The Mystery of Anonymous Investment in US Real Estate

June2024

MatthewCollin,KaranMishra,AndreasØkland

Summary

Thisnoteaddressesthesignificantconcernsassociatedwithanonymousrealestateownershipinthe UnitedStates,highlightinghowaconsiderableamountofproperty,includingresidentialrealestate,is heldviacorporateentitiesthatconcealthetrueowners.AnalyzingdatafromthreemajorUScities,New York,MiamiandBoston,werevealthelimitationsofcurrentmethodsinaccuratelyidentifyingforeign ownershipandproposesolutionsforfederalandstateauthoritiestoenhancetransparencyandunderstandingoftheextentofcross-borderrealestateownership.Withoutsuchmeasures,theenigmaof anonymousownershippersists,obstructingourcollectivegraspofitsbreadthandimplications.The factthatthesizeandscopeofforeigninvestmentinUSrealestateremainsamysteryisnotadataproblem,butapolicyone.

Thisworkisfundedbygrantno.QZA-22/0011fromtheNorwegianAgencyforDevelopmentCooperation(NORAD)and grantno.341289fromtheResearchCouncilofNorway.Theviewsexpressedinthisnotearethoseoftheauthorsanddo notnecessarilyreflecttheviewsofourfunders.WethankthemembersoftheEUTaxObservatory,particurlarlyBluebery PlanteroseandGiuliaAliprandi,fortheirhelpfulcommentsandsuggestions.

1 Introduction

Inmid-2022,theUSJusticeDepartment’sOperationKleptoCapturetaskforce raided severalluxury propertiesinNewYorkandMiami.Theunithadrecentlybeenestablishedtorootout,seizeandfreeze theassetsofsanctionedRussianoligarchs,particularlythosethatmayhavebeenattemptingtocircumventthesanctionsregimebyhidingtheirownership.TheJusticeDepartmentlaterrevealedthatthe propertieswereactuallyownedbyViktorVekselberg,aRussian-CypriotbillionairewhohasbeenunderUSsanctionssincelate2017.

WhileKleptoCapturehadsufficientintelligencethatVekselbergownedroughly$70mworthofproperty,theaverageconcernedcitizenwouldhavebeencluelessastothesizeofhisinvestmentsinthe USrealestatemarket.VekselbergisnotlistedastheownerofanypropertiesinNewYorkCity’sAutomatedCityRegisterInformationSystem(ACRIS).Inplaceofhisnamewasan anonymousshellcompany,actuallyregisteredin Panama butwithaMadisonSquaregardenmailingaddress.Inpractice,this combinationofsecretiveownershipstructuresandlimitedfilingrequirementshadkepttheoligarch’s sizablepropertyportfoliooutofview.

Illicitbillionairepropertyportfoliosareparticularlyeye-catching,buttheyrepresentamoregeneral phenomenonthatdemandsmoreattentionbyresearchersandpolicymakersalike:theriseofsecretlyownedrealestateinluxurypropertymarkets,muchofitheldthroughcomplex,opaqueownershipstructures.Realestateestatemarketshavelongbeenaconcernforthoselookingtocrackdownonfinancial crime(FATF, 2007).Becauseitoffersbothastablestoreofwealthandambiguityoverthemarketvalue, realestateisinmanywaysanidealassetclassforthoselookingtolaunderillicitwealth.Inmanyjurisdictions,thetypesofduediligencechecksthatbanksarerequiredtoconductontheircustomersdo notapplytothelawyersandrealestateagentsinvolvedintransactions.Whentheyare,theyareoften poorly-enforced.

Theserisksareamplifiedwhenownershiporiginatesoffshoreortheownershipstructureinvolvesforeigncompanies.Moregenerally,aperson’sownershipofpropertyoverseas,orathomethroughacomplexoffshorestructure,issignificantlymorelikelytogounnoticedbytheirauthoritiesathome,making iteasiertogetawaywith taxevasion or corruption.Thisisbecausewhilemostpropertyregistersare publiclyaccessible,mostjurisdictionsdonotrequirecorporatepropertyownerstofileinformationon whoownstheunderlyingcompany.Furthermore,manyofthethirdpartyreportingrequirementsthat applytoforeignfinancialassetsdonotextendtorealestate,leavingmanyauthorities—bothforeign anddomestic—inthedarkastowhoownswhat.1

Understandingthesizeofcross-borderpositionsinrealestateisthefirststeptoaddressingtheserisks. Despitethis,therehaveonlybeenafewsystematicattemptstodosobyresearchers.2 Arecenteffortby theEUTaxObservatory,knownasthe AtlasoftheOffshoreWorld,publishednewbilateralestimatesof

1Arecentstudyby ? foundthatthoseholdingoffshoreassetsshiftedasizableportionintoUKrealestateinordertocircumventnewrequirementsontheexchangeofbankaccountinformation.ArecentcasestudyinDubairevealedthatmany propertiesbeingheldtherebyNorwegiannationalswerenotreportedtothetaxauthoritybackhome(Alstadsæteretal., 2022)

2Examplesofrecenteffortsatthecountrylevelinclude AlstadsæterandØkland (2022), BomareandLeGuernHerry (2022), Alstadsæteretal. (2022)and Johannesenetal. (2022)

foreignownershipofrealestateinsixmajorcitiesandareas,includingParis,London,DubaiandSingapore.3 Aswewilldescribeindetailbelow,expandingthecoverageoftheseestimatesrequiresdetailed datathatoffersapathtoobserving,oratleastinferring,theultimateownerofeachrealestateproperty inajurisdiction,aprocesswhichiscomplicatedwhenownershipiscompletelyanonymous.

ThisnotedemonstrateshowasignificantshareofthepropertymarketinkeyUScitiesisownedby anonymouscompaniesandhowthiscorporateownershipopacityhamperseffortstogaugethesize andevolutionofforeignownedrealestateintheUnitedStates.Anecdotally,manyAmericancitiesare primetargetsforillicitwealth,rangingfromRussianoligarchs4 tothoseinvolvedinthe Malaysian1MDB scandal.Arecentstudynotedthatatleast$2.3billionwerelaunderedthroughU.S.realestatebetween 2015and2020,likelyonlyafractionofthetotalamount(GFI, 2021).5 Inrecentyears,concernsover theattractivenessofluxuryrealestatetothoseengagedincorruptionorfinancialcrimehaveledUS policymakerstotargetmanyofitslargestcitieswithnewenforcementordersaimedatgatheringmore infoontheownershipstructuresinvolved(Collinetal., 2021).

Inthisreportwefocusonthreecitiesforwhichthenominalownershipdataforrealestateisreadily available:NewYorkCity,MiamiandBoston.Weshowthattransparencyaroundnominalownership —thenamewrittendowninthepropertyregister—doesnottranslateintotransparencyofultimate ownership.Foreachofthecities,weestablishthefollowing:

• Corporateownershiprepresentsalargeshareofthevalueoftotalresidentialrealestate.

• Thatownershipappearstoo“domestic,”inthatthereisfarlessdirectforeignownershipthanwhat wouldbeexpectedgiventhepopularityofthesemarkets.

• ThemajorityofthatownershipisopaquelyheldthroughcompanieswithnoclearmethodofestablishingwhotheultimateownersofUSpropertiesare.

• Simplified,aggregatereportingbyfederalandstateauthorities,madepossiblebyrecentlegislation,wouldhelpshedsignificantlightonthisproblem.

Therestofthisnoteproceedsasfollows:InSection 2 wehighlighthowwe’veprocessedthedatafor eachofthethreecities.Section 3 providesbackgroundonthedataandbroadtrendsinrealestateinvestmentsinthreemajorcities:NewYork,MiamiandBoston.Wethenanalyzethefaultlinesinthe currentavailabilityofdataonoffshorerealestateinSection 4.Finally,Section 5 positssomerelevant policyimplicationsandoutlinesthescopeforfuturework.

3AtpresenttheAtlascoversthesefourcities,aswellasCôted’AzurandOslo.

4Maybeparadoxically,thereismoretransparencyabouttheinflowofRussianmoneyintotherealestatemarketinthe secretivetaxhavenDubai(UAE)thanintheUS.Thisisduetoleaksfromlocalauthoritiesandorganisations.Theseleaks havebeencoveredextensivelybymediaorganisations(seeDubaiUncoveredandDubaiUnlocked)andhavebeenanalysedin economictermsby Alstadsæteretal. (2022)and Alstadsæteretal. (2024).Themostrecenteffort, Alstadsæteretal. (2024), findsthatRussianownersheldrealestateinDubaiworthUSD3.7billionin2022andthatseveralnewbillionswereinvested afterthenewwavesofinternationalsanctionsin2022.

5Thisamountonlycoveredknowncasesofmoneylaunderingasaresultofcriminalprosecutions.Thismeansitverylikely reflectsonlyasmallfractionofthetotalamount.

2

ProcessingPublicDataonCorporateOwnership

Aspartofthisanalysis,werelyonpublicdatafromthreeUScities:NewYorkCity,MiamiandBoston. Wechoseeachcitybecauseoftheirrenownforbothbeinghighly-popularwithforeignownersand—in thecaseofNewYorkCityandMiami—forbeingsignificanthotspotsforillicitrealestateactivity.6 All werechosenaspotentialcandidatestobeaddedtotherealestatesectionofthe AtlasoftheOffshore World,thewebsitedevelopedbytheEUTaxObservatorytopresentthemostup-to-dateestimatesof theextentofoffshorewealth,profitshiftingandeffectivetaxrates.

WeobtainedannualdataforNewYorkCityusingannualassessmentvaluationspublishedbytheDepartmentofFinanceaswellasownershipinformationheldinits AutomatedCityRegisterInformation System (ACRIS)system.ForMiami,werelyondatafromthe Miami-DadePropertyAppraiser.Lastly, weretrieveddataforBostonfromtheCityofBoston’sopendatahub, AnalyzeBoston.Ouranalysisfor eachcityisbasedonthelatestdataavailableatthetimewebeganouranalysisforthisnote:2022data forNewYork,2023dataforMiami,and2021dataforBoston.

Inouranalysis,weidentifiedcorporationsbyflaggingownersineachdatasetwhosenamescontain wordsthataremostcommonlyassociatedwithcorporations,suchasLLCorINC.7 Thisallowsusto identifythetotalnumberofpropertiesthatareowned(orpart-owned)bycorporations,aswellasthe totalvalueofthatproperty.

Therearelimitstothisapproach,particularlyforcitiesthatpublishmorelimiteddataonpropertyownership.ForNewYorkCity,wewereabletoidentifyeachowningpartythatwaslistedinACRIS,andlink thatinformationtothecity’sannualvaluationdatasetusingeachpropertyaddress’suniqueidentifier.8

Incontrast,neitherMiaminorBostonpublisheddetailedinformationonallthepartiesthatownaproperty,insteadonlylistingasingleownerintheirvaluationdatabase.Thismaymeanweareunderestimatingtheproportionofcorporateownersinthedatabase.Specifically,inthecontextoftheMiami/Boston datasets,ifwepossessedthesamelevelofdetailregardingallpartiesconnectedtoaproperty’sdeedas isavailableforNewYork,itwouldpotentiallyenableustoidentifyadditionalowners,particularlythose thatarecorporateentities,ofthepropertyinquestion.Wedescribeourexactprocessforcreatingeach datasetintheAppendix.

3 EvaluatingtheScopeofHiddenPropertyOwnershipintheUS:Insights fromNewYorkCity,MiamiandBoston

Inthissection,wedescribethescaleandconcentrationofcorporateownershipintherealestatemarket acrossNewYorkCity,MiamiandBoston.

6Allthreecities,alongwithAtlanta,GeorgiaandAustin,Texas,werehighlightedastopdestinationsforcommercialreal estateinvestmentsina survey conductedbytheAssociationforInternationalRealEstateInvestors. Multiple reports byjournalistsandcivilsocietyorganizationshavehighlightedthedegreetowhichbothNYCandMiamirealestatehavebecome hotspotsfordirtymoney,where thinktankreports havehighlightedsimilarrisksforBoston.

7Weoutlinethefullsetofthese“noisewords”thatwerelyonintheappendix.

8Whenmultiplepartiesownthesameproperty,wesplitthevalueequallybetweenthem.

Ouranalysisillustratesthreethings:(i)opaquecorporateownershipcomprisesasignificantpartofeach market,(ii)itismorecommonintheluxuryandhigh-endpropertymarket,and(iii)thatitisverylikely thehighdensityofUScorporateownershipeffectivelyhideshowmuchrealestateisactuallyheldby foreignbuyers.

FIGURE1

ShareofcorporateownershipinselectedcitiesintheUS

(a) (A)Allproperties

(b) (B)Residentialpropertiesonly

Note: Thefigurepresentstheshareofcorporateownershipof(a)totalrealestatevalueand(b)totalresidentialrealestatevalue inNewYorkCity,MiamiandBoston.NYCestimatesuse2022assessmentvaluationandownershipinformationfromNewYork City’sDepartmentofFinanceanditsAutomatedCityRegisterInformationSystem(ACRIS).Miamiestimatesaretakenfrom Miami-DadePropertyAppraiserpublishedasof2023.Bostonestimatesarederivedfrom2021datapublishedbytheCityof Boston’sAnalyzeBostonopendatahub.Corporateownershipwasidentifiedthroughthepresence“noisewords”associated withcorporatenames.

Result1:Corporateownershipcompriseasubstantialshareofthevalueacrosseachmarket,andarisingshareinNYC

Ourfirstresultisthatcorporateownershiprepresentsasizableshareofthevalueofrealestateacross allthreecities.AsshowninFigure 1,corporateownershipofrealestaterangesfromapproximately41% (inBoston)tonearly49%(inNYC).Someofthisdominanceisduetocorporateownershipofcommercial property,whichismorecommonthaninresidentialmarkets.Whenwerestrictthedatatounitsthatare residential,9 theshareofcorporateownershipdropstobetween25-37%acrossthethreecities.Byour estimates,mostofthisrealestateisheldviamoresecretivelimitedliabilitycompanies(LLC):outofall company-ownedrealestateineachcity,roughly71%,68%and67%ofthevalueisownedviaaLLCin NYC,MiamiandBoston,respectively.

Notonlyiscorporateownershipasubstantialshareoftherealestatemarket,italsoappearstoberising.

9WedistinguishresidentialunitsfromthebroaderrealestatestockbyutilizingthetaxclassificationlaidoutbytheDepartmentofFinance.Specifically,TaxClass1encompassesresidentialpropertiesconsistingofonetothreeunits.Conversely,Tax Class4includesawidearrayofrealpropertytypes,suchasofficebuildings,factories,stores,hotels,andhavebeenclassified asTaxclassification1and2inNewYork(Fig A4 ).Tocompensateforvaryingdatastructuresacrosscities,wedevisedastrategytostandardizepropertyclassification.FollowingtheexamplesetbyNewYorkCity’suseoftaxclassvariables,wecreated asimilarsystemforMiamiandBoston.

UsingdataforNewYorkCity,wherewecanmoreeasilyobservechangesovertimebyexploitingthe transactionrecords,wefoundthattheshareofallrealestatevaluethatisownedbyacompanyhas risenbynearly10percentagepointsoverthecourseofthe2010s(Figure 2).10 Thisisconsistentwith recentwork byAngelaStovell’sforJustFix,whichalsofindsthatratesofcorporateownershiparerising acrossNYC.

FIGURE2

ThegrowthincorporateownershipofrealestateinNewYorkCity(2011-2022)

Note: ThefiguredisplaysestimatesfortheshareofallrealestateinNYCthatisownedthroughacorporateentityfortheyears2011-2022. TheseestimatescombinetheNewYorkCityDepartmentofFinance’sannualvaluationdatawithend-of-yearownershipinformationtaken fromtheAutomatedCityRegisterInformationSystem(ACRIS).Corporateownershipwasidentifiedthroughthepresence“noisewords”associatedwithcorporatenames.

Result2:Corporateownershipismorecommonattheluxury-endofthemarket

Fromthe$30mManhattanpenthouse owned byfugitiveMalaysianbusinessmanJhoLowtoanequally expensiveMalibumansionowned bytheson ofEquatorialGuinea’spresident,manyofthemostegregiouscasesofillicitwealthbeingfunneledintorealestateinvolvetheuseofluxuryproperty.Infact, in itsrecentguidance forapplyingarisk-basedapproachintherealestatesector,theFATF(Financial ActionTaskForce)highlightedthedegreetowhichluxurypropertyismorelikelytobeusedformoney laundering,andthatillicitactorsaremorelikelytouselegalentitiestoobscuretheiridentity(FATF, 2022).

10Thisriseinthecorporateshareisnotdrivenbychangesinvaluationovertime.

Tounderstandhowmuchmorelikelyopaqueownershipisintheluxurymarket,weestimatedtheprobabilitythatapropertyisownedorco-ownedbyacorporateentityineachofthethreecitieswehave datafor.Wefocussolelyonresidentialpropertyherebecause,whiletherearemanylegitimatereasons forcompaniestoownhigh-endresidentialproperty(suchaspropertydevelopmentcompaniesorlarge scaleleasingfirms,suchasTrumpTower),theincreasinguseofopaqueownershipstructuresisstilla riskfactorforillicitinvestment.

FIGURE3

Thelikelihoodofcorporateownershipincreaseswiththevalueoftheproperty

Note: Thefiguredisplayslocalpolynomialestimatesoftheprobabilitythatapropertyisfully-ownedorpartly-ownedbyacompany,asa functionofthatproperty’sassessedvalue.

Wefindthatcorporateownershipismorehighlyconcentratedintheluxurymarketineachofourthree cities.AsdemonstratedinFigure 3,wefindthattheprobabilitythatatleastoneownerofaresidential propertyisacorporationincreasesdramaticallyasthepriceofthepropertyexceedsthe$1-2mmark. Forpropertiesthatarevaluedat$10and$100m,respectively,theprobabilitythatacorporateowner isinvolvedexceeds50%and80%,respectively.Luxuryconcentrationalsotranslatesintogeographic translation:whenwemapthedensityofcorporateownershipofresidentialpropertiesforNewYork City,wefindthatManhattanzipcodes(thepartofthecitywiththemostluxuryproperty)havesubstantiallymoredensitythantherestofthecity(Figure 4).11

11TheproportionofallunitsownedbyatleastonecompanytellsasimilarstoryforalltherealestateinNYC(Fig A3).Additionally,Fig A2 presentsanoverviewofgeographicconcentrationofownershipthroughDelaware—astateinfamousforits business-friendlylegalenvironment,especiallyforcorporations.

ProportionofResidentialUnitsownedbyCorporationsinagivenzip-code

(A)AllResidentialunitsinNYC

(B)ResidentialunitsinManhattan

Note: Thefigurepresents-theproportionofallresidentialpropertiesinagivenzip-codethatareowned,whollyorpartly,by acorporation.

Muchofthisluxuryownershipisnotonlythroughcompanies,butthroughshellcompanieswithlittle-tonoeconomicpresence.Todemonstratethis,werepeattheaboveexerciseforallcompanies,nowdistinguishingbetweenregularcompaniesandthoseweclassifyasthosethatarelikelytobeshellcompanies. Weuseacombinationofthreedifferentmethodstoflagcompaniesasbeingshellcompanies.First,we flagcompaniesiftheyappearintheNewYorkStatecorporateregisterandareregisteredtoanaddress thatisinthetop10%ofaddresseswhenrankedbythenumberofcompaniesregisteredthere.Second weflagcompaniesiftheirmailingaddressasprovidedtotheNewYorkDepartmentofFinanceisinthe

FIGURE5

EstimatedProbabilityofcorporate-ownedunitsownedbyshellcompanyentitybasedonproperty value

Note: Thisfigurepresentstheestimatedprobabilityofcorporate-ownedunitsownedbyshellcompanybasedonproperty valueacrossNewYork.Weclassifyacompanyasashellcompanyifitsaddressisamongthetop10percentoftheaddresses intheNewYorkStateRegistryofactivecorporations,thatis,intermsofhowmanycorporationsareregisteredwiththis addressormailingaddressasprovidedtotheNewYorkDepartmentofFinanceisinthetop10%ofaddresseswhenranked bythenumberofothercompaniespresentthereoracompanythatisisregisteredinDelaware,NevadaorWyoming.

top10%ofaddresseswhenrankedbythenumberofothercompaniespresentthere. 12 Finally,weflag companiesasbeinglikelyshellcompaniesifwedeterminetheyareregisteredinDelaware,Nevadaor Wyoming,popular‘secrecystates’thatareknownforhostingalargenumberofshellcompanies(Tuttle, 2020; Aliprandietal., 2023).

Thus,followingthismethodologyFigure 5 illustratesthatshellcompanyownershipisconcentrated amongthemostexpensiveproperties.Shellcompaniesownbothhigh-endandlow-endrealestate,but thepropensityofshellcompanyownershipincreaseswithvalue,evenwithinthesampleofcorporateownedrealestate.Thiscompoundsthetendencyofcompaniesingeneraltobemorelikelytoinvestin high-valuerealestatecomparedtocheaperunits.

12Figure D1 showsapproximatelywhatthetopaddressesbycorporateconcentrationslooklikeinthecorporateregistry. Whereas,Fig D2 depictsthelater-topaddressesbynumberofcorporationsregisteredonthemailingaddressesinNewYork RealEstate.

Result3:Mostforeign-heldrealestateisnotvisibleinpublicdata

Next,weusedpublicdatatoattempttouncovertheoriginsofUSinvestmentinrealestate.Wedidthis onlyforNewYorkCity,whichaswedescribedabove,hasmorecomprehensivecoverageofproperty owners.TherearetwomainchallengestoidentifyingwheretheownersofNewYorkCityrealestate reside.Thefirstisthesameproblemfacingpolicymakersandinvestigators:forcompanies,wewillonly atbestbeabletoidentifythejurisdictionofregistration,notthebeneficialownersandtheirlocation. Wewillfocusonthejurisdictionofregistration,todemonstratethatthisleadstoestimatesofrealestate thatisforeign-ownedorhaveoffshoreownershiplinkswhichareunrealisticallysmall,givenexistingreporting.ThesecondchallengeisthatNYC’spropertyportal,ACRIS,onlyrecordsthemailingaddressof theowner.Thisismorelikelytobetheactualaddressofresidencewhentheownerisarealperson.But companies,particularlysmallerLLCsthatareregisteredoutofstate(orwhosebeneficialownerslive outofstate),aremorelikelytoreceivemailattheaddressofacorporateserviceproviderthathelps managetheiraffairs,oftenalawfirm.

Toovercomethissecondchallenge,wematchedthenamesandmailingaddressesofLLCstotheNew YorkStateRegistry,whichrequiresallcompaniesthatdobusinessinthestatetoregister,including foreignandout-of-statefirms.Forthecompaniesthatwesuccessfullymatchedtothisdatabase(approximately38%outofthosethatownpropertyinNYC),wewereabletorecoverthejurisdictionof registrationfromtheRegistry.Fortheremainder,werelyonthemailingaddress,despiteitslimitations.

Table 1 displaysourestimatesofthejurisdictionoforiginsforthestockofinvestmentinNYCrealestate,allocatingthatjurisdictionbasedoneitherwhatappearsintheNewYorkStateRegistryorthe listedmailingaddressinACRIS.Relyingpurelyonpublicdata,weareonlyabletoallocate0.27%,about $3.7b,ofthetotalvalueofNYCrealestatetoforeignjurisdictions.Over95%ofthevalueisallocatedto companiesconnectedtoNewYorkState,andtheremaining3.7%didnotcontainenoughinformation toallocateittoajurisdiction.

Takenatfacevalue,thiswouldimplythattheownershipofNewYorkCityrealestateisoverwhelminglylocal,andthatlittleoftherealestateisownedfromabroad.However,weknowfromindustry reportsthatforeignpurchasesinNewYorkState(themajorityofwhichwillbeinthecapital)makeup approximately$2-4.5bannually.13 Thishighlightsthedegreetowhichdomesticcorporateownership canobscuretheactualsizeofforeign-heldrealestate.ItisalsoworthnotingthatanumberoftheforeignjurisdictionsinTable 1 arenotabletaxhavensthatareknownforhostingshellcompanies,including theIsleofMan,BritishVirginIslands,andHongKong.

Figure 6 illustrateshowtheobservableoffshoreshareintheNewYorkCityhousingisconspicuously lowcomparedtootherlargecities.ThefigureshowsthattheoffshoreshareintheNewYorkCityresidentialrealestatemarket,0.1percent,isnotonlylowerthaninotherglobalmegacitieslikeLondon (7.6percent)andParis(6.2percent),butalsothefarlessinternationalOslo(2.4percent).

13Seethe NationalAssociationofRealtorsAnnualReportonforeignpurchases,whichprovidesroughestimatesofthetotal dollarvolumeofforeignpurchasesofexistingUShomes,aswellastheirdistributionacrossdifferentUSstates.

Note: ThistablepresentstopinvestmentsbycountriesintheNewYorkRealEstatein2022.Thecountryoforiginismapped throughtheaddressesofthepartiesinvolvedinagivenpropertytransaction.

AnumberofstudieshavehighlightedtherolethatdifferentUSstatesplayinenablingownershipsecrecy,inparticularstateslikeDelawarewhichareknownforhostingalargenumberofshellcompanies (Aliprandietal., 2023).InTable 2,webreakdownownershipofNYCpropertybythespecificstatea companyisregisteredin.ThevastmajorityofthevalueisstillallocatedtocorporationsbasedinNew Yorkstate.ThisisinpartduetothepopularityofNYLLCsinholding,butalsoalimitationofouruse ofmailingaddressdata.However,thesecondmostpopularlocationweidentifyareDelaware-based companies,whichownatleast$27bofNYrealestate,roughly4%ofthetotalvalueinvestedbycorporations.

Usingpublicly-availabledata,wehaveshownthatmostNewYorkCityrealestateappearstobeowned byindividualsandentitiesbasedinthesamestate.Fromcountlessinvestigativeandindustryreports, weknowthattheshareofrealestateownedbyforeignersislikelytobemuchhigherthanwhatwe reporthere.Publicly,foreign-heldrealestateislargelymissingfromtheequation.Inthenextsection, we’llexplorepopularmethodsthatresearchersusetogetaroundtheopacityofownershipthatplagues realestatemarkets,andexplainwhythosemethodsfallshortintheUScontextduetoinsufficienttransparency.

ObservableoffshoreownershipinNewYorkCityandotherrealestatemarketsaroundtheworld

Note: ThisfigurecomparestheobservableoffshoreresidentialrealestateinNewYorkCitywithsixothercitiesandareas aroundtheworld.Allnumbersareforresidentialrealestateonly,withtheexceptionofLondon.Themethodologybehind theestimatesisdocumentedisdocumentedin Alstadsæteretal. (2023),andtheLondonestimatesinmoredetailin Bomare andLeGuernHerry (2022).Thecountry-by-countryestimatesfromthedifferentcitiesareshownandcanbedownloaded from AtlasoftheOffshoreWorld

4 Whydoesthetrailruncold?

Intheprevioussection,wehighlightedhowalargeshareofresidentialrealestateinsomeofthelargest UScitiesareownedbyopaquecorporateowners.Butwhyisitsochallengingtolooppastthatcorporateownershipandestablishwhoaretherealownersofthesecompanies(andthusproperties)?Inthis section,wedescribethefourmaintoolsorsourcesofinformationthatresearchersandcivilsocietyorganizationsusetofindultimateownersandestimateforeign-heldrealestateforajurisdiction,andwhy thosetoolsarelesseffectiveintheAmericancontext.

Beneficialownershipregistries

Manycountriesaroundtheworldhavenowimplementedpublicregistriesofbeneficialownership,eitherfordomesticcompaniesoralso-inthecaseoftheUnitedKingdom-forforeigncompaniesthat holddomesticrealestate.Whiletheyare notperfect (Advanietal., 2023),public-facingregistriesare stillenormouslyusefulbecausetheyallowresearcherstomoreeasilypiercetheveilofcorporatesecrecywhenallocatingrealestatewealthtoforeignowners.Beneficialownershipregistrieswerecrucial indeterminingforeignownershipintheAtlasoftheOffshore’sestimatesforParisandCôted’Azur,as wellasintheUnitedKingdom(?).However,noUSstatecurrentlyhasabeneficialownershipinplace, andthefederalgovernment’scentralizedregisterhasbeenkeptprivate.

TABLE2

TopCorporateInvestmentsinNYCRealEstatein2022(byStates)

Note: ThistablepresentstopcorporateinvestmentsbystatesintheNewYorkRealEstate.Thestateoforiginismapped throughthejurisdictioninformationfromtheactivecorporationdatacombinedwiththeaddressofthepartiesinvolvedina givenpropertytransaction.

ORBIS

ORBIS,aproprietarydatabaseownedbyBureauvanDijk(BvD),isperhapsthelargestfirm-leveldatabase intheworld.Asthedatabaseincludesvastinformationonownershipstructure,manyresearchershave usedittostudythebehaviorofmultinationalsacrosstime.Somehavealsousedittoimproveuponestimatesofoffshoreownership,matchingfirmnamesinpublicrealestateregisterstothoseinORBISand usingthelatter’sinformationonultimatebeneficialownershiptobetter-detectforeign-ownedproperty(Johannesenetal., 2022).

However,ORBISsuffersfromtruelimitationsthatmakesitsusefulnessintheUScontextchallenging. ThefirstisthatitreliesentirelyonpublicinformationthathasbeencollectedbyBvD.Thatmeansthat itscoverageofultimateownershipwillbepoorincontextswheretheownershipstructureinvolvesjurisdictionsthatdonotpublishdetailedshareholderorbeneficialownershipinformation.Ifforexample aforeignerownsaDelawareLLCdirectly,andthatLLCownspropertyinMiami,ORBISwouldbeunabletorecordtheforeigner’sownership,becauseDelawaredoesnotpublishthisinformationpublicly. Onlyincircumstanceswherepartoftheownershipstructureistransparent,suchaswhentheparent companyintheownershipchainisregisteredinajurisdictionthatpublishedbeneficialownershipinformation,willORBISbeabletocorrectlyallocatethatownershiptotherightindividual.14

14ORBISisalsoexpensive,makingitadifficulttoolforinterestedpartiestoaccess.Furtherlimitationsincludeduplicate

Leakeddataonownershipstructures

ManyresearchershaveutilizedleakedownershipinformationpublishedbytheInternationalConsortiumofInvestigativeJournalists(ICIJ),includingthePanamaandPandoraPapers,toshedlightonownershipstructuresthatgovernrealestateinvestments.Thisapproachcanbearfruitwhenthereisa heavydegreeofoverlapbetweenthecoverageofICIJ’sdataandownershipchainsforagivenjurisdiction.Forexample,both ? and Johannesenetal. (2022)usetheICIJ’sOffshoreLeaksDatabaseto improveupontheirallocationofrealestateownershipinEnglandandWalestoforeignjurisdictions. ButtheICIJdatahaspoorcoverageofownershipstructuresthatbeginintheUnitedStates.Thisis becauseleakslikethePandoraandPanamaPapersinvolvedcorporateserviceproviderswhomainly specializedinsettingupshellcompaniesinoffshoretaxhavens.ThefactthatUSLLCsofferthesame secrecyasshellcompaniesinnotorioustaxhavens,whichmeansthatmostUSrealestateisownedby domesticLLCs,limitstheusefulnessofthisapproach.

Officialstatistics

Occasionally,governmentsthemselvescompileandpublishstatisticsontheultimateownershipofpropertyinawaythatcanbeusedtoidentifyhowmuchofthedomesticmarketisownedbyforeigners.For example,usingdatasourcedfromSingapore’sSingstat,thenationalstatisticalagency,andREALIS,a government-ownedrealestateinformationprovider,researchersattheEUTaxObservatoryhavederivedestimatesoftheforeign-ownedshare.15

YetintheUS,nogovernmentagencymakesanefforttocollateandpublishdetailedinformationonthe ultimateownershipofrealestate.PrivatesectorgroupssuchastheNationalAssociationofRealtors dooccasionallyrelease reports detailingtrendsinforeignownership.Butbecausethesestatisticsare basedonsurveysofrealtorsratherthanadministrativedata,theyareunlikelytobewhollyaccurate, eveniftheymightofferasenseoftheorderofmagnitude.

Consolidateddatathatcouldbeusedtopiercetheveilofcorporatesecrecydoesexist,butitisnotcurrentlyavailabletothepublic.Sinceearly2016,theFinancialCrimesEnforcementNetwork(FinCEN), partoftheUSTreasury,hasbeengatheringdataonthebeneficialownershipofresidentialpropertiesin certainpartsoftheUS.TheirGeographicTargetingOrder(GTO)program,whichnowcoversatleast55 countiesacrosstheUS(morethan30%ofthevalueofallrealestatesales),requirestitleinsurancecompanieswhocoverresidentialpropertiespurchasedbycorporationswithoutamortgagetocollectbeneficialownershipinformation.TheGTOprogramnowcoversallofNewYorkCity,MiamiandBoston, aswellasalltransactionsabove$300,000,whichcoversthemajorityofthosethatoccurinthethree cities.TheUSTreasuryisalsomakingplanstoexpandtheGTOprogramnationwide,whichmeansthat namesofforeignentities,andtheinformationitpublishesistypicallyafewyearsold.

15InSingapore,residentialrealestatecomprisespublicandprivatehousingsegments.Publichousingisexclusivelyavailable toSingaporeancitizens,whileprivatehousinghasnonationalityrestrictions.Todetermineforeignownership,weincludepublichousingintheoverallhousingstockdenominator.Weallocateprivatehousingdatatospecificcountriesbasedonhousing purchasestatisticsspanning1995to2019,encompassingdistrict,propertytype,andbuyernationality.Transactionvalues areapproximatedfrompricerangebins,adjustedusingannualpriceindicatorsbypropertytype,andaggregatedbycountry annually.

FinCENwillsoonhavetherequisitedatatobetterunderstandtheultimateownershipofthemajority ofpropertysalesintheUS.

Similarly,datagatheredundertherecently-introducedCorporateTransparencyAct,whichcentralized thegatheringofbeneficialownershipinformationforallUS-basedentitiesunderthecontrolofFinCEN, couldbeusedtoshedlightontheproblem.However,aswiththeGTOprogram,theinformationgatheredthereisnotpublishedpublicly.Inthenextsection,wewillexplainhowthisinformationcouldbe usedtosolvethemysteryofforeignownershipofUSrealestate.

5 PolicyImplications

ThefactthatthesizeandscopeofforeigninvestmentinUSrealestateremainsamysteryisnotadata problem,butapolicyone.Changestothewaythatfederalandstateauthoritiescollectandpublish informationwouldprovidepolicymakers,researchersandcivilsocietytheabilitytobothestimateand trackinvestmentsacrosstime.

Inthissectionwedescribethepolicychangesthatwouldbenecessaryforthistohappen,startingwith theonesthatwouldhavethebiggestimpact.

Recommendation1:Apublic,machinereadablebeneficialownershipregistry

Inthebeginningof2024,theUSTreasurybeganimplementingtheCorporateTransparencyAct(CTA), thefirst-everefforttomandatethereportingofbeneficialownershipinformationintheUSaswellas centralizeitscollection.TheCTArequiresallcorporateentities(companies,LLCs,LPs,andevenforeigncompaniesregisteredtodobusinessintheUS)tofileultimatebeneficialownershipinformation withFinCEN.Existingbusinesseshaveuntilthebeginningof2025tocomeintocompliance,wherenew entitiescreatedafterJanuary1,2024havetocomplyimmediately.

Bytheendof2024,FinCENwillhaveamalgamatedacomprehensivedatabaseofbeneficialownership ofeverycompanythatdoesbusinessintheUnitedStates.However,theCTAdoesnotprovideany mechanismforthepublictohaveaccesstothatdata.OtherlawenforcementagenciesandtheIRSwill beabletosearchthedatabase,andfinancialinstitutionswillhaveaccesswiththeircustomer’s consent. Buttheseagencieswillnotlikelyhavetheresourcestoconductasystematicanalysisofforeign-owned property.

TheeasiestsolutionwouldbetomakeaccesstoFinCEN’sdatabasepublic,inamachinereadablefashion,muchinthesamewaythattheUK’sCompaniesHousedoeswithitsRegisterofPeoplewithSignificantControl.Thiswouldallowinterestedpartiestolinkstate-levelrealestateregisterstothebeneficial ownershipdatabase,makingamorepreciseestimationofforeign-ownedrealestatepossible.Itwould alsomakethedatabasemoreeffective,byallowingtheinterestedpublictocross-checkandverifythe informationitcontains.

However,thiswouldrequireasignificantamendmenttotheCTA,atatimewhentherehasalreadybeen pushbackagainstpublicbeneficialownershipregistriesduetoprivacyconcerns.AnalternativethataccommodatestheseconcernswouldbetofollowtheEU,whofollowingthe2022 ruling oftheEuropean AnonymousRealEstate|16

CourtofJustice,revisedtheirpoliciesinearly2024tostillrequireultimatebeneficialownershipregistriesandallowaccesstopublicauthoritiesandrelevantstakeholders,likebanksandothercompanies involvedinanti-moneylaunderingworkand“personsofthepublicwithlegitimateinterest”,suchasthe press,researchersandNGOs.

Inthemeantime,NewYorkStatewilltakethefirststepinprovidingthepublicwithaccesstobeneficial ownershipinformation.ThankstotheintroductionoftheNewYorkLLCTransparencyAct(NYLTA), beginningin2025,companiesthatdobusinessinthestatewillhavetobeginfilingsimilarinformation withthelocalDepartmentofState.IncontrasttotheCTA,theNYLTAwillmakesomeoftheinformationgatheredpublic:thenameandmailingaddressofthebeneficialowner.Twokeyprovisionswillbe essentialtomakingthisworkproperly:First,thattheinformationismadepublicinamachine-readable format.Andsecond,thatitincludesthecountryofresidencyorthenationalityofthebeneficialowner. Inthemeantime,otherstatescouldadoptsimilarlawsinordertobypassthelackofpublictransparency intheCorporateTransparencyAct.

Recommendation2:Thepublicationofroutine,publicly-availablestatisticsonforeign ownershipofUSproperty

WhileamendingtheCorporateTransparencyAct(andexpandingtheinformationcollectedunderthe NewYorkLLCTransparencyAct)wouldallowresearchersandotherstothoroughlymonitortheUSreal estatemarket,theUSauthoritiesalreadygatherinformationthattheycanputtoworkandusetoinform thepublic.

Asecond-bestsolutionwouldbefortheUSTreasurytoregularly-publishinformationontheforeign ownershipofpropertyusinginformationitgathersthroughtheGeographicTargetingOrder,whichrequiresthefilingofidentitydocumentationforbeneficialownersofcompaniesthatbuyrealestatewithoutamortgage.Whilenotperfect,thisidentitydocumentationcouldbeusedtoassignthepersontoa probablejurisdictionoforigin.ItwouldbethenstraightforwardforFinCENtoaggregatethevalueof corporate,cashpurchasesgovernedundertheGTOprogrambythejurisdictionofthebeneficialowner andpublishthisinformationonamonthly,quarterlyorannualbasisatthenational,stateorevencounty level.Suchinformationwouldofferonlyapartialpictureoftheflowofnewforeigninvestmentinthe USrealestatemarket,butwouldbesufficientforresearcherstomakeinitialestimatesthatcouldbe extendedtotherestofthecountry,withsomeassumptions.

Ofcourse,FinCENhasallthetoolsonhandtocomeupwithmorecomprehensiveestimates:bycombiningthefilingsmadefortheCorporateTransparencyActwiththerealestateregistriespublishedby citieslikeNYC,MiamiandBoston,FinCENwouldbeabletopublishdetailedestimatesofthestockof foreign-heldrealestateforthemostimportantmarketsinthecountry.Butatpresent,withoutasignificantincreaseintheagency’sresources,adetailedanalysislikethisisunlikelyinthefuture.

OnewaytobridgethisgapwouldbeforFinCENtoembracecollaborationwithacademicresearchers, muchinthesamewaythattheIRSfrequentlydoesinordertoconductpolicy-relevantresearchusing sensitivedata.Suchcollaborationshavebeenfruitfulinthepast,allowingtheIRStobetterunderstand therisksitfacesregardingtaxevasion,bothonandoffshore(Johannesenetal., 2020; Guytonetal.,

2021).DoingsowouldhelpFinCENexpanditsanalyticalcapacitysubstantiallyatlittlecost.

6 Conclusion

Inthisnote,wehavedescribedthesignificantrisksassociatedwithanonymousrealestateownership, particularlyownershipthatiscrossborderinnature.UsingdatafromthreemajorUScities,wehave demonstratedthatasubstantialportionofbothtotalrealestateandresidentialrealestateisheldthrough corporatevehiclesthatobscureitsultimateownership.Webelievetheseofficialstatisticsdrastically undercountforeignownership,butaswehavedescribed,traditionalmethodsofallocatingtheownershipofrealestatedonotworkwellintheUScontext.

Wehavesuggestedawayforward:iffederalandstateauthoritieswishtoimproveboththepublic’s aswellastheirownunderstandingofhowmuchrealestateownershipiscross-border,theyneedto eithergatherandreleasetheinformationthatresearchersneedtomaketheirestimates,ortheyneed toaggregateandpublishthoseestimatesthemselves.Untilthen,themysteryofanonymousownership ofUSrealestatewillcontinue,andourcollectiveunderstandingofitsscalewillcontinuetosuffer.

References

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Aliprandi,G.,Busschots,T.,andOliveira,C.(2023).MappingtheglobalgeographyofShellCompanies. EUTaxObservatoryNote.

Alstadsæter,A.,Collin,M.,Planterose,B.,Zucman,G.,andØkland,A.(2024).ForeignInvestmentinthe DubaiHousingMarket,2020-2024.Technicalreport.

Alstadsæter,A.andØkland,A.(2022).Increasingcross-borderownershipofRealEstate:Evidencefrom Norway.

Alstadsæter,A.,Zucman,G.,Planterose,B.,andØkland,A.(2022).Whoownsoffshorerealestate? EvidencefromDubai.

Alstadsæter,A.,Collin,M.,Mishra,K.,Planterose,B.,Zucman,G.,andØkland,A.(2023).Towardsan AtlasofOffshoreRealEstate:EstimatesforSelectedAreasandCities.WorkingPaper.

Bomare,J.andLeGuernHerry,S.(2022).WillweeverbeabletotrackOffshoreWealth?Evidencefrom theoffshorerealestatemarketintheUK.EUTaxObservatoryWorkingPaperNo.4.

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A AdditionalTablesandFigures

TABLEA1

SummaryStatistics:AllProperties Percentiles,MedianandMean

Note: ThistablepresentssummarystatisticsofvaluesforNewYork,MiamiandBostonpropertiesfromtheadministrative data.Anobservationisauniqueproperty.

TABLEA2

AnIllustrationofJurisdictionMapping

Note: Method1involvesgatheringinformationfrombothCorporateRegistryandACRISParties,whichissubsequently mergedwith2019NewYorkRealEstateDatatoascertaintheultimatejurisdictionofthesecorporateentities.Conversely, Method2involvesextractingdatafromACRISPartiesandthencombiningitwith2019NewYorkRealEstatedatato determinethejurisdictionofcorporateentitiesengagedinpropertytransactions.

SummaryStatistics:AllPropertiesbyTaxClass

Note: ThistablepresentssummarystatisticsforvaluesforNewYork,MiamiandBostonpropertiesfromtheadministrative data.For,NYC,Class1:Mostresidentialpropertyofuptothreeunits(familyhomesandsmallstoresorofficeswithoneor twoapartmentsattached),andmostcondominiumsthatarenotmorethanthreestories.Class2:Allotherpropertythatis notinClass1andisprimarilyresidential(rentals,cooperativesandcondominiums).Class3:Mostutilityproperty.Class4: Allcommercialandindustrialproperties,suchasoffice,retail,factorybuildingsandallotherpropertiesnotincludedintax classes1,2or3.Toensureuniformityandenablecomparisonamongdatasetsfromdifferentregions,weemployasimilar consistentTaxClassclassificationsystemfortherealestatemainlyTaxClass1forresidentialandOthersanddatasetsof bothBostonandMiami.Anobservationisauniqueproperty.

ActiveCorporationDensitybyZipCodeinNewYork

Note: Thefigurepresents-densityofactivecorporationsbyzipcodelevelinNewYork.TheDepartmentofStatekeepsa recordofeveryfilingforeveryincorporatedbusinessinthestateofNewYork.

ProportionofResidentialUnitsownedbyCorporationsfromDelaware

Note: Thefigurepresents-theproportionofresidentialpropertiesinagivenzip-codethatareowned,whollyorpartly,bya companywithajurisdictionmappedtoDelaware.

FIGUREA2

FIGUREA3

ShareofallpropertiesinaNewYorkCityzip-codethatareownedbyacompany

Note: Thefigurepresents-forNewYorkCity-theproportionofallpropertiesinagivenzip-codethatareowned,whollyor partly,byacompany.

DistinctionbyTaxClassinNewYorkRealEstate

Note: ThefigureillustratesshareofownershipthroughcorporationswithineachtaxclassoftotalrealestatevalueinNew York.Theestimatesuse2022assessmentvaluationandownershipinformationfromNewYorkCity’sDepartmentof FinanceanditsAutomatedCityRegisterInformationSystem(ACRIS).

FIGUREA4

Note: ThefigurepresentstheshareofownershipthroughlimitedliabilitycompaniesoftotalrealestatevalueinNewYork City,MiamiandBoston.NYCestimatesuse2022assessmentvaluationandownershipinformationfromNewYorkCity’s DepartmentofFinanceanditsAutomatedCityRegisterInformationSystem(ACRIS).Miamiestimatesaretakenfrom Miami-DadePropertyAppraiserpublishedasof2023.Bostonestimatesarederivedfrom2021datapublishedbytheCityof Boston’sAnalyzeBostonopendatahub.Corporateownershipwasidentifiedthroughthepresence“noisewords”associated withlimitedliabilitycompaniessuchas“LLC”,“LP”,etc.

B.1 KeywordsforFlaggingCorporateOwnershipintheU.SDataset

Comprehensivelistoftermsandabbreviations,carefullycompiledthroughanin-depthanalysisofthe data.Thesetermsarecommonlyusedtoflagcorporationsbasedonownernamesandincludethefollowing:

“LLC”,“L.L.C”,“CORP”,“BANK”,“HOLDING”,“CO”,“INC”,“LL”,“AND”,“LC”,“ASSN”,“ASSOC”,“ASSOCIATION”,“BUSINESSTRUST”,“CHARTERED”,“CHTD”,“CO-OP”,“COMPANY”,“COOPERATIVE”,“CORP.”, “CORPORATION”,“CREDITUNION”,“FCU”,“FEDERALCREDITUNION”,“FEDERALSAVINGSBANK”, “FSB”,“GENERALPARTNERSHIP”,“GMBH”,“INC.”,“INCORPORATED”,“JOINTSTOCKCOMPANY”, “JOINTVENTURE”,“JSC”,“JV”,“LIMITED”,“LIMITEDCOMPANY”,“LIMITEDLIABILITYCOMPANY”, “LIMITEDLIABILITYLIMITED”,“LIMITEDLIABILITYPARTNERSHIP”,“LIMITEDPARTNERSHIP”,“LLC”, “LLLP”,“LLP”,“LP”,“LTD”,“LTDCO”,“MD”,“MDPA”,“MEDICALDOCTOR”,“NATIONALASSOCIATION”, “PARTNERSHIP”,“PLC”,“PLLC”,“PROFESSIONALASSOCIATION”,“PROFESSIONALCORPORATION”, “PROFESSIONALLIMITEDCOMPANY”,“PROFESSIONALLIMITEDLIABILITYCOMPANY”,“REGISTEREDLIMITEDLIABILITYPARTNERSHIP”,“RLLP”,“SAVINGSASSOCIATION”,“SSB”,“TRUST”,“ACQUISITION”,“ENTERPRISES”,“INFRASTRUCTURE”,“PROPERTIES”,“PROPERTY”,“ESTATE”,“INDUSTR”, “OFFICE”,“INVESTMENTS”,“BROTHER’S”,“MANAGEMENT”,“PARTNERS”,“RETAIL”,“GROUP”,“CONSTRUCTION”,“UNION”,“ESTATE”.

Followingthecompilationofthislist,anextensivemanualcleaningprocesswasundertakentoensure thatindividualswiththesekeywordsarenotinadvertentlyincluded.

B.2 PropertyinNYCisdividedinto4broadTaxClasses:

• Class1:Mostresidentialpropertyofuptothreeunits(familyhomesandsmallstoresoroffices withoneortwoapartmentsattached),andmostcondominiumsthatarenotmorethanthreestories.

• Class2:AllotherpropertythatisnotinClass1andisprimarilyresidential(rentals,cooperatives andcondominiums).

• Class3:Mostutilityproperty.

• Class4:Allcommercialandindustrialproperties,suchasoffice,retail,factorybuildingsandall otherpropertiesnotincludedintaxclasses1,2or3.

C DataConstruction

C.1 NewYork

IntheprocessofextractingandanalyzingdatafromtheNYCAutomatedCityRegisterInformationSystem (ACRIS),wereliedon datasets relatedtoparties,masterrecords,legaldocuments,andvaluation. Ourgoalwastorevealtheintricatepatternsofpropertytransactionsandownershipshifts.Weintersectedthemaster,parties,andlegaldatasetstotrackpropertydealingsinvolvingindividualsandcorporateentities,suchasLimitedLiabilityCompanies(LLCs),andnotedownershipchanges.Althoughthe valuationdatasetcontributedtoourunderstanding,itslimitedinformationoncorporateownershipindicatedanotablegapincapturingcomprehensivecorporatepropertystakes.

Ourmethodologyincludedidentifyingcorporateownershipindicatorswithinpropertydeeds,notably thementionof”LLCs”.Thisapproach,uponvalidation,facilitatedananalysisofresidentialpropertyvaluationsandtransactionsacrossthecity,employingtaxclassificationdistinctions.Wefurtherrefined ouranalysisbyfilteringoutnoisewordsfromownerandpartynamestoflagcorporateownership,uncoveringpotentialinadequaciesinthevaluationdataset’soverallrepresentationofcorporateentities. Additionally,weaddressedownershiparrangementsbyequitabledistributionofeachproperty’svalue, enhancingourinsightintothedistributionofpropertyownership.

WealsoutilizedtheActiveCorporateRegistrytosupplementmissingdata,particularlyconcerningcorporatejurisdictions,andtoanalyzecorporatedensityatthezipcodelevel.ThisapproachaidedinmappingthegeographicaldistributionandpotentialconcentrationofshellcompaniesinNewYork’sreal estatemarket.

C.2 MiamiandBoston

ForouranalysisonMiamiandBoston,wesourceddatafromadministrativepublicdatabases: theMiamiDadePropertyAppraiser andtheCityofBoston’sopendatahub,(AnalyzeBoston).Weusedthemost currentdataavailableattheonsetofourresearch—2023dataforMiamiand2021dataforBoston.

Ourmethodologyinvolvedidentifyingcorporate-ownedpropertiesbyfilteringpropertyrecordsfor ’noisewords’indicativeofcorporateentities(e.g.,LLC,Cooperative).Thisapproachisconsistentwith ouranalysisinNewYorkCity.However,whileBoston’srecordslistonlyoneownerperproperty,Miami’sdatasetallowsforuptotwoownersperproperty.Thisdiscrepancyintroduceschallengesinaccuratelyidentifyingpotentialadditionalstakeholdersinpropertydeeds.Consequently,theabsenceof comprehensivetransactionaldatamayleadtoanunderestimationoftheactualnumberofcorporate propertyownersinMiamiandBoston.

Tocompensateforvaryingdatastructuresacrosscities,wedevisedastrategytostandardizeproperty classification.MirroringNewYorkCity’suseoftaxclassvariables,wedevelopedananalogousvariableforMiamiandBoston.Thiswasachievedbyleveraginglandusecodesandpropertyclassification dataprovidedwithineachcity’sdataset.Thisstandardizationenablesustocategorizepropertiesaseitherresidentialornon-residential.Coupledwithourcorporateownershipidentificationalgorithm,this methodologyaidsindemystifyingtheownershipstructuresofpropertiesinMiamiandBoston,enhancingtransparencyinouranalysisofmysteriousinvestments.

D ShellAnalysisFigures

FIGURED1

TopAddressesbyCorporationDensityintheActiveCorporateRegistry

Note: Thefigurepresents-top20addressesbynumberofcorporationsregisteredintheActiveCorporateRegistryinNew York.TheDepartmentofStatekeepsarecordofeveryfilingforeveryincorporatedbusinessinthestateofNewYork.Data ActiveCorporations:Beginning1800

TopAddressesinNewYorkRealEstatebyCorporationDensity

Note: Thefigurepresents-top20addressesbynumberofcorporationsregisteredonthemailingaddressesinNewYork RealEstate.TheaddressesweremappedusingtheNewYorkdatabasefromACRISandthedataofcorporateregistryActiveCorporations:Beginning1800