Lynn Cadwalader, the lawyer who worked with Chinese real estate firm Shenzhen New World Group on its January acquisition of the Sheraton Universal Hotel and last year’s purchase of the Los Angeles Marriott Downtown, says her client and other Asian investors are looking to buy trophy hotel assets in the U.S.

Cadwalader, co-chair of Holland & Knight’s global hospitality resort and timeshare group, handled the majority of legal work for Shenzhen on both transactions, its first foray into the U.S. She says the transactions weren’t more complicated because of the foreign investment, and maybe even easier, but the biggest challenges came because of the distressed nature of the assets.

The Sheraton Universal Hotel in Los Angeles.

The 451-room Sheraton sold for an estimated $90 million, according to published reports, well below the $122 million Lowe Enterprises paid for the property in 2007 before it spent an additional $25 million on renovations. The hotel fell into receivership last year.

Shenzhen bought the 469-room Marriott last March for an estimated $60 million after lender GE Capital foreclosed. Rim Hospitality now manages both properties for Shenzhen, which also owns and operates a hotel in China.

Cadwalader recently took some time to discuss the transactions and her work with Shenzhen.

Why were these two acquisitions by Shenzhen so significant?
It shows the general strength of the Southern California market, in particular, and for iconic assets. The [Los Angeles] Marriott Downtown has been around a long time, and although it was in need of some refurbishment, it’s on the landscape as an important hotel. Certainly the Sheraton Universal is iconic. It’s significant because I see more foreign investment coming.

What attracted Shenzhen to these properties?
The Asian investors we’re working with are looking for assets that I would describe as iconic, trophy assets. Ones that have significant profiles and that would be immediately up and running and doing OK.

Were both assets in distress?
The Marriott was owned by the lender, GE Capital, and the Sheraton was a sale through receivership and the lender was a consortium of banks. When you look at distress, for whom? For my client, they were great acquisitions at great prices. For the sellers, sure they were distressed assets.

Do Asian buyers have an advantage in situations like this?
One thing you’ll see with Chinese investors is they can act quickly. There was a lot of private equity circling, but foreign investors can act quicker because there’s usually one primary ownership group or investor; it’s not like dealing with a fund or consortium putting together an offer.

I think capital is also more available to foreign investors looking to take advantage of the exchange rate and low real estate values here. They can come up with significant equity, and what we’re seeing in a lot of these deals is 50-50 debt-equity ratios. The buyer’s lenders on these transactions were Chinese banks.

Are these transactions more complicated because of the foreign component?
Not really, the cultural aspects of Chinese investors with Chinese banks made these transactions much easier to proceed. It’s very helpful to have an Asian bank because there are different and less regulatory concerns. Some of the complications are with buying distressed assets, out of receiverships or from the lender, and the number of participants involved on that end.

Honestly, Shenzhen cut its teeth on the Marriott deal, and because of that, this one was much easier to close. Culturally they are very different in China. They don’t use lawyers like we do here. The relationship is between the parties and that’s most important there, not the contract and legal documents. Coming to a country where legal documents are paramount—it’s just not the way they do business in China. It’s a cultural hurdle, but my client has done beautifully. And one thing I can say with Chinese investors, they are a very loyal group. Once they establish relationships they are more inclined to work with the same group. Rim Hospitality is the manager on both properties.

Does Shenzhen own hotels in China?
Shenzhen New World Group is one of the largest developers in China and it has a hotel there and other real estate. This was their first foray into the U.S. market. They are actively looking for other assets here.

Do you expect to see more Asian investment into the hospitality sector here?
We’ve already been contacted by different groups looking. There’s a lot of cash there and with the exchange rate and a growing number of Asian tourists, there could be an onslaught coming.

What kind of owners do you think Asian investors will be here?
I don’t see them looking to flip. I expect at least a five-year hold. The hospitality industry has risen slightly and continues to rise, so I see Chinese investors looking at this as an ongoing cash-flowing annuity as opposed to a short-term investment. They are coming in at the bottom and will sell at the top, in five to 10 years, in my opinion.