Canadian Operator Cogir Hopes Brookdale Portfolio Deal Can Spur U.S. Expansion

A Montreal-based firm has plans to rapidly scale up its U.S. senior living operations, after agreeing to take over management of a dozen properties from Brookdale Senior Living (NYSE: BKD).

Real estate investment trust (REIT) Welltower (NYSE: WELL) first announced in June plans to scale back its Brookdale portfolio and divvy up dozens of Brookdale-managed properties to other operators. As part of that deal, 12 Brookdale locations went to Cogir, which agreed to invest $68.2 million for a 15% joint venture interest in the properties in its first foray into the U.S. senior housing industry.

This marks Cogir’s entry into the United States, although previously, Cogir had operated about 3,000 Canadian senior living units in collaboration with Welltower. And the Toledo, Ohio-based REIT was seemingly pleased with that arrangement.

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“We are excited to expand our partnership with Cogir, a premier Canadian operator that we are pleased to see enter the U.S. marketplace with their innovative approach to senior care,” Welltower CEO Tom DeRosa stated in a press release earlier this year. “Cogir’s CEO, Mathieu Duguay, and his team represent the next generation of seniors housing leadership, and we are excited to expand our relationship through the Brookdale restructuring.”

Cogir isn’t the only company looking to use Brookdale properties as a launchpad for overall growth. Private equity giant Apollo Global Management, for example, is using the acquisition of a $428 million, 22-property Brookdale portfolio to invest further in senior living.

Expansion plans

With the forthcoming addition of the former Brookdale properties, which are located in the greater Seattle and San Francisco metro areas, Cogir will have about 50 senior housing assets under its management in the U.S. and Canada. But the operator doesn’t plan to stop expanding, according to Mathieu Duguay, president and CEO of Cogir Real Estate.

“Within the next five years, we’d like to be … anywhere between 50 to 100 communities [in the U.S.],” Duguay told Senior Housing News. “Mainly, we’ll begin with the West Coast and East Coast. But there are very nice markets like Chicago and Washington that we would certainly jump into if we would have an opportunity.”

Rendering of the Humaniti Montreal project

As part of that expansion push, Cogir would embark on new joint ventures with local developers, take over property management contracts or outright acquire third-party property managers in the U.S.

The growth period could also include some non-senior housing development, such as mixed-used projects. Last year, Cogir broke ground on a project in Montreal under the “Humaniti” brand name. As planned, that development will include a 193-room Marriott hotel, 334 apartments, 150 condos, office and commercial space, and amenities such as a terrace, two pools, five floors of underground parking, and a lounge and spa.

While the Montreal project, slated to deliver in 2020, won’t come with any senior housing units, future such developments in the United States could.

“We’re looking to implement [senior housing] properties in very urban locations,” Duguay said. “We’re very big believers in having properties near public transport.”

Experienced operator

Though Cogir is new to the U.S. senior living market, it’s a well-established player in Canada. Since its founding in 1995, Cogir has grown from a strictly third-party property manager to one that also builds, develops, and invests in properties. Today, the company manages roughly US$3 billion in assets, the majority of which lies in senior housing.

The operator likes to have at least some ownership in its managed senior housing assets.

“We like to have skin in the game to show the owner that we’re completely aligned with them, and that we do manage those properties like we own [them] 100%,” Duguay said.

Most of the senior living properties under Cogir’s care have a unit mix that’s 75% to 90% independent living. The operator’s “sweet spot” is between 200 and 300 units, but Cogir does look after properties with up to 700 units on one campus.

Today, the company has a roughly 95% occupancy rate, and that’s because of the innovative way the company operates, according to Duguay.

“We believe we have a cookbook, operationally, that is extremely tight and works very well, and we have a good track record to prove it,” he explained.

Part of that strategy includes a sharp focus on lifestyle and hospitality. In particular, Cogir likes to design its communities in a way that promotes a family-like atmosphere. That includes placing the executive director’s office and sales floor behind a glass wall in full view of the community’s lobby, and using vibrant colors throughout the property to instill a hotel-like design.

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“We really like to see each community to have its own personality,” Duguay said. “They almost make you feel like you’re in a hotel. That’s the look we like to give to our homes.”

Technology also plays a big part in what Cogir does. For the 12 Brookdale properties, the provider will implement new technology tools for residents and employees alike—though Duguay preferred not to elaborate on the company’s proprietary plans.

“We want to be a bit secret on our strategy,” he said. “But it’s going to be a big impact.”

Written by Tim Regan

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