NEW YORK CITY—Last week's vote by the US House of Representatives to exempt foreign retirement and pension funds from taxation under the Foreign Investment in Real Property Tax Act could hasten domestic REIT privatizations, according to Fitch Ratings. The exemption for funds was one of a number of tax-related changes signed into law by President Obama that remove some obstacles for foreign investors in REITs.

Already, Fitch forecasts more REITs going private over the next one to three years, and foreign investors providing more capital for these transactions. The exemption for foreign funds enacted as part of the Protecting? Americans from Tax Hikes Act of 2015 puts these funds on equal footing with domestic ones, according to Fitch.

The current year has already seen $32 billion of REIT privatizations announced or completed, thus putting 2015 on par with 2006. "This year's privatizations were all led by private equity?funds, but foreign capital could act as both a competitor and partner to these funds going forward," according to a report from Fitch's Britton Costa and Steven Marks, director and managing director, respectively, of US corporates, REITs.

The impact the FIRPTA exemption actually has on REIT acquisitions next year will depend on whether a given fund meets the standard for the exemption, according to Fitch. "For? example, Norway's Government Pension Fund Global would appear to screen as a qualified fund?based on its name; however, it has no formal pension liabilities and was set up to provide fiscal?policy flexibility as changes in oil revenues and population demographics require."

Moreover, a memo from law firm Fried, Frank, Harris, Shriver & Jacobson LLP makes it clear that qualifying for an exemption is not the end of the road. "Overall, these provisions will be welcome relief for qualified foreign pension funds," according to the Fried Frank memo. "However, depending on the circumstances, including the type of investment and expected exit, and whether the qualified foreign pension funds are investing alone or in tandem with other investors, maximizing tax benefits may prove complex and, in many cases, may continue to require utilization of separate REITs or other special structures."