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Displaying leadership for our veterans

Displaying leadership for our veterans

Five decades before Sweeney became the president of the foundation that would raise millions of dollars to construct two Fisher Houses in Cleveland, he fought in a controversial war as a sergeant within the 11th Brigade, Americal Division. As a 22-year-old raised in a military family, Sweeney rode helicopters over the jungles of Vietcong as he dodged machine gun fire. He lost friends, slept on sandbags, endured artillery fire five days a week. Though Sweeney speaks rarely in detail of his wartime years — which earned him a Bronze Star — he’s unafraid to capture its severity in brief.

“Every war sucks,” he said. “Plain and simple. It’s cruel. It’s arbitrary. Only the truly lucky ones come out of combat. It’s a special experience, I can tell you that.”

After a two-decade career as a deep-voiced news anchor for Baltimore’s WMAR and, later, Cleveland’s WKYC Channel 3, Sweeney retired in 1992 to care for his boys, Tuck and Connor.

Come 2011, Sweeney was asked by Susan Fuehrer, the director of the Louis Stokes Cleveland VA, to spearhead a special team to raise funds for the first Fisher House suites in the area. Sweeney was taken aback: He’d never heard of the concept.

“I had no idea what the hell she was talking about,” he said. “Why would I? They weren’t around when I was in uniform.”

Although the first Fisher House opened up 25 years ago at the Walter Reed National Military Medical Center in Bethesda, Md., the push for improved psychiatric care for returning vets has long been a conundrum in the United States. “Shell shocked” soldiers who survived mortar shrapnel in World War I were occasionally sent back into combat if their disorder was deemed “nervous” — an emotional collapse — and not a physical wound. By the time President Richard Nixon had resigned, psychiatrists were just starting to analyze Vietnam vets for signs of physically manifested trauma, though it would take another decade for the American Psychiatric Association to add “post-traumatic stress disorder” to the “Diagnostic and Statistical Manual of Mental Disorders,” in 1980.

Soldiers were finally being understood. Yet, still, there was an entity widely left out of DSM mental diagnoses: their families.

In 1990, while the VA was starting to treat polytrauma via the neurologically focused Eye Movement Desensitization and Reprocessing treatment, Zachary Fisher, an 80-year-old owner of the Intrepid Sea, Air and Space Museum, shifted gears to found an organization of military “comfort homes,” all under the belief that “a family’s love is the best medicine.” (Vets families were also, Fisher noticed, sleeping on VA couches.)

Seventy-two Fisher Houses would pop up globally, though not in Cleveland. Most today are near military bases and VA medical centers, and operate as state-of-the-art, 16-suite hotels fashioned with modern-designed interiors, full kitchens, play rooms and lasagna dinners.

“It’s a holistic approach to reintegration,” said Dr. Joseph Baskin, a psychiatrist at the Cleveland Clinic who worked for the Louis Stokes Cleveland VA for 12 years. “But it’s certainly not a one-size-fits-all. I’m sure there are some people who might be better off apart, who don’t want to impose on their families.”

(Why?)

Published at Sat, 02 Sep 2017 08:00:00 +0000

Source Lunch with … Fred Cummings

Source Lunch with … Fred Cummings

Fred Cummings founded Elizabeth Park Capital Management in Pepper Pike in 2008. Over the years of running a supremely successful, bank-focused hedge fund — which happens to feature some of the region’s most prominent businesspeople as investors — he has carved out a significant niche in the investment world and banking industry, comfortably establishing himself as an authority the world of M&A for financial institutions.

With 2017 shaping up to be another highly active year for bank deals, Crain’s decided to sit down with Cummings to talk about the M&A environment overall, what trends are driving buyers and sellers in today’s market, and what catalysts in the banking sector could influence deal flow from here.

Q&A

So 2016 was a big year for bank M&A. What’s activity looking like in 2017 so far?

While M&A is not stronger than ever, it’s stronger than it’s been in the last six years. Things are moving in the right direction in terms of the number of deals getting done. And even the price-to-tangible book multiples are all trending higher. I think the all-time high level of M&A activity occurred in the early 1990s, where you had a record number of deals. One reason we won’t see that happen again is simply because there is a fewer number of banks out there. So one has to look at the percentage of banks that have sold each year relative to the number of banks at the beginning of the year. That number has been hovering around 4%. Around the early ’90s, it reached 4.5%. So that’s a signal that things are very robust and very healthy right now.

What’s comparable in terms of M&A volume today is relative to some 25 years ago, then. Why did it take so long to get back to this level of activity?

There are a couple factors. For one, typically buyers don’t want to buy until they’re confident credit quality is sound, and we’re clearly at that point. Right now, credit quality indicators are stronger than they were (before the) financial crisis in 2007. Two, you had bank stock prices go up. That’s allowed the buyer to have strong currency with which to pursue acquisitions. Three, the regulatory environment has loosened up to some extent. Not to the extent we need it to, but it’s improved. And lastly, the economy is improving. All those factors taken together have contributed to an ideal environment for M&A activity to occur.

So as we talk about it being a strong year for M&A, how’s that treating your business?

We launched an event-driven fund in February 2016 with the focus of identifying banks who would be likely sellers over a three-year time frame in anticipation of M&A remaining strong. That fund did well last year, in part due to the broad-based rally that bank stocks enjoyed. But in terms of number of deals in that fund, we had five banks sold in that fund last year. This year, we’ve had seven so far. So we’re very pleased with that progress.

And I imagine you expect more before the end of the year?

We fully expect, based on our conversations with banks across the country, that there is going to be more M&A. Banks are looking to increase their market share in specific markets all over the country and looking to achieve economies of scale, cut costs, and they’re attempting to leverage their capital. And that’s the best thing. The banking industry is blessed with a lot of capital right now. And they want to put that to work, and one way to do that is through strategic M&A.

Now let’s say the administration actually makes progress on its agenda and achieves things like bank regulatory relief or tax reform. How could that impact the M&A landscape?

I think the biggest impact would be regulatory changes, particularly loosening regulations on larger banks. At that point, you’d likely have more big banks like KeyBank and Fifth Third Bank entering the M&A markets. We saw Huntington Bank do a deal over the last year and Key. But I think the biggest change would be with any type of regulatory relief, you’ll see more big banks, super-regional banks, actually pursue deals. That would put more buyers in the marketplace.

And those large banks would target other large banks, too, I imagine.

Yes, they’d buy larger banks. The banks with assets of $20 billion to $50 billion would be the sellers. Right now, most of those banks want to be buyers. If we get regulatory relief, some of those big, super-regionals might enter the M&A arena.

In terms of relief, how the definition of SIFI (systematically important financial institutions) banks could change, would be a major factor in this, right?

It’s why we think the largest banks would be the biggest beneficiaries of any type of regulatory relief. What you’re looking for in tangible regulatory relief is definitely that SIFI definition, which is defined as a bank with assets greater than $50 billion. That threshold might be lifted. And if that happens, we anticipate some of those banks becoming buyers.

Any thoughts on the general state of M&A in our regional market here or across the state?

We know there are a lot of banks around and outside the state who are interested in becoming bigger here in Northeast Ohio — names like First Commonwealth Bank, S&T Bank, Park National Bank in Newark, Peoples Bank in Marietta. There are a number of banks who want a stronger presence in Northeast Ohio or want to enter the market based on the number of business that operate here. So I would expect there to be some M&A still. But you got to have a willing seller, and we don’t know how many are really willing to sell.

FIVE THINGS

A top item on your bucket list?

Visiting the Ferrari factory in Maranello, Italy

Any hobbies?

Traveling and drinking red wine

Any wines you prefer?

“Cabernet Sauvignon. Joseph Phelps is one of my favorites.”

What’s something your friends may not know about you?

“I’m a big fan of Broadway shows.”

If not running your own investment business, what might you be doing?

“Probably teaching elementary school math. I love young people and working with kids.”

Lunch Spot

Flour Restaurant

34205 Chagrin Blvd., Moreland Hills

The meal

Sausage sandwich with peppers and onions, with chips and iced tea. And the catch of the day: lemon vinaigrette salmon served on a bed of chick peas, cucumbers and tomatoes, with water.

The vibe

The restaurant has an industrial-modern feel. Bright, spacious and colorful. Lots of authentic Italian dishes and reworked classics. Quick service for a busy lunch.

The bill

$37.26, plus tip

(Why?)

Published at Sun, 27 Aug 2017 04:01:00 +0000

Off the Clock: Things to do in and around Akron

Off the Clock: Things to do in and around Akron


By CRAIN’S AKRON BUSINESS

Artist Talk: Bruce Checefsky

6:30 p.m. Thursday, Aug. 24; Akron Art Museum, 1 S. Main St., Akron.

Bruce Checefsky — an artist whose work is spotlighted in the museum’s “Serial Intent” exhibition, which features series of works in pop art prints, photographs and more — will talk about the process behind his “Garden” series of pieces and give a demonstration in the Bud and Susie Rogers Garden.

This event is free.

Rubber City Jazz & Blues Festival

Thursday-Saturday, Aug. 24-26; various venues in downtown Akron.

This is the second year for the celebration of jazz and blues that will take place all over downtown Akron at venues including Blu Jazz+, Lock 3 Park, Nightlight Cinema, Musica, the Akron Art Museum and more. The fest kicks off with a Jam Fest on Thursday night at Blu Jazz+ and continues with a slew of performances, including a full day of festival fun (kids activities, vendors, etc.) on Saturday. Artists include Joey DeFranceso, Victor Provost and James Johnson III. Check out the fest’s website for details, times and a full schedule.

Events are free.

Akron Pokemon Go

10 a.m. Saturday, Aug. 26, through 6 p.m. Sunday, 27; downtown Akron.

Spend some time this weekend chasing Pokemons around downtown Akron. OK, they are not real critters, but virtual ones as the John S. and James L. Knight Foundation teams up with Pokemon Go publisher Niantic Inc. for the weekend event. The goal is to get residents, University of Akron students and visitors to connect with the downtown area. The event, which coincides with UA freshman orientation, is incorporating some-real world things, too: activities, musicians, free charging stations and more.

This event is free.

Rock the Lock

7 p.m. Friday, Aug. 25; Lock 3 Park, 200 S. Main St., Akron.

This week’s tribute act channels David Bowie as “David Brighton’s Space Oddity: The Ultimate David Bowie Experience” gets top billing. Brighton has been doing musical impersonations since 2001 and even performed once with Bowie, who died in 2016. Mo’ Mojo opens.

This event is free.

‘Dave Made a Maze’

Various times through Thursday, Aug. 31; Nightlight Cinema, 30 N. High St., Akron.

This unique indie film by director and Cleveland native Bill Watterson is receiving some rave reviews. Dave, an artist who can’t seem to finish any project he starts in his career, manages to build — and finish — a cardboard-box maze in his living room. But that’s where the trouble starts as he and his friends get trapped inside the maze’s supernatural world. How does one recent review in The Arizona Republic describe the film? ” ‘Weird’ is one word for it, and it certainly applies. But so does ‘creative,’ ‘inventive,’ ‘compelling’ and, finally, ‘good.’ “

Tickets range from $7 to $9.

Akron Pride Festival

Noon to 8 p.m. Saturday, Aug. 26; Hardesty Park, 1615 W. market St., Akron.

Akron Pride’s mission is to “unify and affirm the LGBTQ community and allies in celebrating our diversity and recognizing our likeness. We will promote acceptance of all individuals by defending human equity.” The inaugural event kicks off with a Equality March, which will step off at 11 a.m. in Highland Square and process to Hardesty Park. There, festivities will include live music by Martha Wash, food and art vendors, street performers, a kids zone and carnival games.

This event is free.

Wild for Wine

6-9 p.m. Saturday, Aug. 26; Akron Zoo, 500 Edgewood Way, Akron.

Wine lovers, it’s your turn to check out the animals. The Akron Zoo is hosting its first wine-tasting event, with six local wineries — Barrel Run Crossing Winery and Vineyards, Filia Cellars, Maize Valley Winery, NautiVine Winery, Troutman Vineyards and Wolf Creek Winery — offering their products. Square Scullery will prepare appetizers to pair with the wine offerings. The event also will feature live painting demonstrations.

Tickets range from $45 to $50 and are available online. Designated driver tickets range from $25 to $30.

Fall Hiking Spree Kickoff

Noon-3 p.m. Sunday, Aug. 27; Liberty Park Nature Center, 3973 E. Aurora Road, Twinsburg.

Get a head start on the 54th annual Fall Hiking Spree at this kickoff celebration. A naturalist and mascots will be on hand, and hiking forms will be available, as well as Fall Hiking Spree T-shirts for purchase. The spree requires participants to hike at least eight designated trails by Nov. 30 . At the end of all that walking are some cool rewards in the form of walking staffs (first-year hikers) and shields.

This event is free.

John Mayer

7 p.m. Wednesday, Aug. 30; Blossom Music Center, 1145 W. Steels Corners Road, Cuyahoga Falls.

Grammy winner John Mayer is coming back to down, this time singing his own stuff instead of fronting the Dead & Company, as he did earlier this summer. Known for hits “Your Body is a Wonderland” and “Daughters,” among other, Mayer is touring behind his latest album, “The Search for Everything,” released in April.

Tickets range from $36 to $125 and are available online.

Jason Isbell and the 400 Unit

8 p.m. Wednesday, Aug. 30; Goodyear Theater, 1201 E. Market St., Akron.

Jason Isbell, formerly of the Drive-By Truckers, brings his unique, pure sound — which stretches across genres, from folk and country to rock — to the fantastically intimate Goodyear Theater. The singer-songwriter and his band are touring behind his latest album, “The Nashville Sound.” A recent review in the New York Daily News said, “Isbell (and more specifically, Isbell’s voice) anchored a set that was low on spectacle, but filled with moments that made you shake your head in disbelief.”

Tickets range from $30 to $85 and are available online.

(Why?)

Published at Thu, 24 Aug 2017 08:00:00 +0000

Frank Sinito has sky-high hopes for real estate portfolio

Frank Sinito has sky-high hopes for real estate portfolio

Frank Sinito recently bought the 57-story Key Tower and the attached 400-room Marriott Cleveland Downtown in a $267 million deal. It’s a long reach for a Cleveland native who started out with a 14-suite apartment complex and a bar in the suburbs.

But at 54 with a tireless devotion to work, he’s fine-tuning things at the Key Center complex and has his eye on another big downtown building and renovation project.

On Sept. 1, Sinito will move the last of about 90 employees of his Millennia Cos. to Key Tower and is eagerly undertaking enhancements to Ohio’s tallest skyscraper, as well as the hotel.

Asked what’s next for him and Millennia in the wake of an epic transaction, Sinito said he’s hoping to launch the multimillion-dollar conversion of the massive former Huntington Building — now called Union Trust, in honor of its original name — on the northeast corner of Euclid Avenue and East Ninth Street.

“I have a bid in,” Sinito said. “I hope I get it. It will be a real roll-up-your sleeves opportunity.”

If a Sinito affiliate lands the 1-million-square-foot property or a stake in the project, it would be a big change and the biggest development for the massive Huntington Building since late 2015, when Hudson Holdings of Delray Beach, Fla., won an allocation for as much as $25 million in Ohio State Historic Preservation Tax Credits. Hudson Holdings has planned a $300 million adaptive reuse as apartments, hotel and contemporary office space, though construction is not yet underway.

Sinito said he would undertake adding 400 apartments to part of the landmark building if he gets involved in the project. Other parts of the building? He’ll figure those out later.

Although he would not say how much he offered to pay for Union Trust, Sinito’s disclosure of his interest in it also confirms that Hudson has been shopping the project or seeking additional investors.

For months, Andrew “Avi” Greenbaum, has denied such efforts. He wrote in a text message to Crain’s last week that Sinito “submitted an offer to which we haven’t responded at this time.”

How Sinito fares, coming weeks will tell. Making a play for another giant deal in his hometown so soon after snagging the city’s tallest skyscraper says a lot about Sinito. He enjoys what he does. He is aggressive. That’s also how the native Clevelander went from humble beginnings to launching the highly regarded Lockkeepers restaurant to growing an apartment-based real estate empire with 24,000 suites in 26 states. Now the company is so large that it hosts an annual conference in downtown Cleveland devoted to training and motivation for 500 managers.

Doing it the hard way

Motivation is important in the segment that provides most of Sinito’s cash flow, as 80% is in affordable and senior citizen housing. The remaining 20% is in more traditionally profitable market-rate projects.

Running affordable housing is not an undertaking for the passive or thin-skinned. Some of the buildings he buys have been covered for squalid conditions or crime problems by local news or TV stations in places including Jacksonville, Fla., and Birmingham, Ala. Millennia’s growth has been low-profile in Northeast Ohio, and Sinito likes it that way, saying he does not like talking to news media or about himself. Most of the coverage of Lockkeepers, for instance, is done by quoting his wife, Malisse, who runs it.

For his part, Sinito said his wife’s operation of the restaurant puts her in the limelight while allowing him to put his energies into the apartment business. As a result, many outside real estate circles were surprised when Millennia last year surfaced as Key Center’s buyer. Some even considered him a restaurateur. Moreover, Millennia pursues a segment of the multifamily business that other apartment owners wouldn’t consider.

A telling commentary on sizing up a new acquisition in Birmingham was shared by Sinito to staffers who attended Millennia’s recent annual meeting at the headquarters of Global Cleveland.

“When I first stopped at Bankhead Towers, the hookers were there to ask if they could help me,” Sinito said. “When I went the last time, residents were there to go to a picnic.” He then told staffers that they are on the front lines and need to work to keep affordable housing properties “places where you, your family or grandmother would live.” A zero-tolerance policy on drugs and improving security are essential, he said.

“I know how hard your jobs are. I’ve done your jobs. You are in the trenches every day,” Sinito said at the conference.

Many elements in the multifamily business eschew investments in the affordable housing segment, even with their stable cash flow from federal housing assistance, and even fewer do what Millennia has done: bought market-rate properties as well as affordable and senior citizen properties.

Ralph McGreevy, executive vice president of the Northeast Ohio Apartment Association, said Sinito chose a tough road.

“It’s a difficult path for many reasons,” McGreevy said. “Another is that it’s an eye-on-the-ball business because you are dealing with public money. The i’s have to be dotted and the t’s have to be crossed. Market-rate (housing) is not as risky. If you’re smart, have a good property and a good location, it’s hard to screw it up.”

Sinito balanced those challenges while building a portfolio of market-rate housing, which McGreevy said takes someone who is “very skilled. What he’s doing has impressed most members of our association.”

For Sinito’s part, he traces his interest to writing a paper on public housing while he was earning a degree in economics at Cleveland State University, at the time thinking he might pursue a law career. The takeaways from that research would later shape his direction with respect to affordable housing.

“This is an industry that is recession-proof,” Sinito said. “Unfortunately, demand for it will always exceed supply.”

Leaving an impression

John Burke, a now-retired Cleveland State professor, does not remember the paper Sinito said he penned for him, but remembers Sinito, even though he has not seen him for 30 years and believes he taught thousands of students.

“He was congenial, friendly and open,” Burke said. “He wanted to know why things happened. When you teach a class with 100 to 150 students, isn’t it amazing that (Sinito) made such an impression? When I read that he had bought Key Center, I said, ‘Good for him.’ “

For Sinito, buying his first properties also solidified his passion for the low-income housing business: “These are folks with needs. They are the least of the least,” Sinito said. At the conference, he reminded managers to hold Thanksgiving dinners at the properties because they provide social contact as well as food for some residents who lack families to visit.

A crucial step came in 1995, when Millennia was technically launched and Sinito owned about 1,000 units. That was when Millennia bought a six-property portfolio of Northeast Ohio senior citizen apartments from Cleveland developer John Ferchill. Sinito said he and his wife, who had created Lockkeepers as an upscale restaurant a few years before, refinanced the restaurant to swing the portfolio’s purchase.

The other key thing was listening to advice people gave him. In 1988, he bought a 52-unit portfolio where Sinito said, “I did everything wrong. I hired the wrong general contractor. I had the wrong financing. I had to take over the construction and run it myself.”

The late Kenneth Snyder, a BakerHostetler lawyer who would later become its managing partner and died in 2005, told Sinito in the late 1980s, as Sinito recalls it, “‘You’re going to be successful. You’re hard-working.’ He advised me to be careful about the scale of my business as I grew.” He emphasized building a solid organization. In 1992, Sinito decided to hire some key executives. That is when his CFO, John McGinty, joined Millennia, and Allan Pintner, vice president emeritus, came on after a long career in federal subsidized housing at the former Associated Estates Corp. of Richmond Heights, which had developed thousands of such units primarily in Northeast Ohio.

A new era

Today, Millennia has its own in-house design staff with two architects and an interior designer, an in-house construction company and a four-lawyer legal team. Such staffers allow closer control of the business than using outside specialists.

On a tour of Millennia’s new office on Key Tower’s 13th floor, the place is strikingly different from most downtown offices.

For one, it’s a bustling place. Staffers huddle over construction drawings or meet with designs in front of them. Sinito and the firm’s executive staff are scheduled to move to the 40th floor by Sept. 1 from Millennia’s Thornburg Station project in Valley View, a mixed-use project that is up for sale. In early August, the 40th floor was just beginning to take shape. Sinito will occupy the building’s northeast corner with a view of North Coast Harbor, the Hilton Cleveland Convention Center Hotel and Burke Lakefront Airport. When it’s in, the 87-person headquarters office will occupy more than twice the 18,000 square feet it has in Valley View.

On the tour, Sinito quizzed staffers about how the new layout was working for them in communicating with other departments. Known for being detail oriented, he even commented on how the new carpet on the 40th floor looked more blue, and better, than the sample.

“This is like a dream come true,” Sinito said as he looked down at a broad sweep of Lake Erie from such a height.

Buying Key Center was the end of a two-year undertaking to find Millennia’s new home. He started sizing up downtown because he looked for office buildings to convert to apartments years ago. The result of years of searching is just now being realized as the first tenants are moving into Corning Place, apartments in the 1890s-vintage former Garfield Building at Euclid Avenue and East Sixth Street.

As Corning Place came together, he also looked for a home for Millennia because he enjoyed the place that downtown has become and needed room to grow. After Key Center owner Columbia Property Trust put the buildings on the market, he was approached to become an investor with Scott Wolstein and lease two floors of the building. After Wolstein’s deal fell through, he discussed leasing space with another bidder Sinito did not identify. After that Chicago group passed, Sinito decided to buy it himself.

“I got excited about what we could do here,” Sinito said, both as a tenant and owner. He said that as a tenant, Millennia would have occupied two side-by-side floors. Now, doing what he considers best for the building, most of the staff is on the never-before-occupied 13th floor. The remainder is on the 40th floor.

Seeing the light

The makeup of the building also played into the favor of the local buyer. When the skyscraper was built in the late-1980s, developers Richard and David Jacobs of Westlake won a 20-year tax abatement on the project by incorporating the 400-room hotel in the project, which the city needed to promote its emerging goal to become a tourist and convention destination. However, the combination turned off many buyers — particularly institutional-quality buyers, who typically buy large office buildings.

“I don’t think we would have gotten the project if it had been only an office building or only a hotel,” Sinito said. “The office buyers did not want the hotel. And the hotel buyers did not want the office building.”

However, Sinito said with his food and beverage background, he saw opportunity with the hotel. As a result, Millennia Hospitality took over the hotel’s restaurant, where it’s installing an Italian restaurant and is adding a sushi operation in place of the former newsstand.

“We have 3,000 people working in the building who can be customers of the restaurant,” Sinito said. “Previously, there was no synergy to the three parts of the building. Our challenge is to create that.”

Likewise, the renovated fitness center, operated by an outside firm, will serve hotel guests and the public, and Millennia will operate an event center in the dining room and related space in the formerly private Club at Key Center. Plans to renovate the Marriott are being worked out with the hotel chain. Other improvements will soften the lobby and replace deteriorating pavers on the building’s east side.

“We don’t take the typical landlord’s view of the building,” Sinito said. “We look at it as a tenant. What do we want? A pleasant setting. Food. Artwork. Lots of light.”

All told, the improvements are budgeted at more than $25 million. Sinito said the ability to retain Jacobs Real Estate Services of Westlake to lease and manage the property also was an important factor in the transaction.

“Tom Kropf has been here since the beginning, and Doug Miller worked with Richard and David Jacobs on the development,” he said.

Work still to do

Alec Pacella, an investment specialist and managing principal of the NAI Daus, pointed out that the $276 million purchase of the skyscraper overshadowed another transaction associated with the deal. Concurrent with the acquisition, Millennia landed a lease with Forest City Realty Trust for the megadeveloper to move into seven floors at Key Tower from its former headquarters in Terminal Tower, which it had sold. Pacella said the lease is the largest in downtown Cleveland since 1995, when the former LTV Corp. (now part of ArcelorMittal) moved into what’s now 200 Public Square.

Sinito also has a loose end to tie up downtown.

He bought 75 Public Square in 2014, but plans for converting the office building to apartments have come to naught because Millennia has not landed key state tax credits for the project. A potential sale to a hotel developer also fell through.

Millennia looked at moving into 75 Public Square, but Sinito said the building’s floor plates are too small for it and the company would have wound up on too many floors. And going after Huntington shows he’s still hunting major projects.

“I love to work,” he said. “I’ve always worked.”

And Sinito’s end game?

“I really hope my three kids want to be in the business,” he said.

(Why?)

Published at Sun, 20 Aug 2017 04:01:00 +0000

Calling all flipsters: How to keep your flip from becoming a flop

Calling all flipsters: How to keep your flip from becoming a flop

Many young professionals are becoming real estate investors by devoting their time and money into flipping properties, hoping to sell them to other young professionals. The Los Angeles Times has even coined a new term for these young professional home flippers: “flipsters.”

So, let’s assume that you, a flipster, have done your due diligence and found that ideal fixer upper in that picture-perfect neighborhood. Your bid has knocked out the competition, and now you’re ready to tear down walls and install those French doors (Joanna Gaines, anyone?). So, what are some things you can do to help align the real estate profit gods in your flipster favor?

Permits

I’m sure it’s no surprise to most, but flips, whether residential or commercial, require substantial work in terms of rehab. But before you go swinging that hammer, make sure you’ve checked in with your local building department to determine which permits are necessary for your project. Yes, most localities do require permits for residential projects. You may need a permit to install that new white picket fence or for any changes to electrical, plumbing, HVAC, or mechanical systems.

Even if you hire skilled contractors, be clear who is responsible for obtaining the permits. Check with your local building department to determine who is ultimately responsible for procuring the permits. Some localities require the owner to apply, while others will only work with contractors who are certified to perform work in that locality. Keep this in mind when you’re picking a contractor.

Any time you’re taking on a project, expect that you will have to pass an inspection by your local building official. Trying to hide work or thinking you can get away without getting the required permits is a mistake. If work is done without a permit, the building department can put a hold on any occupancy or rental permits, charge a 300% markup on permit fees, or even require that the unpermitted work be removed. Setbacks such as these can be the difference between a successful flip and a flop.

Construction contracts

While it can be tempting to have your brother’s friend’s uncle work the rehab job on a handshake deal, entering into any type of construction project without a written contract can be a recipe for disaster. Construction contracts are vital to keeping the project on schedule, on budget, and to hedge some of your risks. Construction contracts may seem like an easy item to skip over, but if your contractor leaves you high and dry with half a flip to go, you’ll be glad you protected your interests, in writing.

A construction contract can save you from every flipster’s nightmare: a contractor taking your hard earned money and skipping out on the project. Your construction contract can save you by scheduling payments that coincide with the progress of the project. For example, your contractor will get 10% to start, then when the project is 30% complete, they get another 20% payment, and so on. Your construction contract can also require retainage. Retainage is when a percentage of the total project price is retained by the owner until the project is 100% complete to the owner’s standards. This can help deter a contractor from rushing through the project, taking the full payment, and then never returning your calls about that shoddy paint job that needs touched up.

In sum, flipsters can take these simple steps to help ensure they have the best chances at a successful flip and to avoid a flop. Research your locality and understand what permits must be acquired before you start the work and get a construction contract in writing to protect your interests. Once you have these items completed, you’ll be well on your way to a successful flip.

Happy flipping, flipsters!

Tara J. Rose is an associate real estate and construction attorney with Buckingham, Doolittle & Burroughs in Akron.

(Why?)

Published at Fri, 18 Aug 2017 09:00:00 +0000

Merck CEO quits Trump council, prompting drug-price tweet from the president

Merck CEO quits Trump council, prompting drug-price tweet from the president


By BLOOMBERG

Merck & Co.’s CEO quit President Donald Trump’s council of manufacturing executives on Monday, Aug. 14, saying “America’s leaders must honor our fundamental values” by rejecting expressions of hatred, bigotry and group supremacy.

He was almost immediately attacked by Trump on Twitter.

Following a weekend of violence in Virginia involving white-supremacist groups that Trump has been criticized for not explicitly condemning, Merck CEO Ken Frazier said “as a matter of personal conscience, I feel a responsibility to take a stand against intolerance and extremism.”

Less than an hour later, Trump tweeted in response, “Now that Ken Frazier of Merck Pharma has resigned from President’s Manufacturing Council, he will have more time to LOWER RIPOFF DRUG PRICES!”

The council has included top executives from Boeing Co., Dow Chemical Co. and Johnson & Johnson. The move by Frazier — the latest CEO to quit the groups — comes after a weekend of violent clashes in Charlottesville, Virginia, that resulted in one death.

Trump, over the weekend, said “many sides” bore blame for the violence, though has so far not directly criticized the supremacist groups that were protesting the removal of a statue of the confederate war general Robert E. Lee. On Saturday, Aug. 12, a man drove a Dodge Challenger into a group of counter-demonstrators, killing a woman.

Social issues

Frazier is a black CEO — a rarity in large American corporations — and Merck has in the past taken stands on social issues. In 2012, the Kenilworth, N.J.-based company’s foundation ended funding for the Boy Scouts of America over the group’s exclusion of gays from its leadership ranks. Frazier is a registered Democrat, according to Pennsylvania voter records.

Trump created two CEO advisory groups early in his presidency. Blackstone Group CEO Steve Schwarzman leads one described as a strategy and policy forum, and Dow Chemical Co.’s Andrew Liveris organized a manufacturing initiative. After an initial burst of activity and press attention, the councils have fizzled with neither meeting since April.

Other chief executives have also stepped down from the various business-advisory groups. Earlier this year, Elon Musk of Tesla Inc. and Walt Disney Co. CEO Bob Iger quit the strategy and policy panel after Trump withdrew from the Paris climate pact. Former Uber Technologies Inc. CEO Travis Kalanick quit in February after Trump’s executive order on immigration.

Toby Cosgrove, the CEO of the Cleveland Clinic, plans to remain on the strategy and policy group, said to Eileen Sheil, a spokeswoman for the health system. She said the group hasn’t met since April, and there are no meetings scheduled.

Goldman Sachs Group Inc. CEO Lloyd Blankfein also took to Twitter Monday in response to the violence, citing former president Abraham Lincoln. “A house divided against itself cannot stand,” wrote Blankfein, whose inaugural tweet in June expressed disapproval over Trump’s decision to ditch the Paris climate accord.

Trump made U.S. drug prices an issue during the presidential campaign and after — at one point accusing drug companies of “getting away with murder.” While his rhetoric on the subject has cooled, the Food and Drug Administration has taken steps to try and bring more competition to the market for some drugs, and speed more generic drugs to the market.

Merck’s prices

Trump made U.S. drug prices an issue during the presidential campaign and after — at one point accusing drug companies of “getting away with murder.” While his rhetoric on the subject has cooled, the Food and Drug Administration has taken steps to try and bring more competition to the market for some drugs, and speed more generic drugs to the market.

Frazier, in December, said his company has a “ restrained” approach to price increases, calling aggressive price increases a foolhardy move by the industry. In a company report published this year, Merck said it has a “long history of making our medicines and vaccines accessible and affordable through responsible pricing practices.”

For 2016, the list price on its drugs rose by 9.6% on average while the net price, which more closely reflects what is paid by consumers, rose 5.5%, according to the report.

Merck shares were up 0.7% to $62.84 at 9:42 a.m. in New York.

(Why?)

Published at Mon, 14 Aug 2017 14:29:19 +0000

Local tech startup steps on the gas

Local tech startup steps on the gas

Sarah Grant always loved the open road but was never too high on staying in hotels, so the idea of purchasing an RV had obvious appeal

“If you can’t travel the world, you should at least have a good grasp of the lower 48,” said Grant, whose family typically travels each year by car from their home in Fostoria, Ohio, to Texas.

However, the prospect of a piece of equipment costing $50,000 or more sitting in her driveway for 10 or 11 months a year wasn’t ideal. That was until RVShare, a local startup, helped turned her apartment-on-wheels — a 2010 Fleetwood Quest, to be exact — into a revenue generator for her family. So far this vacation season, “The Quest,” as the family calls it, only sits in their driveway for two or three-day stretches at a time and the earned revenue more than covers the debt service on their RV.

Akron-based RVShare is an AirBnB-like platform that allows RV owners to rent out their vehicles when they aren’t using them. For making the connection and providing some of the back-end work — insurance, most importantly — RVShare takes a cut of the rental fee, which usually starts at about 15%.

“Our mission statement is not on our website because it wouldn’t make sense to the front-end consumer,” said RVShare co-founder and CEO Joel Clark. “We create entrepreneurs. We fell in love early on with helping the middle-American family.”

Admittedly, Clark said, the RV rental business seems like an odd niche, but there was clearly a market need. For one, people had been pedaling RV rentals on Craigslist for years, lacking access to much of the back-end technology that he believes makes RVShare so valuable. Also, many RV dealerships or mom-and-pop shops who rent vehicles only do so during certain times of the year.

The impetus for the company was RVShare co-founder Mark Jenney, who had bought an RV to travel the country as part of his honeymoon. Afterward, he realized he had no use for the vehicle and longed for a way to make money off the investment. Enter Clark, who offered to build a rudimentary template. It immediately started getting hits.

“The average RV sits unused for 50 weeks a year,” Clark said. “When insurance companies rate the risk, they’re rating the risk on only two usage weeks per year. That’s crazy. You’ve got 10 million families for 50 weeks a year that pretty much have a money pit in the driveway they don’t have time to use. It’s almost a second mortgage.”

And so far, the business model seems to be working. Without providing exact figures, Clark said the 4-year-old startup remains self-funded and “fully profitable.” Also, at this point last year, RVShare had about 12 employees, but today its workforce hovers around 40 people. Right now, more than 30,000 RVs are listed for rent on the company’s website. According to the company, the average RV owner earns more than $10,000 per year through the service. Some reported earning $30,000. Listings also are free.

“Our greatest challenge is finding the right people to add to our team fast enough,” Clark said. “We’re very much a puppy growing into its paws.”

The so-called “sharing economy” is hardly a novel concept — just look at the success of companies like Lyft, Uber and AirBnB. The idea behind it being sharing underused assets or services, usually for a fee, on a peer-to-peer basis.

However, the model, especially for a startup, does present its challenges, Clark said. For one, Clark said RVShare’s first two years were spent trying to develop the marketplace.

“Building a platform doesn’t necessarily mean users would immediately flock to it,” he said.

“Marketplaces are a simple idea, but they also present some very unique problems,” Clark said. “Starting a marketplace from scratch is a chicken-and-egg problem. You’re responsible for one side of the equation or the other. Neither side wants to be first side to the party. We ended up cracking that egg and built this product, and then went out and found people trying to do this but didn’t have a platform.”

RVShare does have its competitors, though Clark said RVShare’s differentiator is that it’s the only marketplace with both liability and comp insurance backed by a rated carrier. Others, he said, self-insure damage and collision. RVShare has an exclusive arrangement with MBA Insurance, which specializes in the RV space.

The sharing economy, meanwhile, is becoming an increasingly larger piece of the overall economy. According to a survey from the Pew Research Center, 72% of American adults have used at least one of 11 different shared and on-demand services mentioned in the survey.

Also, about one in five Americans have used four or more of these services, and 7% have used six or more. Moreover, according to a recent report from the Federal Reserve Bank of Kansas City, current economic data might not yet fully grasp the impact peer-to-peer services, particularly ride-sharing apps, are having on the overall economy.

(Why?)

Published at Sat, 12 Aug 2017 04:01:00 +0000

Adviser: Lessons abound as Tesla speeds toward streaming

Adviser: Lessons abound as Tesla speeds toward streaming

“And the sign says you’ve got to have a membership card to get inside.”

Twenty-seven years ago, the metal band Tesla covered the song “Signs” for its MTV Unplugged album, Five Man Acoustical Jam. This title was a (relatively uncreative) spin on the Five Man Electrical Band, the Canadians who initially penned the lyrics to the album’s fifth track. Fast forward to 2017, and this mildly obscure hair band may have been oddly prophetic. Another Tesla — this time I’m referring to Tesla Motors Inc., the technology company led by a One Man Electrical Brand, Elon Musk — may soon be delivering the same message to competitors like Apple, Amazon and Spotify.

Look out music providers, objects in your mirror may be closer than they appear. Tesla could be speeding into the streaming business.

In late June, Tesla revealed its intent to develop its own proprietary music-streaming service. This unnamed product would come bundled in all Tesla vehicles according to the report from Recode. On the surface, this won’t impact most Americans. After all, Tesla fell short of its sales goal — delivering at least 80,000 vehicles — by the end of 2016. They passed 100,000 cars sold this January.

At first blush, some pundits questioned the investment necessary to design and launch a proprietary music-streaming service for a couple hundred thousand vehicles. It’s hard not to raise an eyebrow when Spotify claimed at least 50 million paying subscribers while Amazon reported 27 million. But, if there’s one thing Musk has proved time and time again, it’s that he isn’t afraid of the long play. And new members of the Tesla family may be easier to obtain in the next few years.

On July 5, Volvo announced that all new cars launched from 2019 onward will be partially or completely battery-powered. In that same story, The Guardian reports that Volvo, “has yet to build a single fully electric car.” The company’s self-imposed deadline is a mere 24 months away.

France followed suit by announcing that it planned to ban all new petrol and diesel cars by 2040. By the end of July, the United Kingdom became the latest European country to announce a similar move, likewise targeting 2040 as the year its gas-car ban will go into effect.

With this rising global demand for electric vehicles, Tesla appears to have a head start in the electric car arms race. That may be exactly why the streaming business is music to Musk’s ears.

Pandora seems to be caught between the net and baseline — a place tennis players refer to as “No Man’s Land.” They burst onto the streaming scene with an ad-supported listening model. Then, to chase Spotify, Pandora introduced Premium, it’s $10-a-month, me-too service, to lukewarm reviews. After a management shakeup, Pandora is reportedly back to the drawing board to figure out how to make the ad-supported model work.

Spotify is clearly the streaming leader. But its financial health is directly correlated to its ability to negotiate better music royalty rates. Unlike Apple or Amazon, there are no other business units that can subsidize these premiums.

Which leads us back to Tesla. If the fledgling auto maker can accelerate its manufacturing to meet this growing demand, its affluent customer base will grow exponentially. The combination of locking its streaming competition out of its vehicles in favor of its proprietary service and growing its base of rabid fans could land a deadly body blow to Apple, Amazon, Pandora and Spotify.

In a recent Business Insider interview, a Tesla spokesperson said, “Our goal is to simply achieve maximum happiness for our customers.”

On the surface, this may sound like a squishy platitude from a seasoned PR veteran. But I believe that remark was delivered in earnest. I believe it because since it burst onto the scene in 2003, Tesla has proven that it isn’t just a car company. It is a technology company. And often, technology companies forget the real purpose of technological advancement: to make our lives more enjoyable.

Technology should make the complex simple. It should help connect us with people more effectively. It should give us new ways to share ideas and express creativity. Ultimately, the role of technology is to help us reach a different level of happiness. Perhaps, a level that we didn’t couldn’t collectively conceive five years prior.

When it comes to technological advancement, Tesla is clearly in the driver’s seat. The lesson for other technology companies is that Tesla got there by thinking outside of its car.

(Why?)

Published at Sat, 12 Aug 2017 04:01:00 +0000

The 5 newest and fastest growing companies in Chicago

With the growing number of population, Chicago is one of the best places to start a business. Over the last couple of years, some new companies have entered the market with their innovative thoughts. Here are the top new startups in Chicago.

Au Cheval

Au Cheval

It is a European style restaurant. Here you will find fried homemade bologna sandwich, pork and duck dishes. You will get a delicious burger, too. There are 30 international beers on tap which makes it unique.

Bethie b.

Bethie b

This company buys and sells recycled products like furnishings and art. It makes custom-made and hand-painted pillows. The products are eye-catching and attractive.

Citizen Made

citizen-made-screen

It is a custom sales software company which helps online businesses in Chicago to create their online stores. Their designs are such that it is easy for customers to personalize, buy and share their products in various designs and styles. The clients of the small businesses can share their purchases on the social network, thus enhancing brand awareness.

Do-Rite Donuts

Do-Rite Donuts

It is a high-end donuts and coffee store. The chefs are very experienced and have worked for the finest restaurants in Chicago before. Here you will get donuts of various exotic flavors such as Candied Maple Bacon, Banofee Pie, etc. There are gluten-free options as well. This shop is so popular that they are thinking of opening a second branch.

Flowers For Dreams

Flowers For Dreams

It is a florist company founded in 2012. The specialty of this company is that all its flowers grow organically. They donate school supplies to a student in need with their every purchase. Just after six months of operation, the company has donated 1,750 backpacks in Chicago.

These innovative businesses have changed the business landscape of Chicago. Many young entrepreneurs are now turning their ideas into reality getting inspired from these successful businesses.