Capitalizing on Hospitality Fundamentals

DENVER—“We are looking to capitalize on a sector that is experiencing peak rebound characteristics.” So says Oak Coast Properties' CEO, Matt Heslin, in this exclusive Q&A. According to Heslin, the firm, which recently revealed plans to invest millions in the hotel sector, is actively looking for additional acquisitions across the Eastern Seaboard, Pacific Northwest and Western US.

GlobeSt.com: You recently entered the hotel sector and revealed plans to invest $125 million. Why enter this sector now? What are the opportunities you are hoping to capitalize on?

Matt Heslin: Oak Coast Properties been completely focused on apartments for the past few years. However, the fundamentals in the hospitality sector are so strong they cannot be ignored. We are looking to capitalize on a sector that is experiencing peak rebound characteristics. Because of where we are in the recovery, both business and personal travel have increased dramatically leading to increased demand for rooms across the country – especially in metropolitan regions. This is a great time to invest in hospitality properties.

GlobeSt.com: What is your investment strategy?

Heslin: Our signature is a long-term investment hold. We look at ways to add value to properties via interior and exterior enhancements, property repositioning and in bringing rents on rehabbed properties back up to market values. We emphasize net operating income growth potential throughout our portfolio regardless of whether a property is a hotel or an apartment community.

GlobeSt.com: Are there specific markets you feel are ripe with opportunities?

Heslin: We are actively looking for additional acquisitions across the Eastern Seaboard, Pacific Northwest and Western United States. Some of the specific cities we like include Denver, Seattle and Austin.

GlobeSt.com: How would you characterize the recovery happening in the hotel sector?

Heslin: The recovery is strong. Hotel occupancy levels have rebounded to peak 2006 levels. Our historically low interest rates have not risen much. And limited hotel supply is confounded by the sharp decrease in new construction starts the past few years. This has led to supply constrained markets where demand for rooms is high.

GlobeSt.com: What are some of the challenges investors are facing (or will face)?

Heslin: It is likely that as capital continues to flow into this sector—much like it has with multifamily in parallel with increased rental demand and limited product—it is likely to increase competition and make it more difficult to access quality acquisitions. Savvy investors with relationships that deliver off-market deals in choice markets will bode well. These investors will also be required to have access to quick capital in order to close deals before they are swiped up by other market players.