A new Bloomberg op-ed by RER Tax Policy Advisory Committee Chair Joshua Parker (Founder, Chairman and Chief Executive Officer, Ancora) reinforces The Real Estate Roundtable’s (RER) push for Treasury to modernize Section 892 regulations without discouraging sovereign investment in U.S. real estate and other long-term assets. (Bloomberg Tax, March 11)

Op-Ed Highlights

• Section 892 of the tax code generally exempts investment income earned by foreign governments, including sovereign wealth funds, from U.S. income tax. The 892 exemption does not apply, however, if the foreign government effectively controls the U.S. business or is deemed to be engaged in a commercial activity.

• Parker writes that Treasury’s regulatory effort is “constructive and necessary,” but cautions that the rules must distinguish between legitimate investor stewardship and effective control of a business. (Bloomberg Tax, March 11)

• The op-ed argues that Section 892 needs to catch up with major changes in capital markets, including the growth of private credit, direct lending, and co-investment strategies that were not significant features of the market when the statute was enacted.

• Parker emphasizes that policymakers should not “sweep fundamentally different forms of investor participation into the same regulatory framework.

• Responsible investors “must exercise fiduciary oversight, manage risk, and ensure disciplined capital deployment,” Parker adds. Customary minority protections such as consent rights, veto rights, and approval of extraordinary actions are forms of stewardship, not day-to-day business control.

Why It Matters

• Since 2011, foreign governmental investors have invested more than $100 billion in U.S. commercial real estate. (Roundtable Weekly, Feb. 13)

• Foreign capital invested in the U.S. has supported housing supply, infrastructure development, research facilities, and place-based economic growth. (Bloomberg Tax, March 11| RER Letter, Feb. 12)

RER Advocacy

• In February, RER submitted a comment letter to Treasury Secretary Scott Bessent on the Section 892 regulations and proposed rules, urging clear grandfathering rules and changes to prevent disruptions to sovereign investment in U.S. real estate. (Letter, Feb. 12 | Roundtable Weekly, Feb. 27)

RER will continue engaging Treasury to ensure the final rules provide clarity for investors while avoiding unintended disruptions to U.S. real estate capital formation.