20120611-NEWS--1-NAT-CCI-CL_--
6/8/2012
2:12 PM
Page 1
$2.00/JUNE 11 - 17, 2012
Innovation group provides Clinic allies nationwide Members sharing best practices, will use collective strength when applying for grants By CHUCK SODER csoder@crain.com
FOTOLIA/STEVE BENNETT ILLUSTRATION
Investment home sales surge Trend of buying single-family houses for rental ‘only going to get bigger,’ one local broker says
By STAN BULLARD sbullard@crain.com
Eric Frey moonlights from his full-time small business by operating Multiples LLC of Medina to tap what he sees as an attractive residential real estate market. Through Multiples, Mr. Frey so far in 2012 has bought three singlefamily homes to rent and plans to buy six more by year’s end. The houses — mostly small ranch homes
in Akron or its suburbs — will join a portfolio of 11 homes he’s assembled as rentals since 2010. Investor purchases such as those by Mr. Frey are a big part of a recent surge in home sales both in Northeast Ohio and nationwide. Local statistics are not available, but Northeast Ohio real estate agents say purchases here are in line with trends identified in the National Association of Realtors See SALES Page 6
WHO ARE THESE INVESTORS? The National Association of Realtors reports that single-family home sales to investors climbed to 27% of the existing and new-home market in 2011 from 17% in 2010. A profile of these investors:
50 $86,100 25 Median age
Average earnings
Mileage between primary residence and investment purchase
The Cleveland Clinic is getting into a new line of business: bridge building. The Clinic during the last 18 months has formed alliances with two large Coburn hospital systems as well as with the University of Notre Dame as part of an effort to build a national network of institutions that can help each other innovate and improve the delivery of health care. The Clinic-led Healthcare Innovation Alliance is intended to be both broad and deep. The alliance eventually could grow to include 10 to 25 member institutions nationwide, said Chris Coburn, executive director of Cleveland Clinic Innova-
tions, the business development arm of the hospital system. Almost all will be health care providers, Mr. Coburn said. Despite the physical distance between them, alliance members are meant to be more than casual acquaintances. For example, Cleveland Clinic Innovations already has employees on the ground at the other two hospital systems in the alliance, helping them amass ideas for new health care technologies and turn the best ones into products. Mr. Coburn said it plans to have one or two employees do similar work at Notre Dame, which joined the alliance last month. The relationships between alliance See CLINIC Page 12
INSIDE Gauging the effect on Ohio of Chesapeake Energy’s struggles The dominant driller in Ohio’s Utica shale region is under fire, but the state still should see plenty of benefit even if Chesapeake’s troubles continue. PAGE 3 PLUS: ■ Lobbyists on each side of the oil and gas tax issue line up in Columbus. PAGE 3
Banks rejoin leveraged transactions, and sellers are benefiting Lenders willing to extend more debt per deal in search of bigger yields By MICHELLE PARK mpark@crain.com
23
Companies and private equity firms that want to buy businesses stand to have more debt available for their deals as banks warm back up to putting more of their money behind such transactions — a devel-
opment that ultimately should result in higher purchase prices and more money for sellers. Given the economic uncertainty of recent years and the way businesses’ operating performance troughed, many banks withdrew from socalled higher leverage lending. “They were reticent to lend into
new situations at high leverage levels because no one really knew where the market was going” in 2008 and 2009, said Andrew Petryk, managing director and principal of Brown Gibbons Lang & Co., a Cleveland investment banking firm. However, Mr. Petryk said Brown Gibbons now is receiving “very
aggressive financing proposals” from banks that want to help leverage transactions. Others in the dealmaking business are seeing the same. Steven Ross, managing director and partner with MCM Capital Partners, which deals largely in middlemarket transactions, said there “clearly has been a change in terms of not only banks’ appetite to lend, but also their willingness to lend more into a transaction.”
John LeMay, a partner with Cleveland private equity firm Blue Point Capital Partners, said he, too, has noticed a “meaningful” increase in the breadth and aggressiveness of lenders in the past six months to a year, particularly toward deals at the lower end of the middle market.
Haves and have-nots Leveraged transactions tend to be See LEVERAGE Page 10
0
NEWSPAPER
74470 83781
7
SPECIAL SECTION
SMALL BUSINESS Bakeries, grocers catering to growing number of customers who suffer from allergies ■ Page 13 PLUS: WINDOW WATCH ■ TAX TIPS ■ ADVISER ■ & MORE
Entire contents © 2012 by Crain Communications Inc. Vol. 33, No. 23