When Martha Bray and her husband moved into River Glen of St. Charles, a senior living community west of Chicago, she figured it would be her last home. The couple loved the neighborhood’s tree-lined streets, tended lawns and tidy red-brick townhomes.
The Brays paid a $314,000 entry fee for their townhouse in 2013, plus a monthly maintenance fee. They didn’t own the property, but if they decided to leave, their contract promised they’d receive 85% of the current value determined by a local realtor.
A Vietnam veteran, Bray, 83, thrived at River Glen even after her husband died in 2016. But all that changed with a knock at Bray’s door in late June 2023. River Glen had been sold to a private equity firm and real estate investment group, she was told, and her financial contract was changing.
River Glen’s new owners, Jaybird Capital of Cedar Rapids, Iowa, and Citrine Investment Group of Chicago, were jacking up Bray’s monthly maintenance from $1,395 to $6,500, a 365% increase, Bray said. And if she didn’t like the deal and left the community, she would receive only 75% of the entry fee she’d paid more than a decade earlier.
“We had to agree to their conditions by Sept. 1 or move,” Bray recalled.
She decided to move. But she estimates that she lost out on at least $100,000 because even though her home had risen in value, she only received 75% of the original entry fee.
“I just want people to know not to believe a damn word anybody says,” Bray said, referring to senior living contracts. “Your money is not safe.”
Residents of senior living facilities typically expect to live out their remaining years when they buy into a community. But a new dynamic in the industry, fueled by private equity firms and other aggressive investors seeking high returns, is altering the deals these residents agreed to. Those, like Bray, who thought they were protected by their financial contracts soon learn those arrangements can be canceled by a new owner. Among the impacts on residents: soaring rents and reduced amounts returned on deposits.
Recourse for residents is limited, as Bray and some neighbors learned when they asked a lawyer for advice about challenging the change. A lawsuit was viable, they were told, but no sure thing.
The new owners “could do whatever they wanted,” Bray said. “They owned the place. They made the rules.”
After initially offering to answer NBC News’ questions about River Glen, Meg Harper, a spokeswoman for Jaybird Senior Living, the affiliate of Jaybird Capital that operates the community, stopped responding to emails seeking comment. Citrine Investment Group did not respond to multiple requests for comment.
In a statement provided to CBS News Chicago in 2023, Jaybird CEO Kevin Russell said its changes to the residents’ deals were “guided by the increasing demand for rental structures versus buy-in,” and that the rents were based on fair-market value.
“Those who chose not to transition to the monthly rental structure did so in accordance with the terms of their contracts,” Russell added.
Lucas Hammonds, a specialist in senior living facility financing, said changes like those seen at River Glen are increasingly common and driven by investors in search of profits, with residents often ending up as casualties.
“For the people affected by this, these are big issues,” added Hammonds, who is a senior legal analyst at Octus, a provider of in-depth credit analysis. “The bargain has changed. It’s destabilizing.”
Two resident deaths in two months
NBC News spoke to nine current and former River Glen residents, many of whom bought in when it was owned by Northwestern Medicine, a nonprofit health system affiliated with Northwestern University’s medical school.
Like many senior living communities, it offers a continuum of care including independent living arrangements, assisted living and memory care services in 106 units. The residents who spoke to NBC News gave high marks to River Glen prior to the new owners taking over.
Jaybird, which paid $20 million to buy River Glen with Citrine Investment Group, is a relatively small entity, managing 40 senior living communities mostly in Iowa, Minnesota and Wisconsin. In January, Jaybird acquired two new communities in North Carolina.
Founded in 2004 by Kevin Russell, a former investment banker and lawyer, Jaybird is named for his mother, according to its website.
“For me, the Jaybird brand is a reminder that we are taking care of someone’s mother or father,” Russell says in a quote on the site.
In 2021 and 2022, two residents of Jaybird communities in Iowa froze to death when they wandered away from their memory care facilities, state regulatory records show. A 95-year-old woman at Keelson Harbour in Spirit Lake died in December 2021. The following month, a 77-year-old woman died at Courtyard Estates at Hawthorne Crossing in Bondurant.
Door alarms sounded in both cases but employees did not inspect them, according to civil penalty citations filed against the facilities by the health facilities division of the Iowa Department of Inspections, Appeals and Licensing.
In 2023, Justin Wray, Jaybird’s chief operating officer, told The Washington Post the company takes cases of residents leaving the premises unsupervised “very seriously,” adding that “at times individuals didn’t follow the policies or the procedures set forth.”
Since 2020, regulators have levied civil penalties on three other Jaybird facilities in Iowa for problems with door alarms.
Kimberly Graham, who leads the Polk County Attorney’s Office, said in a statement that because Iowa has no negligent homicide law, her office was hindered in its attempts to pursue full accountability in the Courtyard Estates case.
“This company managed facilities that had two similar deaths of residents within a two-month period in Iowa,” Graham said. “Preventing these tragedies and holding accountable all people responsible must be a higher priority for lawmakers and regulators.”
Harper, the Jaybird spokeswoman, did not respond to questions about the residents’ deaths.
Investors like Jaybird are increasingly interested in purchasing senior living communities because the number of seniors — potential residents — is growing significantly. Some 56 million people in the U.S. were 65 or over in 2020, according to the U.S. Census Bureau, an increase of almost 39% from 2010. The last time this segment of the population grew as fast was in the 1880s, the Census Bureau said.
In recent years, private equity firms have been active in senior living, with Vistria Group in Chicago and Audax Group and Bain Capital, both in Boston, among the larger participants. More deals lie ahead: Last year, 78% of institutional investors said they planned to increase their holdings in senior care facilities, according to the 2024 Seniors Housing & Care Investor Survey by JLL, a global provider of real estate and investment management services.
But as private investors pour money into senior living facilities, some are changing the economics to increase their profit potential, experts say.
For example, in prior years most communities worked like River Glen — residents would put down a deposit or entry fee and the facility would agree to return most of it when they left or died.
Today, investors in these operations may prefer not to have to return a resident’s deposit and then wait for a new resident to generate a fresh entry fee. It’s easier and less capital-intensive simply to rent the units, Hammonds said.
Another negative: The entry fee model is heavily tied to the health of the overall housing market, said Hoa Nguyen, assistant editor at Octus, the credit analysis firm. When housing slows, so do senior living applications.
“If people are not able to sell their homes, they won’t have funds to move into a senior living facility,” Nguyen said.
‘It left a mark’
Senior living facilities are licensed by the states they operate in and all require that they maintain certain levels of staffing and training, a review of state laws shows. Other rules vary, with most requiring owners to provide residents with comprehensive consumer disclosures outlining the services provided, fees and charges and conditions under which an agreement may be terminated.
In reviewing the rules governing senior living facilities, NBC News found no language barring new owners from buying a facility and changing the residents’ contracts.
Susan French, 88, a mother of six, lived at River Glen for about eight years. But she left after Jaybird took over.
“There was nothing right about what they did or the way they did it,” French said.
The new monthly maintenance fee of $6,000 was far more than the $1,300 she had been paying before. But she said she had to pay it anyway for two months because she could not find a house to move into soon enough.
“It was one of the most frightening things in my lifetime, and it left a mark,” French said.
Patrick M. Griffin, a lawyer at Griffin Williams McMahon & Walsh, represented French and two other River Glen residents who hoped to stay in the community under the terms they had agreed to before Jaybird and Citrine bought in.
Griffin told NBC News that he examined the residents’ contracts and determined that they might have a case against River Glen’s new owners. But the residents decided against bringing the suit because of the costs they’d have to absorb in the process, Griffin said.
“On the one hand, I understand this business model wasn’t working for Jaybird,” Griffin said in an interview. “At the same time, you’d like to think they would change it slowly as residents passed on, not uproot them while they are still current on their agreements.”
Ann Richards and her husband, Ron, lived at River Glen for four years and made many friends there. Like several others who spoke with NBC News, they moved out after Jaybird changed the terms of their arrangement.
“It’s just the way they did it with no discussion,” Ann Richards, 82, said.
“We need legislation in Illinois to protect seniors,” she added.
Even though the former River Glen residents are no longer neighbors, many meet once a month over lunch to keep up their friendships.
“The group of people living here together was not only a community, it was a family,” said Darlene Kudron, 90, who still lives at River Glen. “They never had neighbors like this before and never will have neighbors like this again.”
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