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CarMax is bringing its unique way of purchasing a vehicle to its first Northeast Ohio location — P. 5 Westlake company is making major inroads with MLB and other professional sports leagues — P. 6
Foreclosure activity is picking up Number of commercial cases expected to spike, despite jump in economy By STAN BULLARD sbullard@crain.com
Between 1989 and 1994, Bruce Mavec built three office/warehouse buildings on land next to the Cuyahoga County Airport in Richmond Heights. On Dec. 30, 2014, Judge Nancy Fuerst approved an agreement with his lender to settle a Cuyahoga County Common Pleas Court foreclosure case. The highly desirable properties are bound for a sheriff’s sale, not yet set, as the lender seeks to recoup a $4 million loan. “It’s very disappointing,” Mavec said. “You put the effort into a project and fill the buildings. Over the years, you develop relationships with the tenants.” The problem, though, was that the loan matured, and Mavec could not find replacement financing as the value of the properties is less today than the note his partnership needs to pay off. Property owners, brokers and attorneys expect Mavec to have a lot of company, even as the economy slowly improves, leasing action resumes and construction of new commercial properties starts in the region. The reason is that substantial numbers of 10-year loans were recorded in 2005, and the following year, primarily securitized loans in bundles of loans sold to investors called collateralized mortgage bond securities. Ira Krumholz, president of the property management affiliate of NAI Daus in Beachwood, who has aggressively pursued work managing commercial properties for lenders during foreclosure proceedings and after lenders seize them, said he expects activity to pick up markedly during the next few years. Meanwhile, David Browning, managing director of CBRE Group’s Cleveland office, hopes the activity level does not get as great as in the
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See FORECLOSURE, page 20
Anything but healthy Consultant says closing of Lakewood Hospital is the logical move By TIMOTHY MAGAW tmagaw@crain.com
Out of date, half empty and bleeding money. Those aren’t exactly symptoms of a healthy hospital, but that’s just what’s happening at the 108-year-old Lakewood Hospital, the 233-bed facility owned by the densely populated West Side suburb and run by the Cleveland Clinic since 1997. In fact, hospital officials say it would have cost as much as $100 million just to keep the facility up to date until the Clinic’s lease expired in 2026. This month’s news that the city would shutter the hospital by 2016 and sell a piece of the land on which it sits to the Clinic to
build a $34 million family health center and emergency department came as a blow to many in the city who believe having a fullservice hospital is a pillar of a strong community. However, the consultant that worked with Lakewood Hospital Association — the nonprofit governing body overseeing the hospital — stressed in an interview with Crain’s that all alternatives were exhausted, and had the board taken no action, Lakewood may have been left with nothing. “If you wait until the end and run the balance sheet all the way to zero, then you have no choice,” said Lisa Fry, a partner of Subsidium Healthcare, the Atlanta-based consulting group hired by the Lakewood Hospital Association in July 2013 to evalu-
ate the future of health care in the city. “You end up with an empty building and not a whole lot of options, unfortunately.” Aside from closing the facility, which hasn’t turned a profit in a decade, the city considered finding a new partner. The board quietly solicited proposals from other local health systems, and despite some initial interest, there was no “firm alternative offer,” Fry said. The group even sought proposals from seven for-profit hospital systems — many of which have national footprints and seemingly specialize in scooping up struggling community hospitals. Again, no one bit. The conclusion? A hospital in Lakewood See HEALTHY, page 20
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REBECCA R. MARKOVITZ
BUSINESS OF LIFE Welcome House, a Westlake nonprofit, is helping more who are in need of a hand ■ Pages 15-17 PLUS: RAISING AWARENESS ■ GIVING BACK ■ & MORE
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