Former tennis star turns into one of the biggest owners and operators in seniors housing.
By Jeff Shaw
It would be a massive understatement to describe Andy Kohlberg’s resume as “unusual.”
It’s also very short:
• Professional tennis player, 1979 to 1988 (final record of 90-100, including one doubles tournament win. His highest ranking was 142nd in February of 1986)
• CEO and co-founder, Kisco Senior Living, 1990 to present
• Vice chairman, Phoenix Suns, 1994 to present
Taking a year off after retiring from tennis at the age of 30, Kohlberg decided to purchase a seniors housing community in Virginia, officially launching Kisco as an owner. The company is based in Carlsbad, California.
The growth since that time — including transitioning from an owner into an owner-operator — has been slow and steady, with two exceptions.
In 2001, Kisco acquired the senior living assets of Transamerica, doubling the number of communities in its portfolio from nine to 18.
In October 2023, Kisco merged with
Colorado-based Balfour Senior Living. Once the transaction is complete, the two companies will own and/or manage a combined 32 communities with over 5,000 units, which will result in it being the top 40 largest owners and operators in the United States. Kohlberg, now 64, will be CEO of the combined company, while Balfour CEO Michael Schonbrun will serve as an advisor as he approaches retirement.
Kisco’s properties, which offer all levels of care from independent living to skilled nursing, target a high-income resident in high-barrier-to-entry markets such as California. Balfour has largely focused on Colorado, offering a complementary portfolio with little to no overlap.
Kisco also made news in 2021, when Welltower announced it was partnering with the company for two ground-up developments: The Carnegie at Washingtonian Center in Gaithersburg, Maryland, and Phase II of The Cardinal at North Hills in Raleigh, North Carolina. Welltower and Kisco’s first project, The Cardinal, has maintained occupancy above 95 percent over the past five years and returned to full occupancy in September 2021 following the worst of the COVID-19 pandemic.
Welltower is also partnering with Kisco to redevelop an entire college campus as a seniors housing community in the upscale, first-ring Boston suburb of Brookline. Newbury College held its final classes in spring 2019, and Welltower purchased the property later that year. The 159-unit community will be named The Newbury of Brookline.
Seniors Housing Business spoke with Kohlberg about his unusual history and Kisco’s long, patient rise to prominence within seniors housing.
Seniors Housing Business: Walk me through your career leading up to founding Kisco in 1990.
Andy Kohlberg: I was born in Westchester County, New York. My parents moved to Mount Kisco, New York, which is where the name comes from.
I started as a tennis player. I went to the University of Tennessee and was ranked No. 1 in college. I turned pro in 1979 and retired in 1988.
I took a year off and became interested in real estate. A portfolio of seniors housing communities came to our attention in 1989. We were able to buy one in Virginia Beach in 1990 — First Colonial Inn. We still own it today.
We bought that community with a management company in place, and that continued for a number of years. We bought a couple more properties in the early 1990s under the same structure of third-party management. In 1995, we started our own operations company and took over the three communities.
SHB: Why did you name the company after Mount Kisco?
Kohlberg: My family was among the original early investors. It was a family company in the early days — my parents and siblings. Since it was family, we named it after the town they lived in.
SHB: How did you get up to speed on seniors housing, having no background in the sector before buying your first property?
Kohlberg: It’s just learning as you’re going. No matter what industry you’re in, you have to learn and adapt. That’s what I’ve done.
There’s always a lot more to know, and you have to be open to that. I’m still learning, and there’s still a lot to learn. It’s not any more complicated than that — just being agile, open and curious and wanting to learn.
Relationships make the company
SHB: What has been the company’s growth pattern in the 33 years since?
Kohlberg: I didn’t have a plan, but I did have a pattern. We bought Transamerica’s senior living assets in 2001. That was a large portfolio for us — nine properties. And we were only nine properties at the time. We pretty much doubled in size.
That was a big undertaking. All the properties were in California, except one in Nevada. It took us to another level of size and scale and complexity.
Outside of the two big acquisitions — Transamerica and Balfour — there were really no multi-site acquisitions, just one at a time. We started developing in 1999, and that was also one at a time.
SHB: How did the merger with Balfour come about?
Kohlberg: I knew Michael Schonbrun for a long time, over 10 years. We always stayed in touch. We both felt we had similar philosophies and approaches to the business. I told him, “If you ever think about retiring or selling, let me know.” When he was ready, it was important to him to find a partner who shares his philosophy.
SHB: What is that philosophy?
Kohlberg: Hiring really good people, catering to a more affluent prospect and customer base, having density within the markets. He was smart in having a large density in Denver. The Balfour name has value in that market. We like that.
SHB: With both Kisco and Balfour maintaining their independent brands and headquarters, what was the value to the two companies of the merger?
Kohlberg: Part of the attraction was the two development projects on the East Coast: The Fitzgerald of Palisades in Washington, D.C.; and The Newbury of Brookline near Boston. Those are fully Kisco communities now. We are doing the development and lease-up and operations.
Geographically, it was a great fit, getting concentration in Denver and then the East Coast communities. We have a property in Maryland 30 minutes away. Boston’s a market we really like, and we want to build a cluster there.
SHB: What’s next? Do you want to take some time to digest the merger, or is it full speed ahead?
Kohlberg: We’re going to take time to digest it. We may do one-off additional properties, but we’re not actively looking. This only came about through a longstanding relationship and a good fit geographically and culturally. There aren’t many companies that meet those same criteria.
SHB: Tell me about Kisco’s partnership with Welltower. How did that come to be?
Kohlberg: We’ve had a 10-plus-year relationship that started in Raleigh, North Carolina, with The Cardinal of North Hills. We were actually in partnership years before with a local developer, and we started to do some pre-leasing, but the project never got off the ground.
Welltower was brought in and had a partnership with another developer that didn’t go well. They called us in because they knew we had been on that project prior. We built the first phase of the project, and we are now working on the expansion. Lease-up is going exceptionally well on Phase II — it’s 70 percent full after just six months.
We had three other communities in Raleigh that, after the success of The Cardinal, we rolled into the partnership with Welltower.
SHB: Is the partnership expected to grow further from here?
Kohlberg: Yes, I think both parties want to grow. But our pattern has always been slow and steady. We’re really selective about which communities are a good fit regarding both geography and timing.
SHB: What makes Welltower a good partner for you?
Kohlberg: They have a long-term horizon. They’re smart people, know the industry well and share best practices. They have a good data analytics group with demographics information on the locations. I’ve always had a good relationship with the CEOs of the company. There have been a number of them, but I always have a good relationship with the CEO there.
SHB: Tell me more about Kisco’s structure. Do you own a stake in most of your properties?
Kohlberg: We own the majority, if not 100 percent, of our non-Welltower properties. In our partnership with Welltower, we have a minority interest.
We always have an ownership interest in the properties. Our model is not to be a third-party manager. We like owning the real estate. Our strategy is to own and manage real estate and develop as well.
SHB: What income level of senior do you target?
Kohlberg: Generally, most of our communities are in higher-end markets with higher-end residents and rents. We have a few exceptions, but in general as we have progressed we have tended to be a little more focused on high-end markets in high-barrier-to-entry locations.
SHB: Do you prefer to grow by acquisitions or development?
Kohlberg: Both. About two-thirds of our growth has come from acquisitions and about one-third through development. It all depends on whether you are counting units or dollars. We layer in development when it makes sense.
A competitive spirit
SHB: You have a fascinating background in sports, having been a pro tennis player and are vice chairman of the Phoenix Suns. Does that aspect of your life affect how you run Kisco’s business in any way?
Kohlberg: Some of the early lessons from sports — the competitiveness, the preparation — are key to success in business as well. Teamwork and finding the right people are critical. It doesn’t matter if it’s a sports team or a senior living business, finding people that buy into the team concept is similar. My background in sports has helped and impacted the way I run Kisco.
The reverse is also true. The way I run Kisco has benefitted my approach to sports teams. There are a lot of similarities in people and processes. It doesn’t matter what industry, there are a lot of key elements that are very similar.
SHB: Can you give us some specific examples?
Kohlberg: We had James Jones, general manager of the Phoenix Suns, speak at our executive director conference in Phoenix. He was one of the best speakers we’ve had in 25 years. He talked about a winning mentality, the difference between being on a winning team and losing team, and the leadership of the league’s top players.
I still ask people years later who the best speaker we had, and they say James. It’s an example of how much similarity there is across industries. If you have the right people with the right mindset, it’s a lot easier to be successful.
SHB: Where else did you get some of your business education?
Kohlberg: In 2000, we started using Malcolm Baldrige Criteria — an award the president gave out.
[The award is named after the late Secretary of Commerce Malcolm Baldrige, a proponent of quality management. The U.S. Commerce Department’s National Institute of Standards and Technology manages the award.]
It was a data-driven framework for running a company. Since I didn’t have an education running a company, we used that criteria to formulate the roadmap for how we do things.
For a relatively small organization we’ve been very data driven and process driven. That’s helped us over the years.
They stopped funding the criteria about 10 years ago, but it was very helpful in how we structured the company and used data to make decisions.
SHB: What’s something people in the industry would be surprised to learn about you?
Kohlberg: I spent three months in India by myself when I was 17 playing a tennis circuit. My brother and another two guys came with me. They were there a week, and I was there three months.
It was a defining experience for me, learning a different culture and learning to be on my own in a different environment. You can imagine India in 1977. The phones didn’t work, the planes were barely going. It was a tough experience, but it taught me a lot of life lessons about people and culture. It also taught me at a very young age about fighting through challenges.