How to use
Use this matrix at investor-strategy stage to pick which foreign source pools to target for a given deal, and then which structure to wrap them in. Each section narrows by one dimension: geography, structure, deal size, and overlay risks (FIRPTA, treaty, CFIUS). Not tax or legal advice, engage international tax counsel and CFIUS counsel on every cross-border CRE transaction.
Section 1. Geography × asset-class fit
Each foreign source pool has well-known asset-class preferences and minimum check sizes. Match the deal to a source pool before designing the structure.
Foreign source pool by typical asset preference and check size.
| Source geography | Typical check ($M) | Asset preference | Hold horizon |
|---|---|---|---|
| Canadian pension / SWF | 100-500+ | Core office, industrial, multifamily; alts via JV | Long (10-20 yr) |
| UK / Western European institutional | 50-250 | Core/core+ office, industrial, life sciences | Long (7-15 yr) |
| Middle East SWF | 100-1,000+ | Trophy office, hospitality, life sciences, gateway multifamily | Very long (15+ yr) |
| Singapore / Hong Kong institutional | 100-500 | Industrial, data centers, life sciences, multifamily | Long (10-15 yr) |
| Japanese institutional / life insurers | 50-300 | Core office, multifamily, industrial; minority JV | Very long (15+ yr) |
| South Korean institutional (pensions, life insurers) | 50-200 | Office, logistics, hospitality; minority JV | Long (7-12 yr) |
| LatAm HNW / family office (Mexico, Brazil, Colombia) | 5-25 | Multifamily, retail, hospitality in gateway/Sun Belt | Medium (5-10 yr) |
| EB-5 regional center pools | 5-50 (per project tranche) | Hospitality, multifamily, mixed-use in TEAs | Medium (5-7 yr) |
| European HNW family office | 5-50 | Multifamily, hospitality, trophy retail | Medium-long (7-12 yr) |
Section 2. Structure dimension (FIRPTA + tax)
Structure selection turns on the investor's residence, entity type, treaty position, and exit horizon. Each structure has different FIRPTA, distribution-withholding, and compliance consequences.
Structure options for foreign equity in U.S. CRE
| Structure | FIRPTA at sale | Distribution tax | Best fit |
|---|---|---|---|
| Direct ownership | Yes, gain taxed at U.S. rates | Branch profits + ECI | Rare, high tax cost |
| U.S. partnership / LLC | Yes, flows through; FIRPTA withholding on sale | ECI taxed at graduated rates | Active operators with U.S. trade/business |
| REIT blocker (private REIT) | No, converts to dividend | 30% withholding (or treaty rate) | Most common for HNW and sovereign investors |
| Domestically-controlled REIT | No, exempt from FIRPTA on stock sale | 30% / treaty rate | Multi-investor funds with majority U.S. ownership |
| Treaty-qualified foreign corp | Yes; treaty may reduce branch profits tax | Treaty rate | Treaty-jurisdiction corporates with substance |
Section 3. Deal-size band × structure fit
Match the source pool's typical check size to a structure that scales for the number of LPs and the compliance overhead.
Structure-to-deal-size pairing
| Deal-size band | Typical investor count | Recommended primary structure | Notes |
|---|---|---|---|
| $5-25M (HNW club) | 5-15 LPs | Single REIT blocker per investor (or shared) | Lower fixed REIT cost; flexible exit |
| $25-100M (family office / mid-institutional) | 3-10 LPs | Shared private REIT blocker + parallel U.S. partnership | Cost-share REIT compliance across LPs |
| $100M-$500M (institutional) | 1-5 LPs | Domestically-controlled REIT with anchor U.S. LP ≥ 50% | Open FIRPTA-exempt stock sale |
| $500M+ (anchor institutional / SWF) | 1-3 LPs | Bespoke vehicle (DRC REIT, JV with U.S. operator, separate-account) | Negotiated fees, governance, MFN |
Section 4. Treaty rate overlay (dividend withholding)
Treaty position drives the dividend withholding rate (30% statutory, treaty-reduced). Pair the source geography with the relevant treaty article and limitation-on-benefits test.
Headline U.S. treaty rates on REIT-style dividends (illustrative; verify each article)
| Source country | Treaty rate on REIT-paid dividends | Notes |
|---|---|---|
| Canada | 15% | 5% on certain corporate-to-corporate qualifying |
| UK | 15% | Most common HNW route |
| Germany | 15% | Pension exemption available |
| Netherlands | 15% (varies by REIT facts) | LOB scrutiny |
| Luxembourg | 15% (varies) | LOB scrutiny, substance required |
| Japan | 15% | Pension exemption available |
| Korea | 15% | , |
| Mexico | 10% (most cases) | Confirm individual vs. corporate |
| Singapore | No treaty / 30% statutory | Structure via REIT blocker; treaty does not apply |
| Saudi Arabia / UAE | No treaty / 30% statutory | SWF exemptions may apply per §892 |
Section 5, CFIUS overlay by source geography
FIRRMA and 31 CFR Part 802 give CFIUS jurisdiction over foreign acquisitions of U.S. real estate near covered installations. Source-pool sensitivity varies materially.
- Highest sensitivity: state-owned enterprises and SWFs from non-allied jurisdictions; mandatory filings on covered real estate.
- Medium sensitivity: private investors from non-excepted-state jurisdictions; voluntary filings often advisable on covered real estate.
- Lower sensitivity: investors from "excepted state" jurisdictions (UK, Canada, Australia, NZ), still subject to mandatory filing rules where TID U.S. business or covered real estate is involved.
- Always run the property address against the FIRRMA covered-real-estate list pre-LOI.
- Build CFIUS clearance (30-90 days) into the closing condition schedule for any foreign-controlled buyer.
Section 6. Worked source-fit examples
Three illustrative deals to show how the matrix steers structure choice.
- Deal A: $40M Sun Belt multifamily acquisition. Best source pool: LatAm HNW family office club ($5-10M tickets) and EB-5 tranche. Structure: shared private REIT blocker + EB-5 leverage loan. CFIUS: low.
- Deal B: $250M gateway industrial portfolio. Best source pool: Singapore institutional or UK life insurer ($75-150M anchor) with U.S. anchor LP. Structure: domestically-controlled REIT (≥50% U.S.). CFIUS: screen for port/airbase proximity.
- Deal C: $750M trophy life-sciences campus near defense installation. Best source pool: Middle East SWF ($300M+) with passive minority. Structure: bespoke separate-account REIT with §892 sovereign-immunity analysis. CFIUS: mandatory filing likely.