A Shenzhen real estate firm with one Los Angeles hotel already in its fold closed a deal to buy the Sheraton Universal hotel, showing a growing trust in a recovery of the hospitality industry and the rising interest of Asian investors in U.S. commercial property.
The price of the Sheraton was not disclosed, but industry experts who tracked the deal said Shenzhen New World Group Co. paid about US$90 million for the 451-room inn overlooking Universal City.
That would make it a deep discount from the US$122 million that previous owner Lowe Enterprises paid for the hotel at the top of the market in 2007. The Los Angeles developer and landlord also spent US$25 million on improvements, but lost control of the property last year after the recession battered the travel business.
The sale of the 20-story hotel to Shenzhen New World marks the second Los Angeles purchase for the real estate developer, which bought the 469-room Los Angeles Marriott Downtown last year for an estimated US$60 million.
Overnight, properties dropped 50 percent or 60 percent in value, and cash flows fell through the bottom, said Jim Butler, a Los Angeles hotel lawyer who helped put the Sheraton sale together.
Shenzhen New World executives took control of the Sheraton on Wednesday. Company spokesman Yu Ming said it would spend an additional US$5 million to renovate the Sheraton s pool area, meeting rooms and other private spaces.
Yu said the company was attracted to the hotel because it was in the heart of Los Angeles County near the Universal Studios Hollywood theme park.
It s a great location, he said, and we see the hotel business getting better in the next year or two.
The company was looking for other commercial real estate to purchase in the United States, he said, but not necessarily more hotels.
The Universal property will continue to be operated as a Sheraton, said real estate broker John Strauss, who represented court-appointed receiver Rim Hospitality, which took over Lowe s interest.
Investors from the Chinese mainland, such as those from Shenzhen, were still less common than real estate buyers from Hong Kong and Taiwan, said real estate analyst Peter Slatin of Real Capital Analytics.
Chinese buyers are still on a learning curve and invest more often in real estate funds than in individual properties such as hotels, he said.
