Approaching its 20th year, Vesta Hospitality is embarking on a major mixed-use development project with the port authority and city of Vancouver, Washington.
VANCOUVER, Washington—This is a big year for Vesta Hospitality.
In addition to celebrating the company’s 20th anniversary this fall, the Port of Vancouver USA chose Vesta as its preferred hotel developer for the port’s Terminal 1 mixed-use project. The development will be the first thing people see as they cross the bridge leaving Oregon into Vancouver, said Rick Takach, president and CEO of Vesta.
“This is a big thing for the city, for the Port of Vancouver,” he said. “It was a huge honor (to be chosen). It was a rigorous interview process, but we came out on top. We were very proud, pleased and honored.”
Takach said he originally pictured a large full-service hotel for the project. However, there’s already a Hilton Hotel and convention center near the site, and the city and port wanted the new hotel to support the convention center. Because he wanted something new and unique, he decided to build a 130-room AC Hotel on the Columbia River with a rooftop lounge.
The Port of Vancouver USA wants Vesta to open the hotel as soon as possible, he said, but there are some hoops the port has to jump through first. The current timeline has the property opening sometime in late 2018 or early 2019.
“We’re looking forward to getting that development completed,” he said.
20 years and still going
Vesta will celebrate its 20th anniversary 16 September. It’s been a great 20 years, Takach said, and the company is doing well and positioned for growth. Before starting Vesta, he was operating another company, Dimension Development in Louisiana. While that company was enjoying fast growth, he was traveling coast to coast six or seven days a week and his family needed him at home more.
The company was working on two hotels in the Northwest U.S.—a redevelopment of an Embassy Suites by Hilton in downtown Portland, Oregon, and building a new Homewood Suites by Hilton in Vancouver, Washington. One of the partners at the time decided not to participate, he said, which gave Takach the opportunity to buy in and start his company through managing both of those properties.
“That’s how I got my start,” he said. “Interestingly enough, one of the partners who stayed in the deal was my partner for a long time and helped me get Vesta started.”
Over the past 20 years, Vesta has been part of 35 projects, Takach said. The company has a portfolio of about 12 to 13 properties, he said, but it has bought and sold numerous over the years.
“I think we’re poised for growth now better than we ever have been,” he said.
Vesta recently purchased two new properties in Oregon. The Riverhouse on the Deschutes in Bend, Oregon, was built 40 years ago and sits on both sides of the Deschutes River, something that developers can’t build today. It also has a convention center with more than 41,000 square feet available for meetings and conferences.
“The owners were not really reinvesting what they needed to (in order) to maintain the caliber of the property,” he said. “I thought if we reinvested in it and revitalized the restaurant, we can turn this around and create an advantageous asset.”
Vesta recently relaunched the property after spending $10.5 million for new infrastructure, computers and training. It also acquired 3 entitled acres next to the convention center that could allow Vesta to add 51 new suites, he said.
“It’s off to a great start,” he said.
Vesta also recently purchased the Best Western Agate Beach Inn located in Newport, Oregon. The property sits in a nook off U.S. Highway 101, and the drive in to the property gives the hotel an oasis-like feel. The property has access to the beach and sand dunes, and there’s a lighthouse visible nearby.
A $6.5-million renovation will allow the company to upgrade the common areas, remodel the rooms and add a new food-and-beverage concept. Takach said the view and the bones of the hotel made it a solid investment.
Acquisition over development
There are a number of hotels Vesta officials want to buy, Takach said. It’s already closed out its first fund and is launching its second for $50 million over the next 60 days. There are already investors lined up.
“In the big fund world, it’s not a lot, but for us, we’re happy,” he said. “We think it will be what we need to continue. For $50 million, you can buy a lot of assets if you do it right.”
The fund will allow Vesta more flexibility to buy outright, buy distressed debt and develop, he said. The plan is to focus more on acquisitions than development because new properties require a lot of work while the money can sit there at a greater risk. The Port of Vancouver project is an exception because it’s in Vesta’s backyard, he said. There are some companies out there looking to partner up on projects, and the company might consider those relationships if they don’t require Vesta to do all of the development grunt work.
“Our primary focus is asset acquisition and creating value,” he said. “It’s out there, but it’s harder to find. If you’re looking, you can find value-added properties.”
Vesta is looking for assets that will help it survive the next downturn, Takach said.
“I learned from the last downturn; I don’t want to go there again,” he said. With every acquisition the company looks at, “we look at the downturn NOI, and we’re not leveraging past that. It makes it harder to buy, but I think we’re prepared for the slipping market, and we’ll survive and survive well.”
Every downturn is different, he said, so preparing isn’t easy. No one knows if or when the next will happen, he said, so the company is keeping an eye on what’s going to be the worst-case scenario without spending too much time on it.
“We’re trying to prepare so we’re best positioned to make acquisitions during that time,” he said.