Following a failed health care pivot, the company’s stock has hit lows not seen since the 1990s I
By Katherine Davis
AS WALGREENS BOOTS ALLIANCE RUNS OUT OF OPTIONS to turn itself and its stock price around, so too does the fortune of its single largest shareholder and executive chairman: Stefano Pessina, the chief architect of a decadelong plan that’s put the pharmacy retail giant into a financial bind.
Following an expensive and failed health care pivot kick-started by Pessina amid challenging retail and pharmacy landscapes, Walgreens’ stock has hit lows not seen since the 1990s.
With its stock trading at about $8 on Sept. 23, Deerfield-based Walgreens is among companies with the 10 worst-performing stocks in the S&P 500 this year, falling 67%. More than $14 billion of value has been lost year to date, with Walgreens’ market capitalization sitting at
See WALGREENS on page 19
As it turns out, Chicago’s pandemic exodus wasn’t as bad as it seemed
By John Pletz
Plenty of people picked up and moved from Chicago during the worst of the COVID-19 pandemic — just not as many as you might think.
Although it was the largest exodus from Chicago in five years, it wasn’t nearly as severe as those seen in other big cities, such as New York, Boston, San Francisco and Los Angeles, according to a Brookings Institution analysis of
How two dysfunctional relationships are hindering a new Bears-Sox
IRS data on where people filed their taxes from one year to the next.
In 2021, 47,374 more tax filers left the Chicago area than arrived — a 64% jump from 2019, the year before the pandemic.
But the surplus of tax filers leaving New York was 103% higher than before the pandemic. In San Francisco, the difference between departing and incoming tax filers was 274% greater than 2019. The net number of depart-
CRAIN’S LIST
ing tax filers was 99% higher in Los Angeles, while Boston was 98% higher. Departures from San Diego, the other city highlighted in the study, were up 54%.
“Chicago’s losses in the pandemic were the continuation of a steady leak rather than a pipe suddenly bursting,” says Alan Berube, who conducted the study for Brookings.
Like Los Angeles, New York
See our updated ranking of the area’s largest woman-owned companies.
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The most famous move by a Chicago tax filer during the COVID pandemic was hedge fund titan and Florida native Ken Griffin, who moved to the Miami area. BLOOMBERG BLOOMBERG
Emily Heisley Stoeckel
Stefano Pessina
How two dysfunctional relationships are hindering a new Bears-Sox stadium deal
AGreg Hinz
fter a fruitless six months or so, the Chicago Bears and White Sox received more bad news out of Springfield in recent days: The Illinois General Assembly is not about to give either a big subsidy for a new stadium in its fall veto session, this according to House Speaker Emanuel “Chris” Welch, Gov. J.B. Pritzker and a host of others.
Indeed, neither team has had a winning record lately, either on the field or with lawmakers. That’s raising the odds that, sooner or later, the Bears will give up
President Kevin Warren’s dream of a new playpen on the lakefront and decamp to Arlington Heights, leaving the Sox to fight alone for money for a new ballpark in the South Loop.
But though it’s getting late, the game isn’t over yet. The Big Deal is still there to be done, one that could give each team a new home in Chicago proper. It depends, in large part, on whether two so-far dysfunctional relationships can somehow be made productive.
The first relationship is between two sets of billionaires who now are blocking each other. That’s principal Sox owner Jerry Reinsdorf and the asset-rich but cash-poor McCaskey clan that owns the majority share of the Bears.
Both want all or the lion’s share of the estimated $900 million or so in new bonds financed by the
state’s existing tax on Chicago hotel rooms could provide. That’s a problem, because even if one or the other got every penny for their proposed project, hundreds of millions of other public funds would be needed for related infrastructure and other work. The question is whether a deal can be struck to divide that $900 million trove, something that would free each side’s lobbyists to work together rather than in opposition.
Multiple inside sources say the two are talking, directly, with Reinsdorf and George McCaskey — accompanied by Warren — having met personally several
Bulls and Blackhawks eliminating plastic bottles
By Pawan Naidu
The United Center is joining sustainability efforts in Chicago by eliminating single-use plastic bottles during Bulls and Blackhawks games.
The United Center and its teams have partnered with Culligan International to sell aluminum water bottles at concession stands during games. The water treatment company will also provide 62 water fountains/refilling stations, over 90 aluminum recycling bins and multi-use faucets in lower-level suites.
“By eliminating plastic water bottles from our concessions and introducing refillable, aluminum water bottles, we’re reducing plastic waste and empowering our fans to make more conscious environmental choices with a purpose-driven, hometown partner,” Joe Myhra, United Center’s chief operating officer, said in a statement.
times as of late. But no deal. Until there is one, lawmakers who already are leery of throwing a party for billionaires are going to stay far, far away.
The second bad relationship — and it really is bad — is between Pritzker and Mayor Brandon Johnson. Johnson strongly backs the Bears' plan, saying it could bring new life and Final Four-type events to the South Side, though he lately has had little to say on the matter and his team declined to comment for this column. Pritzker, in turn, has termed the Bears’ request for billions in subsidies “a non-starter” and has, if anything,
Patrons will be able to refill the bottles at the new water fountains and put them in recycling bins around the arena. This change was made, in part, because aluminum has a 57% recycling rate, making it more environmentally friendly than plastic, which only has a 29% recycling rate, according to a statement by Culligan.
doubled down on that take.
Team Pritzker is waving off such talk, saying any fights are over policy not personality. But after public brawls over migrant shelters, public school funding and more, chatter is increasing that Pritzker might see his way to back someone else for mayor in Johnson’s presumed re-election bid just a little over two years from now.
“The relationship is not good,” says one ranking official who regularly deals with both men. “I wouldn’t be shocked” if Pritzker ended up helping another mayoral hopeful. “I’ve never seen it this bad,” says another longtime
Visitors to Bulls and Blackhawks games will be able to purchase the new water bottles in October when the respective seasons kick off.
The teams are not the only ones changing business practices to be more sustainable. Illinois has recently passed a law banning hotels in the state from distributing single-use plastic bottles of personal care products.
The change is part of a larger movement toward sustainability, with many hotels already beginning to phase out these single-use bottles. Instead, they will transition to using larger, multi-use containers.
City Hall fixture, who compares today’s standoff to the feud between former Mayor Richard M. Daley and former Gov. Jim Edgar three decades ago.
Given a mayor who’s headed in one direction and a governor in another, ordinary lawmakers have a good excuse to duck and just watch. Only if the two officials get together — and McCaskey and Reinsdorf strike a deal — will the ingredients be there for a potential big Springfield stadium deal. Of course, if Warren and the Bears give up on the lakefront, they still could go to their former track property in Arlington Heights — if, that is, local school districts are willing to compromise. One of the other rumors floating around this fall is that Pritzker might be more willing to provide funds for routine roads and other infrastructure in Arlington Heights than for parking and other items in a congested lakefront. Personally, I’m still of the view that using the former Michael Reese property just to the south of Solider Field makes a lot more sense than fighting lakefront protection zealots on the east side of DuSable Lake Shore Drive. So, we’ll see. But keep your eyes on the two relationships I wrote about above. If something’s going to happen, it’s got to start there.
In Crain’s Notable Black Leaders section that published in the Sept. 23 issue, David Nichols’ job title should have stated that he is a global client service partner with EY. Correction
A rendering of the proposed stadium and redevelopment of Soldier Field | CHICAGO BEARS
Local film fest celebrates its biggest endowment ever
Monroe Capital to develop $1 billion auto suppliers fund
It will help smaller firms along the supply chain gain access to capital in what’s considered an underserved market in the finance industry
By Mark Weinraub
The White House has chosen Chicago’s Monroe Capital to raise a $1 billion private credit fund devoted to funneling money into the U.S. automotive supply chain.
The Drive Forward Fund will raise money from institutional investors and receive additional capital from U.S. Small Business Administration loans, Monroe Capital’s chairman and CEO, Theodore Koenig, said.
“This is an underserved market from a financing standpoint,” Koenig told Crain’s in an interview. “There is a ton of demand. We have got the EV industry, autonomous driving. We have got batteries. We have got all kinds of software.”
Koenig said the automotive supply chain is a trillion-dollar industry, representing 5% of the U.S. GDP. He added the White House reached out to Monroe when developing the program.
used EVs, included incentives to electrify heavy-duty vehicles like school buses, and supported the development of charging infrastructure.
“There is a lot of opportunity here,” Koenig said. “Most of these companies are smaller companies that are in the supply chain.”
The Drive Forward Fund will raise money from institutional investors and receive additional capital from U.S. Small Business Administration loans.
Hard to believe in this uber-era of video streaming and awards shows everywhere, but when 22-year-old graphic designer Michael Kutza staged the inaugural Chicago International Film Festival in 1965, it was the first competitively judged film fest in the U.S. From the start, it was devoted to foreign films at a time when moviegoers willing to sit through subtitled flicks had few choices in the commercial houses around the Loop.
As a pioneer in the genre, Kutza was certainly on to something. The 60th Chicago festival is slated for October, with a sprawling schedule of 120 feature films plus 70 short films planned to run at seven spaces
H. Lee Murphy
For 60 years, the Chicago International Film Festival was run on a shoestring budget, but a new gift from the robert & penelope Steiner Family Foundation is changing all that | By
Cinema/Chicago is announcing this month that it is receiving the first sizable gift in its history, a $2 million endowment.
The investment comes at a time when growth in EV sales is flattening out, with concerns about a lack of chargers and high vehicle costs causing consumers to dial back on their plans to ditch cars powered by internal combustion engines.
Major automakers such as Ford, General Motors and Volvo have pumped the brakes on EV development as consumer uptake has slowed.
The Biden administration has set a goal of having 50% of all new vehicle sales be electric by 2030. The president’s signature Inflation Reduction Act added and expanded tax credits for purchases of new and
Monroe Capital has previously raised two funds that received support from the Small Business Administration, which provides loans at belowmarket rates. The firm received the Small Business Investment Company of the Year award in 2015 for a fund that invested in 33 companies.
The Drive Forward Fund will have an advisory council made up of automotive industry experts, including representatives from the Alliance for Automotive Innovation, a trade group formed in 2020 to develop clean, safe and smart transportation.
“A successful transformation to automotive electrification in the United States requires a
Cboe CEO on what’s next for the Chicago-based exchange
In a departure from his predecessor, Fredric tomczyk has backed away from dealmaking during his first year on the job
By Mark Weinraub
After a year on the job, Cboe CEO Fredric Tomczyk is convinced the best way to grow the world’s largest options exchange is to focus on what it already does best, a departure from his predecessor, who aggressively pursued acquisitions in search of the next big thing.
“It happens to be an area that's growing,” Tomczyk told Crain’s in an interview. “I look at long-term secular trends, and options trading is growing. Everybody wants in. It is not
just in the U.S. It is all over the world.”
Market volatility and geopolitical uncertainty are driving more investors toward the U.S. as they look for the biggest market to hedge risk. The trend benefits the Chicago options exchange’s most popular products: its VIX options, which track market volatility, and its S&P 500 index options contracts.
“We have got two wars in the world,” Tomczyk said. “We have got trade wars, elections and the rise of countries getting more di-
vided. All that sets up for a more volatile market. The market here today has become much more news-driven, event-driven.”
Edward Tilly stepped down as head of Cboe in September 2023 after an internal investigation revealed the longtime chairman and CEO failed to disclose personal relationships with colleagues.
Stepping in with little notice was not much of a stretch for Tomczyk, who was already a member of Cboe’s board and
Cboe CEO Fredric Tomczyk | CbOe
Private-equity firms see profitability in affordable housing
Chicago’s Vistria Group is taking advantage of government incentives to structure investments
By Mark Weinraub
New laws aimed at boosting the supply of affordable housing are drawing the attention of financial services firms looking to turn a profit.
The Vistria Group, a privateequity firm based in Chicago, is going all in, partnering with local governments and housing authorities to provide affordable housing in what it sees as a key area of growth.
Margaret Anadu, who leads Vistria’s real estate division, hopes to invest $1 billion annually in the affordable housing market with its dedicated fund, and said the deals are being structured so rent controls will not be a barrier to profitability.
The firm is taking advantage of an Illinois law passed in 2021, House Bill 2621, providing tax credits and other incentives for the development of affordable housing.
Using HB 2621, Vistria bought a complex in Naperville. It layered in two tiers of affordable rents, one for tenants with incomes at 60% of the community average and one at 80%.
Diminishing support from the federal government and a massive undersupply of new housing make state initiatives like HB 2621 necessary, said Kristin Faust, executive director of the Illinois Housing Development Authority, which finances the creation and preservation of affordable housing in the state.
Vistria, which has about 5,000 affordable units in its portfolio, plans to hold on to its affordable housing investments for at least 10 years, longer than typical private-equity investments.
“When you can build housing that is affordable and maintain it well and keep it in great condition for that lower-income, moderate, middle-income segment, you have incredibly resilient cash flows because the demand is so strong,” Anadu told Crain’s.
“I love the intersection with private equity,” Faust said. “The private sector builds 90-plus percent of the housing in America. If we are going to build more housing, we have to leverage that engine of the private sector. You have to create incentives and tools that
allow it to be a win-win.”
The IHDA itself has financed the creation of 187 affordable units in two developments that are utilizing HB 2621, and a spokeswoman said local governments and housing authorities have been active in taking advantage of the law to issue loans to developers.
“The state is always facing pressures around housing and affordable housing,” Faust said. “Those pressures have really increased over the last several years. We are facing a lot of headwinds. Different parties and people in the housing field are always trying to come up with the best ideas, the best ways of using existing resources, the best ways of stretching resources."
Anadu, who joined Vistria
from Goldman Sachs in 2022 to increase the firm's investments in affordable housing, said partnerships with government entities are the “secret sauce” behind its deals.
The firm has been growing, recently opening an office in New York and expanding its Chicago headquarters. The firm increased its assets under management to $12.3 billion by the end of 2023 from $10.4 billion a year earlier.
Its latest purchase, a $67 million acquisition of a 299-unit apartment complex in Dallas, was made with Waterford Property and the Dallas Housing Finance Corp. The new owners will immediately restrict rents at the complex, which was the second Dallas housing project Vistria has invested in this year.
Vistria, which has about 5,000 affordable units in its portfolio, plans to hold on to its affordable housing investments for at least 10 years, longer than typical privateequity investments that stretch from five to seven years. The government-supported programs Vistria finds attractive will also make it a good investment for the next owners when it comes time to sell.
“The structures that we put in place are tied to the asset,” Anadu said. “It is not like the next buyer is going to say, ‘You know what, never mind, let's convert this back to market rate and kick out all these middle-income families.’ They are economically motivated to keep the structure in place. The tax abatement is an economically rational trade.”
NanoGraf plans to make EV battery components in Michigan
the Chicago-based startup is getting money from the feds and the state of michigan to set up shop in Flint
By John Pletz
NanoGraf, a Chicago-born startup, looks to get into the electric-vehicle battery game with a new factory in Flint, Mich.
The 12-year-old company, which traces its roots to a Northwestern University lab, announced plans on Sept. 20 for a $175 million facility in Flint to make a key component of lithium-ion EV batteries. The factory will employ about 150 people.
NanoGraf received a $60 million grant from the U.S. Department of Energy through the federal infrastructure bill passed three years ago. It also received an unspecified amount of incentives from the state of Michigan.
The company will retrofit a former Buick plant to make materials used to create silicon anodes, the part of a battery that holds the charge.
NanoGraf considered Illinois for the project but chose Michigan for its proximity to the Big Three automakers.
“We looked at several states,” CEO Francis Wang says. “There were a lot of considerations: ecosystem, workforce. When we thought about getting to the mainstream and reaching EVrelevant scale, we thought it would be best to put this plant in an ecosystem where GM, Ford, Stellantis all are within reach.
“We talked to Illinois. I would have loved to have had this in Illinois. But this will not be our last facility. Our next manufacturing facility could easily end up being in Illinois.”
NanoGraf’s technology increases the storage capacity of lithium-ion batteries about 30%, compared to traditional graphite anodes, while also making them lighter. The company makes anode materials, and a contract manufacturing partner assembles finished battery cells.
NanoGraf received a key validation from the Department of Defense two years ago with a $10 million contract to supply rechargeable batteries for the military. After receiving an $8 million contract from the U.S. Army, the company announced plans to set up a manufacturing facility on the Near West Side. It has about 35 employees in Chicago and its headquarters and R&D facility, and it expects to hire another 20 or so for its production operations.
But EV batteries were always seen as the big prize, in a market worth about $70 billion this year that is expected to grow into the hundreds of billions by the end of the decade.
NanoGraf has yet to announce an EV customer, although Wang says it’s having discussions with various automakers and their suppliers.
The EV battery industry is dominated by Korean and Chinese companies. Many of them
are setting up manufacturing operations in the U.S., such as Gotion, which will assemble EV battery packs at a factory in Manteno.
But the U.S. government and automakers also are interested in having a supply chain that includes domestic companies de-
signing and building batteries. The Department of Energy awarded $3 billion to 25 projects in 14 states on Sept. 20, including NanoGraf’s facility in Flint. The department previously awarded $1.8 billion for 14 projects. None of the projects selected so far is in Illinois.
The Vistria Group, a private-equity firm based in Chicago, is partnering with local governments and housing authorities to provide affordable housing in what it sees as a key area of growth. | GEttY mAGES
Tavern on Rush sets an opening date for its new location
the storied Gold Coast restaurant, which closed its doors almost two years ago, will re-emerge across the street from the previous itera tion and still feature steaks, seafood, some of the same cocktails and a patio I By
Tavern on Rush is set to open its new location just shy of two years after the storied Gold Coast steakhouse closed the doors of its original spot on Rush Street.
The new location, at 1015 N. Rush St., is set to open today at the base of the Thompson Hotel, across the street from the building its previous iteration occupied for more than 25 years.
“Tavern on Rush had to be on Rush and Bellevue (Place),” said owner Phil Stefani. “We were given opportunities to go elsewhere — down the street, farther away — but . . . it had to be on Rush and Bellevue, and we accomplished that.”
Tavern on Rush earned a star-studded reputation during the quarter century it spent at its original 1031 N. Rush St. location. Michael Jordan smoked cigars on the patio, and Jon Bon Jovi popped in to sip rosé. The scores of patrons who became regulars recall the steakhouse’s early days in the late 1990s, when the bar was on the first floor, the restaurant on the second, and the sun-dappled patio became a place to see and be seen.
That iteration of Tavern on Rush closed in 2022, after its longtime lease ended. Landlords Fred Barbara and Jim Banks, who have owned the building since 2005, thought it was time to breathe some new life into the neighborhood and gutted the building. They opened a new restaurant called The Bellevue there last year.
Opening now, rather than two years ago post-closure, means Tavern will reopen in a stronger, more stable market for restaurants.
Darren
Tristano, CEO of research and consulting firm Foodservice Results
Ally Marotti
patrons. The restaurant will sell champagne and caviar, and the decor is modern. The second floor has mostly glass windows, so “every table will have a view of Rush Street,” Stefani said. The space is also larger. The 16,000square-foot restaurant, which took over the space previously occupied by Nico Osteria, is about 5,000 square feet larger than the original Tavern, Stefani said.
Opening now, rather than two years ago post-closure, means Tavern will reopen in a stronger, more stable market for restaurants, said Darren Tristano, CEO of research and consulting firm Foodservice Results. There’s also a chance to quickly win back former customers, particularly boomers who have moved back to the city from the suburbs.
“There’s a strong opportunity for nostalgia,” he said. “As long as their service and their food is up to par, I think there’s no reason why they shouldn’t have strong reviews and rebuild that clientele.”
The new Tavern on Rush is part of a wave of modernization that is ushering in a new era for an area once nicknamed the Viagra Triangle. Nearby, Carmine’s closed last year so its landlords could knock down and rebuild at 1043 N. Rush St. That restaurant is set to reopen on March 1, 2025.
“There has to be a reason why we lasted 25 years,” Stefani said.
“Restaurants, unfortunately, don’t
Stefani said the reborn Tavern on Rush will carry the same ethos as the one that shut down nearly two years ago. It will still be a steakhouse, with steak, seafood and some of the same cocktails (he mentioned the pineappleinfused martini by name). Like the old Tavern, the first floor will have a bar and dining area, and the second floor will have a full dining room. And, of course, there will be a patio.
have that kind of longevity. We have to respect the fact that our client base wanted it and they kept us open.” At the same time, Stefani also hopes to rope in new, younger
Outside of the Gold Coast, Stefani’s restaurant group recently renovated Castaways, the boatshaped restaurant at North Avenue Beach. The lakefront eatery had not been fully open since before the COVID pandemic. The group also opened Stefani’s Bottega Italiana, a quick-service Italian shop and pasta lab, in the Norwood Park neighborhood earlier this year.
Boka Restaurant Group is planning its first Florida outpost
Company behind the acclaimed Girl & the Goat is teaming up with a michelin-starred chef to bring a new concept to the Sunshine State
By Brandon Dupré
Boka Restaurant Group and Michelin-starred chef Lee Wolen are opening a new restaurant in Florida, the group’s first in the state.
Elliott Aster, which is named after a native Florida wildflower, is set to open in early 2025 at the Vinoy Resort and Golf Club in St. Petersburg. It's the latest collaboration between the restaurant group and Wolen, who is the chef-partner of the Michelin-starred restaurant Boka in Lincoln Park, as well as Italian eatery Alla Vita in the
West Loop and GG’s Chicken Shop in Lakeview.
“I am truly honored to be opening a restaurant in St. Pete, a place that holds a special place in my heart,” Wolen said in a statement. “Having stayed at The Vinoy with my family and experiencing its rich history and charm, it feels like the perfect setting to create something truly special. I can't wait to bring our culinary vision to life in such an iconic destination."
Elliott Aster has yet to unveil its menu, but the Boka group announced that it could in-
er items. The dining room will feature an antipasti bar at its center.
Boka is the latest Chicagobased restaurant group to head for the South, eyeing expansion and untapped revenue streams. The group behind the Maple & Ash steakhouse is also planning a Miami outpost in early 2025.
Outside of Chicago, the Boka group has three restaurants in Los Angeles and two in New York and will open Momotaro in Nashville, Tenn., next year.
Boka Restaurant Group has 23 restaurants under management and three additional partnership concepts, including GG's Chicken Shop and Tavern Burger at Soldier Field, and select offerings at the Art Institute of Chicago.
The exterior sign at Tavern on Rush’s new location | ALEXA VAICAItIS
clude steaks such as a 45-day dry-aged prime bone-in rib-eye or a 48-ounce bistecca fiorenti-
na, seafood dishes and pastas such as king crab tagliatelle or rigatoni alla vodka, among oth-
A rendering of the bar lounge area at Elliott Aster ROCKWELL GROUp
The interior of Tavern on Rush’s new location | ALEXA VAICAItIS
Advocate planning $18M in Lutheran General updates
the health system wants to expand bed ca pacity at the
northwest suburban hospital
By Katherine Davis
Advocate Health Care, the Illinois unit of Charlotte, N.C.-based health system Advocate Health, is planning a nearly $18 million modernization project at its Lutheran General Hospital in Park Ridge that would shrink its obstetrics unit but expand its bed capacity overall.
Advocate revealed details of the plan in a recent application filed to the Illinois Health Facilities & Services Review Board, which must approve the project. The board is tentatively scheduled to consider the proposal at a Dec. 10 meeting.
The project would transition an 11-bed OB unit into a medical and surgical unit, reducing the hospital’s number of OB beds to 51 from 62. Additionally, the proposal seeks to add a 22-bed medical-surgical unit on the ninth floor of the hospital, expanding Lutheran General’s total medicalsurgical beds from 332 to 370.
Finally, Advocate aims to double the number of beds to 18 in an intensive care unit on the seventh floor, ultimately expanding the hospital’s number of ICU
beds from 75 to 85.
Altogether, the changes will increase Lutheran General’s total number of beds from 671 to 708, according to the application.
Other changes include transitioning about 15 medical-surgical beds to semiprivate rooms on various floors.
The modernization will affect nearly 18,000 square feet of existing space in the hospital, about 15,000 of which is clinical space, the application said. The project does not include building any new space.
If approved, the project is expected to be completed by June 2026.
"Securing regulatory approval to modernize and renovate our facilities is a pivotal step toward improving the health and well-being of our patients and communities," an Advocate spokesperson said in a statement to Crain's. "As a leading tertiary hospital, this project reaffirms our commitment to providing high-quality, efficient care tailored to meeting the needs of our community now and into the future."
In its application, Advocate argues the proposed changes are necessary to address a bed short-
age for patients requiring emergency and specialized care. Lutheran General has seen an increase in the number of patients with stroke and respiratory illnesses, and occupancy is consistently above 90% each day.
“The high patient census in the hospital and the emergency department continues to limit appropriate placement of patients into the right level of care,” Advocate writes in the application.
Lutheran General is the only Level I trauma center in its service area, which encompasses
about 1.4 million people, about 21% of whom are 65 and older. Over the next five years, the 65plus population is projected to grow by more than 9%, according to the application.
Lutheran General currently performs nearly 20,000 inpatient and outpatient surgical procedures every year.
The modernization proposal adds to Advocate’s growing list of projects aimed at sparking growth in the Chicago area. Advocate is working on a $645 million expansion and modernization of Advo-
cate Illinois Masonic Medical Center in Lakeview. The health system is also building several outpatient centers in the Chicago area, including a $52 million facility in Naperville.
Advocate Health Care became part of Advocate Health in the late 2022 merger of Advocate Aurora Health and Atrium Health. Prior to the deal, Advocate Health Care was headquartered in Downers Grove. As of today, Advocate Health Care operates more than 500 sites of care in Illinois, primarily in the Chicago area.
Proposed changes will increase Advocate Lutheran General Hospital’s total number of beds from 671 to 708. | GOOGLe
Brandon Johnson’s push to oust CPS chief Pedro Martinez speaks volumes
In the news business, one learns certain words can be trouble. “Never” is one of them. The moment a news outlet declares something has “never” happened before, along comes a smart reader brandishing a well-researched list of precedents.
Even so, we’re fairly certain we actually have never seen this before: a Chicago mayor seeking to jettison the CEO of Chicago Public Schools while that CEO and the Board of Education are in contract negotiations with the Chicago Teachers Union.
And yet, here we are.
Chicago Mayor Brandon Johnson has called for the chief exec of CPS, Pedro Martinez, to step down, even as Martinez sits across the bargaining table from the CTU during protracted talks over the union’s expensive and expansive demands.
The mayor hasn’t openly stated his reasons, but the smoke signals surrounding this particular fire aren’t that difficult to read. Johnson may not be saying much publicly, but the CTU under its president, Stacy Davis Gates, certainly is — and the mayor has done little to reverse the impression that Davis Gates speaks for him.
Davis Gates and her CTU members have criticized Martinez for failing, in their view, to aggressively secure more funding for union priorities such as teacher raises and reductions in class size. In current negotiations, the CTU is also advocating for a broad range of demands that go beyond what’s typically contained in a teachers
contract — including measures such as CTA passes for students and staff, stipends for students seeking asylum, and construction of fully green, carbon-free schools.
The merits of these ideas are being debated against the backdrop of a significant budget shortfall, projected at around $628 million in the 2024-25 school year. Johnson and Davis Gates have called on school
leadership to borrow to cover the costs of salary increases and other financial commitments, with Johnson expressing support for taking on as much as $300 million of additional debt to get the job done. Martinez, meanwhile, has pushed back. The district currently carries more than $9 billion in debt. Martinez has argued, correctly, that further borrowing would exac-
erbate the district’s financial instability.
New reporting from the Chicago SunTimes suggests the board has been unhappy with aspects of Martinez’s performance — and no public official should be above public scrutiny. But Johnson’s move to oust Martinez now, while his friends and former co-workers at the CTU seek a contract the city clearly cannot afford, speaks volumes about the mayor’s priorities and loyalties.
Apparently it’s necessary to remind Johnson he was elected to be mayor of the city of Chicago and its residents — not the CTU’s contract negotiator in chief. Martinez and the board are currently representing parents and students — as well as taxpayers — in hammering out a new deal with teachers. We expect the mayor to represent those constituencies as well, and not just the friends who helped vault him into office.
The Civic Committee of the Commercial Club of Chicago and the Chicagoland Chamber of Commerce put a fine point on it in an unusual joint statement:
“Having stability at the helm of the CPS is critical if we are to improve educational quality, assure financial soundness and maintain confidence in the system among parents and children,” the two business organizations wrote on Sept. 24. “We strongly urge the board to keep CEO Martinez in place, reject the proposal to borrow more money, and work with all parties to bring long-term fiscal stability and quality of education to the school system.”
Chicago Teachers Union can’t get the contract it wants, and Pedro Martinez is taking the fall
Mayor Brandon Johnson’s call for the ouster of Chicago Public Schools
CEO Pedro Martinez is being driven by Chicago Teachers Union President Stacy Davis Gates’ need to find a scapegoat for her failure to deliver on her unaffordable contract demands.
CPS estimates that granting just 52 of the CTU’s 700 proposals, including its request for a 9% annual pay increase, will boost the projected budget deficit from $509 million to almost $3 billion next year.
In the latest attack on Martinez, the CTU leadership would like us to believe it’s because Martinez has plans to close, consolidate or co-locate two or more schools into the same building for up to
100 schools. But Martinez denies he wants to close schools and has reiterated his commitment not to do so, while simultaneously supporting the CTU’s “Community Schools” funding model, which provides more funding to under-enrolled schools.
The attack on Martinez is a sign of desperation for a mayor who has two $1 billion budget deficits to deal with, both the city's and the schools', with few options. The same goes for Davis Gates, who dramatically miscalculated in raising expectations for a contract that would provide 9% annual salary increases, more staff support, greater job protections and advance a broad social agenda advocated by the union's more politically extreme members such as CTU Vice
President Jackson Potter. Martinez must be shocked at demands that he resign since the mayor’s own appointed school board, filled with CTU allies, approved his current budget 7-0. The budget spends an equivalent of $30,000 per pupil while adding 800 additional staff, including over 500 teachers. Furthermore, up to now his administration has been supporting the most important initiatives of Davis Gates and her school board allies.
Consider the following:
First, Martinez has honored the last contract, which increased CTU salaries 24% to 50% while adding 5,500 actually filled full-time staff positions. This despite the district’s chronic financial problems and the prospects of facing a major financial crisis when the COVID-19 money is exhausted. This was a 15% increase in mostly CTU member staff during a period that saw a 9% loss in enrollment. CPS has
one actual full-time employee for every 7.6 students.
Second, Martinez, like previous school CEOs, has kept near-empty schools open while refusing to consolidate or share schools or even lease them to charters. A third of Chicago’s 474 traditional, standalone public schools are half-empty or worse, and 20 operate at 25% or less. Manley Career Academy High School in East Garfield Park enrolls only 76 students but maintains 27 staff. Frederick Douglass Academy High School in Austin currently enrolls 35 students yet has 22 staff.
Third, Martinez has allowed CPS to return to the practice of social promotion to indulge the CTU’s desperation to hide poor student performance, failing schools and bad teachers. The school board's strategic plan calls for the ending of school rankings
See CTU on Page 9
Pedro Martinez | BLOCK CLUB VIA CHALKBEAt CHICAGO
Paul Vallas is the former CEO of Chicago Public Schools, the School District of Philadelphia and the Recovery School District of Louisiana. He ran for Chicago mayor in 2023.
based on performance because “parents who are dissatisfied with their school's rankings will seek a better school.” The CTU’s assault on magnet schools is an effort to eliminate school contrasts and prevent comparisons.
Fourth, Martinez has worked in lockstep with the CTU, slowly eliminating the union’s competition by capping the number of “public” charter schools and placing a ceiling on enrollments at charters, while denying facility support.
Charters educate 54,000 students, including 25% of all public high school students, yet receive less than 3% of the district's capital funding. Charters on average receive $8,600 less per pupil than district average despite being 98% minority and 87% low income.
One might understand Davis Gates' and Johnson’s fury with Martinez if he had challenged them by prioritizing the district’s interests over the CTU’s by refusing to squander one-time COVID funds on thousands of CTU positions that can’t be sustained, closing or consolidating near-empty schools or leasing them to charters, expanding public school choices by lifting the cap on charter enrollment and expanding magnet programs, or embracing high standards and restoring accountability for all.
To no one’s surprise, except perhaps Johnson and Davis Gates, Gov. J.B. Pritzker rejected their demand that he rescue them. Pritzker can’t simply provide Chicago $1 billion without adding an additional $4.4 billion to the state aid formula. Pritzker pointed out that the $2.8 billion in one-time COVID money CPS received was squandered on thousands of new fulltime positions even as enrollment dropped by nearly 40,000 and school campuses were closed for 78 straight weeks.
Davis Gates and her allies did not endear themselves to the governor while he was being vetted as a vice presidential candidate when they responded to his refusal to help by questioning his commitment to public schoolchildren, particularly Black children, and his fitness to be vice president. Davis Gates accused Pritzker of “continuing the tradition of denying funding for Black, Brown, working-class and immigrant kids in Illinois’ largest school district.”
An outrageous remark, Davis Gates’ strong criticism inspired other CTU-aligned groups to assail Pritzker. In one incident following the remark, National Black Empowerment Action Fund Executive Director Darius Jones blasted Pritzker ahead of the Democratic National Convention, accusing him of failing Black students across Illinois: “Gov. Pritzker has failed Illinois’ Black students, and he has no one to blame but himself.”
Pritzker likely feels he’s given enough. He consistently supported the CTU’s legislative agenda, including restoring the union’s power to strike for any reason while providing record increases
in school funding statewide. Illinois spends 16% to 64% more per student than surrounding states. High-poverty districts like Chicago benefit from state aid formula changes and partial protections for enrollment loss. CPS spends $30,000 per student, having seen its per-pupil funding grow by 40% since 2019.
With Pritzker closing the door to more state aid and Davis Gates failing on her promises that CTU membership would receive a new contract with considerable pay increases, more staff, and greater job security with Johnson at the helm, Davis Gates and her handpicked mayor are searching for a scape-
goat. Their scapegoat is not going to be the mayor’s appointed school board. Therefore, the rogue must be Martinez.
The CTU-generated controversy over Martinez is a continuation of the union's campaign to wreck anything that stands in their way to achieve their goals. In the process, the union has brought the district to the brink of financial collapse, undermined the quality of schools and limited school choice. As school board elections approach, Chicago residents would do well to ponder the impact a school board dominated by CTU handmaidens would have on public education in Chicago.
The Modern Law Firm.
Taft expands on Jan. 1, 2025 to the Mountain West region with the addition of Sherman & Howard, a prominent
Stacy Davis Gates and Brandon Johnson NeWSCOm
An ambitious challenge by Howard Lutnick to CME’s Treasury dominance takes a political turn
the longtime Cantor Fitzgerald CEO and close ally of Donald trump has been lining up major U.S. banks to back his plan to start competing with the Chicago-based financial services company. the other side of the aisle has taken notice.
By
The battle for market share in US Treasuries is getting an extra dose of politics.
Howard Lutnick, the longtime chief executive officer of Cantor Fitzgerald LP, has lined up major US banks to back his plan to start competing with CME Group Inc. in Treasury futures.
Now the move from one of Donald Trump’s closest allies on Wall Street is drawing attention from the other side of the aisle.
Without mentioning Lutnick or his new FMX exchange, Democratic Senator Dick Durbin of Illinois — CME’s home state — warned of risks related to an ongoing debate over how FMX plans to handle a particular aspect of the market, according to a letter to the top US derivatives regulator seen by Bloomberg News.
It all boils down to whether the US should allow Treasury futures to be cleared abroad, with FMX having partnered with UK-based clearinghouse LCH Ltd.
On the surface, the debate centers on a technicality of the derivatives market, a topic usually left in the hands of specialists. But in an election year, the issue has reverberated on Capitol Hill.
“I urge you to consider any potential risk to US regulators not having full authority over a clearinghouse in a foreign jurisdiction that is clearing US Treasury futures,” Durbin said in an Aug. 21 letter to Rostin Behnam, chairman of the Commodity Futures Trading Commission. The senator also warned about the potential impact “on the stability of our nation’s sovereign debt.”
BGC and LCH defended their plan, pointing out that their clearinghouse is fully licensed and will hold all collateral in the US. But the companies didn’t directly say where futures will be cleared. A person familiar with
the plans said the contracts will be cleared in London.
The US Treasury sells debt, seen as one of the world’s safest securities, as a way to fund America’s deficit spending. Most of it trades in the cash market, where buyers and sellers exchange securities that settle in a day, with a small percentage of the transactions being cleared by the Fixed Income Clearing Corporation, a federal organization.
Investors primarily use futures to hedge their positions in the $27 trillion market. While CME is currently the dominant player, Lutnick’s plan threatens to upend that.
CME’s market capitalization of roughly $78 billion dwarfs BGC’s $4.8 billion market cap. But FMX is gradually taking more business. Its cash US Treasury platform, FMX UST, ended the second quarter with a market share of 30%, up from 23% a year earlier, according to BGC Group, the brokerage that was spun off from Cantor and is FMX’s majority owner.
SEC moves in
The fight for control of the Trea-
sury markets deepened after the Securities and Exchange Commission pushed through new rules requiring that most cash trading be centrally cleared. That compares to just over 10% of the market that now goes through FICC, currently the only central clearinghouse for cash treasuries.
CME, Intercontinental Exchange Inc. and LCH all expressed interest in grabbing a share of that market.
But the competition doesn’t stop there. FMX is also challenging CME’s position in US Treasury futures and US interest-rate futures, with its SOFR contract expected to start trading — all in partnership with LCH, which already handles US dollar interest-rate swaps.
With all deals under the same clearinghouse, FMX says clients will receive significant capital savings on margins, the amount of money they need to put down as collateral to back their transactions.
“At the end of the day for investors taking the risk, the ideal setup is having as many products within one clearinghouse, to maximize margin efficiency,” said
Amazon closing Goose Island fulfillment center
About 200 workers at the facility are set to be laid off
By Pawan Naidu
Amazon is closing its fulfillment center in Goose Island, nearly 10 years after it opened as part of the e-commerce titan's expansion efforts in Illinois.
The company says it will not renew its lease at 1111 N. Cherry Ave. According to a WARN notice filed with the state, 211 employees are set to receive layoff notices effective Nov. 13. Amazon says they will have the option to relocate to “nearby operations sites.”
“We’re always evaluating our network to make sure it fits our business needs and to improve the experience for our employees, customers and partners,” an Amazon spokesperson told Crain’s. “As part of that effort, we've decided not to renew the lease at this facility in Chicago.”
In 2015, Amazon leased the 51,970-square-foot warehouse at 1111 N. Cherry Ave.
The company opened the facility nestled between densely populated Bucktown and Lin-
coln Park that year. It was one of Amazon's first distribution centers established within city limits at a time when the company was rapidly expanding in Illinois to meet rising demand for sameday and next-day deliveries.
Although the Goose Island facility is closing, Amazon opened a 140,000-square-foot warehouse in West Humboldt Park in October, the Chicago Tribune reports. The facility’s opening was delayed for nearly a year as the company was undergoing nationwide job cuts.
Amazon, having paid nearly $38
debt futures to be cleared offshore under the jurisdiction of a foreign regulator, a practice the US has never before approved and that is not allowed by any other major country,” Duffy said in a statement.
In a report to clients, Piper Sandler said that if the US government moves to block FMX’s use of clearing partner LCH, “we believe would ultimately lead to FMX failing to succeed” in interest-rate futures.
‘Valid argument’
“LCH will hold all futures collateral in the United States and all exchange of value will occur in the United States, as required by the CFTC,” according to a statement from BGC Group.
In a separate statement, LCH said it’s “directly registered” with the CFTC to clear futures contracts, and that it “holds all futures customer collateral in the US onshore, as required by the CFTC for the protection of such funds and assets belonging to U.S. firms.”
The clearinghouse added that its services are “subject to direct regulatory oversight by the CFTC.”
For CME CEO Terry Duffy, keeping his large share of the Treasury futures market is crucial. He has questioned whether FMX should be allowed to clear Treasury futures overseas.
“With so many challenges already facing our country, it is hard to understand why our regulators would willingly introduce an unprecedented new risk by permitting trades of US sovereign
“Although this may seem like a global economic system, it’s really US-based,” said Chris Ferreri, a former Treasury broker at ICAP who’s now chief operating officer at broker Hartfield, Titus & Connelly. “If there is a crisis, what happens? If we have a US clearinghouse that’s regulated by the US government, we’ll have a better understanding where the risk is. If we have a clearinghouse outside, how do we know?”
Ferreri called it “a valid argument in the time of great stress.”
Durbin warned that foreign regulators would prioritize the interests of their home countries, and that “could have significant repercussions to US Treasury market volatility and liquidity, and ultimately to US borrowing costs,” according to the letter.
US Treasuries wouldn’t be the first market to clear at LCH. The London-based company already handles about 98% of cleared US dollar interest-rate swaps. Lutnick and his partners also started working on FMX and its futures contracts long before he was appointed to Trump’s transition team.
Capco’s Spicer, for one, said an increase in the number of players controlling the Treasury market will be a benefit.
“It’s good to have competition,” Spicer said. “It’s best to have the risk spread out a bit, and not one dominant clearinghouse.”
million for that property, also invested millions more in developing the warehouse. The hope was the warehouse would “inspire re-
newed hope for already disadvantaged neighborhoods,” Ald. Emma Mitts, 37th, who represents the neighborhood, said at the time.
Kit Spicer, partner and co-head of finance, risk and compliance at Capco, a management and technology consulting company.
Isis Almeida, Katherine Doherty, Lydia Beyoud and Alice Atkins, Bloomberg
Howard Lutnick
BLOO m BERG
BLOO m BERG
CRAIN’S DINING AND ENTERTAINMENT SPOTLIGHT
Options for vibrant culture, delectable cuisine and unforgettable entertainment.
MARISOL RESTAURANT AND BAR
205 E. Pearson St., Chicago, IL, 60611 312-799-3599 • marisolchicago.com
Located in the Museum of Contemporary Art, Marisol Restaurant & Bar is a unique extension of the contemporary art experience. Featuring an innovative, seasonal menu from James Beard Award-winning Chef Jason Hammel and an immersive interior designed by renowned artist Chris Ofili, Marisol is perfect for business lunches, special occasions, or any event requiring a private dining space.
MORETTI’S RESTAURANTS
Visit our website for our locations across Chicagoland morettisrestaurants.com
Moretti’s was founded in Chicago and is 100% family-owned and exclusive to the Chicago area. The original Moretti’s is on the northwest side of Chicago. Ten other locations serve the north and west metro area. Moretti’s original family recipes range from traditional to the latest delicious trends. All ingredients are fresh, and everything is handcrafted to order.
ROANOKE
135 W. Madison St., Chicago IL 60602 312-361-3800 • theroanokerestaurant.com
Excellent service and a top-notch culinary program have made The Roanoke a staple restaurant in the Chicago Financial District. The menu boasts artisan comfort food, signature rotisserie options and hand-crafted cocktails. Available for brunch on the weekends, lunch, dinner and happy hour during the week. Inquire about private parties for up to 250 guests.
Plan revamped for former orphanage in Wicker Park
Neighbors are looking into asking a court to issue a temporary restraining order to delay a zoning change that’s needed for the project
By Dennis Rodkin
The developer who wants to buy a partially rehabbed historical orphanage building in Wicker Park — whose conversion into a giant single-family home stopped years ago — revised his plan in ways that might make it more palatable to the surrounding community.
Even so, a neighborhood preservation leader describes aspects of the proposal as an “architectural insult.” He also says neighbors are looking into asking a court to issue a temporary restraining order to delay a zoning change that’s needed to make the project happen.
The 118-year-old building at 1239 N. Wood St. was originally the Marks Nathan orphanage for Jewish children, mostly refugees. It later housed Polish American veterans for half a century, then was an art gallery and live-work artists' housing in the early days of Wicker Park’s revival as a hip neighborhood.
McKenzie Maher and Michael Mertz, who paid $3.1 million for the 22,000-square-foot building in 2014, did not complete their planned conversion into a large single-family home with two rental apartments on the ground floor before putting it up for sale at $8.4 million in 2021. They later cut the price to $6.7 million.
After several years waiting for a buyer who might continue their plan, the couple has a contract to sell it to Chicago Pro Builders, which plans 26 units of housing in the building and an addition. The contracted price has not been made public. Mertz told Crain’s in July "we truly want what's best for the community," which is "to have that architectural building in use. We tried to find a single user,” but none materialized.
Alderman delivers proposal
The new plans from Chicago Pro Builders are being sent by 1st Ward Ald. Daniel La Spata’s office to residents. Currently, the building is three stories with a partially enclosed rooftop garden on the fourth level. The new proposal includes fully enclosing the garden to create a fourth floor, but an earlier plan to add a fifth was eliminated when the developer determined shoring up the foundation to support the weight was cost-prohibitive, a source close to the project told Crain's.
The most notable revisions are
to the proposed new structure built in the L formed by the existing building’s south and east wings. It would now be set back a few feet, rather than aligning with the sidewalk presence of the 1906 building, and finished with materials different from those on the historical structure, an effort to delineate old from new.
Separating historic from new
In Chicago Pro Builders’ earlier proposal, the top-floor addition and the new structure were designed to make it look almost like a single building. Separating historic from new is a standard goal in historic preservation, because as a U.S. Department of the Interior document explains, “a new addition has the potential to confuse the public and to make it difficult or impossible to recognize what part of the historic building is genuinely historic.”
Uros Pantelic, principal of Chicago Pro Builders, declined to comment, as did La Spata’s staff. Both the original and the revised designs are by Chicago firm Laszlo Simovic Architects.
Ed Tamminga, director of preservation and development at the Wicker Park Committee, the neighborhood civic group, said making the rooftop a finished floor amounts to “an architectural insult to this building,” whose neoclassical facade includes notched brick corners designed to suggest pillars, with carved stone capitals.
Adding a new top floor wrapped in stucco or some other material, as seen in the new plans, "is not right,” Tamminga said.
The cladding for the proposed addition appears from the plans to be multi-hued metal panels, while the original plan showed a cream-colored stucco or Dryvit like what would be added to the top of the historical building.
Changes to the look of the courtyard addition “improve it, but we don’t want it,” Tamminga said. With the addition, the site “would be too dense for the neighborhood,” he said. Most of the properties on the adjacent blocks of Wood Street are singlefamily homes, with one fourstory historical loft building across the street from the old orphanage.
Tamminga doesn’t live in the immediate vicinity; his home is about a mile away, according to public records.
Pantelic also submitted a re-
quest to City Hall that seems designed to resolve a legal hangup with the building. On Sept. 18, he applied to the City Council’s Committee on Zoning, Landmarks & Building Standards to have the site downzoned to RS-3, limited to single-family homes.
The downzoning was an issue in the lawsuit several Wicker Park residents filed earlier this year. When seeking approval for their rehab in 2015, Mertz and Maher agreed to get it downzoned to single-family but never followed through. The lawsuit, which is still pending in Cook County Chancery Court, sought among other things to get them to do the down-zoning. Now Chicago Pro Builders has done it.
But it’s little more than a procedural step. The Chicago Pro Builders documents La Spata’s office is circulating show that if that goes through, the developer will then seek RM-6 zoning, which allows slightly more density than the building’s present RM-5. Under RM-6, housing units require a minimum lot area of 300 square feet, but in RM-5 the lot minimum is 400 square feet.
The new building design is seen in the first rendering above, with the older version seen in the one below. LASZLO SImOVIC ARCHItECtS
In an interview with Crain’s sister brand pensions & Investments, the co-founder and chief investment officer of his eponymous firm discusses push-and-pull in the industry, stock strategies and his own journey
Dmitry Balyasny predicts the fight for talent “stays hot” in multistrategy hedge funds as long as returns remain steady and firms continue growing.
“What’s been happening is somewhat similar to sports teams, where the percentage split between the owners of a ball club and the players hasn't really changed that much, but the salaries have gone up a lot, right? Because the value of the teams has gone up a lot,” he said. “So the numbers are just bigger … it’s the same thing in funds.”
Balyasny co-founded his eponymous firm, Chicagobased Balyasny Asset Management, in 2001 along with Scott Schroeder and Taylor O'Malley, and serves as CIO. The multistrategy, multi-portfolio manager hedge fund runs approximately $21 billion in assets. Today the firm has 170 teams across strategies including long/short equities, equities arbitrage, macro, systematic, commodities and growth equity and over 2,000 employees globally.
Over the last 23 years, the multistrategy hedge fund sector has grown tremendously and today is the industry’s secondlargest strategy segment after long/short equity funds and accounts for over $700 billion in assets, according data from Nasdaq’s eVestment.
Balyasny, who has a calm demeanor and precisely answers questions, has had a front row seat to all the changes. His own firm started with $40 million in assets under management.
Balyasny said during a recent interview at the firm’s New York office that his firm's growth is “governed by our ability to put up consistent alpha returns ... and then you earn the capacity to grow a little bit again the next year."
To him, it makes sense that multistrategy funds could become the largest percentage of the industry, “similar to what you see in private equity and other businesses, where there’s a lot of consolidation and most of the AUM eventually goes to half a dozen firms that are good at managing strategies as opposed to running one strategy,” he said.
Balyasny said his focus is on putting up good returns, and part of that is conducting capacity exercises several times a year. “We’re closed, and we’re really trying to optimize the return on the capital that we have.
Whenever we have some gap between where we’re modeling out the capacity and what we’re running, then we open up for a little bit,” he said.
Balyasny’s flagship Atlas Enhanced Fund was up 5.5% through June, according to numbers viewed by Crain's sister brand Pensions & Investments.
The PivotalPath multistrategy index was up 6.1% through June.
Atlas Enhanced returned 2.7% in 2023, 9.7% in 2022, 7.8% in 2021 and nearly 34% in 2020. The firm had a bad year in 2018 when it lost over 6%. It has returned an annualized 12% since inception in January 2006.
Concern over leverage
One concern institutional investors have raised about multistrategy funds is the amount of collective leverage they use and what would happen if a largescale deleveraging event occurs.
Balyasny said there is a risk, but he thinks about it more as a correlation risk. “There’s no investment strategies that I’m aware of that doesn’t have correlation to multiple other shops doing the same strategy,” he said.
Diversifying portfolios by strategies, positions, teams, and tight risk constraints are key, he said, pointing out that within the firm’s macro strategy there are
10 different substrategies.
“There’s no foolproof answer to it,” he said. “You have to risk-manage, and you have to react to what’s going on in the markets. From an industry perspective, everyone has pushed out their liquidity (with longer lockups). So, I think all the larger firms have multiyear liquidity. So even if there is a real industrywide drawdown shock at some point, which I’m sure there will be someday, the ability of firms to weather that is much better today than it was before.”
Finding and paying for talent
Fifteen years ago, when hiring for equity portfolio managers, finding a qualified person who ran $300 million was great. Now “you’re hiring folks that run $3 billion. So, of course, they’re going to get paid more if they do well,” Balyasny said.
Last month, Bloomberg reported that Balyasny is set to spend over $200 million to recruit senior money managers who may have worked at rival firms including Citadel, Millennium Management and Point72 Asset Management.
Balyasny says his firm typically spends about 1% of assets under management annually on talent acquisition.
“In percentage terms, the amount that we spent on comp
strategy, that's really significantly more upside,” he said. “And so, we look for ambition and evidence of that … even if it’s at smaller scale.”
Balyasny focuses a lot on the psychology of individuals to understand if they have a good mix of confidence and humility to take meaningful risk but also have a flexible mindset.
“We look a lot for people that have overcome difficult challenges and circumstances over time, so that they’re resilient,” he said, adding, “markets are tough.”
The day Balyasny met Pensions & Investments he was up at 5:30 a.m., and after dropping his kids off at their first day of school, he had an equities portfolio manager meeting, attended a trading and markets discussion, an investment committee meeting, two portfolio manager catch-ups, and then trading until the market close and a business meeting. It was unusual that he did not have a recruiting interview that day, he said.
has been very consistent over the years,” he said. “Maybe it’s gone up a tiny bit, but very, very consistent. But the fund is five times bigger than it was 10 years ago.”
He added, “We’re not the biggest player in our corner of the industry … We’re never going to win because we’re going to pay a lot more than a larger competitor. They can always, and in most cases do, pay a lot more than we do.”
Balyasny typically has two to three job interviews scheduled a day during the fourth and first quarter of the year, he said.
Recruiting is “essential to business building and just making sure we have the best possible people in every seat. So, I spend a lot of time doing that,” he said.
Personal journey
At 18, Balyasny got his foot in the door in finance with a job at a brokerage firm in Chicago. “I knew I wanted to invest and trade,” he said. And by his early 20s, he ran a small group within the brokerage firm.
“If we can find somebody who, in addition to that (being a good portfolio manager in their own right), really has businessbuilding DNA, where they can build a significant team over time, maybe they can run a division, maybe they can run an office, maybe they can run a
“When we started, the vast majority of my business-building was directly trading in the markets,” he said. “Now I still do that, but I’d say the bigger influence is on working with the leaders of different areas to build businesses within the business.”
‘Very interesting’ time for stock picking
Balyasny’s roots are in long/ short equity investing, and today that makes up 40% to 50% on a risk-adjusted basis of the firm’s investing depending on the opportunity set, he said.
“Stock picking right now is very interesting,” he said, adding that investors can add a lot of value when there’s a lot of change happening.
“Between all the AI and technology changes, on the one hand, all the macro, interest rate, recession-no recession changes, and the election now, you’re going to have a lot of change,” he said. “And so every day there’s fresh data points, there’s a lot of surprising news, there’s a lot of technology developments.”
Balyasny said it’s “very hard” to make large bets on the U.S. election because of the inherent uncertainty around the result and how markets will react to the outcome.
“People might take slight tilts here and there if they feel like it’s a somewhat asymmetric outcome in a particular investment. But, overall, we just try to kind of stress manage to make sure we don't have too much
By Lydia Tomkiw, Pensions & Investments
Dmitry Balyasny ARNOLD ADLER
tail risk in any particular outcome,” he said.
In the near term, Balyasny thinks that AI will be a strong research assistant for investors.
“The further out levels, I think, are harder, right, because at some point can the AI become smarter and figure out which questions to ask, ask the questions and come up with its own conclusions which are actually worthwhile? You would think the answer to that eventually is yes, but we have no idea if eventually is in a couple years or in 20 years or in 200 years,” he said.
As new iterations develop, Balyasny imagines AI could go from an assistant to a good junior analyst and maybe even one day a senior analyst.
“I don't know how long it’ll take to be a good portfolio manager. My guess is a long time,” he said. “Because the rules for what makes stocks go up and down, outside of extreme circumstances, you know, change quite a bit.”
Amid all the change, institutional investors have the same concerns they have had historically, Balyasny said.
“Being an institutional investor is a challenging thing, because you're trying to constantly find really uncorrelated alpha at a meaningful enough scale to make a difference to a large pool of capital. And that's hard to do,” he said. “There’s just not that many great sources of alpha that have lots of capacity. And so, you know, I think they’re always concerned rightly so about the correlation in their portfolios.”
About 70% of Balyasny's assets are managed for institutional investors.
Finding investments that don’t have easily replicated factors and are not limited by capacity is difficult, he said.
“We’re doing that all the time — trying to find new teams that are bringing something different to the table, and trying to build out businesses and infrastructure around them to create a sustainable moat around their strategies,” he said. “And you know, we do that with the benefit of several thousand people, and it’s still very hard.”
Fees and cash hurdles
In recent months, a large number of institutional investors and consultants have signed on to a letter demanding cash hurdles with hedge fund fees. Multistrategy funds have employed a pass-through fee structure where managers pass along expenses to their underlying investors.
Balyasny says investors want to make sure they are aligned with their managers.
“I think the pass-through structure is the most aligned structure that there is because the management company doesn’t really make any significant money until everyone else has been paid. And so you’re very aligned with wanting to have the best possible teams in every area, but you don’t want
to overpay them because you’re just cutting your own compensation, your own ability to deliver good net return,” he said.
He added, “it governs your capacity because the vast majority of your earnings are from your net incentive fee. And so if you’re just going to take on a lot more assets, you’re just going to make less money at the end of the day. So it’s actually much more aligned than I think virtually any other investment structure is.”
Hedge funds miss out on ‘some really smart kids’
Balyasny’s start in the hedge fund industry came after he read a newspaper ad that led to a job at Schonfeld Securities. While cold-calling and answering job ads worked for him, he said it is not a “scalable” method for students interested in careers in finance who want to break into the industry but have no connections.
“The industry misses out on some really smart kids,” he said. It led him to launch the Atlas Fellows Program that offers scholarships and paid internships with financial services firms, including Balyasny, to students interested in careers in finance. The program has over 100 students and the first group will graduate next year.
And Balyasny is focused on talent at all levels. This year, his firm had 125 summer interns and is doing more recruiting for students straight out of undergraduate programs, Balyasny said.
Balyasny grew up in what was then Soviet Ukraine, and at age 7 in 1979 his family immigrated to the U.S. from Kyiv during a period of large-scale Jewish immigration from the former Soviet Union. They landed in Chicago not speaking any English. The immigration experience and early years in a new country built his resiliency, he said.
“It gives you a certain drive because you start without much, and everyone you know is in the same position,” he said. “And the only way you kind of get to a more a comfortable life where you’re not worried about how you’re going to pay the bills this month is you really have to step up and achieve something. So there’s like an inherent kind of drive and grit that is difficult to teach.”
And those lessons also translate to markets, Balyasny said.
“There’s a lot of times where whatever you used to do stops working. You have to figure it out, whether that’s somebody’s individual trading or building out a new business or a new strategy, or your overall fund ... they constantly need to be iterated and reinvented and approved. And you need a lot of perseverance to do that over, you know, many, many years.”
Russia’s February 2022 fullscale invasion of Ukraine created knock-on impacts across global energy and commodities
markets. At the time, Balyasny Asset Management had a fairly new commodities business and Balyasny said there were opportunities due to wild moves and dislocations in commodities markets.
“I think markets have sort of gotten used to it,” he said. “We still do a lot of stress testing for various escalations … but now it’s less of an issue from the market standpoint.”
Balyasny, who no longer has any family in Ukraine, returned once about a decade ago for a visit with his family. Both he and his firm made charitable humanitarian donations at the outset of the war, he said.
He said his best guess to how the current war ends is that eventually a settlement will be reached.
The next 10 years
Over the next decade, Balyasny plans to build a more diverse firm.
“Today, I’d say we have a few top-notch businesses and a lot of newer businesses. And I think in 10 years, we want to be known as amongst the best in every strategy that we're in,” he said, pointing to equities and macro as established, mature businesses that make up twothirds of the firm. Emerging strategies include commodities, systematic and equity arbitrage businesses, he said.
For some strategies, such as agricultural commodities for example, it is “very difficult to have an independent fund,” Balyasny said, pointing to the infrastructure, technology, data and weather teams needed as well as the volatility investors must tolerate.
“It’s just a very hard separate business. So strategies like that where there’s a lot of seasonality, right? There’s big chunks of the year where there’s just a lot less to do than other parts of the year,” he said, adding “when it's part of 170 teams, it’s great because it’s totally uncorrelated. You can allocate capital, more capital, when there's more opportunity.”
“We might make changes at the PM level. If somebody’s not performing for an extended period of time, we might make changes in the approach and iterate the strategy,” he said.
“But the only way you build a moat and really deliver consistent, high, Sharpe returns is you have to be in these businesses for decades, and you just get better and better at it every year. And they take a long time to really build a real competitive advantage in something.”
BAM now has 20 partners and Balyansy wants to add more over time.
At 52, Balyasny has no plans to slow down or retire.
“I foresee more senior folks running large portions of the business,” he said. “But I don't intend to go anywhere for a while.”
Lydia Tomkiw writes for Crain's sister brand Pensions & Investments.
County tax break helped Chicago land a quantum campus
the new incentive was projected to provide developer related midwest with a $175 million property tax reduction over 30 years
By Justin Laurence
The Cook County Board of Commissioners has followed through on a commitment to create a new property tax incentive that helped Chicago land the massive quantum computing campus at the former U.S. Steel South Works site on Lake Michigan.
The new Class 8 MICRO incentive provides property tax relief by reducing the tax rate at the site from 25% to 10% for 30 years. The incentive cannot be renewed.
It was approved in a voice vote without objection.
“This is part of our effort to support the attraction of PsiQuantum, a quantum computing company, to the Southeast Side of Chicago,” Cook County Board President Toni Preckwinkle said ahead of the vote.
The property tax relief helped land the 128-acre campus that will be anchored by Psi-Quantum to the South Works site over another in suburban Lockport.
After the county’s approval of the new class of tax incentive, Chicago’s City Council must still approve a resolution providing the tax relief for developer Related Midwest at the site, but city officials have already endorsed the proposal.
A spokesman for Mayor Brandon Johnson previously told Crain’s a city analysis projects a “total benefit of more than $175 million” over the life of the 30year tax incentive.
Johnson has also pledged $5 million toward the project from proceeds from the sale of bonds as part of his housing and economic development bond plan approved in the spring. The county is directly providing $5 million toward the development.
Related Midwest is expected to
submit an extensive zoning application to the city in October, and President Curt Bailey previously said the developer is working on a quick timeline to erect the campus.
“We are looking at having the facility up and running in 2027, which is about as fast as you can go,” Bailey said when the project was announced.
The new tax incentive was created as an alternative to creating a new tax-increment financing district at the site because the Johnson administration was hesitant to continue to rely on TIFs for economic development. The new incentive provides more direct relief to the project without the need for an extensive redevelopment agreement that would outline the infrastructure projects the potential TIF revenue would cover.
The state is also providing significant taxpayer dollars to the project, which will be anchored by PsiQuantum’s 300,000-squarefoot facility that is expected to employ up to 150 people within five years.
Gov. J.B. Pritzker predicts the campus will make Illinois “the undisputed leader of quantum computing,” ultimately attracting more than $20 billion in private and public investment and thousands of jobs.
The state will provide $200 million to PsiQuantum in grants, workforce development assistance, a low-interest loan and other incentives in exchange for a minimum investment of $1 billion by the company.
The state will spend another $300 million to build out what it’s calling the Illinois Quantum & Microelectronics Park, much of it for a large cryogenic facility, and provide $200 million in matching funds.
A rendering shows the Illinois Quantum & Microelectronics Park on the 160-acre former U.S. Steel site along Lake Michigan on the Far South Side. | pSIQUANtUm
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Empty Skokie tech park building is heading to the auction block
By Danny Ecker
After cashing out with a big profit on most of the Illinois Science & Technology Park in Skokie, a local developer has put the rest up for auction to see if investors are as pumped about life sciences properties as they were during the COVID-19 pandemic.
Skokie-based American Landmark Properties has hired real estate services firm Jones Lang LaSalle to seek a buyer for the building at 8030 Lamon Ave. in the northern suburb, according to a marketing flyer. The developer spent nearly $21 million in recent years redeveloping the 1970s-built, 135,851square-foot building with space suitable for life sciences research, the flyer said, betting that biotechnology, pharmaceutical and other types of companies hunting for wet lab space would fill it.
But the three-story property remains vacant today, and American Landmark is looking to unload it amid a sluggish period for commercial property dealmaking. JLL has set an online auction from Oct. 2830 for the building and an adjacent 1.3-acre land parcel that could be developed with a parking structure, the flyer said.
Putting the property up for bidding could be a sign of subdued investor appetite for life sciences research facilities. Auctions are typically a last-resort option for sellers, often indicating the lack of buyer interest in a deal that would otherwise be coordinated by a broker.
American Landmark had no trouble selling the majority of the ISTP campus in 2021. Chicagobased Singerman Real Estate paid $75 million for the life sciences lab portion of the park, and a Florida real estate firm bought a fully leased office building on the site for just more than $36 million. Those deals completed a lucrative cash-out for American Landmark, which bought the entire campus in 2017 for $77 million.
But the 8030 Lamon building could be a tougher sell. Not only have higher borrowing costs
EXODUS
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and Boston, Chicago lost more tax filers than it gained each year between 2014 and 2022.
Meanwhile, Sun Belt cities such as Dallas, Tampa, Fla., and Charlotte, N.C., posted net gains in tax filers each year during the same period, Brookings showed. The inflow nearly doubled for Dallas during the pandemic.
Siren song of South Beach
The most famous move by a Chicago tax filer during the pandemic was hedge fund titan and Florida native Ken Griffin, who moved to the Miami area. He wasn’t the only one. It felt almost like every startup founder in Chicago headed for South Beach.
slowed dealmaking, but some new lab buildings that have gone up elsewhere in the Chicago area over the past few years haven't found the surge of demand developers were expecting.
The local life sciences property vacancy rate was 40% as of the middle of this year, according to a recent report from real estate services firm CBRE, dwarfing the 17% average vacancy rate among the 13 top life sciences markets nationwide tracked by the brokerage.
That's a deflating statistic for developers that have bet on Chicago's life sciences sector to help retain more locally grown pharmaceutical and biotech companies. A lack of high-quality lab space in the area is a key reason many such startups born at Chicago-area universities eventually move to more mature life sciences markets like Boston and Raleigh-Durham in North Carolina. Developers stepped up during the public health crisis as more investors backed life sciences research. Multiple wet lab buildings are now in the Fulton Market District: Chicago-based Sterling Bay developed an eight-story research building on the city's North Side to try to jump-start its Lincoln Yards megaproject, and a 13-story lab building near the University of Chicago campus is set to be completed by the end of this year.
With those disparate nodes of research space popping up, American Landmark's offering will test whether real estate firms see more life sciences demand in the pipeline in Skokie.
A spokesman for American Land-
The number of net new tax filers moving from Chicago to Miami nearly doubled from 2019 to more than 1,200 a year in 2021 and 2022, according to data provided by Berube.
Miami was the top destination for New York tax filers on the move, with about 13,000 more people leaving than arriving in 2022. No two cities saw a bigger increase in the net numbers of people moving between them, according to IRS data.
Kevin Smith, CEO of Number Project, which puts on private and corporate events, was among those who moved from Chicago to Miami during the pandemic. He recently moved back.
“It seemed like every entrepreneur I know moved to Miami. A lot of people thought, ‘I’m going to live here forever,’ ” he says.
mark did not respond to a request for comment.
JLL frames 8030 Lamon as a mostly blank slate for a buyer. American Landmark added a new glass curtain wall, new elevators, a revamped lobby, a tenant lounge and conference center and built out a small move-in-ready wet lab space. All other spaces for prospective new tenants are in "cold shell condition," the flyer said. The building is zoned for uses including wet lab research, manufacturing and office and is part of a campus that is otherwise 96% leased, according to JLL. Marketing materials play up strong interest from other sciencebased tenants at ISTP in recent years, including clean-tech company LanzaTech Global, which is headquartered there and dramatically expanded its footprint on the campus last year. That helped fill space with chemistry design company NuMat Technologies departing the campus for a new home in Humboldt Park.
American Landmark is wellknown locally as the former owner of Willis Tower, having been part of a joint venture that sold the city's tallest building in 2015 for $1.5 billion. The developer earlier this year lost the massive Schaumburg Towers office complex in the northern suburb to foreclosure. The firm also owns a pair of office buildings in Oak Brook.
JLL brokers Sam DiFrancesca, Pat Shields, Jaime Fink and Bruce Miller are marketing 8030 Lamon for sale. The October auction is slated to run by RealInsight Marketplace.
“That didn’t happen. People with kids stayed there, but a lot of the others moved back.”
For Smith, more of his business is based here than there.
“I think most people are buying second homes (in Miami),” he says. “What you hate about Chicago winters, you hate just as much about Miami summers. A lot of people found you can live between the two cities. COVID taught us you don’t have to live in either place full time.”
Whether they claim Chicago or Miami as their primary residence is another matter. Florida, which has no state income tax, has long been a popular change of address for Chicagoans of upper income brackets. Berube notes, however, "more people leave Chicago each year for Dallas, Phoenix, Denver and Tampa than leave for Miami."
8030 Lamon Ave. on the Illinois Science & Technology Park in Skokie | JONES LANGE LASALLE
PEOPLE ON THE MOVE
ARCHITECTURE / DESIGN
Gensler, Chicago
Joey Lawton has joined Gensler as Creative Director focused on experiential branding design. He has a passion for creating multimedia immersive experiences that connect people to spaces, brands, and each other. Joey’s 18year professional journey includes founding the acclaimed experiential design studio Media Objectives, where he led placemaking, exhibition, wayfinding, and brand identity projects for global brands, earning numerous accolades from SEGD, AIA, and Interior Design magazine.
COMMERCIAL REAL ESTATE
Brennan Investment Group, Rosemont
Jack Brennan joins Brennan Investment Group as Managing Principal. Jack will assume overall responsibility for sourcing new investment opportunities and will oversee the Midwest Region’s 30 million square foot portfolio. Jack joins Brennan following 12-year career at CBRE, where he served as Senior Vice President, co-leading a six-person industrial landlord and tenant representation team. During his time with CBRE, Jack orchestrated over $1B in transactions across the nation.
ARCHITECTURE / DESIGN
Gensler, Chicago
Craig O’Halloran has been named Global Professional Services Practice Area Leader at Gensler. Bridging his diverse background in architecture, interior design, and branding, he is a trusted client advisor with a track record of tailoring workplace experiences for management advisory firms. Craig connects business and cultural communities as President of Ireland Network Chicago, recently organizing Irish leaders for a panel discussion on the future of work in the Loop.
CONSULTING
Bluedog Design, Chicago
Graham Ebetsch formerly of Kaleidoscope, joins Chicago’s leading growth consultancy and brand strategy firm Bluedog Design as Executive Director, Brand Vision & Design. With extensive experience in diverse segments, and legacy brands such as Molson Coors, Doritos, and Starbucks, Ebetsch will elevate and extend Bluedog’s design capabilities by championing clarity and making strategy visible as they create, reimagine and revitalize the way their clients’ brands show up in the world.
ARCHITECTURE / ENGINEERING
Klein & Hoffman, Chicago
Klein & Hoffman announces Allysia C. Youngquist, RA as its new President, succeeding Peter Power, RA. Allysia, who joined the firm in 2002, was promoted to Principal in 2022, leading the building enclosure, roofing, and waterproofing department. She holds a Master’s in Architecture (structures option) from the University of Illinois and is licensed in 16 states. Allysia is an active member of IIBEC, AIA, CRCA, WIRE, and NRCA. Her leadership will drive K&H toward continued innovation and growth.
CONSULTING
Guidehouse, Chicago
Guidehouse, a global consultancy providing advisory, digital, and managed services, has appointed Jeff Zych as a partner in its Financial Services segment as the new Insurance leader. Formerly serving as a partner at Fortune 100 technology and services company, Jeff brings 25 years of experience to Guidehouse across areas of risk, enterprise operations, finance, and IT for life, health, and property and casualty clients.
FINANCIAL SERVICES
LGIM America, Chicago
LGIM America (LGIMA) is pleased to announce that Felipe Telles, CFA has joined the firm as a Senior Portfolio Manager. In his role, he works as part of the Portfolio Management team to invest client portfolios consistent with LGIM America’s investment strategy views. In addition, he shares responsibility for marketing and client service requirements and mentors junior associates.
LAW FIRM
Fairchild Duarte & Beres welcomes Michael Warren to the firm as an associate in the finance & liquidity solutions practice group. Michael represents clients in sophisticated transactions and general corporate matters, with a primary focus on debt financing across a broad spectrum of credit facilities.
LAW FIRM
Marshall, Gerstein & Borun LLP, Chicago
Earlier this year
Michael R. Anderson joined Marshall Gerstein as an associate. Michael focuses on domestic and international patent preparation and prosecution within the Electrical & Computer Technologies Group. Michael holds a J.D., cum laude, from Chicago Kent College of Law and a B.S., cum laude, in electrical engineering and music performance from Valparaiso University.
LAW FIRM
Marshall, Gerstein
Earlier this year
Theresa Stadheim joined Marshall Gerstein as Special Counsel. Theresa is a patent attorney who focuses on drafting and prosecuting applications in wireless technologies, artificial intelligence, machine learning, and memory devices. Her interest in patent law began during her career as an electrical engineer, where she worked closely with in-house patent attorneys to understand innovation protection. She earned her J.D. from the University of Minnesota.
LAW FIRM
Earlier this year Christopher Hall joined Marshall Gerstein as an associate. Chris is an intellectual property litigation attorney focusing on complex cases before federal district courts, as well as the International Trade Commission and the Patent Trial and Appeal Board. He has extensive experience in depositions and works closely with expert witnesses, drafting key legal documents. He earned his J.D. from the University of Michigan Law School.
Comcast, Chicago
Grace Hong Duffin has been named Vice President of External and Government Affairs for Comcast’s Greater Chicago Region, which spans Illinois, Northern Indiana, and Southwest Michigan. In her new role, Hong Duffin will lead the region’s Government Relations team and its Community Impact team. Her responsibilities include franchising activity, compliance, third-party relations and community investment initiatives, including the company’s long-standing commitment to digital equity.
To order frames or plaques of profiles contact Lauren Melesio at lmelesio@crain.com
Marshall, Gerstein & Borun LLP, Chicago
& Borun LLP, Chicago
Croke Fairchild Duarte & Beres LLC, Chicago
Croke
had previously served as CEO of TD Ameritrade. He attributed his ability to adapt to a changing situation calmly to his background in hockey, which he played through his senior year at Cornell University.
“I can adjust well to those situations and get myself mentally ready,” he said. “I have that skill to stay calm. When things get more emotional, I get calmer. It drives my wife crazy.” He spent his first few months focusing on limiting expenses and boosting the company’s profit margins. He also looked to slow down the pace of dealmaking, particularly acquisitions he felt took the company’s focus away from its core trading business.
‘Integration fatigue’
“It wasn't clear where it was going,” Tomczyk said. “The organization had a bit of integration fatigue. Going forward we will be much more thoughtful about how we allocate our scarce resources (with) our capital.”
Tilly had taken a big swing on the M&A front with the 2022 acquisition of cryptocurrency trading platform ErisX. It took a non-cash write-off of $460 million on the acquired business just a few months later after the meltdown of major crypto exchange FTX raised questions about crypto's future. Under Tomczyk’s leadership, Cboe folded the rebranded
FESTIVAL
From page 3
around the city between Oct. 16 and Oct. 27, marking a return to the remarkable volume on-screen during the festival’s golden years before the COVID pandemic.
Film fans today have a choice of hundreds of festivals around the nation, with some 50 in Chicago alone each year outside this international competition, ranging elsewhere from New York and San Francisco to Telluride and Tribeca.
And after 60 years, Kutza hasn’t gone away. He’s 82 now and still lives in Chicago, carrying the title of emeritus CEO since his retirement in 2018. He’ll be onstage closing night for the last show to be seen, the premiere of director Robert Zemeckis’ new feature “Here,” to present Zemeckis — best known as the creator of “Forrest Gump” and “Back to the Future” — with the Founder’s Legacy Award.
Fundraising expansion
For years the film fest here was run on a shoestring by Kutza, who depended on the goodwill of both Hollywood talent — director Martin Scorsese premiered his first film, “I Call First,” way back in 1967 — and such international luminaries as Abel Gance, Mike Leigh, Rainier Werner Fassbinder, Wim Wenders and Francois Truffaut, all willing to travel
ErisX digital business into its global derivatives and clearing businesses and closed its spot digital asset trading platform, a move the company said will save $11 million to $15 million per year.
Cboe’s stock has risen about 40% in the year since Tomczyk took over.
The company also has been aggressive in returning cash to shareholders, boosting its share repurchase plan by $500 million and increasing its quarterly dividend to 63 cents a share.
Working to give international traders from countries such as Japan, India, Australia and Canada access to Cboe’s products is one of Tomczyk’s key goals to promote growth.
He noted the company’s recent deal for a minority stake in Japannext, a provider of proprietary trading systems and other financial technology services, was critical to growing Cboe’s presence in the Japanese market, a country where it already has made investments to capitalize on the changing economy and regulatory structure.
In addition to growth from foreign markets, Tomczyk also is looking to capitalize on the rise of retail investors in options trading, who had often stayed away from risky markets but are now able to develop personalized trading strategies that can be executed from their phones.
A shortening of the timeframe positions have to be held through the development of products such as zero-dated op -
to Chicago to show off their work. In addition to the award to Zemeckis this year, Hollywood star Mike Myers will get a career achievement award on the first Saturday night of the festival.
The presenting organization of the festival is Cinema/Chicago, which maintains an aggressive schedule of events — including the CineYouth Film Festival in April and Summer Screenings — throughout the year with a staff of just 11 people plus another 60 seasonal employees who come in for the festival, all on a minuscule budget of $2 million annually.
Cinema/Chicago is announcing this month that it is receiving the first sizable gift in its history, a $2 million endowment from the Robert & Penelope Steiner Family Foundation, which is better known for big contributions to the Art Institute of Chicago and the Lyric Opera of Chicago. The donation is officially supporting the position of festival artistic director, a post held by Mimi Plauché, an 18-year veteran of Cinema/Chicago, but the managing director, Vivian Teng, has even bigger ideas.
“We’ve never had any endowment before,” says Teng, clearly envious of the lofty fundraising accomplished by other arts organizations, including the Goodman and Steppenwolf theaters, around Chicago. “This starts off our first endowment, and we plan to build on it. We are in discussions to expand our fundrais-
tions also has helped enable individual investors to trade in markets that had been traditionally limited to institutions and professionals.
“The retail brokerage side is driving much of the growth,” Tomczyk said. “Whether it's Robinhood, Charles Schwab, Fidelity, Tastytrade, they are all getting much more people investing for themselves.”
Smaller than its rival
Despite the rise in trading volumes, Cboe is still smaller than its rival CME, and its reliance on its most popular products has raised concerns about its long-term prospects, analysts have said. Still, the consensus recommendation on Cboe’s stock is a buy, according to Nasdaq.com’s tracking of 16 research analysts.
Outside of a few board positions, Tomczyk, 69, had been retired for seven years before becoming Cboe’s CEO. He said he does not have an exit strategy yet but is working to develop talent within the organization so someone will be ready when the time comes for him to step down.
Until then, he is happy to take advantage of the market structure favoring Cboe and the growth of options trading.
“We should lean in to that and go with it,” Tomczyk said. “I have always had this view that if you line yourself up with the secular trends, then the wind can be at your back. It is much easier to grow if it is at your back.”
ing in the future. Our hope is that this will inspire others to give.”
Forecasting success
Teng is forecasting the sale of 40,000 tickets through the upcoming festival, a solid number by historical standards, and evidence that the proliferation of streaming series on TV hasn’t cut into the festival audience. About 25% of the tickets are being sold to people coming from outside Chicago, including a sizable contingent from overseas. The festival this year will feature films from 50 countries; in fact, 75% of the festival comprises foreign films, making Chicago one of the most international events in the U.S.
It hasn’t been easy for Plauché and her staff, for festivals function in a highly competitive field in which organizers vie for premieres of new works and attendance on their red carpets by Hollywood glitterati. If a film new this year has already been seen at Toronto and Sundance in recent months, some of the air is let out of the Chicago experience.
But serious students of film, even academics, are drawn to Chicago for its unique retrospectives. This year, for instance, Plauché will screen a half-dozen selected films from the Japanese master Koreeda Hirokazu. The lineup includes works from Hirokazu shown at past festivals, including “After Life” (1998), “Nobody Knows” (2004) and “Shoplifters” (2018). He will get a career achievement award on
FUND
From page 3
cutting-edge automotive supply chain that keeps the country competitive and underpins our economic and national security,” the group's president and CEO, John Bozzella, said in a statement.
“The automotive supply chain is made up of hundreds of companies — many small and medium-sized businesses," Bozzella said. The fund "is an option for smaller auto businesses to access private money to modernize and support the production of the vehicles of today — and tomorrow.”
Monroe will begin raising money from institutional investors immediately, including auto industry sources such as original equipment manufacturers and pension funds, and hopes to is-
Oct. 18 in partnership with the Japan Foundation New York.
Noting that Hirokazu’s films have been a constant at the Chicago festival over the years, Plauché says that “he is a key figure in the Chicago International Film Festival, and it is fitting that we pay tribute to him and honor his incredible body of work.”
The Japanese connection is a natural for Plauché, who was raised in Evanston and studied Japanese literature at American universities before traveling to Japan to live for nine years. She worked at a variety of leading Japanese film festivals while there.
Plauché has kept much of the Kutza formula for success intact at the current festival. One of his priorities, she will tell you, is the search for debut features by promising directors. Accordingly, the festival this year will open on Oct. 16 with the premiere of “The Piano Lesson,” a film produced by actor Denzel Washington (with Todd Black) that is directed by his son, Malcolm Washington, in his first direction of a feature, and starring another son, John David Washington. It’s already been announced that the latter will receive a Spotlight Award for his performance in the film, adapted from August Wilson’s Pulitzer Prize-winning stage masterwork with the same title.
Recent moviegoing trends have given Plauché reason for optimism. For one, broad audiences have begun to accept foreign
sue loans from the fund by the end of the year.
The company, which has about $20 billion in assets under management, plans to issue market-rate loans ranging from $5 million to $50 million from the fund. The average loan size was forecast between $20 million and $30 million, with terms ranging from three to seven years.
“I think one of the big missions here is to provide stability to these companies that are in this Midwest area that are big-time important factors in the supply chain and ultimately ensuring these companies remain community anchors,” said Alex Parmacek, managing director and Monroe’s portfolio manager for the fund.
The fund also will evaluate growth opportunities to invest in battery component manufacturing and materials recycling.
films as practically mainstream, with the Korean Oscar-winner “Parasite” (2019) and the Oscar nominee “Anatomy of a Fall” from France last year as proof of that. Meanwhile, the proliferation of streaming isn’t cutting into festival attendance, she believes. “There is still a hunger for the theatergoing experience,” she says. “There is nothing like being in a theater with other people. They are clearly seeking a communal experience.”
When Plauché began in Chicago almost two decades ago, she noted lots of gray hair in the festival audience. Today the audience is skewing younger, she observes. “Our largest demographic now is 25 to 35 years old,” she reports. “Young people are discovering international directors and films in a way that they haven’t for years.”
The final encouraging trend: There are more, and better, films being made around the world than ever before. That’s in large part because video equipment is more accessible — enterprising directors are making entire movies with their cellphones. “With more films being made, there is also a sense that festivals like ours have an ongoing role to play in launching these films along with their filmmakers,” Plauché says. This story appears in the ChicagoGlobal newsletter, a joint project of Crain’s Chicago Business and the Chicago Council on Global Affairs. Sign up here.
WALGREENS
just $7.5 billion.
Owning nearly 17% of Walgreens’ shares, Pessina, 83, has watched much of his fortune disappear over a decade in which he’s attached himself to the company. After merging his European drugstore Boots with Walgreens and becoming CEO of the combined entity in 2015, his stake was valued at around $12 billion, according to Bloomberg data. Now it’s down to a meager — by billionaire standards — $1.3 billion.
That drop has taken a significant bite out of his entire fortune. Bloomberg estimates Pessina's current net worth at $6.3 billion, down from its peak of $15.4 billion in July 2015.
Walgreens, like its competitors, has been hit with industrywide challenges, like online retail competition and pricing pressure from pharmacy benefit managers, but a series of missed opportunities and a money-losing health care strategy that loaded the company up with debt are taking a toll.
Over the last couple of years, Walgreens’ mission to right-size itself has resulted in closed stores, hundreds of laid-off employees, declining shareholder value and the deterioration of one of Chicago’s largest and most storied brands.
The company’s rival CVS Health has faced similar industry challenges, but its leaders moved quicker to diversify the business and close underperforming stores, and ultimately made more profitable bets than Pessina, analysts say. In contrast to Walgreens’ stock, CVS shares are down just 28% this year.
“While (CVS has) had their own challenges, they haven't faced the same balance sheet or cash flow issues that Walgreens has faced,” says Brian Tanquilut, a health care services equity research analyst at Jefferies.
Now Pessina and Walgreens’ latest CEO, Tim Wentworth, have few options left but to continue downsizing the company until it reaches stability and profitability, and it’s unlikely much value will be recovered for Walgreens or Pessina.
“It's just kind of a war of attrition now,” says John Ransom, managing director of health care research at Raymond James.
Even still, “We've never seen a retailer shrink their way to glory,” he adds.
Pessina and Wentworth declined interview requests.
After several quarters of poor performance, analysts are predicting more pain in Walgreens’ upcoming Oct. 15 full-year earnings report.
Last quarter, Walgreens slashed profit projections as shoppers pulled back and net losses nearly doubled year over year to $5.6 billion in the nine months ended May 31, according to U.S. Security & Exchange Commission filings.
Walgreens burned through $314 million in the first three quarters of its fiscal year, com -
Source: bloomberg
pared to generating $1.2 billion in the same period a year ago. As a result, Walgreens had just $740 million in cash as of May 31, down from $1.1 billion in the year-ago period, filings show.
“This year, you could drive a truck through the cash flow and the earnings,” Ransom says.
The rocky performance has upset shareholders, some of whom filed lawsuits against Walgreens, alleging that senior executives misrepresented revenue and growth expectations in the pharmacy segment ahead of last quarter’s guidance cut.
Health care woes
Like some of its competitors, Walgreens tried its hand at transforming into a full-fledged health care company, offering primary care directly to consumers in its stores. But there are questions about whether that was the correct health care play.
Also facing pressure from PBMs, the middlemen between drug manufacturers and pharmacies, CVS Health moved faster than Walgreens to vertically integrate itself as a health care company by acquiring a PBM and insurance plan before venturing into primary care with the $10.6 billion acquisition of Chicago-based Oak Street Health.
After UnitedHealth Group acquired Catamaran, a PBM formerly based in Schaumburg, in July 2015, only Express Scripts was left on the market. But by the end of 2018, Cigna purchased it for $67 billion.
“At the time, (Walgreens) could have done it, but they let Express Scripts get away to
Cigna,” Ransom recalls.
Instead, under former CEO Roz Brewer, Walgreens focused on health care delivery, a more difficult and expensive route. Brewer poured billions into health care assets like primary care provider VillageMD, postacute and home care firm Care -
Owning nearly 17% of Walgreens’ shares, Stefano Pessina, 83, has watched much of his fortune disappear over a decade in which he’s attached himself to the company.
Centrix and other businesses, but Walgreens’ health care segment was slow to reach profitability.
Investors became impatient, VillageMD was forced to close locations and Walgreens ended up taking a $6 billion impairment charge on the asset.
“That was a very foolish area to go into from the jump,” says James Schrager, an entrepreneurship and strategic management professor at the University of Chicago’s Booth School of Business. “Walmart has done the same thing with much more money and a much bigger balance sheet, and they failed as well.”
Walmart announced it would close all 51 of its health clinics in April. Meanwhile, Bloomberg reported in May that CVS was seeking a private-equity partner to fund growth at Oak Street Health, signaling it may need more financing to reach the asset's potential.
Looking ahead, investors are eager to know more details about Walgreens’ plan to sell part or all of its stake in VillageMD since disclosing last month it was exploring those options. Even if Walgreens takes a loss on the sale, the company will benefit by eliminating a moneylosing asset and shoring up its balance sheet, Jefferies analyst
Tanquilut says. But he warns that finding a buyer may be difficult.
“I'm not sure there's a lot of fresh capital looking to go into value-based primary care today,” Tanquilut says. “And because (VillageMD) continues to burn cash, whoever buys it will have to commit to investing even more capital than just the purchase price.”
Dwindling options
As Walgreens looks to offload assets like VillageMD and close stores, its shrinking valuation could, in theory, make it a takeover target. But analysts say Walgreens has too many problems to be an attractive asset, especially as the company still lacks a clear and effective turnaround plan and carries a heavy debt load.
Other pharmacy chains would likely run into antitrust issues if they tried to buy Walgreens. And while CVS found some success by teaming up with an insurance plan, it’s unlikely insurance companies would see value in buying Walgreens, especially as they battle industrywide hurdles of their own.
“They've all pulled back because of challenges with Medicare Advantage reimbursements,” Tanquilut says. Finally, Walgreens’ debt load would likely scare away wouldbe private-equity investors as well.
“Private-equity people hate to buy a company already loaded with debt,” Booth professor Schrager says. “That's what they do when they take you private. So, it's a little hard to do a double dose of debt.”
With no one coming to save it, Walgreens will likely be forced to continue downsizing and improving cash flow to avoid declaring bankruptcy, as Rite Aid did last year following an unsustainable debt load and opioid settlement payments.
“Their situation was worse,” Raymond James' Ransom says of Rite Aid. “But if things don't reverse, (Walgreens) at some point will run out of liquidity, and they're going to have to raise the white flag.”
Herzog, Justin Laurence, pawan Naidu, Steven r. Strahler, mark Weinraub Researcher Sophie H. rodgers
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