designed to exempt real estate located in 'urbanized areas' from the criteria of a covered transaction.  [See Title II, Sec. 201 in the House’s Foreign Investment Risk Review Modernization Act of 2018 (FIRMMA) and for S. 2098, see  pages 7 through 9].  The Census defines an urbanized area as one comprising more than 50,000 people.

While the House and Senate bills are similar, the definition of “critical technology” differs and will require reconciliation before a final vote in each chamber. The Trump Administration has shown support for reforming FIRRMA to strengthen CFIUS’ oversight.

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OPPORTUNITY ZONES

Roundtable Comment Letter Addresses Productive Real Estate Investment in New Opportunity Zones

The Real Estate Roundtable on Thursday provided formal comments to Treasury Department and IRS officials regarding implementation guidance that could maximize real estate investment, capital and jobs into newly designated Opportunity Zone communities.  Last week, the Treasury Department formally designated more than 8,700 low-income census tracts in the United States, Puerto Rico, and territories as qualified Opportunity Zones. (IRS Notice 2018-48 and Roundtable Weekly, June 22)

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The Real Estate Roundtable  provided formal comments  regarding implementation guidance for newly designated Opportunity Zone communities.

  • “Real estate development and redevelopment is a key component of any region’s economic strength and growth,” wrote Roundtable President and CEO Jeffrey DeBoer.  “In our view, successful implementation of the Opportunity Zone program requires careful consideration of how the new rules will apply to real estate and real estate investment activities.”

  • The Roundtable comments focus on: the certification of Opportunity Funds; the deferral or exclusion of gain; and the Opportunity Fund asset test, including questions regarding when real estate improvements constitute a qualified investment.

  • Congress created Opportunity Zones in the Tax Cuts and Jobs Act to encourage long-term, capital investment in economically struggling, low-income communities.  Opportunity Funds must invest in tangible business property located in a qualifying zone, which can include real estate, and the tax benefits are tied to the investment holding period.  The capital gain on an Opportunity Fund investment is excluded from tax altogether if the asset is held for 10 years or more.

The Roundtable comments are the product of The Roundtable Tax Policy Advisory Committee (TPAC) Opportunity Zone Working Group.  TPAC recently convened a panel on Opportunity Zones that included the tax counsel for Senator Tim Scott (R-SC), the original author and sponsor of Opportunity Zone legislation.   

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FOREIGN TOURISM AND THE U.S. ECONOMY

“VisitU.S.” Advocates Reauthorization of Brand USA Travel and Tourism Program; Improving Efficiency of Visa Application Process  

The significant, positive role of international travel and tourism in boosting the U.S. economy, creating American jobs and helping the foreign trade imbalance was the focus of efforts by the VisitU.S. Coalition this week on Capitol Hill. 

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A VisitU.S. coalition video with CEO testimonials was released to address the drop of 7.4 million international visitors to America from 2015-2017.   Roger Dow, President and CEO of the U.S. Travel Association, above.

  • Roundtable President and CEO Jeffrey D. DeBoer joined coalition CEOs on Wednesday in Congressional meetings. The following day, a coalition video with CEO testimonials was released to address the drop of 7.4 million international visitors to America from 2015-2017.  While foreign travel has increased globally, the U.S.’s reduced market share translates to 32 billion dollars in lost spending and 100,000 fewer jobs in this country. The drop in foreign visitation also widens the foreign trade imbalance, as spending by international visitors is the U.S.’s top service export accounting for 245 billion dollars in total travel exports in 2017.  (Roundtable Weekly, June 8, 2018.)

  • Wyndham Hotel Group President and CEO Geoff Ballotti said, “We have had five or six great years of record growth in terms of international inbounds but the share that we are capturing is continuing to slip and that’s what we are all very focused on – maintaining that great market share.” (VisitU.S. video, June 28) 

  • The coalition is urging Congress to reauthorize the Brand USA program, which is not supported by taxpayer dollars, but through fees on foreign visitors who do not require a visa when entering the U.S.  Legislation is needed to authorize the program beyond 2020 — and ensure that visitor fees authorized for collection from 2021 to 2027 will not be diverted to the Treasury Department, as currently scheduled. 

  • An FY2017 return on investment analysis showed each dollar of Brand USA marketing generated almost 28 dollars in visitor spending.  Moreover, Brand USA-generated international visitor spending is estimated to have produced 486 million dollars in federal tax revenue, and another 526 million dollars in state and local tax revenue. 
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    The economic importance of foreign travel and tourism to the United States' economy and commercial real estate industry was the focus of a panel discussion during The Roundtable's 2018 Annual Meeting this month. 
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  • "Robust international travel helps to power the U.S. commercial real estate markets, not only hospitality properties but retail, attraction, health and investment properties as well,” said DeBoer. "National tourism policies that boost overall economic growth, support and create jobs, and generate revenues help modernize our infrastructure, and generally improve the quality of life in our communities. The Real Estate Roundtable will continue our work with the VisitU.S. Coalition to emphasize that America is a uniquely welcoming, interesting and safe travel destination for international visitors,” DeBoer added.

  • The meetings on Capitol Hill also focused on the need to improve the visa application process for foreign visitors.  Other CEOs joining DeBoer in Wednesday’s congressional visits were Roger Dow with the U.S. Travel Association; Katherine Lugar with the American Hotel & Lodging Association; Robert Cresanti with the International Franchise Association; Chip Rogers with the Asian American Hotel Owners Association; and Steve Shur with Travel Tech.   

A panel discussion at The Roundtable’s June 14 Annual Meeting focused on the travel and tourism issue.  Participants included USTA’s Roger Dow, AH&LA’s Katherine Lugar, Senator Amy Klobuchar (D-MN) and Anthony E. Malkin  (Chairman and CEO, Empire State Realty Trust).  (Roundtable Weekly, June 15, 2018.)

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    For questions about Roundtable Weekly, please contact The Roundtable's Scott Sherwood at rweekly@rer.org or (202) 639-8400.

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