Crain's Cleveland Business

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A DV E RT I S E M E N T

Proud to be the 2012 SBA Large Lender of the Year KeyBank is committed to lend $5 billion to small businesses by 2014.

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All credit products are subject to credit approval. KeyBank SBA Preferred Lender. Š2012 KeyCorp. KeyBank is Member FDIC. ADL5088

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An SBA loan could be the first chapter in your success story.

Your business may be small, but your goals are big. An SBA loan from KeyBank can help you with financing for a new location, new equipment, more inventory, or maybe even an acquisition. KeyBank is an SBA Preferred Lender, and we’re committed to lending $5 billion to community businesses like yours by September 2014. That’s a lot of local success stories. Let’s start writing yours.

KeyBank is proud to have been named the 2012 SBA Large Lender of the Year.

To connect with a Key SBA loan specialist in your area, stop by a local KeyBank branch or call 888-KEY2BIZ or visit key.com/sba.

Pictured: Costas Mavromichalis, owner, Constantino’s Market, and his daughter, Anna Mavromichalis, general manager. All credit products are subject to credit approval. Banking products and services are offered by KeyBank N.A. Member FDIC and Equal Housing Lender.

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Vol. 33, No. 22

$2.00/JUNE 4 - 10, 2012

Law school admission tighter at CSU, CWRU

Eaton shift away from trucks long in coming Acquisition continues manufacturer’s focus on electrical business

Jobs scarce and apps down, schools recalculate class size

By MARK DODOSH mdodosh@crain.com

The planned $11.8 billion megadeal that will combine Cleveland-based Eaton Corp. with Cooper Industries plc of Dublin, Ireland, will result in the formation of a company that is referred to in regulatory documents as “New Eaton.”

But, in reality, Eaton has been ANALYSIS creating a “New Eaton” for at least a decade, with the pace of its transformation into an electrical equipment and energy management giant accelerating over the last four years.

Eaton began its life 101 years ago as a maker of truck axles, but the company has seen its truck and automotive segments steadily shrink in their relative contributions to Eaton’s business as a whole. That’s because Eaton has focused in recent times on acquiring companies related to its electrical business segments, which the company three years ago divided for financial reporting purposes into “Electrical Americas” and “Electrical Rest of World.”

The acquisition of Cooper Industries would put an exclamation point on Eaton’s transformation because of Cooper’s size and global reach as a supplier of electrical equipment that includes such better-known brands as Crouse-Hinds electrical enclosures and Halo lighting fixtures.

In 2011, Eaton’s two electrical segments combined to account for $7.2 billion, or 45%, of Eaton’s overall sales and $883 million, or 39%, of its operating profits. The planned addition of Cooper, which had sales last year of $5.4 billion and net income of $828 million, would cause Eaton’s electrical business to dwarf each of its four other operating segments — Hydraulics, Aerospace, Truck and Automotive.

However, even before the surprise See EATON Page 26

By MICHELLE PARK mpark@crain.com MARC GOLUB

Josh Kabat and his fiancée, Kiaran Daley, own the new Cleveland Pickle sandwich shop in the City Club Building on Euclid Avenue in downtown Cleveland.

HEY, NEIGHBORS! Influx of restaurants promising sign for city’s residential hopes

By JAY MILLER jmiller@crain.com

T

here’s no better way to chart the evolution of downtown Cleveland into a residential neighborhood than to watch the kind of restaurants that are moving onto Euclid and Prospect avenues and into the Warehouse District.

Downtown’s streets had lost nearly all their family restaurants, storefront

lunch counters and fast-food spots by the mid-1990s after law firms and businesses fled to the suburbs and the Tower City and Galleria malls opened their food courts. Later, fine dining emerged, first in the Warehouse District and then on East Fourth Street, squeezing out even more delis and diners.

But the tide is turning, or maybe returning. With young people flocking to renovated apartments in former See NEIGHBORS Page 12

MORE OPTIONS DOWNTOWN ... ... AND COMING SOON

Two of Northeast Ohio’s three law schools are among a growing number of law institutions scaling back admissions as applications continue to drop amid a persistently tough job market for attorneys.

In an effort to preserve the quality of the school’s incoming class, Cleveland-Marshall College of Law is cutting the target for its entering class to 140 from its previous target of 200. Likewise, Case Western Reserve University School of Law INSIDE: A look at is reducing its admissions past enrollment target by about 10%, to data from Cleve190 from a previous range land-Marshall and of 210 to 220. the University of Cleveland-Marshall’s Akron. Page 16 applications are down nearly 30% this year compared to last year, when the school admitted 168 students in its fall class, said its dean, Craig M. Boise. Both Mr. Boise and Lawrence E. Mitchell, dean at Case Western Reserve’s law school, are revising their admission targets downward in their first years at the helm.

“Having been here a little less than a year, obviously the first thing you hate to do is say, ‘Look, my revenue’s down, and we need to … shrink revenue projections for the law school going forward,’” said Mr. Boise, who became dean last July. “But this is something that’s not See ADMISSION Page 16

INSIDE BRGR 9, West Ninth St.

Want a tasty treat? You’re in the right place

El Güero, West Ninth St.

Charka Indian Cuisine, West Ninth St. Nexus Café, Prospect Avenue

Potbelly, Euclid Avenue

INSIDE: Many restaurateurs already established in Northeast Ohio are looking to expand beyond the region. Page 14

As summer fast approaches, Northeast Ohio has been inundated by stores serving frozen snacks. PAGE 10 PLUS: ■ The Gotham King portfolio of nine office buildings in the city’s eastern suburbs has entered into foreclosure. PAGE 3

SPECIAL SECTION

INVE$TINGGUIDE2012 Investors grow more leery of potential effects of November’s presidential election ■ Page I-1 PLUS: DEFERRED COMPENSATION ■ SUPERSTAR 10 ■ & MORE

Entire contents © 2012

by Crain Communications Inc. Vol. 33, No. 22

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CRAIN’S CLEVELAND BUSINESS

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Gotham King portfolio in foreclosure Former Duke Realty buildings suffering from lofty ’07 purchase price

By STAN BULLARD sbullard@crain.com

One of the region’s commercial real estate trophies, the Gotham King portfolio of nine office buildings in the eastern suburbs, is the subject of a $135 million foreclosure action in Cuyahoga County Common Pleas Court.

Real estate experts express no surprise at the development, saying

its seeds were sown in 2007 when Gotham Realty Holdings of New York and local developer and broker Donald King bought the buildings from Duke Realty Corp. of Indianapolis for $140 million. The price is considered a record for a portfolio of office buildings in Northeast Ohio’s suburbs, and was paid just before the ensuing recession gave the office market a drubbing.

The Gotham King mortgage went

into so-called “special servicing” a year ago in what Mr. King described as a strategic default to try to renegotiate the loan, which had been sold to investors. However, Dallasbased Orix Capital Markets LLC filed to foreclose on the properties May 23 in county court, and the case was assigned to Judge Peter Corrigan.

Orix, which serves as special servicer, and U.S. Bank, which acts as trustee for the bondholders, have

asked for the appointment of a receiver and to transfer the case to the county court’s commercial docket.

Under court rules, Judge Corrigan cannot rule on the requests until this week at the earliest.

Court papers by Orix maintain Gotham King has not made payments of more than $800,000 monthly since July 2011. The mortgage does not mature until 2017.

Duke sold the nine buildings in its quest to exit Northeast Ohio for See GOTHAM Page 8

3

INSIGHT

Region has strengths in water technology NorTech may work to build industry cluster

By CHUCK SODER csoder@crain.com

JASON MILLER

Vox Mobile CEO Kris Snyder finds himself in a good spot these days. He’s leading a company that helps other businesses manage their handheld mobile devices, and the more types of devices they buy, the more they want the help of businesses like his.

VOX MANAGES A MOBILE WORLD Company triples in size as businesses look for help with smart phones, tablets

By CHUCK SODER csoder@crain.com

V

ox Mobile Inc. should thank that guy who keeps asking his boss if he can get an iPhone.

All those businesses that are starting to let their employees use iPhones, Androids and other handheld mobile devices for their work have helped Vox Mobile more than triple the size of its staff in less than three years.

The Independence-based company, which helps businesses manage their mobile devices, employs 110 today, up

NorTech thinks its latest idea could hold water.

Northeast Ohio could create a lot of jobs if it can build on existing strengths related to water technology, according to NorTech vice president Byron Clayton.

The opportunity could be big enough to warrant more of NorTech’s attention. The technologyfocused economic development group, which already is working to accelerate the region’s advanced energy and flexible electronics sectors, might make water technology its third focus area.

That decision depends on the outcome of a study NorTech is in the process of finishing. Although the study isn’t done, information gathered so far suggests that Northeast Ohio has what it takes to be a player in the water technology sector, said Dr. Clayton, who would lead NorTech’s effort to promote the sector’s growth.

The findings also suggest that demand for water technologies is on the rise, he said.

The near-term opportunity in water technology is driven by federal mandates: The U.S. Environmental Protection Agency is requiring that sewer districts across the nation reduce the amount of sewage that flows into waterways during heavy rains.

Among them is the Northeast Ohio Regional Sewer District, which plans to spend $3 billion over the next 25 years reducing storm water runoff that gets into the sewer system and adding infrastructure designed to prevent sewers from overflowing so often.

The bigger, longer-term opportunity involves cleaning up industrial wastewater, Dr. Clayton said.

That’s a topic companies in Northeast Ohio know a lot about, given the region’s industrial heritage and its well-publicized struggles to keep the Cuyahoga River and Lake Erie clean.

See WATER Page 27

See MOBILE Page 26

CORRECTION

THE WEEK IN QUOTES

The May 21 “Who’s Who” feature incorrectly stated Third Federal Savings & Loan’s deposits in the entry for chairman and CEO Marc A. Stefanski.

Third Federal had $6.1 billion in deposits in 2011 in the Cleveland area and $8.8 billion companywide.

“We either needed to prepare to admit a lot of students who were likely not going to be successful ... or we had to get smaller.”

“Even if your mistakes are horrible, people want to try it. They say, ‘I want to see what horrible tastes like.’”

“Everybody’s afraid that the wrong president doing the wrong thing can put us back into a recession.”

— Craig M. Boise, dean, Cleveland-Marshall College of Law. Page One

— Celeste Blau, co-owner of The Sweet Spot in Lakewood. Page 10

— Kevin Myeroff, CEO of NCA Financial Planners, Mayfield Heights. Page I-1

“I’m bullish on energy. … Over the long term I’m sure it’s a good investment.”

— Carina Diamond, managing director, SS&G Wealth Management, Solon. I-4

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

JUNE 4 - 10, 2012

PUBLISHER/EDITORIAL DIRECTOR:

Brian D. Tucker (btucker@crain.com) EDITOR:

Mark Dodosh (mdodosh@crain.com) MANAGING EDITOR:

Scott Suttell (ssuttell@crain.com)

OPINION

Switch it

M

arketing counts for plenty when selling groups from outside Northeast Ohio on holding their meetings and conventions in Cleveland. And right now, the community isn’t doing itself any favors by giving its convention center second-banana status in marketing the city’s new meeting complex as the Cleveland Medical Mart and Convention Center.

At the very least, the names should be switched so that the convention center receives top billing over the medical mart. And serious consideration should be given to changing the “medical mart” part of the name so that it identifies more clearly just what will be going on inside the space that will serve as an adjunct to the convention center portion of the complex that’s rising on Cleveland’s Mall.

We’ve wondered from the start why “convention center” has come second in the name. Hotels, restaurants and attractions such as the Rock and Roll Hall of Fame and Museum stand to benefit most from the dozens upon dozens of meetings the convention hall could host each year as tens of thousands of visitors from outside the region spend their money here.

Cleveland essentially has been out of the convention business for two decades, as the city’s old convention center was an antiquated, pillar-filled structure that many meeting planners bypassed in favor of modern options in other cities. Nearly a half-billion dollars in Cuyahoga County sales tax money is going toward the new trade show complex that will occupy the place where the former convention center stood. To get the most bang for those bucks, the name that goes on the complex and on promotional materials for it should scream that Cleveland is back in the convention game.

The current name doesn’t do that. Rather, it’s creating confusion in the minds of meeting planners beyond the region, according to Jim Bennett, the former McKinsey & Co. consultant whom developer MMPI Inc. recently appointed to oversee the project it’s building.

As representatives of MMPI and Positively Cleveland — the city’s convention and visitors bureau — go out to sell Cleveland as a meeting place, they “really find (the current name) unhelpful,” Mr. Bennett told Crain’s editorial board last month.

Also unhelpful is the medical mart name, given the way that portion of the project is evolving.

The medical mart concept envisioned permanent showrooms leased by medical equipment vendors.

However, the input Mr. Bennett is receiving in meetings with health care industry leaders is that the space should be more than static rooms. Among the possibilities: areas that offer views of the future of medicine, and others where early-stage biotech companies — both local and from abroad — can showcase their innovations.

Rather than be enslaved to a concept, the project’s backers should go with the industry flow and should transform that part of the complex into a “health innovation center” or something similar to give it a dynamic flair. The focus should be on making the investment a success, not on bemoaning the “failure” of the medical mart.

FROM THE PUBLISHER

A resource for human resource issues

S

ago. It’s free and you can register for it on o, how many times over, say, the our home page at www.crainscleveland last 12 months have you found .com. yourself in something like the But the events we’ve held on this topic following conversation? also have drawn an interesting mix of YOU: “We’ve been trying to fill a folks from all sorts of industries across management job for months now, and we Northeast Ohio. Savvy business owners just can’t seem to find great candidates.” and HR leaders know that if it’s difficult THEM: “I know what you mean. We now to find good people, it’s had a director leave three months going to get far worse as the ago, and have tried everything BRIAN Baby Boomers continue to — recruiters, trade publication TUCKER leave the work force. ads, digital job services and the We believe a key to keeping results are maddening.” talented employees is learning YOU: “Same with us. And it’s what makes them tick. And a good job, with a nice salary believe me, it’s more than just a and benefits package.” salary and benefits package and THEM: “Yeah, same here. With interesting work. this supposed bad economy Think about it: For perhaps and high unemployment, how the first time in American history, can there not be more good workplaces are filled with people from people out there?” three distinctly different generations, Talent retention and acquisition is a each of which looks at job and career problem for all businesses right now, differently than the other. What jazzed and it’s likely to get worse long before it the Boomers might have little value to gets better. It’s one reason we launched Generation X, and what that crowd cares our weekly e-newsletter on staffing and about in their work might have no meaning human resources issues a few months

at all to the Millennials.

To have the best work force, you just might need to manage differently. For example, is there technology you can employ to bridge the generations? Are you trying to identify values that are shared across all these generations so they can pull together? Do you understand what are truths and myths about each generation?

On June 21, we will host a breakfast panel that will delve into those questions and more in an effort to help businesses enlarge their talent pool. And it’s a robust group, consisting of Robert Walker, director of Kent State University’s School of Digital Sciences; Evan Ishida, senior manager of performance and learning consulting at Eaton Corp.; and Alan Loos, manager of information technology at FedEx International.

The event at the Ritz Carlton starts with networking from 7 a.m. to 8 a.m., followed by the panel discussion and Q&A. To register, call 216-771-5158 or visit www .crainscleveland.com/breakfast. See you there.

■

LETTERS

Up with second chances at employment ■ I would like to thank Brad Friedlander for the opinions expressed in his May 21 Personal View, “Give criminals another employment shot,” and for his track record of giving second chances to job applicants with criminal backgrounds.

At Towards Employment, we have helped thousands of individuals with barriers to employment find and keep jobs. In 2004, we added specific services for those with criminal backgrounds, and since that time have placed more than 1,350 individuals with past convictions in full-time jobs. Mr. Friedlander’s experience that people with criminal records are “often model employees” is shared by many of our employer partners.

Our participants have a breadth of skills and experiences that could be an asset to many businesses; however, many with past convictions are barred

from opportunities even long after their debt to society has been paid.

According to a study released in 2010 by the Center for Economic and Policy Research, in 2008 the U.S. economy was estimated to have lost $57 billion to $65 billion in reduced output of goods and services from people with prison records due to their lack of employment. Towards Employment has sought to ameliorate this problem by helping ex-offenders prepare for and find employment while working with employers to meet their staffing needs.

Through our combination of services and employer relationships, we are working to make sure that individuals with criminal backgrounds have the opportunity to take advantage of their second chance and play a role in improving our local economy.

Jill Rizika Executive director Towards Employment

Political centrists minimized ■ My children will never fully appreciate the artistry behind pressing “play” and “record” on a boombox at the precise moment when the DJ stops speaking to tape a favorite song. They will never hear a busy signal when dialing their friends.

And, they will most likely shave 30 pounds from their backpack loads by housing millions of pages of textbooks on a 10-ounce tablet.

I’m OK with this.

What concerns me, as Brian Tucker thoughtfully wrote about in his May 14 commentary, “Yet another defeat for See LETTERS Page 6

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CRAIN’S CLEVELAND BUSINESS

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THE BIG ISSUE Has the environment downtown changed — for better or worse — since the casino opened in May? 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 Phone: (216) 522-1383 Fax: (216) 694-4264 www.crainscleveland.com

TASHA MCCRORY

CHRISTOPHER WOODWORTH

MICHAEL J. TURNER

EMILY BOYLAN

Cleveland

Cleveland

Cleveland

I think it’s changed for the better. The police are patrolling a lot more, the atmosphere is a lot better and the hotels are filled. They’re booked for, like, months in advance.

I think since the casino opened, the downtown atmosphere has improved, especially with people taking the opportunity to attend events downtown and then also going to the casino. ... But the big question is, is this short term?

Cleveland (and an Americab driver for 23 years)

a portfolio company of

I really think it’s changed for the better, not only because it’s better for my business, it’s better for the city. It makes the city look more vibrant at night, makes it look alive.

I’ve noticed a difference just as far as police and security, specifically around the casino. ... It’s definitely a lot more busy. But I think that it’s been a positive change as far as businesses booming everywhere down Euclid.

a portfolio company of

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Film credit extension awaits Kasich

By JAY MILLER jmiller@crain.com

The expected extension of the state film tax credit that wooed production of this summer’s blockbuster movie, “The Avengers,” to Cleveland should help boost the region’s embryonic film industry.

As he waited in late May for the Legislature to move House Bill 508 — one of three pieces of legislation that make up Gov. John Kasich’s mid-term budget update — Ivan Schwarz, executive director of the Greater Cleveland Film Commission, was planning a trip later this month to Los Angeles to see which movie productions he can bring to Northeast Ohio in the next two years.

“We have a lot of people who want to come to here,” Mr. Schwartz said during an interview May 24 in his Caxton Building office overlooking Progressive Field. “But people are waiting; they’re going to go where they can get a tax credit.”

The legislation passed the Ohio House May 24 and awaits the governor’s signature. A spokeswoman for Gov. Kasich said last Thursday, May 31, that the bill reached the governor the previous day and is under review by his policy staff. He has 10 working days to sign the bill.

HB 508 increases the amount of tax credit available to film makers to $20 million a year from $10 million for the next two years. Mr. Schwarz said the extension and doubling of

the available credit will help build businesses that cater to the film and video industry and will convince people who aspire to careers in front of or behind the cameras to stay here.

Mr. Schwarz added that the “Avengers” experience will be a valuable tool he can use to sell the region.

“It was amazing to watch how the city came together to make this happen,” he said. “There is no other city in the United States that would have done what we did. It showed we are capable of a ‘can-do’ approach.”

In advance of the new legislation, the film commission contracted with Cleveland State University for a study of the industry’s impact in the state. That study looked at 16 movie projects filmed in the Cleveland area over the last three years and found that for every dollar in tax credit awarded, the film companies returned $1.20 into the state’s economy and provided a total of $35.5 million in labor income.

■

LETTERS continued from PAGE 4

political reason,” is that with every election cycle more and more centrist leaders are falling prey to the extremist fringes of their respective parties. My former boss, U.S. Sen. Richard Lugar of Indiana, was the most recent political victim. In a statement following his primary defeat, Sen. Lugar clearly and eloquently reminded the country that “bipartisanship is not the opposite of principle.” Is anyone listening?

I’m willing to put my nostalgia for the NFL before free agency and riding bicycles sans helmet to rest. However, I don’t believe that we are progressing as a society when we encourage our children to design only in black or white rather than appreciating the many shades of grey that exist between their beliefs and the beliefs of others.

This is not a problem unique to politics, though it may be best observed in that arena. Rather, this culture of ideological inflexibility is prevalent in every industry. We have all witnessed the damage that “group-think” can inflict on an organization. Yet how many of our organizations overtly or tacitly promulgate this type of activity?

Our leaders, both public and private, need to teach our children how to develop their own ideas and opinions.

They need to show them that the world is far more complex and nuanced than that which exists only in their minds or in their parents’ home. They need to demonstrate that it’s OK to seek out new things. It’s right to ask good questions. And, ideas conflicting with their own are neither “better” nor “worse” categorically.

They are simply “different” and valuable data points of reference for forming new thoughts.

True leadership is teaching younger generations how to listen to and study differing ideologies to develop their own ability to think critically.

The purpose is not to draw a box around their own beliefs, but to help affirm or adapt them appropriately.

I hope that the pendulum will swing and centrism will once again be en vogue. I hope that society will, at some point soon, embrace the value of reaching across the aisle in pursuit of the greater good.

We’ve resurrected other ideas from earlier generations. Wouldn’t this be one worthy of borrowing?

John Znidarsic University Heights

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UH’s Ahuja center ahead of operating estimate Chagrin Highlands location offers broader footprint, draws ‘very favorable’ payer mix

By TIMOTHY MAGAW tmagaw@crain.com

Despite a tepid economy and the region’s population stagnation, University Hospitals’ roughly 1-yearold, $298 million Ahuja Medical Center in Beachwood is on solid financial footing and is shoring up the health system’s presence in Cleveland’s eastern suburbs.

Ahuja achieved a positive operating margin in the first quarter of 2012 — more than a year earlier than anticipated — and is helping fuel University Hospitals’ market growth. The health system saw a 9% hike in inpatient discharges in the first quarter of 2012 over the like period last year, while the entire market stomached a slight decrease.

In the 10 months Ahuja was open last year, patient volume totaled 11,700 at the 144-bed hospital that sits off Interstate 271 at Chagrin Highlands. That number, which includes surgeries and inpatient stays, is expected to climb to 20,600 for all of 2012 if the current momentum keeps up, said Susan Juris, who signed on as Ahuja’s president last December.

“We’re off to a roaring start for 2012,” Ms. Juris said.

Ms. Juris said the medical center’s balance sheet has been buoyed by a “very favorable” payer mix, with

about 44% of its patients carrying commercial insurance, another 44% enrolled in Medicare and the rest paying out of pocket or with Medicaid.

To keep Ahuja’s engine humming, Ms. Juris has been tasked with cementing the medical center’s reputation as the community hospital of choice in the area it serves. Part of that job includes expanding programming, such as wellness seminars and health screenings.

“We have to come to life in the community,” she said. “We’re brand new. People need to know we’re here.”

Zenty: It’s paying off Ahuja is the first new hospital built in Cuyahoga County in three decades and is the crown jewel of University Hospitals’ sprawling $1.2 billion construction initiative, Vision 2010, which launched in 2006. The initiative also includes the $260 million Seidman Cancer Center near the system’s flagship hospital, Case Medical Center in Cleveland, and new community health centers in Concord Township, Medina and Twinsburg.

University Hospitals CEO Tom Zenty said in an interview that by all accounts the system’s investments — the largest in its more than 150year history — are paying off.

The idea behind Ahuja, Mr. Zenty said, was to ease the commute for patients in the eastern suburbs who frequented the system’s modestly sized hospitals in Bedford and Richmond Heights but found it difficult to travel to Case Medical Center for more acute care. Also, Ahuja has helped draw new patients into the system from the south.

“It’s given us that broader footprint because we also now have a large number of patients coming from Medina and Akron,” Mr. Zenty said. “A number of physicians we have in those communities are referring to Ahuja because it’s an exquisite facility.

“Ahuja has allowed us to continue our strategy where our goal is to bring world-class health care closest to where people live,” he said.

Bill Ryan, president of the Center for Health Affairs, an advocacy group representing area hospitals, said a component of University Hospitals’ strategy with Ahuja and its other Vision 2010 investments was to solidify its rank as the secondlargest health system in the region, behind the Cleveland Clinic.

Also, Mr. Ryan said University Hospitals’ investments could help stave off pressure from Summa Health System’s march north from Akron into the Medina market, where Summa opened a health center in fall 2010 and an emergency department in late 2011.

“It’s solidified (University Hospitals’) market share, and it may have

warranted a situation — and Ahuja is a strong example of this — where they’re starting to snatch up the northern tier of that Akron market,” Mr. Ryan said.

Proceeding with caution When Ahuja opened in March 2011, it employed about 400 people, but that number has grown to about 700. Also, the adjacent medical pavilion that was relatively empty during the opening since has filled.

Long-term plans at Ahuja call for two more patient towers on the medical center’s 53-acre campus.

But given mounting concerns facing the health care field, especially at the federal level, Mr. Zenty wouldn’t speculate when construction would start, or whether it may happen at all.

“We’re doing well and still have some capacity,” he said. “We want to make sure to be judicious.”

Mr. Zenty said UH is paying particular attention to potential ramifications of the coming presidential election and the impending U.S. Supreme Court ruling on the constitutionality of President Barack Obama’s expansive health care overhaul.

“There is a lot of uncertainty in the health care world,” Mr. Zenty said. “We have no plans for any expansion right now.”

That wait-and-see attitude was recognized by Moody’s Investors Service, which in April affirmed the health system’s A2 rating and

7

WHO TO WATCH IN HEALTH CARE We’re looking to profile some of the region’s health care up-andcomers in “Who to Watch: Health Care,” a special section slated for publication July 16.

If you think you know who will be among those leading the Northeast Ohio health care scene of the future, drop an email to sections editor Amy Ann Stoessel, astoessel @crain.com, or call 216-771-5155.

Please send your suggestions by Monday, June 18.

There are no hard and fast requirements for possible inclusion in this section other than that the candidate needs to exhibit the kind of potential that makes him or her someone to watch in the health care field.

Also, mark your calendars and keep thinking about the region’s future leaders, as this is the third of these sections in 2012: “Who to Watch: Law” will publish Nov. 26.

stable outlook on its $831 million in outstanding debt. Moody’s also recognized the success of University Hospitals’ expansion strategy, noting that “the benefits of which are apparent in growing market share and revenue which we expect to continue.”

“This is a multifactor strategy we’ve put together,” Mr. Zenty said.

“Our plan is working exactly as we had designed it.”

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Developers fear Clean Ohio changes

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If altered, brownfield program would require greater impact sooner

By STAN BULLARD sbullard@crain.com

Real estate developers and cities with little virgin land available for development are fretting that their efforts to put environmentally tainted properties known as brownfields to good use will receive a big blow if the state changes the criteria for how it goes about doling out money to aid with property cleanups.

Under the state’s Clean Ohio program, developers and cities often could secure brownfield cleanup money even if they didn’t have tenants in tow to occupy contaminated properties they wanted to remediate. However, Kasich administration officials are indicating the state in the future will put an emphasis on issuing cleanup money to projects that are likely to produce jobs sooner than later.

Fred Geis, a member of the Geis Cos. development firm in Streetsboro who makes urban real estate projects his personal mission, calls the potential move a “crippling decision� that would harm urban redevelopment, particularly by jobcreating small businesses. “We have been in development since 1967 but did our first brownfield project three years ago,� Mr. Geis said. “If it took us that long as a developer to take on the liability, the challenge and the learning curve to do a brownfield, how long do you think it will take a corporate middle manager or a small business to do it?�

In 2011, the Geis and Coyne families did the unheard of by putting Midtown Technology Park, a suburbanstyle office-warehouse building, smack in the middle of the city at 7000 Euclid Ave. in Cleveland’s Midtown neighborhood. The technology park, regarded as a poster child for urban redevelopment, received a $750,000 Clean Ohio grant as part of its financing.

The project had no tenants at the outset. The 128,000-square-foot building is now 90% occupied.

“We would have never started the project without brownfield money for it,� Mr. Geis said. He also noted that some tenants in the structure, which is designed to keep in Cleveland spinoff companies from University Circle institutions, did not exist in 2008 when his team began undertaking the cleanup of the site.

Mr. Geis’ firm now is undertaking its fourth Midtown project. “These sites were left for dead 20 years ago,� Mr. Geis said. “As developers, we satisfied the (environmental) requirements to make them productive. I did not make them dirty. I only made them better.�

Why the change?

For now, the state’s brownfield grant program remains in limbo.

The Kasich administration said earlier this year that it will accept no new applications for brownfield remediation under the Clean Ohio Fund because state liquor profits that financed the program have been shifted to JobsOhio, a private entity Gov. John Kasich has entrusted with shepherding economic development efforts statewide.

Laura Jones, spokeswoman for JobsOhio, said the brownfield policy for JobsOhio is still under development but is likely to include programs offering grants — which cities, developers and private property owners prize — and revolving loans. Criteria for issuing loans and grants are not set, but Ms. Jones said the key change will be to require brownfield money to go where it can produce jobs the quickest.

The change is a response to limited state resources, Ms. Jones said.

Todd Davis, a nationally known brownfield legal expert and CEO of Hemisphere Development LLC of Bedford, which redevelops tainted properties, said it may seem sensible to increase job requirements as a condition of receiving a brownfield grant or loan. Nonetheless, Mr. Davis said he believes the change is “going to stop brownfield development in its tracks in Ohio.�

People willing to spend money on real estate developments with a brownfield component will gravitate to states with more generous programs, Mr. Davis said. Losing

the flexibility to redevelop contaminated properties without end users in place will hurt Ohio, he added.

The case of 27 Colman Consider a project Mr. Davis undertook in Cleveland’s Little Italy neighborhood in which a Hemisphere affiliate removed 29 underground fuel storage tanks and replaced 12 feet of topsoil so the land could be redeveloped as commercial or residential property.

The project got a $900,000 grant from the Clean Ohio Fund and site work began in 2002. By the time builder Andrew Brickman took over the site in 2008 and transformed it to sleek, modernist condo suites in a project known as 27 Colman, the residential market had gone through both boom and bust.

Today, all 27 condos on the site have been sold for prices ranging from $300,000 to $600,000 apiece. “That points out the dramatic impact of this program,� Mr. Davis said. “The site had not been developed because of the storage tanks.

Without Clean Ohio, it would still house storage tanks.�

Maintaining the availability of brownfield grants is a top issue with NAIOP Northern Ohio, a trade group representing industrial and office property owners, said Scott McCready, its president. NAIOP argues that grants rather than loans give private interests more incentive to tackle blighted sites; it also says the grant program has proven it can attract private investment.

Brad Beckert, the city of Akron’s economic development engineering manager, said his city also is against changing the brownfield program.

He worries about what it would mean for small businesses that want to do modest expansions, such as a company that wants to expand on a former dry cleaning operation’s site next door.

Mr. Beckert also is concerned about the state doing away with brownfield grants. He said Akron has found no takers for its brownfield redevelopment loan program, financed by a $1 million federal grant. He expects the state would find a similar lack of enthusiasm for a brownfield loan program. â–

Gotham: Firm pushes for new terms continued from PAGE 3

more lucrative markets. Duke sold three office buildings in North Olmsted last year but continues to own 11 office buildings in Cleveland’s south suburbs that it has been unable to peddle.

The Gotham King portfolio includes newer office buildings, such as Metropolitan Plaza and One Harvard Crossing in Highland Hills, as well as others dating to the 1980s, such as Corporate Circle I, II and III in Pepper Pike.

Alec Pacella, a senior vice president of the NAI Daus brokerage in Beachwood, called the Gotham King purchase “far and away the most expensive suburban office sale on a per-square-foot basis.� Comparable sales at the time were about 20% less, he said.

Then the worst recession in decades wreaked unexpected havoc on the office market, driving up vacancies as tenants failed, pulled

out of the region or sought less expensive offices. Statistics from online realty data provider CoStar tell the tale: Vacancy in the Gotham King portfolio is now 12% compared to a mind-bogglingly low 2% at the time of the purchase.

Steve Egar, owner of the Egar Associates brokerage in Beachwood, said if Orix succeeds in wresting control of the properties from Gotham King in the court action, the next choice it faces would be a hard one: hold the buildings or sell them. Mr. Egar estimates that if the buildings were sold at today’s rates, they would go for half the prior price.

In an interview last Thursday, May 31, Mr. King said Gotham King is continuing to negotiate for new loan terms despite the foreclosure filing.

Mr. King maintains the portfolio’s vacancy was higher at its purchase than CoStar suggests, putting it instead in the 7% range, but he agrees the price was too high given

the compression of rents during the downturn.

Mr. King said the portfolio is making some payments on the mortgage from cash flow, though not the required monthly payment.

For the first time, Mr. King revealed last week that he sold his ownership stake in the portfolio prior to the commercial downturn, although he declined to say specifically when he did so. He continues to manage the portfolio.

Charles Ishay, a Gotham principal named personally in the lawsuit, declined comment on the foreclosure action, though he said he later may discuss the litigation. Gotham Realty Holdings has a substantial portfolio of holdings ranging from New York to Chicago, according to its website.

Three calls to Orix were not returned by Crain’s deadline last Friday. Orix’s Cleveland attorney, Michael Shuster, declined comment. â–

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In survey, Indians gauge appetite for new premium seats Proposal would resemble club area, but playing field would be visible from lounge

By JOEL HAMMOND jmhammond@crain.com

The Cleveland Indians are gauging customers’ opinions of a new premium lounge at Progressive Field that would continue the team’s repurposing of the stadium’s suites.

According to a stadium map included in a survey sent to premium ticket buyers, the lounge would encompass about eight suites either on the first-base side of home plate, adjacent to the stadium’s press box, or further down the left-field line, adjacent to the current Champions Suite. It would seat 80 to 100 and, unlike the team’s club level, would include views of the field from dining areas, according to the survey.

The club level, located in the second deck along the first-base line, also features a climate-controlled lounge and all-inclusive food, but its lounge is set back from the field.

The Indians note in the survey that the premium lounge concepts are “hypothetical; the Indians have not committed to providing any of the concepts” contained in the survey. Curtis Danburg, the team’s senior director of communications, said last week the lounge concept is “in its infancy and the team is simply testing the waters,” adding

that the survey questions are part of the Indians’ usual communications with key stakeholders.

The Indians conducted similar research last October about club-level seating at Progressive Field. Before this season began, the team lowered club seat prices — to a range of $55 to $65 from a range of $80 to $100 — and made aesthetic improvements to the club seats.

Various options for the premium lounge are listed in the survey, and respondents are asked whether they would renew in their current seats or opt for the premium lounge scenario presented in the survey.

Pricing options vary from $100 for a premium all-inclusive buffet with alcohol included to $125 for pay-asyou-go food with no alcohol included to $150 for the same premium allinclusive buffet and alcohol.

The survey also asks whether customers would be more likely to commit to multiple years of premium lounge seats if price certainty was included in their purchase.

A work in progress The Indians continue to investigate ways to make little-used parts of Progressive Field — often the most expensive territory at the ballpark — more profitable or fan friendly.

Clinic spinoff installs rare, powerful imaging machine 3-D microscope used by Renovo Neural in demand

By CHUCK SODER csoder@crain.com

Diego Bohórquez, a post-doctoral fellow at Duke University, is looking for “a needle in a haystack on the moon.”

Renovo Neural Inc. has a powerful new tool that could help him find it. The Cleveland Clinic spinoff, founded in 2008 to develop and test multiple sclerosis drugs, has begun leasing an extremely rare 3-D electron microscope that is proving popular with researchers who study other medical conditions and bodily functions.

Without it, Dr. Bohórquez would have a much harder time finding the elusive neural synapses that allow the intestines to sense food and regulate appetite.

“With this technology, we are able to reconstruct a whole network of neurons,” Dr. Bohórquez said.

The 3-D electron microscope — the third Sigma VP-3View system to be installed in the United States — can cut a block of tissue into dozens of layers and provide detailed images of each one, said Renovo Neural CEO Satish Medicetty. By contrast, a traditional electron microscope can scan only one slice at a time.

“Time and cost wise, this technology makes a huge difference,” he said.

There is a four-week wait to use the 3-D electron microscope, which would have cost about $700,000 to buy, Dr. Medicetty said.

With the help of $3 million from

the Ohio Third Frontier economic development program, Renovo was formed to commercialize technology developed by Drs. Bruce Trapp and Wendy Macklin at the Cleveland Clinic.

They developed cell-based formulas designed to identify multiple sclerosis drugs and test their effectiveness, and they figured out how to create multiple sclerosis-like brain damage in animals, Dr. Medicetty said, noting that the company tests drugs on animals at the Clinic. Renovo also aims to develop ways to test treatments for stroke, Parkinson’s disease and other conditions, he said.

Drug development still is in the company’s long-term plans but has taken a back seat to generating revenue from the company’s drug testing services, which are used by pharmaceutical companies, and tissue imaging services made possible by the Sigma VP-3View, Dr. Medicetty said. Renovo Neural, which employs nine people full time and two part time, aims to turn a profit this year, he said. However, he would not provide sales figures.

Renovo Neural is the first company to use the Sigma VP-3View system to provide a service, said Joel Mancuso, applications manager for Gatan Inc. of Pleasanton, Calif., which developed the system with Carl Zeiss Microscopy LLC of Thorn-wood, N.Y. Mr. Mancuso said he knows of no similar electron microscope.

“Renovo is really in position to make it the norm,” Mr. Mancuso said.

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PHOTO COURTESY OF THE CLEVELAND INDIANS

A youngster enjoys the grand opening of the Cleveland Indians’ new “Kids Clubhouse” at Progressive Field in May. The Indians repurposed about a half-dozen suites to for the play area for kids, an ongoing effort to turn unused areas of the ballpark into profit.

In April, the Indians hired former Cleveland Browns ticket sales manager Ryan Robbins, who then was with the Oakland Raiders, as their new director of premium seating. At the time, Indians president Mark

Shapiro said Mr. Robbins would be charged not only with increasing sales now, but also mapping out strategies for the future of the premium areas.

“If we were going to build a ball-

park, what mix of premium seats would it have? How many suites?,” Mr. Shapiro said in April.

In addition to its club seat research, the Indians already have repurposed a number of the stadium’s suites: In 2008, the team combined four suites into the Champions Suite, which can be rented on a per-game basis and holds up to 60 fans. One suite between first base and home plate now is known as the “Fan Cave,” complete with a billiards table and flat-screen televisions. Another is home to the Indians Social Suite, where influential social media users gather for games.

In May, the Indians unveiled their Kids Clubhouse, a new children’s play area in right field that provides children a place to roam while parents can see the action on the field.

The team converted a number of suites to form the 10,000-square-foot area.

Progressive Field, which opened in 1994, was built with 121 suites, at one point the second-most in the majors behind the Texas Rangers’ Ballpark at Arlington. In 2010, the Indians began offering a free suite rental — valued between $2,000 to $6,500 — for new and renewing season ticket holders.

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JUNE 4 - 10, 2012

In time for summer, Cleveland’s menu for frozen treats expands As popularity grows, so does number of stores

By GINGER CHRIST gchrist@crain.com

Frozen yogurt is hot.

Just ask the Bechke family, owners of the Lemonberry frozen yogurt chain. They plan to add a fourth store to the shops they operate in Brecksville, Medina and Strongsville.

Husband-and-wife team John and Joy Bechke, who run their yogurt shops with the help of their two daughters, in 2010 debuted one of the first self-serve yogurt shops in the area with the Strongsville store.

In the two years since, the local frozen yogurt scene has exploded, with stores popping up throughout Northeast Ohio.

“I think it’s getting saturated to a certain point,” John Bechke said, though he maintains there remains “room for growth from competition.”

Frozen yogurt, known to aficionados as fro-yo, has risen in popularity nationwide.

Revenues from fro-yo stores increased in the aggregate in each

of the last seven years and should rise for the foreseeable future, according to IBISWorld Inc., a California-based market research firm.

Frozen yogurt retail store revenue rose 2.8% in 2011 to $723.1 million, according to IBISWorld, which forecasts a 2.9% gain in 2012.

Bob Stark, president and CEO of Stark Enterprises Inc., a Clevelandbased real estate development company, sees a relatively limitless market for frozen yogurt.

Menchie’s main man Mr. Stark’s company, Yogurt Treats LLC, is the northern Ohio franchisee for Menchie’s Frozen Yogurt. It opened its first store last summer on Chagrin Boulevard in Woodmere, and since has added another 10 Menchie’s to the area.

It is on course to open another six

by July and 14 by the end of the year. Mr. Stark wants Menchie’s to become the McDonald’s of the local fro-yo market.

“We say to the competition, ‘Think

twice before you decide to come into our neighborhood,’” Mr. Stark said.

Stark Enterprises’ experience in negotiating leases, identifying real estate and drafting building plans enables it to open stores faster than mom-and-pop shops, Mr. Stark said.

While the company’s plans are to expand in northern Ohio and nearby markets such as Pittsburgh and Erie, Pa., Mr. Stark isn’t dismissing the idea of acquiring franchise rights for other states.

“It certainly piques our interest in thinking about how we could do this in other markets,” Mr. Stark said.

Mr. Stark initially approached Menchie’s as a potential tenant for the developer’s Ohio retail properties.

However, the more Mr. Stark learned about the frozen yogurt chain, the more taken he became with the concept.

Neighbors, and rivals Yogurt Vi, a fro-yo chain owned by Maumee-based Lam Ho Enterprises Inc., opened its first store more than a year ago on the campus of the University of Cincinnati. The company had four stores by the end of 2011

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The Lemonberry yogurt chain — with co-owner Joy Bechke (center) and daughters Lindy Bechke (left) and Kari Bechke-Algaier pictured here — plan to add soon a fourth store to their roster. and plans to have doubled that number by the end of this year, said Kelly Wherley, Lam Ho operations manager.

“Although we receive many inquiries from (retail) centers around the country, we have to be selective of where we choose to go,” Ms. Wherley said. “We want to grow, but it has to be controlled.”

Ms. Wherley said she doesn’t think the Northeast Ohio market is oversaturated with fro-yo shops.

“We believe that the market still has opportunities, and because of how we operate our business, we know that there is always room for the next Yogurt Vi,” said Ms. Wherley, whose company opened a store last month in the Greens of Strongsville shopping center, less than a quarter-mile from the Bechke family’s Lemonberry store.

Yogurt Vi stores all feature bright colors and wireless Internet; some have either flat-screen TVs showing music videos or surround sound music systems.

Ms. Wherley said despite requests to franchise the chain, Yogurt Vi stores remain corporate-owned.

However, the company might consider franchising in the future.

“This has allowed us to control our name, our reputation and our brand,” said Ms. Wherley, whose company also has stores in Legacy Village in Lyndhurst and Great Northern Mall in North Olmsted, and soon will launch stores at Belden Village Mall in Canton and at Kent State University.

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Mr. Stark has a simple explanation for the popularity of the frozen treat.

“It’s a health food. It tastes great,” he said.

A number of frozen yogurt shops also are self-serve, offering customers dozens of flavors and toppings with

which to create a sundae.

Lemonberry, for one, offers customers more than 60 toppings — fruits, cereals, nuts and chocolates — and rotates 50 flavors among its three stores.

“It’s an experience to do it yourself,” John Bechke said. “You can make it as healthy as you want or as large as you want.”

Customers pay by the ounce at self-serve shops, with total costs typically $4 to $7.

So, how does horrible taste?

The growing presence of these frozen yogurt shops doesn’t go unnoticed by other sellers of frozen treats. Celeste Blau opened The Sweet Spot on Detroit Avenue in Lakewood last July with four family members.

She opted to open a gelato store in part due to the number of ice cream shops in the area. Gelato is similar to ice cream but has less butterfat.

“I think of our competition as not just gelato companies,” Ms. Blau said.

“I definitely think that if there weren’t as many frozen yogurt shops out there, we would do better.”

But Ms. Blau isn’t complaining.

The gelato shop has had a successful first year, increasing business as months pass and the company’s reputation spreads.

The gelato store changes its flavors based on the seasons and coming events. For example, the store, which only uses fresh, local ingredients, will start serving raspberry gelato once the fruit comes into season at Rosby Berry Farm in Brooklyn Heights.

Ms. Blau said customers enjoy testing the shop’s flavor experiments, even ones that flop. Take the new black sesame flavor, which Ms. Blau admits is “horrible.”

“Even if your mistakes are horrible, people want to try it. They say, ‘I want to see what horrible tastes like,’” she said.

■

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Neighbors: Office tenants also lure eateries continued from PAGE 1

warehouses and office buildings and businesses bringing offices back downtown — often to attract the 20and 30-somethings — downtown is getting back its smaller-scale eating spots.

They are not, however, the grilled cheese and meatloaf places of old.

Their menus are trendy and varied as they try to attract singles and couples too busy to cook.

“We want to be a small, familiar place, where people stop on their way home from work,” said Josh Kabat, co-owner of Cleveland Pickle, a dozen-seat nook in the City Club Building at 850 Euclid Ave. Cleveland Pickle offers sandwiches ranging from banana and peanut butter — the Cardiac Kid — to the Downtowner, with pickles, goat cheese, pine nuts, spinach, roasted tomato pesto and balsamic apricot spread. It also features a variety of pickles.

“We want to create memorable sandwiches,” said Mr. Kabat’s partner and fiancée, Kiaran Daley. “We’ve had people come back five days a week.”

The pair fixed on downtown after leaving Reddstone, a restaurant in Cleveland’s Battery Park neighborhood where Mr. Kabat was owner and chef. They believe the risk of their location in the city’s struggling financial district is mitigated by the restaurant’s modest rent and the lunch traffic from nearby office buildings.

They were attracted mainly, however, to the growing residential population.

“There’s a waiting list at 668,” Mr. Kabat said, referring to the 236suite Residences at 668, a short jog west on Euclid. “We just knew we had a solid concept and that people would come.”

Like a real estate broker, Mr. Kabat can tick off the names of nearby office buildings that developers are buying for residential renovation; among them are the Hanna Annex at Playhouse Square and the former East Ohio Gas Building further north on East Ninth Street.

Five Guys in its future?

Cleveland Pickle and a handful of other restaurants that opened in the last few months or are set to open in a few weeks are what Thomas Starinsky, associate director of both the Historic Warehouse District Development Corp. and the Historic Gateway Neighborhood Corp., calls “third spaces.” These spaces are not offices for workers or apartments for residents, but the kind of places that knit a neighborhood together.

“As the residential base grows and occupancy (in residential buildings) fills, there’s been nothing” for neighborhood people in the way of modest dining options, he said.

“You can’t go to the Blue Point every night,” said Mr. Starinsky, referring to an upscale restaurant in the Warehouse District.

Restaurateurs, primarily local

chefs developing new concepts, are responding to this void, and franchised and chain restaurants that were hanging back, waiting for a stronger market, are beginning to arrive. For example, a Potbelly Sandwich Shop is slated to open this Wednesday, June 6, at 515 Euclid, as the 200-store Chicago-based chain makes its entrance into the Cleveland market.

And the local franchise holder for Five Guys Burgers and Fries, a madeto-order burger joint, may not be far behind. Queried by email about her interest in downtown, Raji Sankar, co-CEO of regional franchise holder Wholesome Enterprises LLC, said, “We are excited about downtown and we have it on our road map for the future.”

Mr. Starinsky sees these places satisfying a need for eateries with Internet connectivity, carry-out food and late hours.

Currying favor with curry A block south of Cleveland Pickle, at 627 Prospect Ave., Mickey D’Angelo sees the spacious Nexus Café & Coffeehouse as first and foremost a neighborhood meeting place. To amplify the point, Mr. D’Angelo’s partner in the 100-seat space is the Gateway Church Downtown, which holds Sunday morning services in an adjoining meeting hall at the back of the café, after meeting for several years at Pickwick & Frolic on East Fourth Street.

“We were looking for a venue space, but also a café space that is

JUNE 4 - 10, 2012

welcoming, a place where people can meet friends,” Mr. D’Angelo said.

At mid-morning last Tuesday, May 29, Nexus was quiet, with a few young people sitting at tables, laptops open, in the spacious café.

The meeting space in back holds 140, Mr. D’Angelo said.

At present, Nexus is open until 9 p.m., but Mr. D’Angelo said he hopes to stretch out closing time with special events such as poetry readings and live music.

In the Warehouse District the next afternoon, Charka Exotic Indian Cuisine co-owner Beljinder Dadra sat in the quiet of his new restaurant, after surviving his first-day lunch rush.

Mr. Dadra and his partner, Resham Lal, a native Clevelander, took over the space formerly occupied by Waterstreet Grill and more recently the Sixth City Diner. The pair chose their location because they saw only burgers and pizza in the rapidly growing residential neighborhood.

“We wanted to bring something different,” he said. “There’s not much variety here.”

They’re bringing with them from State College, Pa., where they operate a similar restaurant called India Pavilion, a menu of lamb and tandoori Indian dishes. In particular, they offer a lunch buffet of Indian specialties.

Mr. Dadra said the Warehouse District’s mix of offices and residences offers the restaurant two strong markets — the lunchtime office crowd and residents in the evening.

Charka, too, offers Wi-Fi for the laptop crowd, and Mr. Dadra said he’ll be open until 11 p.m. for the

Wiith W t h iits tss ccon onnveeni onve n ennt lo loca cati ca t on andd eeas aassy ac acce cess ce sssibil ibbililit i y to it t t hee hea eart r of do rt down wnto wn town to wnn Cleeve v la l nd nd,, itt’s tim me to t putt BBur urke ur k to woorkk for ke o you o r co comp m an mp any. y Finnd ouut m y. mooree aatt bu b rkkeeaairirpo poort rt.c .ccom m.

residents he hopes will be spilling out of nearby apartment and condominium buildings as they look for places to gather.

Playing off a rebound And there’s more. Last month, BRGR 9, a spacious burger joint that offers hundreds of beer options, opened at 1382 W. Ninth St., while earlier this year, at 1300 W. Ninth, El Güero began serving up tacos and burritos.

Michael Deemer, vice president of business development for the Downtown Cleveland Alliance, a nonprofit that servers the center city, isn’t surprised by the influx of eateries.

“As the residential population downtown has grown, it’s caught the attention of restaurateurs,” said Mr. Deemer, who cited 2010 census data that pegged downtown at 10,500 residents. “We’re now at 95% or greater downtown residential occupancy.”

But it isn’t just new city dwellers that are drawing restaurants downtown. AmTrust Financial Services, a New York insurer, plans to move nearly 1,000 employees into the office building at 800 Superior Ave., and BrandMuscle Inc., a software seller, is moving 150 people from Beachwood to 1100 Superior Ave. Mr. Deemer noted that for the first time in several years, downtown office vacancy has declined below 20%.

“What we’re seeing, similar to what’s happening nationwide over the last five to 10 years, the trend has been to moving back in” to the center city, he said. “That’s where the young talent wants to be.”

■

B UR K E M E A N S B U S I N E S S.

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JUNE 4 - 10, 2012

Established locally, some restaurateurs looking beyond NE Ohio Melt, Winking Lizard’s Lizardville concept among those planning to spread their wings

By GINGER CHRIST gchrist@crain.com

Matt Fish, the founder of the popular Melt restaurants, says he’s now ready to expand the brand outside of Northeast Ohio.

FILE PHOTO/ JASON MILLER

BRIDGING THREE GENERATIONS OF TALENT For the first time in history, U.S. businesses have three distinctly different generations working together – Baby Boomers, Generation X and Millennials.

Is your business prepared to manage the challenges and capitalize on the opportunities of this diverse workforce?

Looking to grab a bite of cheesy goodness at Melt Bar and Grilled, one of Northeast Ohio’s iconic restaurants? Take a number (or, to be accurate, a nametag from the jacko-lantern). The wait time for a table at the gourmet grilled cheese eatery is upwards of an hour any day of the week and show no signs of abating.

Since opening Melt in 2006, owner Matt Fish not only has expanded the original Lakewood location but also has opened two more restaurants — in Cleveland Heights and Independence — to alleviate the demand. Yet, rather than redirect customers, Melt only has attracted more, which isn’t causing Mr. Fish sleepless nights.

With plans already in gear for a location in Mentor, Melt now is among a handful of Cleveland-area restaurants that either are looking to grow beyond their native land or are in the process of doing so.

Mr. Fish said he likely will open a restaurant in Columbus within the next year and could open a site in Akron within the next two years. His plan is to open sites within a threehour radius of Cleveland on a pace of one new restaurant per year.

Columbus, he said, could be another Cleveland. However, he also intends to open one or two more restaurants in Northeast Ohio.

Mr. Fish didn’t start out with the idea of creating multiple Melts. “Our plan was to have just one.

We never thought about expanding,�

Mr. Fish said.

However, with the help of a commercial production kitchen it opened last year in downtown Cleveland, Melt now has the resources to spread its influence.

While most of its new sites will be in the range of 4,500 to 5,000 square feet, the company would have the option to open smaller sites without preparation rooms. “By building this facility, we have the capacity to really expand and not be limited to where we can go,�

Mr. Fish said.

Lizard leaps forward

-FBSO IPX UP NBYJNJ[F UIF QPUFOUJBM GPS FBDI t %JTQFMMJOH NZUIT BOE TUFSFPUZQFT t *EFOUJGZJOH TIBSFE WBMVFT BOE FYQFDUBUJPOT t 6TJOH UFDIOPMPHZ UP CSJEHF HFOFSBUJPOT t #VJMEJOH )3 TUSBUFHJFT UP QSPNPUF JODMVTJWFOFTT BOE EJWFSTJUZ SPONSORED BY:

4HURSDAY *UNE s 4HE 2ITZ #ARLTON #LEVELAND A M s "REAKFAST .ETWORKING A M s 0ANEL $ISCUSSION

UNDERWRITTEN BY:

ADVERTISING: Nicole Mastrangelo 216-771-5158 or nmastrangelo@crain.com REGISTRATION: CrainsCleveland.com/BREAKFAST or contact Jessica Snyder at Phone: 216-771-5388 Email: jdsnyder@crain.com

Winking Lizard Inc. already has achieved small-chain status and is fueling its growth through both expansion and change.

The company, which operates Winking Lizard Tavern, known for the signature pet lizards in each of the restaurants, last year launched its first Lizardville — a beer store and whiskey bar.

The first Lizardville opened in April 2011 in Bedford Heights and the second opened last week in Rocky River. Jim Callam, president of Winking Lizard Inc., said he plans to expand the concept statewide.

With 14 Winking Lizard Taverns in Northeast Ohio and Columbus, the Lizardville concept gives the company a new way to grow in its existing footprint.

Mr. Callam said he doesn’t plan more Winking Lizard Taverns in

Northeast Ohio but could open the restaurants in Dayton and Cincinnati. The company also is considering new concepts for local markets such as Brunswick and Medina.

Yet, the company doesn’t intend to grow beyond the Buckeye State. “It’s our home,� Mr. Callam said.

Flipping out in Columbus When Michael Schwartz in January 2011 launched Flip Side, a gourmet burger restaurant, in Hudson, he thought in the back of his mind it was a concept worth recreating.

Initial plans didn’t call for expansion, but just 14 months later, Mr. Schwartz and his partners, Shawn and Tiffany Monday, opened a larger showcase-style Flip Side in the Easton lifestyle center in Columbus.

Now they’re developing two new sites — in Chagrin Falls and in Cleveland’s Flats — that are set to open in early winter and in summer 2013, respectively. “The concept itself allows for duplication,� Mr. Schwartz said.

The rising popularity of fastcasual restaurants, coupled with a continued demand for organic, locally sourced food, creates a new market for independent restaurants that can blend those two concepts.

To build on that trend, Mr. Schwartz and his partners also are opening a Neopolitan-style pizzeria and bakery, Three Palms, in Hudson, and a Mexican restaurant, Dos Tequilas, in the Flats. Both ideas have potential for expansion because they will be chef-driven, casual-eating experiences, Mr. Schwartz said.

Slow but steady Other restaurant operators that have expanded to multiple locations locally are treading more carefully before going beyond their home base.

Take Larry Shibley, who along with his two brothers and sister opened their first Yours Truly restaurant in 1981. Today, they run eight locations. “We’re not on a real fast track,�

Mr. Shibley said.

Mr. Shibley, president of Yours Truly’s parent, Shibley Management, said the company has opened new locations only as resources have allowed. Consequently, they have no debt on the restaurants.

To keep growing the brand without opening new locations, the Shibleys added patios, liquor and even expanded their menu. And, two years ago, they introduced a catering service focused on party trays.

Through those changes and the introduction of new stores, Mr. Shibley said, Yours Truly has managed to increase sales by an average of 10% annually.

Mr. Shibley said Yours Truly, which only operates restaurants in Cleveland’s eastern suburbs, likely will open one or two locations on the West Side before expanding outside of Cleveland. “It makes supervising and moving product around a little harder when you move completely to a new city,â€? Mr. Shibley said. “I’m sure that day will come.â€? â–

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JUNE 4 - 10, 2012

GOING PLACES JOB CHANGES

LEGAL

CONSTRUCTION

BENESCH: David M. Krueger to associate.

FORTNEY & WEYGANDT INC.: Joe Brooks to project manager.

GILBANE BUILDING CO.: Dave Paully to district chief scheduler; Dawn Hill to project accountant level II; Dave Mooney to senior project manager; Wade McKenzie to senior MEP superintendent; Dan Kronenfeld and Dan Focht to senior project engineers.

EDUCATION CLEVELAND STATE UNIVERSITY: Brent Pieper to assistant vice president for advancement.

FINANCIAL SERVICE LPL FINANCIAL LLC: Bethany J. Bryant to president, The Private Trust Co.

HEALTH CARE

SQUIRE SANDERS: Michele L. Connell, Stephen M. Fazio and Stephanie E. Niehaus to partners; Sherri L. Dahl and L. Todd Gibson to principals.

MANUFACTURING CARDPAK: Seth Duckworth to vice president, sales and marketing.

DAVID INDUSTRIAL SALES INC.: Joseph Ballone to regional sales engineer, Northeast Ohio.

PRESTOLITE PERFORMANCE: Craig Stark to vice president, sales; Michael Grimes to director, retail sales; Bob Bruegging to vice president, business development.

SWAGELOK CO.: Frank J. Roddy to executive vice president, finance and administration.

director of public relations; Jayson Shenk to graphic designer.

TECHNOLOGY

MEDIA

MOBILE AWARENESS LLC: Kevin M. Kuhn to vice president, sales and marketing.

BABCOX MEDIA INC.: Engine Builder — Doug Kaufman to associate publisher/editor; Brendan Baker to senior editor/regional sales manager; David Benson to regional sales manager.

NONPROFIT CLEVELAND ORCHESTRA YOUTH CHORUS: Lisa Wong to director; Daniel Singer to assistant director.

CUYAHOGA VALLEY SCENIC RAILROAD: Craig B. Tallman to president, CEO.

REAL ESTATE TRANSACTION REALTY: Matthew Heinl to sales associate.

RETAIL WALMART: Doug Yost to regional general manager, northern Ohio.

MARKETING

SERVICE

INSURANCE

STUDIOTHINK: Christin Miller to account coordinator; Ryan Shull to interactive designer; Tony Giangrande to graphic designer.

MEDICAL MUTUAL: Heather Thiltgen to vice president, direct to consumer strategy.

WRL ADVERTISING: Sarah Cucciarre to graphic designer; Sabrina Milnes to web programmer; Holly Mueller to

INFOCISION MANAGEMENT CORP.: Yvonne Anderson to vice president, new business development; Mike Stokes to senior vice president, commercial operations.

CLEVELAND CLINIC: Gordon M. Snow to chief of protective services.

Metro pitching insurance program to municipalities

By TIMOTHY MAGAW tmagaw@crain.com

The MetroHealth System is piggybacking on Cuyahoga County Executive Ed FitzGerald’s regionalization plan in hopes that more municipalities will sign on to the county-subsidized health system’s insurance offering.

So far, five municipalities — Olmsted Falls, Olmsted Township, Walton Hills, Mayfield Village and Glenwillow — offer their employees the option of the insurance plan, MetroHealth Select. System officials hope as many as 13 other communities will sign on this year.

“We’re building momentum with this program,” said Dr. William Lewis, chairman of MetroHealth’s market development campaign.

Expanding enrollment in MetroHealth Select, which is administered

by Medical Mutual and in the past only was offered to county employees, has been a paramount task for MetroHealth as it looks to muscle up its outpatient network to bring in more paying patients.

MetroHealth also recently inked a deal with Cleveland State University to offer its employees the bene-

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

fits option and is in discussions with a handful of companies that might offer their employees the plan, according to Phyllis Marino, the system’s vice president for marketing and communications.

The insurance program saw marked growth from 2011 to 2012, nearly doubling in size to 4,406 enrollees, according to Elise Hara, the county’s director of human resources.

Ms. Hara said the county has been in talks with mayors in various towns about embracing MetroHealth Select, but noted that “the ultimate selection is up to the individual employee, and it can be driven by cost, proximity to the facilities and doctors.”

MetroHealth has 17 locations, with that number expected to grow in the coming years. The system is building a $23 million health center in Middleburg Heights — the first of at least three planned health centers.

MetroHealth officials have been tight-lipped about where the others will be, but Dr. Lewis said he expects the location of the next center will be unveiled in the coming year.

“We’re not going to delay and wait for completion of the Middleburg Heights building,” he said. ■

LAZORPOINT: Cale Harter to project engineer, software development.

15

AWARDS ACADEMY OF MEDICINE OF CLEVELAND & NORTHERN OHIO: Anthony E. Bacevice Jr., M.D., (EMH Healthcare) received the Charles L. Hudson, M.D., Distinguished Service Award.

NAIOP NORTHERN OHIO CHAPTER: David O’Neill (Ostendorf-Morris Co.) received the Traveling Gun Broker Award; Terence P. Coyne (Grubb & Ellis) received the Industrial Broker Award; Mark Abood (Chartwell Group LLC) received the Investment Broker Award; Rico Pietro (Cresco Real Estate) received the Office Broker Award; Erin Ryan (Atwell LLC) received the Member of the Year Award; Ari Maron (MRN Ltd.) received the Industry Recognition Award; Eric Wobser (Ohio City Near West Development Corp.) received the President’s Award; Dave Robar (Vocon) received the Chapter Past President Award; William West (Ostendorf-Morris Co.) received the Lifetime Achievement Award.

U.S. SMALL BUSINESS ADMINISTRATION CLEVELAND DISTRICT: Victoria Tifft (Clinical Research Management Inc.) received the 2012

Brooks

Bryant

Thiltgen

Krueger

Duckworth Stark

Bruegging

Roddy

Bacevice

State of Ohio Small Business Person of the Year Award.

YWCA GREATER CLEVELAND: Beth Cole (Weltman, Weinberg and Reis Co. LPA) received a Woman of Professional Excellence Award.

Send information for Going Places to dhillyer@crain.com.

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JUNE 4 - 10, 2012

Admission: Employment down among law school graduates continued from PAGE 1

a result of poor management. It’s just a catastrophic time in the legal field right now. Nobody’s ever seen anything like this.

“We either needed to prepare to admit a lot of students who were likely not going to be successful enough to get a job and pay off their law school loans, or we had to get smaller,” Mr. Boise said.

Nationwide, a number of schools, among them the University of California’s Hastings College of the Law and George Washington University Law School, are reducing class sizes, too.

As of May 4, the number of law school applicants nationwide for fall 2012 was down 14.6% from fall 2011, according to the Law School Admission Council in Newtown, Pa. The council also found that 170 of the roughly 200 U.S. law schools have reported a drop in applications this year.

The decline in applicants comes atop a drop of 10.7% in the number of people applying to law school last fall from levels of fall 2010.

Given those declines, it isn’t surprising that law schools are cutting back on admissions, said Wendy Margolis, director of communications for the Law School Admission

Council.

“It’s just beginning to happen, I think, so it’s really difficult to predict what the extent of it will be and how many law schools will end up doing that,” she said.

WE’RE GOING DOWN Cleveland-Marshall College of Law, the University of Akron School of Law and Case Western Reserve University School of Law are seeing decreased applications.

Cleveland-Marshall and CWRU, in turn, are lowering admissions targets. 2012 numbers are year-to-date figures, with admissions being an expected total.

A dean with a conscience Mr. Boise said higher-ranked law schools are dipping into a student pool they previously didn’t pursue because there are fewer applicants.

That situation leaves lower-ranked schools such as Cleveland-Marshall — ranked 135th by U.S. News & World Report — with less of the applicant pie.

If Cleveland-Marshall continued admitting 200 students, it would have chanced enrolling a quarter to a third of the incoming class at “serious risk” of not being able to pass the bar, Mr. Boise said.

“I think it’s an ethical issue,” Mr. Boise said. “I can’t sleep well at night feeling that I’m telling everybody who comes, ‘Yeah, you’ve got a chance to be a lawyer,’ when as a matter of academic and test performance, that’s not the case.”

It also isn’t a good business model, Mr. Boise said. He said students who don’t excel “are not going to be happy with the school, and word

I research.

I fulfill.

Cleveland-Marshall

Year

Apps

Admissions

Year

Apps

Admissions

2012

1,132

140

2012

1,369

175

2011

1,609

168

2011

1,647

175

2010

1,851

195

2010

2,003

177

2009

1,930

203

2009

1,876

202

2008

1,768

211

2008

2,085

158

2007

1,481

215

2007

1,919

175

will get out.”

“We are measured by outcome,” he said. “You’re going to devalue the product that you’re offering.”

Reducing student numbers reduces tuition revenue, and to compensate, Cleveland-Marshall has cut $800,000 from its 2012-2013 budget, some of it through attrition. It’s expected the school will cut another $750,000 through attrition over the next three years, Mr. Boise said.

The school also plans to raise

I learn.

I prospect.

I save.

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I profit.

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I lead.

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tuition by 9.5% in each of the next three years, though Mr. Boise noted it’s also increasing its scholarship budget and is including for the entering class bar exam preparation courses, which typically run each student roughly $3,000.

Cuts may not be done Case’s Mr. Mitchell, who became dean last June, said he made the decision last December to cut the incoming 2012 class to 190.

Mr. Mitchell said he’s motivated to cut more to improve the quality of the incoming class than by declining application volumes. Case’s applications have dropped 6% this year, according to Mr. Mitchell, though he noted it’s a moving number.

“If we find that we cannot improve the quality of our class at our 10% cut, we will cut further,” Mr. Mitchell said. “Our goal is not to maintain; our goal is to improve.”

Such improvement will be measured by the types of jobs Case graduates achieve, their success on the bar exam and, over the long term, the type of careers they lead, Mr. Mitchell said.

The payoff for Case is a potential climb in U.S. News & World Report rankings, he noted. The school currently is ranked 67th.

Like Cleveland-Marshall, Case needed to reduce its budget in line with its lower admissions. To do so, the school cut its budget substantially, in part thanks to a pay freeze for the 2012-2013 academic year that faculty and staff willingly accepted, Mr. Mitchell said. The school also increased tuition nearly 5%.

Unlike Northeast Ohio’s other two law schools, the University of Akron School of Law does not plan at present to cut admissions because it expects to meet its enrollment projection of 175 — a number it’s held to

“I can’t sleep well at night feeling that I’m telling everybody who comes, ‘Yeah, you’ve got a chance to be a lawyer.’”

– Craig Boise, dean, ClevelandMarshall College of Law for the last couple years — without reducing its standards, said Lauri S. Thorpe, assistant dean of admission, financial aid and student affairs.

It’s all about jobs The job market for law school graduates is the worst it’s been in decades.

According to the June 2011 Employment Report and Salary Survey for the Class of 2010 by NALP — The Association for Legal Career Professionals, the overall employment rate for new law school graduates was 87.6% of graduates for whom employment status was known. That’s the lowest since 1996.

Furthermore, only 68.4% of the graduates for whom employment was known obtained a job for which bar passage is required. That’s the lowest percentage NALP ever has measured.

“There is likely more bad news to come,” said NALP executive director James Leipold. “We can expect that the overall employment rate for new law school graduates will continue to be stagnant or decline further for the Class of 2011, with the curve probably not trending upward before the employment statistics become available for the Class of 2012.”

Even so, the local schools’ admission cuts aren’t necessarily permanent.

Mr. Boise said Cleveland-Marshall’s admission plan, known as the “140 plan,” covers the next three years, and school officials will re-examine admissions when its time is up.

Case Western Reserve’s Mr. Mitchell doesn’t anticipate ever increasing the law school’s class size above 190, though long-term market conclusions would be premature, he said.

“We face, I think, permanent structural changes in the job market,” Mr. Mitchell said.

One benefit to the current legal market, said the Law School Admission Council’s Ms. Margolis, is it’s weeding out those people who go to law school because “they think it’s a nice thing to do.”

Someday, the spread of these admission cuts may result in a lawyer shortage, she said.

“It’s conceivable that the pendulum would swing the other way eventually,” she said. “But who knows how long that would take.”

■

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NNETT STEVE BE TIONS ILLUSTRA

ELECTION FEARS GRIP I INVESTORS

By MICHELLE PARK mpark@crain.com

Advisers report uptick in calls from clients anxious over potential market fallout in November

t’s an extreme example, but an example nonetheless: Fearful that this November’s presidential election would wreak havoc on his portfolio, one local man recently demanded that his investment adviser sell everything in which he was invested. (Ultimately, he reconsidered.)

The man is not alone in his anxiety.

Advisers across Northeast Ohio are fielding calls and emails from a growing number of clients who are concerned about how the market — and their investments — will fare before and after the election.

The anxiety is more intense this election year because of the recession of 2008, said Kevin Myeroff, CEO of NCA Financial Planners in Mayfield Heights, who spoke last week at a Liberty Bank program in Warrensville Heights titled, “Red State, Blue State, State of Small Business & Your Investments.”

“They’re calling, they’re emailing, they’re very emotional and they’re paying way more attention,” he said of clients. “Everybody’s afraid that the wrong president doing the wrong thing can put us back into a recession.”

There’s much more to consider than the election, though, local investment advisers stress, among them, See ELECTION Page I-5

INSIDE ■ After a roller coaster ride, Cedar Fair LP leads the pack in this year’s Superstar 10.

PAGE I-2 ■ Even though land leases have been signed, there still are ways to profit from Ohio’s shale boom.

PAGE I-4 ■ Market cap leaders PAGE I-6 ■ The lower interest rates have fallen, the more risk investors are willing to take.

PAGE I-7 ■ Largest public companies PAGES I-8, I-9

INVE$TINGGUIDE2012 To retain, lure top talent, companies turn to deferred rewards Plans attractive to employees limited by more traditional benefit options

By MICHELLE PARK mpark@crain.com

W

ith many companies’ profits up and competition fierce for highquality people, more companies are eyeing nonqualified deferred compensation plans as the “golden handcuffs” they need to attract and keep employees.

That’s the word from local investment advisers, who say they’ve seen a surge in interest in these plans. Broadly defined, the plans defer the payment of some future compensation until a later date.

For example, a company could tell an employee, “We’ll give you $20,000 a year for the next five years, but you don’t get it if you’re not here in five years.”

“That’s powerful,” said James Merklin, director of employee benefit plan services for Bober Markey Fedorovich, an accounting and business advisory firm in Akron. “Now, I have a reason to stay because I’m putting a lot of money at risk if I leave.

“I’m seeing more interest from my corporate clients in looking at setting up deferred compensation plans because they feel the need to

do something from an overall competitive perspective,” Mr. Merklin said.

“We’re in an interesting environment right now,” he added, citing how unemployment remains high but highly skilled people are difficult to find.

The promise of future compensation is one method of incenting employees to stay without giving them equity in one’s company, said Mark Dorman, president of Dorman Farrell, a Medina financial planning firm.

“The competition for talent in Northeast Ohio is fast and furious,”

Mr. Dorman said.

Nonqualified deferred compensation plans take various forms.

Their value can be tied to some measure of a company’s operations or to an index of equities. They also can be life insurance products bought by an employer for an employee.

“There are additional costs for employers, but the costs pale in comparison on the (return on investment) of keeping your key people with your company,” Mr. Dorman said. “If I’ve got to pay a few extra thousand bucks to install a plan, it’s money well spent.”

The plans address a number of timely issues, including the volatile employment market and the lack

of succession plans many companies are facing because of the retirement of baby boomers and the lack of interest from next generations, said Karyn Sullivan, director of business development for Bober Markey.

Back in style Not every company may do them, though; whether they can depends on their legal structures.

A relatively popular option in the 1970s and 1980s, these plans differ from qualified plans, such as 401(k)s, in that they are not subject to the Employee Retirement Income Security Act of 1974 (ERISA) and do not need to be held in trust.

See PLANS Page I-2

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CRAIN’S CLEVELAND BUSINESS

Cedar Fair steady again after wild ride Amusement park operator weathers recession, heavy acquisition debt; now, it tops Superstar 10

By MARK DODOSH mdodosh@crain.com

C

edar Point Amusement Park in Sandusky has its share of roller coasters with interesting names.

There’s the twisting, turning, greenrailed Raptor; the heart-in-yourthroat Top Thrill Dragster, which goes from zero to 120 mph in less than four seconds; and the park’s signature ride, Millennium Force, which reaches 310 feet into the sky before hurtling riders down from its crest at an 80-degree angle.

The parent company of Cedar Point doesn’t have a similar nickname. But if it did, Cedar Fair LP might be called, “The Comeback Kid.�

The owner of Worlds of Fun amusement park in Kansas City, Mo., was in a world of hurt after it took on a ton of debt to pull off its 2006 acquisition of Paramount Parks, which included Cincinnati’s Kings Island, in a $1.2 billion deal that wrapped up shortly before the credit crunch hit. Cedar Fair weathered the financial storm of the next few years, though, and for the last two years has racked up record aggregate attendance at its 11 amusement parks and six water parks. “All indications now are positive we should be able to do a third record year,� Cedar Fair CEO Matt Ouimet told Crain’s reporter

Timothy Magaw two months ago. “Three record years in a row don’t happen very often. I remind my board of that, but they certainly remind me that we have the great parks to do it.�

If investors need a reminder that Cedar Fair has staged quite the comeback, they should find it in the company topping the list of the Crain’s Superstar 10.

The latest version of Crain’s annual look at public company performance in Northeast Ohio finds only one company — ParkOhio Holdings Corp., at No. 7 this year — as a repeat member from the 2011 Superstar class, which was dominated by manufacturers that rebounded in 2010 from their recession-plagued results of 2009.

The 2012 Superstar class is an eclectic mix of companies from across the region. Some of these companies, such as Cleveland-based Park-Ohio, a diversified manufacturer and provider of supply management services, continued to perform well in 2011 after staging recoveries in 2010. Others, such as Cedar Fair and Diebold Inc. in Green, a producer of automated teller machines and bank security equipment that is No. 2 on this year’s list, have recovered from rough patches and turned solid profits in 2011 after losing money in 2010.

A trio of performance indicators

INVE$TINGGUIDE2012

JUNE 4 - 10, 2012

CRAIN’S SUPERSTAR 10 RK COMPANY

1-YR. COMPOSITE TOTAL SCORE RETURN

TOTAL 1-YR. NET RETURN INCOME RANK CHANGE

NET INCOME RETURN RETURN % CHANGE ON ON EQUITY RANK EQUITY RANK

1

Cedar Fair LP

10

73.30

2

328.59

6

45.46

2

2

Diebold Inc.

32

20.83

15

815.07

2

17.51

15

3

TransDigm Group Inc.

36

51.41

8

95.16

18

27.57

10

4

Myers Industries Inc.

40

58.73

5

157.21

13

11.89

22

5

Nacco Industries Inc.

44

10.50

20

103.90

16

28.13

8

6

Lincoln Electric Holdings Inc. 47

26.97

12

66.75

22

18.45

13

7

Park-Ohio Holdings Corp.

50

1.27

28

93.82

19

44.98

3

8

First Citizens Banc Corp.

52

72.30

3

412.15

5

3.86

44

9

Avalon Holdings Corp.

57

96.55

1

242.91

9

1.94

47

58

48.66

9

-4.46

42

29.13

7

10 Sherwin-Williams Co.

SOURCE: S&P CAPITAL IQ; WWW.SPCAPITALIQ.COM

determines which companies make up the Superstar 10. A composite score for each public company in the 15 counties Crain’s tracks was obtained by adding its rank on three different lists — 12-month total return to shareholders, percentage change in profits in the trailing 12-month period reported before April 30 versus the like period a year earlier, and return on equity during the latest 12 months reported by the company.

As in golf, the lower the composite score, the better a company’s overall performance is considered to be.

Take TransDigm Group Inc., a Cleveland-based producer of aircraft parts that is growing in part via acquisition. It ranked eighth in one-year total return to shareholders, 18th in percentage change in profits and 10th in return on equity. Adding

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eight, 18 and 10 gives TransDigm a total score of 36, which puts the company at No. 3 on the Superstar list just below Diebold and just above Akron-based Myers Industries Inc., a diversified manufacturing and distribution company.

Investors who put money into these companies a year ago largely were rewarded for their foresight.

Half the 10 companies in this year’s class saw their total returns to shareholders in the 12-month period that ended April 30 exceed 50%, with the No. 9 Superstar, Avalon Holdings Corp., increasing the most. The total return of the Warren-based provider of waste management shot up 96.55%. Only Park-Ohio turned in a total return that was less than 10%, though the No. 5 Superstar, Nacco Industries Inc. — a Cleveland-based producer of coal, fork lift trucks and small appliances — barely exceeded that double-digit level.

Of the three other companies that are part of this year’s class of Superstars, two have appeared in past classes while one is a newcomer.

The two veterans are No. 6 Super-

INSIDE THE COMPANY Crain’s determines its Superstar 10 by obtaining a composite score for each publicly traded company in the 15-county coverage area. The composite score is the total of three rankings: ■12-month total return to shareholders ■2011 percentage growth in profits ■2011 return on equity star Lincoln Electric Holdings Inc., a Euclid-based producer of welding equipment, and Cleveland-based paint maker Sherwin-Williams Co., at No. 10 on the list.

The newbie at No. 8 is First Citizens Banc Corp., the Sanduskybased parent of Citizens Banking Co. The small community bank paid off big for investors over the previous 12 months, with a total return to shareholders of 72.3% as its profits over the trailing 12 months improved by more than â– 400%.

Plans: Tax benefits factor in continued from PAGE I-1

That can be a bonus for an employer because they’re not required to write the check right away, Mr. Merklin noted. One downside though: The business doesn’t get a tax deduction until the promised pay actually is paid.

Many companies offer a qualified benefit plan, but not all make available nonqualified deferred compensation plans, so businesses are using such offerings to differentiate themselves, said Jeffrey Malbasa, chief operating officer of Spero-Smith Investment Advisers in Beachwood.

One plus to the plans, particularly for the highly compensated employees who most often have them, is the ability to put more money away. Highly paid people are limited in what they can pay into more traditional qualified plans, such as 401(k)s, but there is no cap on what can be deferred into nonqualified deferred compensation plans, Mr. Merklin said.

Uncertainty about tax rates is a major driver of the resurgence of such plans, said Karyn Pistone, a certified financial planner with

Beacon Financial Partners in Beachwood. “People are starting to ask about them,� Ms. Pistone said. “Most of my clients are really starting to feel they will never be in a lower tax bracket than they are now. People are very concerned about tax rates being higher.�

Here’s how that relates: Employees who have nonqualified deferred compensation plans enjoy the perk of tax deferral. If by the time they’re cashing in their deferred compensation they’re in a lower tax bracket — which many would be after they’ve retired— they could pay significantly less tax than they would if they were receiving the money today, Mr. Merklin said.

Also lending to the resurgence of these plans, according to Mr. Dorman, is the increased clarity regarding Section 409(A), legislation passed in the wake of the Enron scandal. It clarified the timing of deferrals and distributions, among other issues.

Before the sharpened clarity, many companies were leery to do nonqualified deferred compensation plans for fear of noncompliance,

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INVE$TINGGUIDE2012

JUNE 4 - 10, 2012

CRAIN’S CLEVELAND BUSINESS

I-3

In uncertain tax climate, carefully plan income, deductions

N

ow that the 2011 tax filing season has ended, it becomes more and more important to review and take control of your 2012 tax situation.

It also is time to start thinking about 2013 taxes as well. We are in an environment of uncertainty with respect to future taxes and, as a result, planning flexibility will be essential.

If Congress does not enact any new legislation, federal income tax rates will increase — in some cases dramatically — for individual taxpayers effective Jan. 1.

These changes include an increase in maximum rates on dividend and ordinary income from 15% and 35%, respectively, both to 39.6%. In addition, tax rates on long-term capital gains are scheduled to increase from 15% to 20% and a new 3.8% tax on unearned income begins for high-income individuals.

Regardless of what action Congress takes, it is virtually certain that some of us will face increased tax rates starting next year. This situation presents opportunities and risks that require planning.

To the extent that you have control over timing and realization of your potential income and deductions, you should consider the tax consequences and the relative benefits and costs of your decisions.

Additionally, a review of the tax consequences of your investments also is advisable. Some planning ideas to keep in mind: ■ For owners of closely held C corporations: 2012 may be the best opportunity for quite some time to declare and pay dividends.

If your corporation has excess funds that you would like to tap, 2012 is the year to do it. We know that the maximum tax rate for these qualified dividends will only be 15%, but we do not know what the future will hold.

■ For investors with capital gains: The obvious suggestion, as with dividends, is to sell profitable

Mr. Dorman said.

Grass isn’t always greener As with anything, risks exist.

Chief among them is the fact that one condition of nonqualified deferred compensation plans is there needs to be substantial risk of forfeiture. That risk can be an employee standing to lose all of the promised pay if they leave a company before a plan requires, or the company itself going under.

Nonqualified plans are not exempt from creditor claims, so any company’s unfunded promises are not protected.

“That promise (of deferred compensation) is only as good as the business giving it to me,” SperoSmith’s Mr. Malbasa said.

Market risk is another potential downside since some deferred compensation is tied to equities, said Tom S. Goodman, a partner with Cedar Brook Financial Partners in Cleveland who specializes in nonqualified deferred compensation plans.

Though he said he hasn’t seen the increased popularity that other advisers say they have, Mr. Goodman expects a surge in the use of nonqualified deferred compensation plans toward the end of this year and in 2013, given the increase in taxes many expect.

■

investments in order to take advantage of the final year of the low tax rate on capital gains. A closer analysis suggests you consider the expected rate of return on that asset.

Even if a higher tax is incurred when the investment is ultimately sold, selling now to “take advantage” of a lower rate may ultimately cause you to miss more asset growth and end up with a lower after-tax result.

And do not forget to consider realizing capital gains if you have capital losses that are otherwise going to be subject to the $3,000per-year deduction limit.

This strategy works even if you like the investment with the built-in capital gain, because you can buy back the investment without trig-

DAVEJANOSEK

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■ For investors in general: The dividend income you earn will likely result in less after-tax income. At the same time, as tax rates increase, the value of your municipal bond

portfolio will likely increase, other things being equal.

■ Converting traditional IRAs to Roth IRAs: Many have discussed the advisability of converting a traditional IRA to Roth IRA this year.

In 2012, there is no limitation on the level of income to be eligible for a Roth conversion. Be careful and discuss this with a tax adviser.

Your age and tax situation play a significant role in determining the benefit of a Roth conversion.

■ Estate and gift: The current estate and gift exemption amount is $5 million per person. A couple can pass up to $10 million free of estate tax. If a new tax law isn’t passed, the estate and gift exemption will fall to $1 million per person.

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In addition, valuation discounts have been the target of numerous proposals. If you are planning on giving and have a substantial net worth, 2012 is the year to give.

■ Year-end planning ideas: Depending on where tax rates are headed next year, typical year-end planning may change.

Doing the opposite of typical year-end tax planning may be appropriate, and you may decide to accelerate income into 2012.

This year will be difficult for planning because of the timing of the election and the difficulty in ■ passing any tax legislation.

Mr. Janosek is a managing director for CBiz Inc.

20120604-NEWS--20-NAT-CCI-CL_--

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CRAIN’S CLEVELAND BUSINESS

INVE$TINGGUIDE2012

JUNE 4 - 10, 2012

There’s still room in shale boom Advisers see plenty of opportunities in energy

By DAN SHINGLER dshingler@crain.com

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o, you want to keep up with the Clampetts and be a shale gas millionaire — what to do, what to do?

If you’ve got a time machine, the thing to do is to go back a few years and buy mineral rights in eastern Ohio — rights worth $50 or so an acre 10 years ago are worth $3,000 or more today.

But, for those of us stuck in 2012, experts say there still are ways to possibly profit from Ohio’s new “gold rush,” as the rush to drill for shale gas and oil is being called, as well as increased domestic energy production generally.

Ohio’s Utica shale, which is about 8,000 feet below most of the eastern half of the state and contains not just natural gas but oil and other valuable liquids, has become one of the hottest spots in the nation for drillers in the last six months.

State residents — even those not living near the shale itself — have taken notice.

“We get questions of two types on this,” said Andy Schuler, regional investment director for PNC Wealth Management in Cleveland. “There are those who express an interest in, ‘How can we take advantage of the opportunities (directly in shale gas)?’ But we’re also getting clients inquiring as to the broader impact: ‘What is the impact of lower natural gas prices on companies and on the economy generally?’”

For the curious and ambitious, Mr. Schuler and other investment professionals say it’s fine to have optimism because of what you see in Ohio or in terms of generally increasing natural gas or oil production in the United States. He and others share that positive outlook.

“I’m bullish on energy generally,” said Carina Diamond, managing director of SS&G Wealth Management in Solon. “We have been bullish on it for a long time. It hasn’t been such a good investment the last couple years, but over the long term I’m sure it’s a good investment.”

Getting into the game Demand for energy is only going to go up, say folks like Ms. Diamond.

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COMING UP: CFO OF THE YEAR AWARDS Crain’s Cleveland Business currently is taking nominations for its annual CFO of the Year section, which this year will publish in the newspaper on Oct. 15.

Each year Crain’s honors top financial professionals in the forprofit and nonprofit sectors.

To nominate someone you feel is worthy for consideration, visit this website: http://crainscleveland.com/ section/CFOevent_nominations.

The nominating process ends in August.

Additionally, find profiles of past honorees and photos and videos from past events at http://crains cleveland.com/section/CFOevent _Event.

This year’s awards reception is set for the week of Oct. 22.

Increasing production in the United States will impact both energy companies as well as industries that rely on oil and gas to operate, they say — and it will create investment opportunities.

“It’s a vast industry and I’ve increased the allocation for my clients,” Ms. Diamond said. “I strongly believe that for the long term you have to have some significant exposure to that industry.”

But there are a lot of ways to play it, Ms. Diamond and others say, and investors should try to diversify themselves as much as possible, not only by owning other unrelated investments, but also by investing across different parts of the energy sector itself.

“How to play the Utica? If you think about it, you can segment into various opportunities,” said G. Allen Brooks, author of the energy industry blog “Musings from the Oil Patch,” a Houston-based energy industry consultant and former securities analyst covering the industry.

First, Mr. Brooks said, are the producers, the companies such as Chesapeake Energy Corp. that actually find and produce gas and oil. But it’s not as easy as just finding the company with the most trucks in the area, he warns.

“You get into the whole commodities market and the risk that that brings” when you invest in producers, Mr. Brooks notes. That’s because most of the assets of these companies are tied up in underground reserves of oil and gas — if the price of those commodities rises, so does the asset value of the companies that own them.

That’s one reason that Ohio’s biggest driller, Chesapeake Energy, has seen its stock drop from more than $25 per share in March to less than $16 per share recently. The company relies, in part, on the value of its natural gas assets for both its cash flow and financing needs.

Take it downstream Further “downstream,” as they say in the energy industry, are the companies that make it possible for gas and oil to get to processors, refineries and their end markets.

These are companies that build pipelines and other equipment to

handle the gas and oil once it comes out of the well.

“A lot of these midstream companies are limited liability partnerships,” Mr. Brooks notes, meaning they pay their earnings to partners in the form of dividends. “For people looking for income, that’s a great way to play it.”

There’s also the supply chain, experts point out — companies such as Timken Co. in Canton or U.S. Steel’s plant in Lorain, which produce steel tubing for drillers.

Those companies already are feeling the positive effects of increased demand as U.S. drilling picks up.

But some of the best long-term investments might be farther downstream still — all the way at the end of the chain.

“We think, in part, some of the improvement in U.S. manufacturing is tied directly and indirectly to the shale gas development,” Mr. Schuler said. “It’s lowering energy costs for manufacturers in general.”

Diversify, diversify, diversify If you’re really bullish on domestic energy, the best strategy is probably to diversify across the industry, from producers right downstream to the end users, Ms. Diamond said.

“You’ve got to diversify yourself across the sectors of the energy universe,” she said. “I don’t think the average person realizes there are all these subsets of the industry.”

One way to do that, she said, is by investing in mutual funds that put money across the vast spectrum of the energy industry. Ms. Diamond said she also advises the use of such funds because it puts a full-time investment professional at the front line in terms of picking individual stocks and other securities.

Which is in keeping with the one piece of advice that all the experts give to their clients and friends: No matter how bullish you are on a particular energy play, always invest in management first.

In other words, they say, be aware that money can be lost by investing it in a poorly managed company, even if that company is in the hottest new industry or energy play going.

“Poorly managed companies, like companies that operate in struggling markets, are generally not a recipe for good, long-term investments,” Mr. Schuler said.

■

TOP 2-YEAR RETURNS RK COMPANY

2-YEAR RETURN AS OF 4/30/12

1

Chart Industries Inc.

2

Cedar Fair LP

132.6

3

TransDigm Group Inc.

128.2

4

Preformed Line Products Co.

98.8

5

Avalon Holdings Corp.

82.1

6

Lincoln Electric Holdings Inc.

69.5

7

Park-Ohio Holdings Corp.

67.8

8

Timken Co.

66.2

9

Myers Industries Inc.

60.6

10 Sherwin-Williams Co.

59.7

SOURCE: S&P CAPITAL IQ; WWW.SPCAPITALIQ.COM

232.4%

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INVE$TINGGUIDE2012

JUNE 4 - 10, 2012

CRAIN’S CLEVELAND BUSINESS

I-5

Election: If equity markets falter, buying opportunities could arise continued from PAGE I-1

the tax cuts and unemployment benefits set to expire and the continuing turmoil in Europe.

“At least in my experience, this is probably one of the most complicated election periods I’ve ever seen,” said Rick Buoncore, who’s worked as an investment adviser for 25 years. “The market does not like uncertainty, and in this year, we have much more uncertainty than we’ve ever had before.”

Mr. Buoncore, managing partner of MAI Wealth Advisors in Cleveland, is among many who regard the impending expiration of the Bushera tax cuts and unemployment benefits as a financial cliff. Both expire early next year if Congress does not act.

“We’re really pretty certain, no matter who wins the election, that in the first part of 2013, there’s going to be a challenging environment,” Mr. Buoncore said.

Risky business Investment advisers say it’s important for investors not to make skittish, all-or-nothing bets.

That’s not to say advisers don’t see reason to dial back risk, because they are. Most, though, say they’re doing it with much more than the election in mind.

“Our actions are purely based on data that the economy is delivering, not on the rhetoric going back and forth in this election cycle,” Mr. Myeroff said. “We look at jobs growth, we look at corporate earnings, we look at money supply. All of those things are pointing relatively positive.”

Historically, the first year of a presidential cycle tends to be the worst for the market because that’s the year a president tends to do unpopular things, advisers said.

The third and fourth years tend to be most positive, which should mean the odds are in investors’ favor for above-average growth in 2012, noted Mike McGervey, president and founder of North Canton-based McGervey Wealth Management.

However, Mr. McGervey cautioned, “I would not bet the farm on the historical presidential cycle outcome.”

Like other advisers, he cited the many headwinds that exist today, among them the moderate economic growth and the uncertainty about U.S. taxes, regulation and health care that has paralyzed many businesses.

So what do investment advisers favor currently? Mr. McGervey and others see opportunity in higherdividend stocks and high-quality short- and intermediate-term bonds.

Robert Siewert, managing director in the Beachwood office for Glenmede, a Philadelphia-based wealth management firm, said his office has made changes in recent weeks, including reducing allocations to equities in client portfolios, more of them international than domestic.

MAI Wealth Advisors is hedging its portfolios and reducing risk in a number of ways, too, Mr. Buoncore said. That involves buying put spreads, which he said protect investors for a certain percentage of downside moves in the market, and implementing buffers that limit what one can lose but also cap what one can gain.

“I think, long term, that a lot of the problems and issues we have not only here and internationally

will be remedied, but I don’t have a lot of confidence that they’ll be remedied in an orderly way,” said Mr. Buoncore, who cited the delays that occurred before the debt ceiling crisis was resolved and the subsequent first-time downgrading of the U.S. credit rating.

Opportunity calls If the election year proves to be a negative year for the equity markets, that actually might present a buying opportunity for investors, though individual investors tend to assume the opposite, Mr. Siewert noted.

Michael Charnas is not that kind of investor. He will “bottom fish” and buy equities when no

one else is buying, he said.

Mr. Charnas, the former chief financial officer of the Pick ‘n Pay grocery chain, also is not like the people he sees getting emotional about the election.

“I do have certain concerns about the election, but the election’s in November,” said Mr. Charnas, who now buys and operates businesses for a living and has an MBA in finance. “I think it’s so up in the air now as to who’s going to win.”

Mr. Charnas is advised by Steve Rudolph, managing director of HW Financial Advisors in Beachwood, but also buys and sells on his own for what he dubs his “ego account.”

His adviser, Mr. Rudolph, said

he’s by and large staying the course.

“I think the reality is the day-today news items in the paper that my clients are getting very worried about every day, I don’t think have a great relevance on the market,” he said.

Mr. Charnas, too, hasn’t changed the way he’s investing, but does have his thoughts about what may happen if President Obama is re-elected or if Mitt Romney wins. If President Obama stays, Mr. Charnas anticipates more regulation and more taxes.

“I think all of those things will spook American businesses to invest even less in growth,” he said. “If you invest less in growth,

then the economy isn’t growing jobs and you have that overhang over the market.”

If Mr. Romney is elected, Mr. Charnas predicts a neutral to slightly positive effect on the market.

As for Mr. Myeroff of NCA Financial Planners, his prediction is that neither of the presidential candidates would send the economy into a tailspin.

“The current economy’s strong enough, and the outlook for the future economy is strong enough that I don’t think it makes a difference which guy gets the office,” he asserted. “They won’t be able to stop the economy from moving forward.”

■

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CRAIN’S CLEVELAND BUSINESS

INVE$TINGGUIDE2012

FirstEnergy bigger after Pa. deal Area’s other top market caps fall in last 12 months

By SCOTT SUTTELL ssuttell@crain.com

T

alk about a power play.

FirstEnergy Corp., the Akron-based electric utility that in February 2011 completed a big merger with Allegheny Energy Inc., zoomed to the top of Crain’s Cleveland Business’ list of Largest Public Companies with a 60.7% increase in market capitalization over the one-year period that ended April 30, 2012. That

surge — to a market cap of $19.58 billion from $12.18 billion on April 30, 2011 — enabled FirstEnergy to leap from No. 5 on the list to the top spot this year.

Its deal with Allegheny made FirstEnergy one of the nation’s largest utilities. It now has 10 operating utilities in seven states and serves more than 6 million customers.

FirstEnergy on May 1 reported that its first-quarter net income climbed to $306 million, or 73 cents a share, from $52 million, or

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15 cents a share, in the first quarter of 2011. Revenue at FirstEnergy rose 14%, to $4.1 billion in the first quarter from $3.6 billion in the like period a year ago.

The four companies that ranked higher than FirstEnergy on the 2011 list — in order, they were Eaton Corp., a producer of power management and electrical systems; Parker Hannifin Corp., which makes motion and control technologies; auto insurer Progressive Corp.; and Cliffs Natural Resources Inc., a producer of iron ore and metallurgical coal — all saw their market caps decline in the past year.

The steepest fall in market cap among that group came at Cliffs, which tumbled 30% to $8.87 billion from $12.71 billion. Cliffs’ decline in market cap dropped it out of the top five to the No. 7 spot on this year’s list. (But go figure — Cliffs’ net income rose 58.8% to $1.62 billion in 2011 from $1.02 billion in 2010.)

A similar pattern was in place at Eaton, where net income rose 45.3%, and at Parker, where net income was up 30%.

The drop at the top was illustrative of a 12-month period in which the number of Northeast Ohio companies that lost market value exceeded the gainers. Among the 60 public companies on this year’s list, 27 posted gains in market cap from the 2011 list but 31 posted declines.

Two companies — Farmers National Banc Corp. of Canfield and OurPet’s Co. of Fairport Harbor — were not measured because they were not on the 2011 list.

Cliffs’ drop brought a new — but quite old — face to the top five: the 146-year-old Sherwin-Williams Co. The Cleveland-based maker of paint, coatings and related products moved to the No. 5 spot on this year’s list from No. 6 in 2011 on the strength of a market cap increase of 41.8%, to $12.42 billion. Slow improvement in the housing market is helping the company.

Sherwin-Williams said its net income in the first quarter climbed nearly 47%, to $100.2 million, or 95 cents per diluted share, from $68.3 million, or 63 cents a share, in the first quarter of 2011. Sales at Sherwin-Williams rose 15%, to $2.14 billion from $1.86 billion.

JUNE 4 - 10, 2012

TOP MARKET VALUATIONS (IN BILLIONS) RK COMPANY

VALUATION 4/30/12

VALUATION PERCENT 4/30/11 CHANGE

1

FirstEnergy Corp.

$19.58

$12.18

60.7%

2

Eaton Corp.

16.21

18.27

-11.3

3

Parker Hannifin Corp.

13.23

15.27

-13.3

4

Progressive Corp.

13.02

14.39

-9.5

5

Sherwin-Williams Co.

12.42

8.76

41.8

6

J.M. Smucker Co.

9.02

8.71

3.6

7

Cliffs Natural Resources Inc.

8.87

12.71

-30.2

8

KeyCorp

7.69

8.27

-7.1

9

TransDigm Group Inc.

6.38

4.13

54.4

10 Timken Co.

5.52

5.52

0.1

11 DDR Corp.

4.11

3.77

9.0

12 Lincoln Electric Holdings Inc.

4.10

3.31

24.0

13 RPM International Inc.

3.49

3.07

14.0

14 Nordson Corp.

3.49

3.89

-10.3

15 TFS Financial Corp.

3.04

3.36

-9.5

16 Forest City Enterprises Inc.

2.70

3.18

-15.1

17 Goodyear Tire & Rubber Co.

2.69

4.43

-39.3

18 Diebold Inc.

2.47

2.22

11.0

19 Chart Industries Inc.

2.29

1.40

63.1

20 FirstMerit Corp.

1.83

1.90

-3.4

21 Steris Corp.

1.81

2.14

-15.3

22 Cedar Fair LP

1.72

1.05

63.8

23 GrafTech International Ltd.

1.69

3.37

-49.8

24 Applied Industrial Technologies

1.65

1.50

10.3

25 PolyOne Corp.

1.23

1.36

-9.5

SOURCE: S&P CAPITAL IQ; WWW.SPCAPITALIQ.COM

On a percentage basis, the biggest gainer on this year’s list was Avalon Holdings Corp. of Warren, a provider of hazardous and nonhazardous waste brokerage and management services. Its market value rose 96.5% since last year, to $21.7 million from $11 million. That increase

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moved Avalon up on the list by three spots, to the 53rd-largest public company in Northeast Ohio from 56th last year.

The biggest jump in terms of position on the list came from Myers Industries Inc. of Akron, a diversified manufacturing and distribution company. Myers’ market value rose 46.6%, to $552.4 million from $376.8 million a year ago. That increase made Myers the 31stlargest company on the list, up eight spots from last year.

There were six companies that posted market valuation gains of at least 50%. In addition to FirstEnergy and Avalon Holdings, they were First Citizens Banc Corp. of Sandusky (up 69.1% to a market cap of $53.2 million); Cedar Fair LP of Sandusky (up 63.8% to a market cap of $1.72 billion); Chart Industries Inc. of Garfield Heights (up 63.1% to a market cap of $2.29 billion); and TransDigm Group Inc. of Cleveland (up 54.4% to a market cap of $6.38 billion).

Ferro Corp. of Cleveland, a maker of specialty performance materials, has the ignominious distinction of posting the largest decline in market cap on this year’s list. Its market value fell 65.4%, to $449.3 million from $1.298 billion a year ago. As a result, it dropped nine spots to No. 35. Even so, Ferro saw its profits rise enormously, to $31.6 million in 2011 from $5.7 million in 2010.

■

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INVE$TINGGUIDE2012

JUNE 4 - 10, 2012

For better returns, risk is the in thing Lower interest rates in more traditional areas necessitate shift

By GINGER CHRIST gchrist@crain.com

R

isk is the name of the game in today’s investment market.

With interest rates set to remain near zero until 2014, Northeast Ohio investors and financial advisers are turning to traditionally riskier strategies to generate investment income.

Where once certificates of deposit and treasury bonds could generate the kind of returns on which investors depend, they now are being supplemented by real estate investment trusts, master limited partnerships and dividend-yielding stocks, among other investments.

Douglas Kuhlman, managing partner of Westlake-based Paradigm Wealth Management, said the Federal Reserve’s low short-term interest rate policies have forced clients to take on additional risk.

To keep up with the dollar and inflation, investors have to look beyond traditional investments, he said.

“They have to really start to expand their portfolio, which can be a little bit uncomfortable for some, especially the savers,” Mr. Kuhlman said.

Yet despite investors’ comfort levels, financial advisers are steering them toward higher-yield investments, even if only to protect the principal.

William Hoover, president of Hudson-based Broadleaf Partners LLC, said people can’t continue to buy into long-term treasury bonds with the belief that their principal

can’t erode.

“If interest rates do begin to move up, they’ll find their principal may deteriorate and they may have trouble recovering that,” Mr. Hoover said. “That risk is very real.”

No silver bullet Tom Haught, president and CEO of Akron-based Sequoia Financial Group LLC, said his clients — typically financially independent and college-educated individuals — usually look for 4% to 6% distribution rates.

“The trend is making people look into alternative markets to find that kind of yield, Mr. Haught said.

To generate that income, Mr. Haught is advising clients to invest in REITs, companies that own income-producing real estate; utility stocks, stocks of water, gas and electric companies; and master limited partnerships, publicly traded limited partnerships that generate income typically from real estate, commodities and natural resources.

Low interest rates make both REITs and utility stocks attractive, he said, because there’s an expanded margin of benefit: Investors can purchase debt at a low rate and then generate income from the property or stock to pay said debt.

The downside is those markets aren’t nearly as big as traditional markets, he said.

“Smaller markets tend to be more volatile,” Mr. Haught said.

“They tend to be more influenced by global macroeconomics.”

He generally recommends investors dedicate 5% to 10% of their portfolio to alternative investments.

Bill Keller, portfolio manager of Paradigm, said any time an investor can add diversification to a portfolio,

CRAIN’S CLEVELAND BUSINESS

I-7

TOP 5-YEAR RETURNS

it’s a benefit.

Paradigm is working with clients on international fixed income, sovereign debt, REITs, preferred stocks and commodities, and private equity.

“There’s no one silver bullet that’s going to solve everything,” Mr. Kuhlman said.

RK COMPANY

5-YEAR RETURN AS OF 4/30/12

1

Athersys Inc.

316.17%

2

Chart Industries Inc.

305.46

3

TransDigm Group Inc.

298.06

Alternative evolution

4

Nordson Corp.

151.59

While each investment strategy offers higher returns, each also carries its own risk.

For example, investments in private equity — one area in which there is a lot of interest — are not as liquid as other investment options.

For that reason, Paradigm also recommends that alternative investments make up 15% to 20% of an investor’s portfolio, of which only 10% to 15% is reserved for the riskier investments.

Indeed, Mr. Haught expects alternative investments to become more mainstream the longer interest rates remain low. And he doesn’t expect rates to rapidly rise in the next 12 to 24 months. In fact, he said interest rates have been declining for most of the past 50 years.

He characterized the change in investment strategy as an evolution.

Mr. Keller agrees changes are

5

PolyOne Corp.

114.70

6

Sifco Industries Inc.

113.02

7

Sherwin-Williams Co.

109.87

8

Timken Co.

90.97

9

Cliffs Natural Resources Inc.

89.90

10 J.M. Smucker Co.

78.25

11 Lincoln Electric Holdings Inc.

69.02

12 Applied Industrial Technologies Inc.

64.91

SOURCE: S&P CAPITAL IQ; WWW.SPCAPITALIQ.COM

here — at least for the short-term.

“We have to expect to deal with this environment for the foreseeable future,” Mr. Keller said. “But

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20120604-NEWS--24-NAT-CCI-CL_--

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10:39 AM

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INVE$TINGGUIDE2012

CRAIN’S CLEVELAND BUSINESS

JUNE 4 - 10, 2012

LARGEST PUBLIC COMPANIES RANKED BY MARKET VALUE

Company/Ticker symbol This Last Headquarters year year Phone/Website

Market value (millions) 4-30-2012

4-30-2011

Percent change

Net income (millions) 2011

2010

Percent change

2011 return on equity

Lines of business

Top local executive Title

1

5

FirstEnergy Corp./FE 76 S. Main St., Akron 44308 (800) 736-3402/www.firstenergycorp.com

$19,580.9

$12,181.2

60.7%

$885.0

$742.0

19.3

6.7

Electric utility holding company

Anthony J. Alexander president, CEO

2

1

Eaton Corp./ETN 1111 Superior Ave., Cleveland 44114 (216) 523-5000/www.eaton.com

$16,212.6

$18,274.7

-11.3%

$1,350.0

$929.0

45.3

18.1

Electrical, hydraulic, aerospace, truck and automotive products

Alexander M. Cutler chairman, CEO

3

2

Parker Hannifin Corp./PH 6035 Parkland Blvd., Cleveland 44124 (216) 896-3000/www.parker.com

$13,232.7

$15,268.7

-13.3%

$1,109.6

$853.4

30.0

21.5

Fluid power systems, electromechanical controls

Donald E. Washkewicz chairman, CEO, president

4

3

Progressive Corp./PGR 6300 Wilson Mills Road, Mayfield Village 44143 (440) 461-5000/www.progressive.com

$13,018.6

$14,386.1

-9.5%

$1,015.5

$1,068.3

-4.9

17.5

Insurance and financial company

Glenn M. Renwick president, CEO

5

6

Sherwin-Williams Co./SHW 101 W. Prospect Ave., Cleveland 44115 (216) 566-2000/www.sherwin-williams.com

$12,422.2

$8,760.9

41.8%

$441.9

$462.5

-4.5

29.1

Coatings and related products

Christopher M. Connor chairman, CEO

6

7

J.M. Smucker Co./SJM One Strawberry Lane, Orrville 44667 (330) 682-3000/www.smuckers.com

$9,018.6

$8,706.3

3.6%

$450.5

$505.2

-10.8

8.4

Manufacturer of branded food products

Richard K. Smucker CEO

7

4

Cliffs Natural Resources Inc./CLF 200 Public Square, Suite 3300, Cleveland 44114 (216) 694-5700/www.cliffsnaturalresources.com

$8,871.2

$12,712.7

-30.2%

$1,619.1

$1,019.9

58.8

28.0

Full-service iron ore company

Joseph A. Carrabba chairman, president, CEO

8

9

KeyCorp/KEY 127 Public Square, Cleveland 44114 (216) 689-6300/www.key.com

$7,687.1

$8,270.5

-7.1%

$920.0

$554.0

66.1

9.3

Bank holding company

Beth E. Mooney chairman, president, CEO

TransDigm Group Inc./TDG 1301 E. Ninth St., Suite 3000, Cleveland 44114 (216) 706-2939/www.transdigm.com

$6,382.4

$4,134.3

54.4%

$244.6

$125.3

95.2

27.6

Designer and producer of W. Nicholas Howley highly engineered aircraft chairman, CEO components

10 10

Timken Co./TKR 1835 Dueber Ave., S.W., Canton 44706 (330) 438-3000/www.timken.com

$5,519.2

$5,515.1

0.1%

$454.3

$274.8

65.3

22.4

Friction management and James W. Griffith power transmission president, CEO products and services

11 14

DDR Corp./DDR 3300 Enterprise Parkway, Beachwood 44122 (216) 755-5500/www.ddr.com

$4,107.0

$3,766.9

9.0%

($15.9)

($209.4)

NM

NM

Real estate investment trust

Daniel B. Hurwitz president, CEO

12 17

Lincoln Electric Holdings Inc./LECO 22801 St. Clair Ave., Cleveland 44117 (216) 481-8100/www.lincolnelectric.com

$4,104.9

$3,309.9

24.0%

$217.2

$130.2

66.8

18.5

Designs and manufactures welding products

John M. Stropki chairman, president, CEO

13 19

RPM International Inc./RPM 2628 Pearl Road, Medina 44258 (330) 273-5090/www.rpminc.com

$3,493.6

$3,065.1

14.0%

$203.5

$179.4

13.5

16.1

Specialty coatings for industrial and consumer markets

Frank C. Sullivan chairman, CEO

14 13

Nordson Corp./NDSN 28601 Clemens Road, Westlake 44145 (440) 892-1580/www.nordson.com

$3,487.4

$3,886.5

-10.3%

$214.8

$187.2

14.7

38.9

Adhesives, coating and sealant applicators

Michael F. Hilton president, CEO

15 16

TFS Financial Corp./TFSL 7007 Broadway Ave., Cleveland 44105 (216) 441-6000/www.thirdfederal.com

$3,036.6

$3,355.3

-9.5%

$25.1

($4.9)

NM

1.4

Bank holding company

Marc A. Stefanski president, CEO

16 18

Forest City Enterprises Inc./FCE-A 50 Public Square, Suite 1100, Cleveland 44113 (216) 621-6060/www.forestcity.net

$2,698.1

$3,178.3

-15.1%

($86.5)

$58.0

NM

NM

Owner and developer of real estate

Charles A. Ratner, chairman David J. LaRue, president, CEO

17 11

Goodyear Tire & Rubber Co./GT 1144 E. Market St., Akron 44316 (330) 796-2121/www.goodyear.com

$2,690.1

$4,428.6

-39.3%

$343.0

($216.0)

NM

45.8

Tire manufacturer

Richard J. Kramer chairman, president, CEO

18 20

Diebold Inc./DBD 5995 Mayfair Road, North Canton 44720 (330) 490-4000/www.diebold.com

$2,466.2

$2,221.2

11.0%

$144.8

($20.3)

NM

17.5

Integrated self-service delivery systems and services

Thomas W. Swidarski president, CEO

19 24

Chart Industries Inc./GTLS One Infinity Corporate Centre Dr., Suite 300, Garfield Heights 44125 (440) 753-1490/www.chartindustries.com

$2,285.2

$1,401.2

63.1%

$44.1

$20.2

118.6

7.2

Maker of cryogenic Samuel F. Thomas processes and equipment chairman, president, CEO

20 22

FirstMerit Corp./FMER III Cascade Plaza, Akron 44308 (330) 996-6300/www.firstmerit.com

$1,834.3

$1,899.6

-3.4%

$119.6

$102.9

16.2

7.6

Bank holding company

Paul G. Greig chairman, president, CEO

21 21

Steris Corp./STE 5960 Heisley Road, Mentor 44060 (440) 354-2600/www.steris.com

$1,810.4

$2,138.5

-15.3%

$130.9

$42.1

211.0

16.8

Maker of sterile processing and infection prevention systems

Walter M. Rosebrough Jr. president, CEO

22 29

Cedar Fair LP/FUN One Cedar Point Drive, Sandusky 44870-5259 (419) 627-2233/www.cedarfair.com

$1,721.8

$1,051.3

63.8%

$72.2

($31.6)

NM

45.5

Amusement and water A. Ouimet parks in the United States Matthew president, CEO and Canada

23 15

GrafTech International Ltd./GTI 12900 Snow Road, Parma 44130 (216) 676-2000/www.graftech.com

$1,689.1

$3,367.2

-49.8%

$153.2

$174.7

-12.3

11.4

Manufacturer of graphite electrodes and cathodes

Craig S. Shular chairman, president, CEO

24 23

Applied Industrial Technologies Inc./AIT 1 Applied Plaza , Cleveland 44115 (216) 426-4000/www.applied.com

$1,650.3

$1,496.9

10.3%

$102.1

$86.2

18.5

15.8

Distributor and provider of industrial parts and service

Neil A. Schrimsher CEO

25 25

PolyOne Corp./POL 33587 Walker Road, Avon Lake 44012 (440) 930-1000/www.polyone.com

$1,230.8

$1,359.7

-9.5%

$172.6

$162.6

6.2

29.3

Provider of specialized polymer materials, services and solutions

Stephen D. Newlin chairman, president, CEO

26 31

Nacco Industries Inc./NC 5875 Landerbrook Drive, Suite 300, Cleveland 44124 (440) 449-9600/www.nacco.com

$950.2

$876.9

8.4%

$162.1

$79.5

103.9

28.1

Coal mining, lift trucks, Alfred M. Rankin Jr. small electrical appliances chairman, president, CEO

27 27

OM Group Inc./OMG 127 Public Square, Suite 1500, Cleveland 44114 (216) 781-0083/www.omgi.com

$768.6

$1,106.2

-30.5%

$37.9

$83.4

-54.5

3.1

Producer/marketer of metal-based specialty chemicals

Joseph M. Scaminace chairman, CEO

28 33

A. Schulman Inc./SHLM 3550 W. Market St., Akron 44333 (330) 666-3751/www.aschulman.com

$726.4

$783.9

-7.3%

$47.3

$50.0

-5.5

9.1

High-performance plastic compounds and resins

Joseph M. Gingo chairman, president, CEO

29 34

Associated Estates Realty Corp./AEC 1 AEC Parkway, Richmond Heights 44143 (216) 261-5000/www.associatedestates.com

$716.7

$688.6

4.1%

$5.3

($8.6)

NM

1.7

Real estate investment trust

Jeffrey I. Friedman chairman, president, CEO

30 30

American Greetings Corp./AM One American Road, Cleveland 44144 (216) 252-7300/www.americangreetings.com

$589.7

$994.0

-40.7%

$57.2

$87.0

-34.3

7.9

Greeting cards; character Zev Weiss licensing CEO

31 39

Myers Industries Inc./MYE 1293 S. Main St., Akron 44301 (330) 253-5592/www.myersindustries.com

$552.4

$376.8

46.6%

$24.5

($42.8)

NM

11.9

Polymer and metal products; equipment for tire service

9 12

John C. Orr president, CEO

20120604-NEWS--25-NAT-CCI-CL_--

6/1/2012

11:01 AM

Page 1

INVE$TINGGUIDE2012

JUNE 4 - 10, 2012

Company/Ticker symbol This Last Headquarters year year Phone/Website

Market value (millions) 4-30-2012

4-30-2011

Percent change

CRAIN’S CLEVELAND BUSINESS

Net income (millions) 2011

2010

Percent change

2011 return on equity

Lines of business

I-9

Top local executive Title

32 28

Invacare Corp./IVC One Invacare Way, Elyria 44035 (440) 329-6000/www.invacare.com

$504.4

$1,063.5

-52.6%

($4.1)

$25.3

NM

NM

Home health care equipment

Gerald B. Blouch president, CEO

33 32

Materion Corp./MTRN 6070 Parkland Blvd., Mayfield Heights 44124 (216) 486-4200/www.materion.com

$501.8

$848.6

-40.9%

$40.0

$46.4

-13.9

9.9

High-performance engineered materials

Richard J. Hipple chairman, president, CEO

34 35

National Interstate Corp./NATL 3250 Interstate Drive, Richfield 44286 (330) 659-8900/www.nationalinterstate.com

$465.6

$435.3

6.9%

$35.6

$39.5

-9.8

10.2

Specialty property and casualty insurance

David W. Michelson president, CEO

35 26

Ferro Corp./FOE 6060 Parkland Boulevard, Mayfield Heights 44124 (216) 875-5600/www.ferro.com

$449.3

$1,298.3

-65.4%

$31.6

$5.7

455.4

5.5

Manufacturer of specialty performance materials

James F. Kirsch chairman, president, CEO

36 37

Omnova Solutions Inc./OMN 175 Ghent Road, Fairlawn 44333 (330) 869-4200/www.omnova.com

$362.2

$385.1

-5.9%

$9.7

$101.1

-90.4

7.0

Decorative and functional interior surfaces

Kevin M. McMullen chairman, president, CEO

37 38

Preformed Line Products Co./PLPC 660 Beta Drive, Mayfield Village 44143 (440) 461-5200/www.preformed.com

$307.9

$378.7

-18.7%

$31.0

$23.1

34.1

14.6

Wire and cable products

Robert G. Ruhlman chairman, president, CEO

38 40

CBiz Inc./CBZ 6050 Oak Tree Blvd. S., Suite 500, Cleveland 44131 (216) 447-9000/www.cbiz.com

$304.2

$368.7

-17.5%

$28.0

$24.5

14.3

10.8

Provides outsourced business services

Steven L. Gerard chairman, CEO

39 42

Park-Ohio Holdings Corp./PKOH 6065 Parkland Blvd., Cleveland 44124 (440) 947-2000/www.pkoh.com

$262.1

$252.4

3.9%

$29.4

$15.2

93.8

45.0

Diversified manufacturer

Edward F. Crawford chairman, CEO

40 36

Stoneridge Inc./SRI 9400 E. Market St., Warren 44484 (330) 856-2443/www.stoneridge.com

$241.5

$388.5

-37.8%

$49.4

$11.5

328.1

37.7

Highly engineered electrical and electronic components

John C. Corey president, CEO

41 41

Olympic Steel Inc./ZEUS 5096 Richmond Road, Bedford Heights 44146 (216) 292-3800/www.olysteel.com

$230.4

$319.6

-27.9%

$25.0

$2.1

1,071.2

8.7

Steel service center

Michael D. Siegal chairman, CEO

42 44

TravelCenters of America LLC/TA 24601 Center Ridge Road, Suite 200, Westlake 44145 (440) 808-9100/www.tatravelcenters.com

$181.3

$141.6

28.0%

$23.6

($66.7)

NM

7.4

Interstate travel plazas; fuel, food, convenience stores and truck repairs

Thomas M. O'Brien managing director, president, CEO

43 43

Shiloh Industries Inc./SHLO 880 Steel Drive, Valley City 44280 (330) 558-2600/www.shiloh.com

$154.1

$190.7

-19.2%

$8.9

$4.9

81.9

8.1

Steel processing

Theodore K. Zampetis president, CEO

44

Farmers National Banc Corp./FMNB 20 S. Broad St., Canfield 44406 (330) 533-3341/www.fnbcanfield.com

$115.9

NM

NM

$9.2

$9.0

2.5

8.0

Bank holding company

John S. Gulas president, CEO

45 46

Sifco Industries Inc./SIF 970 E. 64th St., Cleveland 44103 (216) 881-8600/www.sifco.com

$105.6

$86.5

22.0%

$7.4

$4.6

63.1

13.5

Production, repair, plating, machining and marketing of jet engines

Michael S. Lipscomb president, CEO

46 48

PVF Capital Corp./PVFC 30000 Aurora Road, Solon 44139 (440) 914-3900/www.parkviewfederal.com

$57.7

$52.9

9.1%

($7.9)

($5.8)

NM

NM

Bank holding company

Robert J. King Jr. president, CEO

47 52

First Citizens Banc Corp./FCZA 100 E. Water St., Sandusky 44870 (419) 625-4121/www.fcza.com

$53.2

$31.4

69.1%

$4.0

($1.3)

NM

3.9

Bank holding company

James O. Miller president, CEO

48 50

United Community Financial Corp./UCFC 275 Federal Plaza West, Youngstown 44503 (330) 742-0500/www.ucfconline.com

$52.5

$43.6

20.3%

$0.2

($37.3)

NM

0.1

Bank holding company

Patrick W. Bevack president, CEO

49 49

LNB Bancorp Inc./LNBB 457 Broadway Ave., Lorain 44052 (440) 244-6000/www.4lnb.com

$51.8

$45.7

13.3%

$5.0

$5.4

-6.8

4.4

Bank holding company

Daniel E. Klimas president, CEO

50 53

Middlefield Banc Corp./MBCN.PK 15985 E. High St., Middlefield 44062 (440) 632-1666/www.middlefieldbank.com

$39.4

$27.8

41.6%

$4.1

$2.5

64.1

8.7

Bank holding company

Thomas G. Caldwell president, CEO

51 47

Athersys Inc./ATHX 3201 Carnegie Ave., Cleveland 44115 (216) 431-9900/www.athersys.com

$34.0

$53.2

-36.0%

($13.7)

($11.4)

NM

NM

Biopharmaceutical company

Gil Van Bokkelen chairman, CEO

52 54

Wayne Savings Bancshares Inc. /WAYN 151 N. Market St., Wooster 44691 (330) 264-5767/www.waynesavings.com

$26.3

$25.6

2.6%

$1.7

$2.2

-21.4

4.4

Bank holding company

Phillip E. Becker president, CEO

53 56

Avalon Holdings Corp./AWX One American Way, Warren 44484 (330) 856-8800/www.avalonholdings.com

$21.7

$11.0

96.5%

$0.8

($0.5)

NM

1.9

Hazardous and nonhazardous waste brokerage and management services

Ronald E. Klingle chairman, CEO

54 51

Ohio Legacy Corp./OLCB 600 S. Main St., North Canton 44720 (330) 263-1955/www.ohiolegacycorp.com

$21.3

$31.6

-32.6%

$1.8

($3.1)

NM

9.8

Bank holding company

Rick L. Hull president, CEO

55 55

Energy Focus Inc./EFOI 32000 Aurora Road, Solon 44139 (440) 715-1300 /www.energyfocusinc.com

$9.2

$18.7

-50.7%

($6.1)

($8.5)

NM

NM

Fiber optic lighting systems

Joseph G. Kaveski CEO

56

OurPet's Co./OPCO.OB 1300 East St., Fairport Harbor 44077 (440) 354-6500/www.our-pets.com

$6.3

NM

NM

$0.1

$1.0

-87.7

2.4

Products for the retail pet Steven Tsengas business chairman, CEO

57 57

Datatrak International Inc./DATA 6150 Parkland Blvd., Suite 100, Mayfield Heights 44124 (440) 443-0082/www.datatrak.net

$4.6

$9.6

-52.0%

($1.0)

$0.1

NM

NM

Provider of clinical research services

Laurence P. Birch chairman, CEO

58 60

Morgan's Foods Inc./MRFD 4829 Galaxy Parkway, Suite S, Cleveland 44128 (216) 359-9000/www.morgansfoods.com

$3.7

$2.3

58.2%

($2.2)

($0.0)

NM

NM

Restaurants

Leonard R. Stein-Sapir chairman, CEO

59 59

Hickok Inc./HICKA.PK 10514 Dupont Ave., Cleveland 44108 (216) 541-8060/www.hickok-inc.com

$2.4

$2.4

-2.6%

($0.5)

($1.3)

NM

NM

Products for the transportation industry

Robert L. Bauman president, CEO

60 58

Central Federal Corp./CFBK 2923 Smith Road, Fairlawn 44333 (330) 666-7979/www.cfbankonline.com

$2.3

$4.8

-52.1%

($5.4)

($6.9)

NM

NM

Bank holding company

Eloise Mackus CEO

Numerical information provided by S&P Capital IQ, www.spcapitaliq.com. The Market Cap and Total Return data used the April 30, 2012 close price for each company, net income figures represent trailing 12-month data through the quarter ending December, January or February depending on the fiscal year end of each company. NA=Not available. NM=Not meaningful. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. The Book of Lists and other specialized business lists are available to purchase at www.crainscleveland.com.

RESEARCHED BY Deborah W. Hillyer

20120604-NEWS--26-NAT-CCI-CL_--

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JUNE 4 - 10, 2012

Eaton: Auto, truck segments comprise less of balance sheet continued from PAGE 1

May 21 announcement of the deal for Cooper, Eaton had shown through a series of acquisitions that its electrical business would be the centerpiece of the company going forward.

Electrical deals rule From 2008 through 2011, Eaton completed 18 acquisitions, with twothirds of those transactions involving companies headquartered overseas.

Of those 18 deals, seven companies became part of Eaton’s Electrical Rest of World segment, six would come under its Electrical Americas segment, and four would join its Hydraulics business.

Only one acquisition — Eaton’s purchase in July 2008 of the engine valves business of Kirloskar Oil Engines Ltd. of India — would become part of the company’s Automotive segment. And that deal was for a business that totaled just $5 million in sales in 2007.

By contrast, Eaton has gobbled up companies of all sizes as it has added to its portfolio of businesses that come under one of its two electrical segments.

Last August, Eaton bought IE Power Inc., a company in Mississauga, Ontario, that makes high-power inverters for use in solar, wind and battery energy storage. IE Power had only 24 employees and totaled just $5 million in sales in 2010, but an Eaton official said at the time that the deal gave the company “access to the rapidly growing utility solar inverter market.”

On the opposite end of the spectrum were two big acquisitions completed in early 2008.

In February of that year, Eaton wrapped up the $565 million purchase of Phoenixtec Power Co., a company in Taiwan that makes

uninterruptible power supply systems.

A few weeks later, it would complete the acquisition for $2.23 billion of Moeller Group, a German supplier of electrical components for commercial and residential buildings and controls for industrial equipment.

Those purchases would turn out to be preludes to the deal for Cooper, which is a crescendo of sorts for Eaton as it concentrates on what it calls “power management” — something chairman and CEO Alexander “Sandy” Cutler described on the occasion of Eaton’s 100th anniversary as taking on many forms, “from improving the efficiency of buildings, planes and vehicles to helping massive machines leave a smaller footprint on our planet.”

Asset sales possible How — or if — the planned acquisition of Cooper eventually will impact Eaton’s non-electrical businesses remains to be seen. However, the big price tag on the Cooper purchase, and the ton of debt Eaton must take on to swing the deal, leave open the possibility that Eaton will need to sell pieces of its past as it pursues its future.

Under terms of the transaction, Cooper shareholders will receive $39.15 in cash and slightly more than three-quarters of a share in the new combined company — known tentatively as Eaton Global plc (aka, New Eaton) — for a total payout of $72 a share, or a 29% premium over Cooper’s stock price before the deal was announced.

Those terms indicate Eaton will shell out about $6.4 billion in cash in the transaction, which explains why the company secured a $6.75 billion bridge financing commitment from units of Morgan Stanley and

EATON’S STRATEGY Eaton Corp., in a slideshow presentation that accompanied a May 21 teleconference with securities analysts to discuss its acquisition of Cooper Industries plc, made no mention of its Truck and Automotive business segments in a slide discussing its long-term strategy. What that slide, titled “Eaton’s strategy remains consistent,” did say, in bullet point format: ■ A premier power management enterprise run as an integrated operating company serving customers globally ■ Provide innovative, safe, reliable, and efficient electrical, hydraulic, and mechanical solutions across diverse end markets ■ Focus upon one of the most important challenges of our time ... reducing the rising cost and increasing environmental impact of the world’s growing energy needs ■ Maintain balance across geographies, the economic cycle, and our business mix ■ Build on our leadership positions through acquisitions in our Electrical, Hydraulics, and Aerospace businesses

Citibank to cover that expense.

Eaton indicated during a May 21 teleconference with securities analysts to discuss the Cooper deal that it would issue over time about $5.1 billion in term debt to help replace the bridge loan. But in announcing the deal that day, Eaton also stated that it might turn to the sale of assets to help repay debt.

In an exchange of emails last week with Crain’s, Eaton spokesman Gary

Klasen downplayed the significance of the reference to the possible sale of assets. Mr. Klasen wrote that Eaton, as stated during its teleconference, has “at this time no plans to (make) material changes to our portfolio post closing of the transaction.” He offered a similar response when asked by Crain’s whether Eaton might sell or spin off either its Automotive or Truck segments.

Nonetheless, in viewing a slideshow presentation on Eaton’s website that served as a companion to its May 21 teleconference, a few analysts made note during the call that references to the company’s Truck and Automotive segments were conspicuous by their absence in a slide discussing Eaton’s long-term strategy.

Eaton stated in the slide that it intends to “(b)uild on our leadership positions through acquisitions in our Electrical, Hydraulics and Aerospace businesses.” It’s a bullet point that gives the definite impression that future acquisitions will be in keeping with Eaton’s recent history of buying businesses in areas other than auto and truck.

Mr. Cutler, Eaton’s CEO, affirmed as much during the question-andanswer part of the teleconference.

In response to a question from Jeffrey Sprague, an analyst with Vertical Research Partners in New York, Mr. Cutler said he believes Eaton has been “consistent since 2000 indicating that the vast majority of our acquisition dollars would be spent on building out our electrical, our hydraulic, and our aerospace business.

“We have continued and will continue to grow our two vehicle businesses, primarily (through) internal investments, so that really was the point of that amplification,”

Mr. Cutler said.

More ‘evolution’ ahead?

The changing composition of Eaton’s operations over the last decade shows up in the company’s financial statements as it reports its results by business segment.

In 2002, the Automotive and Truck segments accounted for 38% of Eaton’s total sales and 48% of its operating profit. Last year, they together were responsible for 27% of total sales and 30% of Eaton’s operating profit. Assuming Eaton and Cooper had been together in 2011, the two segments combined would have made up 20% of all sales.

By contrast, “Electrical” wasn’t even identified as a business segment in Eaton’s annual report for 2002. Back then, the business was labeled as “Industrial & Commercial Controls” (it would be renamed “Electrical” a year later) and it was responsible for generating less than 28% of Eaton’s total sales and 23% of its operating profit.

The electrical businesses of a combined Eaton-Cooper would have produced 59% of total sales last year.

Just how far Eaton intends to go in rebalancing its sales and asset mix is at the heart of both an observation made by and a question from Mr. Sprague, the analyst at Vertical Research, during the May 21 conference call.

“You’re looking a lot more like an electrical company,” Mr. Sprague said. “Should we expect more portfolio evolution over time?”

Mr. Cutler’s response: “We are not anticipating — it’s not in our act of planning — any substantial additional change in the portfolio as a result of this transaction.”

That isn’t a full-fledged no, but it isn’t a yes, either.

■

Mobile: Limited competition makes Vox attractive to investors continued from PAGE 3

from 32 in mid-2009. And that doesn’t count the people it plans to hire with the $7.5 million in venture capital it just raised.

The deal, which closed May 14, was led by Edison Ventures of Lawrenceville, N.J., with participation from one of its limited partners, Permal Capital Management of Boston.

Other investors were pursuing Vox Mobile, too, said CEO Kris Snyder. The company started getting calls and emails last year shortly after information technology research company Gartner Inc. published a report that included Vox Mobile as one of 10 companies competing in the managed mobility services sector.

In the Competitive Landscape and Managed Mobility Services report, published last August, Gartner also predicted that the market for such services would hit $3.4 billion in 2016, up from an estimated $382 million in 2011. That’s a ninefold increase.

“We’re looking at just a huge opportunity,” Mr. Snyder said.

Three years ago, Vox Mobile largely was focused on serving businesses that used BlackBerrys, which formerly dominated the corporate market.

Since then, however, businesses have started to let their employees

use other smart phones, such as iPhones and phones that use Google’s Android operating system, often while other employees continue using BlackBerrys. Some companies have started using iPads, too. And some have deployed mobile software applications used by either their employees or their own clients.

Managing it all has gotten harder, which has made Vox Mobile’s services more appealing, Mr. Snyder said.

“Email, text, phone, calendar — that’s all people were really doing three years ago,” he said.

Swimming in new streams The company’s services cover various issues related to the use of smart phones and tablet computers.

For instance, Vox Mobile deploys the devices, trains people to use them and provides technical support for both the devices and the servers with which they communicate. The company also manages contracts with wireless carriers and helps companies develop mobile strategies and policies through a five-person consulting team called Vox Strat.

The consulting team, which was started in early 2011, represents a new revenue stream for Vox Mobile.

So does a recent partnership with Canadian telecommunications firm Telus Corp.; the companies are working together to provide Telus’

“We’re looking at just a huge opportunity. ...

Email, text, phone, calendar — that’s all people were really doing three years ago.”

– Kris Snyder, CEO, Vox Mobile business customers with mobility management services.

Managing mobile apps also has become a bigger line of business for Vox Mobile over the past few years, Mr. Snyder said. Today, 30% of Vox Mobile’s clients ask the company to manage apps used by either their employees or their own clients. That’s up from about 5% in 2009, he said.

The growing market presents opportunities for other companies, too, including some major corporations. Among the competitors listed in the Gartner report are AT&T, Verizon and IBM. A lack of ability to serve customers with locations around the world is one of Vox Mobile’s weaknesses, said Phillip Redman, research vice president in Gartner’s Boston office, who worked on another report on the sector that was published in December.

However, the company does have a lot of expertise related to mobility, Mr. Redman said. Plus, Vox Mobile isn’t afraid to work with

telecommunications companies such as Telus and even direct competitors, he said.

The company in November 2010 started forming partnerships with managed mobility services providers in different countries. Thus, if the company has a customer with an office in Germany, Vox Mobile can provide that office with local service through a German company that belongs to the Global Enterprise Mobility Alliance. Work is under way to turn the seven-member alliance, a contractual joint venture, into a formal joint venture company, Mr. Snyder said.

Mr. Redman described the alliance strategy as unproven but interesting.

“They have an ability to partner with anyone,” he said.

An era of disruption Though the August Gartner report listed several competitors in the managed mobility services sector,

few of them provide the same services Vox Mobile does, said Sever Totia, a principal at Edison Ventures.

One reason Edison Ventures invested in Vox Mobile is because it faces limited competition, Mr. Totia said. Edison also was impressed by the company’s management team and its growth rate, he said, noting that Vox Mobile’s sales doubled in 2011. Mr. Snyder would not provide revenue figures.

Mr. Totia said the sector itself also was appealing to Edison, which found out about Vox Mobile through Chris Sklarin, an investment manager the firm hired in Cleveland after it received an investment from the taxpayer-backed Ohio Capital Fund.

The shift to mobile devices is a big disruption to businesses, Mr. Totia said, noting that it resembles the shift to personal computers or the introduction of the Internet.

“That represents huge challenges to the enterprise,” he said.

■

Volume 33, Number 22 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the third week of May and fourth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2012 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00.

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Water: Group sees opportunities in some sectors continued from PAGE 3

Now, developing countries could use our help, Dr. Clayton said.

“They’re going to run into a lot of problems that we went through with the auto and steel industries,” he said.

Making market waves Information NorTech has collected so far suggests the region first should focus on three types of water technology: automation and control systems, corrosion protection systems, and sorbents, which are used to remove impurities from water.

Northeast Ohio already is strong in the first category: Milwaukeebased Rockwell Automation, which has operations in Mayfield Heights, Twinsburg and Warrensville Heights, and other local companies sell more than $40 million per year of automation and control technology for controlling and treating industrial water. That’s about 15% of the $270 million worldwide market for 2012. NorTech expects the market to reach $1 billion by 2019.

The other categories are bigger, though Northeast Ohio’s market share in them is small.

Small for now, at least. Although companies in the region have less than 1% of the $1.2 billion market for industrial sorbents and related systems, there are local companies

“There are a lot of knowledge-based companies dealing with water science in this part of the world.”

– Harry Shimp, CEO, MCM Capital Partners, which in October bought a majority stake in Zinkan Enterprises Inc. of Twinsburg. Zinkan produces chemicals for water treatment and underground dust control.

She noted how Hanson Pipe and Precast of Irving, Texas, is producing huge pieces of concrete in Macedonia, which the sewer district is using to build the 18,000foot-long Euclid Creek overflow storage tunnel in Cleveland.

However, the sewer district also will be looking for nontraditional products. For one, the EPA is requiring that the district over the next eight years spend at least $42 million on “green infrastructure” designed to reduce the amount of storm water that flows into the sewer system. Examples include permeable pavement, vegetative roofs, reservoirs and anything else that harvests rainwater in an environmentally friendly way, Ms. Rotunno said, noting that the amount spent on green infrastructure likely will be “much larger” than $42 million.

She also said demand for products that mitigate agricultural runoff is growing.

“If there was a way to cost-effectively handle phosphorus and nitrogen from agriculture, that would be a big winner,” said Ms. Rotunno,

with expertise in that space, such as Mar Systems Inc. of Solon and ABSMaterials Inc. of Wooster. Plus, NorTech expects that market to hit $2 billion by 2019. One big market for sorbents makers is the natural gas industry, which is booming in eastern Ohio and elsewhere.

The worldwide market for industrial corrosion protection system is by far the largest, at $60 billion in 2012. Northeast Ohio’s share is less than 0.1% today. Even so, the study findings suggest that no region dominates the market, which is expected to grow to $74 billion by 2019.

All three technologies could be applied to industrial wastewater treatment and storm water management, Dr. Clayton said.

Vegetative roofs and more The Northeast Ohio Regional Sewer District already is spending money locally to reduce the amount of sewage that gets into area waterways, said Kellie Rotunno, director of engineering and construction for the sewer district.

who has attended meetings of NorTech’s water working group.

Pooling their efforts The working group includes five nonprofits, three universities and 10 private companies, including Rockwell Automation, ABSMaterials, Mar Systems and Zinkan Enterprises Inc., a Twinsburg company that makes chemicals for water treatment and underground dust control.

MCM Capital Partners of Beachwood bought a majority stake in Zinkan last October, partly because it wanted to capitalize on the growing demand for water, said CEO Harry Shimp. And Zinkan isn’t the only local company with water-related expertise, Mr. Shimp said.

“There are a lot of knowledgebased companies dealing with water science in this part of the world,” he said.

If NorTech decides to focus more on building a water technology cluster in Northeast Ohio, it would start by hosting networking events and connecting local companies that could work together to solve water-related problems, Dr. Clayton said. The group also could work to improve work force development and education related to the industry, and it could push for regulations that would drive the industry’s growth, he said.

27

ON THE WEB

Story from www.CrainsCleveland.com.

Ronald McDonald House preps to expand Cleveland’s Ronald McDonald House on Euclid Avenue will break ground Tuesday, June 5, on a 20,000square-foot expansion that will allow the organization to care for 17 more families each night.

The project, which will expand the house’s capacity to 54 families each night, is a direct response to the growth in demand for the organization’s services. The organization has turned down 3,000 families over the past four years because of a lack of space, according to a news release.

The organization launched a $12 million capital campaign to fund the expansion. About 75% of the needed funds have been raised. Huntington National Bank is providing financing for the project while the remaining pledges and donations are collected.

— Timothy Magaw

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THEINSIDER

THEWEEK MAY 21 - JUNE 3 The big story: A Chicago private equity firm bought Things Remembered Inc., which is based in Highland Heights, for $295 million.

Madison Dearborn Partners acquired Things Remembered from private equity firms Bruckmann, Rosser, Sherrill & Co. and GB Merchant Partners. Things Remembered, which sells personalized gifts such as blankets, mugs and pens, operates 640 stores in the United States and Canada. New York-based Bruckmann Rosser and Boston-based GB Merchant Partners in 2006 jointly acquired Things Remembered from Luxottica Group S.p.A.

Daimler demand drives deal: Aluminum recycler and supplier Aleris said it has signed a four-year contract to provide molten aluminum to Daimler AG for the production of cylinder heads for all Daimler automobile models.

Beachwood-based Aleris did not estimate the value of the contract. However, the company said it recently installed a fifth furnace at its Deizisau, Germany, plant to increase capacity by 20% in order to support increased demand from Daimler.

The heart of the matter: The Cleveland Clinic expanded its relationship with Cadence Health, a Chicago-area health system, to include cardiology services. Cadence Health, based in Winfield, Ill., has existing affiliations with the Clinic in the areas of heart surgery and oncology. The Clinic in recent years has pursued such affiliations to generate revenue as the health system looks to expand its footprint beyond Northeast Ohio. In 2011, such affiliations generated $10 million in revenue for the Clinic.

REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

Something’s up at Ben Venue

drugs sold by its Bedford Laboratories division. — Chuck Soder

■ At least it’s planning to restart manufacturing at some point.

Ben Venue Laboratories Inc. is recruiting to fill more than 200 open positions, according to an email from spokesman Jason Kurtz.

Ben Venue stopped producing and distributing pharmaceuticals last November after multiple inspections by domestic and foreign regulators turned up dozens of quality control issues at its plant in Bedford.

Last Friday, June 1, the website for Ben Venue’s German parent company, Boehringer Ingelheim GmbH, listed 76 open positions in the Cleveland area. The company could be hiring multiple people for some positions.

It’s unclear why there are so many open positions at Ben Venue, which employed about 1,300 people in Bedford last year. Mr. Kurtz did not immediately respond to an email and phone messages left for him last Friday morning.

When it shut down manufacturing, Ben Venue caused drug shortages in the pharmaceutical industry. For instance, Ben Venue was the sole supplier of Doxil, a popular ovarian cancer drug marketed by Johnson & Johnson. The New Jersey-based pharmaceutical giant has started importing a similar drug called Lipodox and has been working to find another manufacturer to make Doxil.

Although Ben Venue in the past has said it is working to restart manufacturing, the company eventually plans to get out of the contract manufacturing business. Instead, it would focus on producing generic, injectable

A rare topping-off party awaits downtown

■ The University of Akron is expanding a degree program aimed at assisting those people who are looking for a promotion or a salary bump but who have been stonewalled ■ If you like watching crews change downby the lack of a bachelor’s degree. town Cleveland’s skyline, look fast. The The idea behind the program — the bachprocess of raising steel skyward at Ernst & elor’s of organizational supervision — is to Young Tower in the Flats is nearly complete. offer students with an associate’s degree, or The developers expect ironworkers to top those who never finished off the tower this Wednesday, college but have an arsenal June 6, as they put in place the of credit hours, the chance to final structural steel beam at snag a fast-track bachelor’s the 23-story building. degree.

Recent additions to the “It was conceived as a skyline were the Pinnacle degree completion program.

Condominiums in 2006 and It’s for those who have a Carl B. Stokes Federal Courtbackpack of credits but no house in 2002, according place to park them,” said to building and construction FILE PHOTO/STAN BULLARD Larry Gilpatric, chairman of website Emporis. The last time the department of business a multitenant office building Flats East Bank in late April technology at the University transformed the skyline was of Akron’s Summit College. in 1991, with the opening of the 57-story Key Mr. Gilpatric said the degree would be ideal Tower. for those looking to take on a supervisory When the 500,000-square-foot Ernst & role at their place of employment.

Young building opens in 2013, it will close a The program rolled out at the University 22-year gap since a new, multitenant skyof Akron in 2010, but since has been added scraper increased the size of the city’s office to eight other locations throughout the market. That is a long time, yet still less than region. For instance, the program this year the 28-year span between Terminal Tower expanded to the university’s new Lakewood in 1930 and 55 Public Square in 1958. location, Lorain County Community College Although the structural steel work may be and other sites. drawing to a close, workers will continue When the program launched, 29 students hanging gray and silver exterior panels to were enrolled. This spring, enrollment grew the steel frame for months to come. — Stan to 192 students. — Timothy Magaw Bullard

WHAT’S NEW

BEST OF THE BLOGS Excerpts from recent blog entries on CrainsCleveland.com.

Enhanced image:

ViewRay Inc.’s entire medical imaging system now can be used to treat patients in the United States. The Oakwood Village company said its MRI-guided radiation therapy system has secured 510(k) clearance from the U.S. Food & Drug Administration.

Another piece of ViewRay’s imaging system — treatment planning and delivery software — received FDA approval last year.

Transition comes too soon: Aircraft parts supplier TransDigm Group Inc. of Cleveland named Bernt G. Iversen II, a nearly 20-year company veteran, to replace Albert J. Rodriguez, its executive vice president of business development and merger and acquisitions, who died May 25. TransDigm said Mr. Rodriguez “passed away unexpectedly” in Waco, Texas. He was 51.

Mr. Iversen most recently served as executive vice president responsible for a group of TransDigm business units.

Spreading innovation: The Lorain County Community College Foundation aims to replicate its Innovation Fund in other regions. The foundation was awarded a $1 million grant from the Ewing Marion Kauffman Foundation and plans to use the money to help other community colleges start programs that resemble its Innovation Fund. The Innovation Fund America project will begin in three communities, with plans to add more later.

This and that: Cleveland State University named Steve Percy, a Cleveland native and former chairman and CEO of BP America Inc., as interim dean of its Monte Ahuja College of Business. He replaces Robert Scherer, who last month accepted a similar post at the University of Dallas. … Case Western Reserve University broke its fundraising record for the second straight fiscal year, as it reports raising $134.5 million — more than $8 million ahead of last year’s total.

With names like this, it has to be good

THE COMPANY: Heartland Consumer Products, Cleveland THE PRODUCT: Square Shooters dice game If you’re a game omnivore — dice and cards — Heartland Consumer Products has something for you.

The company bills Square Shooters as “a full deck of cards printed on dice.” Users have the option to play the Square Shooters feature game or versions of other card games such as rummy, 21 and poker. It can be used as a simple matching game for kids or a game of chance for adults, “making it a good fit for families,” the company says.

Heartland also is taking the game to Facebook with a contest called “That’s How I Roll.”

The challenge on Square Shooters’ Facebook page (www.facebook.com/square shooters) allows fans to show their gameplaying style for a chance to win $1,000 in prizes. Contest participants are encouraged to express how they roll by submitting a picture and a short caption that illustrates their personal style. The Facebook contest runs through July 2.

Back in the physical world, Square Shooters costs $12.99 for a basic set and $19.99 for a deluxe set. The game is available at Walmart, Walgreens, Barnes & Noble, BooksA-Million and many independent retailers.

For more, visit Heartland-Products.com.

■ A $3.3 billion plan in which Clevelandbased Cliffs Natural Resources Inc. plays a prominent role to build North America’s first major chromite mine deep in the Canadian wilderness “promises to usher in an era of prosperity for the region’s aboriginals and generate millions of tax dollars over its lifetime,” Reuters reported.

Tucked deep into northern Ontario, the so-called “Ring of Fire” contains rich mineral deposits “that could transform the region much as the oil sands have transformed Alberta,” the news service said. The region contains North America’s only known large-scale chromite deposit.

If Cliffs develops the “Black Thor” project in the “Ring of Fire,” it “will likely revolutionize the stainless steel industry on the continent, which now relies on imports from South Africa and Kazakhstan,” Reuters reported.

Remember these things about Things Remembered ■ The new owner of Highland Heights-based Things Remembered Inc. has “seized a challenging investment” from the personalized gift chain’s previous backers, according to a blog post from The Wall Street Journal.

Chicago private equity firm Madison Dearborn Partners paid $295 million to buy Things Remembered from private equity firms Bruckmann, Rosser, Sherrill & Co. and GB Merchant Partners. Bruckmann Rosser and GM Merchant had owned Things Remembered since 2006.

“It’s unclear how the two firms fared on

Lack of a degree holding you back? Check this out

the exit, but while under the six-year ownership of Bruckmann Rosser and GB Merchant, Things Remembered’s revenue doesn’t seem to have grown much and its footprint appears to have shrunk,” The Journal noted.

New York-based Bruckmann Rosser and GB Merchant said in 2006 that Things Remembered “booked about $300 million of revenue in 2005 through the business’ 653 locations — compared to more than $315 million in total revenue through 640 stores for the last fiscal year ended Jan. 28, according to a recent note by Moody’s Investors Service,” the blog post stated.

The Journal said Madison Dearborn “contributed about $163 million of equity to its buyout, while the remainder of the deal was financed through proceeds from a $147 million senior secured credit facility and a $30 million mezzanine note, according to a Standard & Poor’s Ratings Services disclosure.”

An ‘iconic cultural destination’ rises in University Circle ■ Architectural website Arch Daily called attention to the new Museum of Contemporary Art Cleveland building that’s rising in the University Circle area.

“With its strong formal moves, the museum intends to aid the city’s urban revitalization efforts by shaping an iconic cultural destination alongside its neighboring concentration of museums, such as the Cleveland Museum of Art and the Cleveland Museum of Natural History,” Arch Daily said.

A public opening will be celebrated in early October. The website noted the inaugural exhibition, “Inside Out and from the Ground Up,” will feature “an in-depth look at how international artists engage with architecture and spatial ideas.”

See photos from the Arch Daily post at tinyurl.com/7msy9ro.

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