Where Trustwell CEO Larry Cohen Sees Opportunity in a ‘Bifurcated’ Industry

After two decades of leading Capital Senior Living (NYSE: CSU), Larry Cohen left the company in 2018 — and spent the next two years preparing for his next venture in the industry.

“I left Capital always intending to come back,” Cohen told Senior Housing News.

But first, he took the opportunity to again become a student of the industry, “really getting under the hood” to understand how other operators are structured and what systems they have in place.


“It’s interesting to have 32 years of experience running full-steam in an industry, and having time to sit back and take a look, and take a lot of that knowledge and use it,” he said.

His new perspective as well as his deep experience will be leveraged in his role as CEO of Trustwell Living, an operating company he is launching with three former Capital Senior Living colleagues. 

The team is ready to “hit the ground running” and is actively underwriting potential acquisitions while eyeing future opportunities in an industry that has been rocked by Covid-19 but still holds huge potential in the long-term, Cohen said.


Bringing the team back together

Cohen kept in touch with members of the team from his days at Capital, and they were discussing the possibility of starting a new operating company when Covid-19 struck the United States last spring.

The pandemic halted progress, but the conversations began again in earnest in the fall, leading to this week’s announcement of the Trustwell launch.

At Trustwell, Cohen is joined by Greg Boemer, who is serving as senior vice president of operations, and Colleen Honnors, who is quality and clinical director.

Boemer was VP of operations for Capital Senior Living from 2013 to 2016, then was president and COO of Cornerstone Senior Living from 2016 to 2020. Honnors first worked with Capital Senior Living while in a risk management role with Darwin/Allied World-Professional Liability Insurance, then was hired as national quality and clinical director and held that position from 2013 to 2020. She is a registered nurse and holds several professional certifications.

Another former Capital Senior Living leader will be joining Trustwell in the near future in a sales and marketing capacity, Cohen said.

Trustwell also is assembling a bench of regional leaders, who are ready to join the team as the portfolio takes shape.

The Trustwell team aims to re-create many of the operational practices that they developed and honed, and elements of company culture that they nurtured, during their time at Capital Senior Living.

“We had a philosophy which really put a lot of emphasis on the executive director and the local community, by providing the leadership at a community with autonomy, responsibility and accountability,” Cohen said. “And we did that by providing the best data, the best systems, the best resources, the best regionals, to really provide the support for the onsite staff to provide the best care and services to residents … The metric that I probably was most proud of over more than 22 years leading Capital was that every year, we scored higher than 95% in resident satisfaction surveys.”

Still, he acknowledges that the resident of 20 years ago was very different than the resident of today, and that Trustwell’s operating model will adapt to suit the current era.

“The business model changes, and that’s a healthy thing … there will be changes in technology and the physical plant, and a lot of other features have changed and will begin to change,” Cohen said. “But I really think it’s that core value and that core focus — really focusing on community empowerment, philosophy and culture — that is what breeds success in this industry.”

Creating a middle-market platform

Trustwell currently has a “nice pipeline” of opportunities and is underwriting a number of transactions, according to Cohen. The company is interested both in third-party management and in joint ventures to acquire communities with institutional investors.

“We’re having very advanced and active conversations,” he said.

Given where the company’s leadership team and future regional directors are located, the Southeast, the Pacific Northwest and the center of the country are among the most attractive regions for future communities.

The company is looking to serve the middle market by acquiring older communities that can be improved through physical plant and operational updates, as well as new communities that have failed to lease up.

Cohen sees both challenges and opportunities as a result of Covid-19. On the opportunity side of the ledger, pandemic fatigue is taking a toll on providers.

“I give my friends in the industry tremendous kudos for a great job in a very difficult environment … but there’s a lot of fatigue,” he said. “A lot of the opportunities we’re seeing today are owners, operators that are just tired. It’s been a very tough year.”

Trustwell brings an experienced but fresher team, as well as a clean balance sheet that is not burdened by the financial effects of the pandemic.

But Cohen also notes that Covid-19 has hit some providers harder than others.

“It’s still a very bifurcated market,” he said. “There are operators that are still building occupancy or communities that stay 90-plus percent occupied, and then you see properties that have fallen into the 30% level.”

It is Trustwell’s challenge to carefully evaluate those distress situations to evaluate whether issues stem from management, market dynamics, or a combination, in order to judge whether an acquisition opportunity is viable. That’s especially important considering the middle-market price point that Trustwell is targeting, which leaves little room for error.

And while providers around the country are beginning to experiment with novel operational models to meet the middle market, Cohen emphasizes some operational basics.

“I think the driving force of why we think we will be successful is we have a team that has excelled through various cycles in sustaining high margins, being very proactive in expense management, and having excellent systems and data to facilitate that,” he said.

Trustwell is not putting a dollar figure on what it considers middle market, but is focused instead on delivering the best value at rates that are affordable, even if they are not the lowest in a given area.

In terms of challenges facing Trustwell and other providers, one is repairing the reputational damage that senior living sustained during the pandemic, and rebuilding consumer confidence.

“Transparency is key here,” Cohen said. “… I do think it’s a challenge, but also an opportunity to be able to communicate well with residents, with prospects, with families. I’ve seen the communications vary amongst operators — some companies have done an outstanding job, and Trustwell I hope will continue that.”

He does anticipate that the recovery for senior living might be slower coming out of Covid-19 compared to some past downturns, in part due to the reputational damage. But, he also believes that pent-up demand is present and that vaccination may start to turn the tide by the second half of 2021.

“We’re very much aware of the challenges that the industry has faced and continues to face, but we’re extremely excited about the vast opportunities that lie ahead of us,” Cohen said.

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