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2867 posts categorized "Follow-up"

March 26, 2015

Furniture store owners buy building for $5 million

A year after quadrupling the size of their businesses by leasing the former Menards North store, two Rochester retailers have purchased the building for $5 million.

Jim Sather and Mark Byer moved Furniture Superstore and America's Mattress into the complex at 5150 U.S. 52 North last spring, shortly after Mernards moved to a new store. They were leasing the huge store and the surrounding 10 acres of property with an option to buy it after a year.

They closed on the deal to buy it for $5.09 million from John Mernard Jr. on March 17.

"Our intent all along was to buy the building," Sather said Wednesday. "Business has been stellar here. That and outstanding support from Bremer Bank helped make this happen. It's a big deal for us."

Sather and Byer also bought the adjacent Jo-Ann Fabric and Craft store for $2.4 million on the same day, but they immediately sold it to Rochester-based Brackenridge 52 LLC for $3.4 million. While it's unclear who the new owners are, it appears the very successful Jo-Ann Fabric store will remain where it is for now.

Now that they own the building, Sather and Byer plan to upgrade their store. The first step is to remodel inside the store and then reface the building within the next 12 months or so, Sather said.

A team of 18 employees staff the furniture/mattress store. However, it isn't just retail sales that's driving the business. They are renting out portions of the former Menards outdoor lumber yard for boat and RV storage. Other businesses, including a trucking firm, are  using the yard for storage.

They also are considering other business possibilities on the land in front of and behind the facility.

"We'll see what happens," Sather said.

Cardio3 reports losing $18 million in 2014

Cardio3 released a financial report today with a lot of interesting tidbits like it's building in the Minnesota BioBusiness Center due to an agreement with Mayo Clinic.

Also it's developing a U.S. headquarters… in Boston.

Here's most of my article on this:

The Belgium-based biotech firm building a manufacturing facility in downtown Rochester reported today that it lost $18.1 million in 2014, up from the $15.9 milCardiobioscience_jpeglion it lost in 2013.

Cardio3 BioSciences, which works closely with Mayo Clinic and is taking over the fifth floor of the Minnesota BioBusiness Center, reported its financials for 2014, plus some highlights of its activities in 2015.

Cardio3 is publicly listed on the European stock markets of NYSE Euronext Brussels and NYSE Euronext Paris, although it is not traded publicly in the United States.

Mayo Clinic owned 2.69 percent of Cardio3, as of March 3. Mayo Clinic first acquired equity in Cardio3 in 2007, when it licensed stem cell research by Mayo Clinic's Dr. Andre Terzic and Dr. Atta Behfar. Its cardiopoiesis technology repairs patients' hearts by re-programming their own stem cell to regenerate cardiac tissue.

6a00d83451cc8269e201a511d8e824970c-250wiThe Hong Kong-based Medisun, which is opening an office in Rochester, owned 7.2 percent of Cardio3 on March 3.

In the years since 2007, Mayo Clinic has developed a close working relationship with the Belgian company. Mayo Clinic is participating the U.S. clinical trial of Cardio3.

"We made significant strategic, operational and financial advancements in 2014 as we seek to build C3BS into a global specialty therapeutics company," stated Cardio3 CEO Dr. Christian Homsy in the announcement.

The annual report highlighted "a non-exclusive preferred access agreement" signed with Mayo Clinic in October that cleared the way for Cardio3 to build a facility in the City of Rochester's BioBusiness Center building.

"With this agreement, Cardio3 BioSciences agreed to give preferred consideration for Rochester, Minnesota to the U.S. to build a manufacturing facility for the production of C-Cure, at a facility located adjacent to the campus of the Mayo Clinic, and the Mayo Clinic agreed to periodically review with Cardio3 BioSciences its portfolio of regenerative medicine technologies, including in the areas of cardiology and oncology, with a view towards future potential licensing," according to the Cardio3 report.

Cardio3's prototype manufacturing facility will occupy the 14,963-square-feet of space on the fifth floor of the downtown building. Mayo, which leases the fourth through eighth floors, moved its employees out of the fifth floor earlier this year. Cardio3's five-year lease calls for it to pay a rent of $18 per square foot, or $22,444.50, per month. The city agreed to pay for $600,000 in equipment and improvements to the space.

The Minnesota Department of Employment and Economic Development also agreed to give Cardio3 a Minnesota Job Creation Fund award of $357,000, if the company invests $1.5 million in Rochester within a year and hires 33 employees within two years.

The ultimate goal of this project is for the city and RAEDI to eventually convince Cardio3 to build a 100,000-square-foot manufacturing facility with 350 employees in Rochester, according to officials at RAEDI.

However, Rochester is not the only city wooing the Belgium company. While the Rochester facility is Cardio3's first official U.S. location, the company's report show that it also has plans to build a U.S. headquarters in Boston, Mass.
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The company also reported that it's re-stating its 2013 financial reports "to reflect errors" found by PriceWaterhouseCoopers.

"After due consideration with its auditors, we decided that the shareholders convertible loans should have been accounted for as a financial debt instead of equity (previously called 'quasi equity') as originally posted in our 2013 financial statements, because the loans were convertible into a variable number of shares," according to today's statement from the company.

March 25, 2015

Upscale craft beer pub to open in northwest Rochester

A Crooked Pint Ale House is on tap to open soon in Rochester's former Green Mill Restaurant building.

Green Mill Restaurants CEO and Crooked Pint franchisor Paul Dzubnar announced this week that the "nouveau urban pub with a local neighborhood feel" is scheduled to open on April 21 at 2723 Commerce Drive NW.

Dzubner built the 6,800-square-foot restaurant in 2006 and still owns the building. The Green Mill operated there until it abruptly closed Jan. 1.

Place_18269"Even though the Green Mill closed, we still think Rochester is a great restaurant market. We want to get right back out in front of the market," Dzubnar said on Tuesday. "I think the people of Rochester have a very good palate."

He cited the poor timing of Green Mill's opening just as the recession started and the resulting development hiatus as contributing to the restaurant's failure. The resurgence of development along West Circle Drive and Mayo Clinic's Destination Medical Center initiative makes it much more favorable to launch a new concept now, he said.

Construction crews have been revamping the restaurant for weeks. It is expected to employ between 65 and 70 people, about the same that Green Mill did.

This will be the third Crooked Pint in Minnesota and the first outside of the Twin Cities metro area. Jeremy Brown owns the Rochester Crooked Pint as well as one in Apple Valley.

“Everything at Crooked Pint is the real deal, from the menu to the furnishings to all of the local craft beers,” Brown said in an announcement.

Dzubner described the Crooked Pint concept as catering to the growing craft beer trend, while serving "upscale pub fare," like stuffed burgers, homemade tater tots and stuffed pickles.

"We think this concept is really good. While the food is upscale, it's very affordable. We offer a daily $6 burger basket lunch special," he said.

From the bar, the Crooked Pint offers 30 local and regional craft beers on tap as well as 20 wines available by the glass. It also will serve a variety of high-end bourbons and scotches.

Plans call for up to 10 more Crooked Pint locations to open in the next three years.

“Rochester is growing with a mix of business and residential, providing a great backdrop for this fabulous concept. We are excited for Crooked Pint to join the community,” Brown said.

March 17, 2015

O'Neill's Pizza goes dark before the wearing of the green

Instead of St. Paddy's green, things are blue at Rochester's O'Neill's Pizza Pub.

The popular Irish-flavored spot at 1201 S. Broadway in the Crossroads Shopping Center closed its doors for good on Saturday, after an early St. Patrick's Day party.

O'neill's"We've been happy there for 10 and half years. We've been happy with our customer base there," said Shannon O'Neill, one of the owners of the family business. "Our lease is done, so we decided to close."

She owns O'Neill's with Erin O'Neill, Brian O'Neill and Phyllis O'Neill.

O'Neill's Pizza Pub moved to that spot, the former home of the Face The Music store, in late 2004. The family originally launched the eatery in 1999 at 7 Second St. S.W. That's the former bank building, where Goonie's Comedy Club is located.

AfteroneillsOne of its pizza slingers, Cam Kvittem, made news in 2012 when he was named the second best dough slinger in Minnesota.

"If he had been able to use to the dough for our cracker crust, I'm sure Cam would have gone all the way to first," said Shannon O'Neill at that time.

Shannon O'Neill said this week that this latest closing might not be the final end of the business and it could possibly be re-kindled in Rochester. She said the family is considering starting looking for a new location, though it's too early to even consider that at this point.

March 10, 2015

Tinn's to double its Rochester footprint with 2 new shops

Rochester fans of Tinn's Grilled Philly Steak Subs soon will have twice as many places to get their favorite sandwiches.

Tinn's, originally founded by Tien Danh, is opening a shop next to Tonic across from Mayo Clinic's Saint Marys Hospital on Second Street and another one on North Broadway at the corner of First Street Northwest.

03092015tinnsalibabasTinn's General Manager Bounlot Singkeo says he hopes to have the Saint Marys location, which is next to Tonic, open possibly as soon as late May. This shop will be take-out only with no customer seating, he said.

"We saw an opportunity there. We have a lot of customers at Saint Marys," he said. "So we thought we'd give it a try."

Singkeo estimated the store could have about eight employees to staff it, when it opens.

The other Tinns shop is opening in the former Ali Baba Restaurant spot at 101 N. Broadway Ave. It's currently undergoing an extensive makeover.

If everything goes as expected, Singkeo estimated the Broadway restaurant could be ready to launch within three to four weeks. It will be a sit-down restaurant with seating for about 20, as well as take-out. It probably will have about eight to 10 employees to staff it, he said.

These two new Tinn's will complement the other two older locations at  3462 55th St. in the Northwest Plaza and in the First Avenue Food Court on the skyway level at 100 First Ave. SW. 

March 05, 2015

Three local biotech start-ups win funding

A regional economic development fund is giving three local medical technology start-ups a financial boost.

Southern Minnesota Initiative Foundation recently announced it's giving funding to three local companies: Ambient Clinical Analytics, a Mayo Clinic spin-off software firm in Rochester; Xcede Technologies Inc., a Rochester company that makes surgical sealants; and Sonex Health, a Byron-based company that markets a carpal tunnel surgery device device called Stealth Microknife.

G_southern-minnesota-initiative-foundation-1395-1410186849.1865SMIF, which typically doesn't release the amounts of its economic development investments, is tapping its new $3 million Southern Minnesota Equity Fund for the capital for these three companies. The fund was created to to invest up to $600,000 per year for five years. The maximum investment is $100,000, according to SMIF.

The fund provides capital and expertise to early-stage and start-up companies. SMIF partners with organizations and individual investors to leverage capital and expertise to grow these companies to provide economic opportunities for Southern Minnesota.

"We're pleased to invest in these high-tech businesses through our newly-created equity fund program. Our Foundation remains committed to providing resources to grow local businesses," stated SMIF President/CEO Tim Penny in the announcement of the investments.

Ambient Clinic: Ambient Clinical is based in the newly opened expansion of the Mayo Clinic Biobusiness Accelerator in the Minnesota Biobusiness Center. It's CEO is Al Berning, who previously led Pemstar, Hardcore Computing and other Rochester companies. Drew Flaada, a former Rochester IBM executive, serves as chief technology officer.

Ambient raised $1.18 million in funding in early 2014.

Xcede Technologies Inc.: Xcede, subsidiary of Watertown, Mass.-based Dynasil Corp. of America, designs, develops and manufactures innovative hemostatic (bleeding prevention) and sealant products for surgical application.

Xcede is based at 1815 14th St. NW. Ambient's Berning was listed as an executive director in 2014.

Dynasil acquired Mayo Clinic technology initially invented by Dr. Daniel Ericson in 2011.

Sonex Health: Sonex Health is the creator of the Stealth MicroKnife. The Stealth MicroKnife is a medical device that allows clinicians to perform carpal tunnel release surgery under ultrasound guidance in the office

Sonex is listed as being based in Byron as well as having a presence in Mayo Clinic Mayo Clinic Biobusiness Accelerator. 

March 02, 2015

Mayo Clinic-linked NeoChord looking to drum up $1.5 million

NeoChord, a medical device firm I first wrote about in 2007, filed with the SEC in February to raise $1.5 million in funding. So far it has pulled in $457,000 or so of that.

I need to give a nod to the intrepid Katharine Grayson of the Minneapolis/St. Paul Business Journal for first pointing this out. I'm always impressed by how closely she tracks Form D filings for financing.Portfolio-neochord-260x138

The Eden Prairie-based NeoChord surfaced locally in 2007, when it licensed technology designed by Mayo Clinic cardiac surgeons Dr. Richard Daly and Dr. Giovanni Speziali. Speziali was named as the company's chief medical officer in 2013. 

Beside licensing its technology, Mayo Clinic has also previously invested in NeoChord. I'm checking to to see if that is still the case.

Neochord deviceThe NeoChord DS1000 device is used to treat a heart condition called mitral regurgitation. Mitral regurgitation means the valve or leaflet that controls the flow of blood from the left atrium to the left ventricle is not working properly.

Treatment typically consists of “cracking the chest,” stopping the heart and doing surgery. NeoChord's approach is much less invasive and can be done on a beating heart.

A tool is inserted between the ribs and into the heart. Then it is used to attach a chord to the faulty valve leaflet, which is tethered to the heart.

The market for less invasive techniques for mitral valve repair has been estimated at more than $2 billion. There are 50,000 surgeries done in the U.S. each year. An estimated 2 million patients are treated due to the risks of surgery.

Since it formed in 2007, NeoChord's lifeblood has been venture capital funding. By 2008, it had raised $3 million. It raised another $5.1 million in 2011 to finance the European clinical trial. In March 2013, it raised $3 million through the sale of its series B-2 preferred stock.

 

February 26, 2015

Rochester senior apartments sell for $1 million

In the wake of the sale of Rochester's Maple Manor Health Care, the senior apartments next door now have been sold for $1.01 million.

The 18-unit Maples Senior Apartments at 1893 19th St. NW was purchased by Kurt Luschen, of Maynard, Minn., on Feb. 17. The Blum family, which owned Maple Manor until it was sold in January, sold the complex.

Maples senior apartmentsPat Blum, the former administrator of Maple Manor, said it made sense to sell it after the sale of the senior-care center.

Having the apartments next door, Blum previously easily could manage the apartments and handle his duties at Maple Manor. Now that he has left Maple Manor, it wasn't practical for him to continue managing the apartments.

"It's a good fit," he said. "I'm happy we found a buyer for it so quickly."

Darci Fenske, of Rochester's Paramark Real Estate, represented the Blums in the deal, while Cory Magnuson, of Edina Realty, represented the buyer.

Luschen, the new owner, also is pleased with the deal.

"It's an investment property for me. I plan to keep it fairly the same," he said. "I think it's good to invest in Rochester. It's a fairly stable community down there."

Luschen is in talks with Pritok Capital, of Skokie, Ill., which bought Maple Manor, about working out an agreement to provide some services to the apartments' tenants. Pritok bought the center at 1875 19th St. NW for $3.5 million in mid-January.

February 25, 2015

City to lease former Mayo Clinic space to Cardio3

This has been in the works for quite a while. It looks like it's now a done deal, at least on the city, RAEDI and DEED side.

We'll see what happens next. After following this for more than a decade, it will be interesting to see how it plays out. I'm particularly fascinated with how the China piece of this, including Medisun and Danny Wong, turns out.

----------

After amending its original lease, Belgium-based Cardio3 BioSciences is now finally cleared to take over the entire fifth floor C3BS_may_spotlightof Rochester's Minnesota BioBusiness Center.

In December, the Rochester City Council originally approved a five-year agreement with Cardio3 for the 14,963-square-feet of space to use as a prototype manufacturing facility. However, the company then asked for "an early termination provision" in the lease.

The deal is being driven by the city, Rochester Area Economic Development Inc., Mayo Clinic and the Minnesota Department of Employment and Economic Development to make Rochester more attractive to Cardio3, so that the company will build a major manufacturing plant here.

This is the second phase of deal funded by $1.2 million from the city of Rochester's economic development sales tax fund. The first phase was developing little more than 5,000 square feet of unused space on the third floor of the BioBusiness Center to build a special manufacturing lab for Cardio3.

Mayo Clinic and Cardio3 have collaborated for years on the cardiopoiesis technology the company uses to repair patients' hearts by re-programming their own stem cells to regenerate cardiac tissue. Mayo Clinic owned 2.96 percent of the company as of Jan. 21. It's also managing a clinical trial for Cardio3.
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On Wednesday, city council members voted to add an early termination provision to the deal that allows Cardio3 to end the five-year lease after just two years in the space. That provision kicks in only if Cardio3 decides to "construct or lease a larger production facility in Rochester" or the clinical trial on its regenerative heart treatment is not successful.

To leave early, Cardio3 will need to notify the city six months ahead of time. Under the modified lease, the earliest that the regenerative medicine firm could pull out is April 30, 2017. Cardio3 would need to pay the city $269,334 if it did leave earlier than five years. That amount equals about one year of base rent.

If Cardio3 does leave before its lease is up, all of the city-funded fixed equipment and improvements will become the city of Rochester's property. The city agreed in the lease to pay for $600,000 in equipment and improvements to the space.

The final version of the lease calls for Cardio3 to pay a rent of $18 per square foot or $22,444.50 a month.

Mayo Clinic, which leases the fourth through eighth floors of the BioBusiness Center, moved its employees out of the fifth floor earlier this year. At one point, Mayo Clinic Global Products' corporate accounts had offices on the fifth floor.

In earlier discussions about this project, RAEDI estimated that Cardio3 will need 30 to 50 employees to staff the proposed prototype manufacturing facility on the fifth floor.

The ultimate goal of this project is to convince Cardio3 to build a 100,000-square-foot manufacturing facility with 350 employees in Rochester. That's what Cardio3 anticipates it will need if the Federal Drug Administration gives it a green light to take its stem cell treatment to market.

RAEDI President Gary Smith calls it "the big enchilada."

February 23, 2015

Delta to end Rochester-Detroit flights in April

Despite their popularity, nonstop flights to Detroit will soon end for passengers using the Rochester International Airport, after only a few months.

5403bad42fa22.imageAfter about six months, Delta Air Lines has notified the airport that it will be pulling the plug on the daily nonstop flights to Detroit on April 9, according the new Airport Director John Reed.

Reed says he received notification from Delta on Feb. 17, his second day on the job. Delta launched the Detroit and Atlanta flights in September with great fanfare with many saying it was needed for the anticipated increase in air travel expected due to Mayo Clinic's Destination Medical Center initiative.

While the City of Rochester owns the airport, Mayo Clinic is contracted to manage it via its Rochester Airport Co.

Delta confirmed Monday that the flights will end with a short statement that said it "has made the decision to indefinitely suspend Rochester service to Detroit to ensure we’re matching capacity with demand."

This is not the first time Delta has ended flights from Rochester to Detroit. It killed a similar flight back in 2011.

While the Detroit will come to an end, Delta did stress that its daily flights to Atlanta and Minneapolis will continue. In fact, Delta intends add another Minneapolis flight as the Detroit one ends, according to Reed.

"Essentially, our seat capacity will remain the same," he said.

Numbers from the airport shows that the new flights did bump up its Rochester passenger numbers in 2014 by 20 percent over 2013. Rochester Airport Co. President Steve McNeill, who works for Mayo Clinic, recently reported that Delta had 120,474 passengers here in 2014. From September through December, the months of service to all three of its hubs, the count was 41,854, an 18 percent or 6,500 increase over the similar period in 2013.

"We're certainly happy with the new, expanded service," said McNeill earlier this month, "and I'm sure Delta is, too." Flight payloads, or occupancy levels, were slightly above expectations, with flights to Atlanta averaging at about the mid-80s percent, and to Detroit slightly lower, he added.

Reed says data shows that the Detroit flights ran about 75 percent filled, most of the time.

"It wasn't that the community wasn't supporting us, because they were," he said.

Mayor Ardell Brede hadn't been notified yet about the change on Monday. He said, if true, it would a loss for Rochester.

"I liked that flight," he said. Brede added that it was full when he recently used it.

Reed and Brede both said that they had heard that a shortage of pilots was one reason that Delta ended the flight.

Another possible factor could be a $950,000 "risk mitigation fund set up to guarantee Delta a profit on the new flights during the first year. The rub is that the fund, made up of federal grants, a city match and private donations, doesn't cover the Detroit flight. It only guarantees a profit for Delta's Atlanta fight.

A Delta media representative didn't know about the fund or if it could have played a part in this change.

The ending of the Detroit flights does cast a pall on the airport's future requirement of airlines, to add flights, like ones to Denver.

In May, a national air service consultant said in a Rochester Area Chamber-sponsored forum that, "Adding Atlanta and Detroit is a game changer."

He followed that by saying that many other airlines will be watching how those flights fare.

"This is an important test case to prove that you can fill the larger airplanes. If they (Delta) have to pull it, it would be a big red flag," Joseph Pickering told the crowd of local business leaders.