In a Nutshell
What: After facing an existential crisis during the pandemic as the organization was forced to close its doors for 18 months, nonprofit HUGE Improv Theater has rebounded by purchasing a new facility that will enable it to expand its performance and class schedule, generate more revenue to reinvest in the organization, and strengthen its long-term financial outlook by building equity – all in a facility with room for continued growth well into the future.
Sector: Arts and Culture
Location: Minneapolis, MN (Lowry Hill East a.k.a. “The Wedge”)
Size: 15,730 square feet
Cost: $3.25 million (acquisition and renovation)
Funding and Financing Sources: IFF, Propel Nonprofits, agency equity/capital campaign
IFF Support: Two loans totaling $2.45 million closed in August 2023
IFF Staff Lead: Darian Luckett, Director of Lending – Wisconsin and Iowa
Design: Shelter Architecture
General Contractor: RJ Marco Construction
Now settling into a newly renovated, 6,700-square-foot space in a building it owns, it’s difficult to imagine that, less than three years ago, HUGE Improv Theater’s (HUGE) future was very much in question. In the midst of a pandemic-induced, 18-month closure, the Minneapolis-based nonprofit found itself uncertain about what the future might hold. After 15 years of consistent growth while carving out a niche in the Twin Cities with its inclusive approach to long-form improv comedy, the organization was without the revenue that had sustained it and unsure how long it would take to get back to normal – or if that was possible at all.
Through perseverance and a bit of good fortune, however, the theater has bounced back from the existential challenges of the pandemic while positioning the organization for continued growth. By acquiring a building of its own that’s 70 percent larger than its previous, leased location, HUGE will be able to expand its improv classes and performance schedule, generate more revenue to reinvest in the organization, and strengthen its long-term financial outlook by building equity in its facility. Most importantly, HUGE has ensured that the community of artists it’s fostered since the organization’s founding in 2005 will have a welcoming place to hone their craft for years to come.
“It’s hard to put into words how much a relief it is,” said HUGE Co-executive Director Butch Roy in a recent interview. “It feels like we’ve crossed a threshold into a much more secure future.”
Navigating uncertainty to achieve a long-held goal
Founded with the ideal that improv should be an art form accessible to everyone, HUGE was launched by a small collective of artists who nurtured the organization for six years before leasing a 3,900-square-foot storefront as its base of operations. A former clothing store, the space in Minneapolis’ LynLake neighborhood was converted to include a 100-seat theater and two small classrooms. HUGE flourished over the next eight years – staging more than 500 performances annually and maintaining a waiting list of 170 prospective students despite enrolling more than 600 students per year by 2019.
Recognizing in 2017 that HUGE couldn’t continue to grow for much longer in its current space, HUGE’s leadership began exploring options to relocate. Their search led to an ideal property only four blocks away that was owned by an art supply company looking to downsize. In addition to offering much more space, the 15,730-square-foot facility’s location would enable HUGE to retain the goodwill it had built in the arts-centric neighborhood over the previous decade while also serving as a bulwark against gentrification after the closure of several other local theaters.
After deciding to move forward and putting down earnest money to acquire the property, however, the bank HUGE had been working with for financing pulled out of the deal because of the legal and financial challenges associated with the organization breaking its lease on its existing facility. Though deflating at the time, this turned out to be a stroke of luck, helping the organization avoid being saddled with more than $2 million in debt just months before the start of the pandemic.
“We continued to pay our rent during the pandemic through a lot of belt tightening, creative solutions, grants, and some government assistance,” says Sean Dillon, HUGE’s managing director. “It was an understandably rough time for all of us, but the first attempt to purchase a permanent location not working out ended up being a blessing in disguise because it meant not having a larger mortgage to pay during that period.”
In June 2021, HUGE reopened and focused on rebuilding its performance and class schedule. While a slow process, by the summer of 2022 the organization’s attendance numbers and revenue began rebounding to a degree that the thought of purchasing a facility once again seemed feasible. And, in another stroke of luck, the same property that HUGE had tried to acquire in 2019 was still available. Buoyed by the opportunity to follow through on the organization’s original plan, HUGE began approaching banks to discuss financing for the purchase and renovation of the facility.
“It was a tough sell to convince a lender that providing a $2.4 million loan to an arts organization was a safe investment at a time when lots of arts organizations continue to struggle.”
“It was a tough sell to convince a lender that providing a $2.4 million loan to an arts organization was a safe investment at a time when lots of arts organizations continue to struggle, particularly since our earned income was nearly nonexistent while we were closed during the pandemic,” says Dillon. “It really felt like we were shouting into the void but, at the same time, we believed strongly in our vision and were confident that getting into a larger space was going to be good for the organization and a really good investment for a lender as we were able to expand.”
Unable to secure the financing it needed after discussions with multiple lenders, and with the end of the organization’s current lease rapidly approaching, HUGE negotiated a 10-year lease for a 6,700-square-foot space of the building that enabled the owner to continue operating there while waiting for a buyer for the entire property. Critically, this arrangement provided HUGE with an option to buy the property outright in the future with the assurance that the organization could move into the building and begin renovations over the summer, regardless of its progress toward purchasing the facility.
With that, HUGE began planning renovations to convert the hangar-like retail space into a fully equipped theater with classrooms, dedicated storage, and more – while continuing to seek financing to acquire the building. Through this process, the organization was introduced to Propel Nonprofits (Propel), a Minneapolis-based CDFI that serves nonprofits in the upper Midwest. Though Propel provides loans for facility renovations and purchases, HUGE’s request for roughly $3 million in financing exceeded Propel’s lending guidelines and so the organization referred HUGE to IFF – leveraging a partnership established in 2014 as part of JPMorgan Chase & Co.’s PRO Neighborhoods Program.
Recognizing that HUGE was on a solid trajectory in its recovery from the pandemic and would be financially constrained until it could expand its programming in a larger facility, IFF closed two loans in August 2023 that provided the nonprofit with $2.45 million to acquire the property and transform it into a functional space for the arts organization, with Propel lending HUGE an additional $600,000 to support the purchase.
“We were very fortunate that IFF and Propel believed in our vision and concluded that it made more sense to provide financing to purchase the building so that it could be used as collateral rather than simply providing a loan to renovate a leased facility we wouldn’t permanently control,” says Dillon. “We’re enormously grateful for that and tremendously excited to have our own space after all of this time that we’ll be building equity in. And to know that in 15 years, that the building will be ours free and clear after we’ve repaid the loans…what an opportunity that is.”
“[We’re] tremendously excited to have our own space after all of this time that we’ll be building equity in. And to know that in 15 years, that the building will be ours free and clear after we’ve repaid the loans….what an opportunity that is.”
An ideal home with room to grow
Since work began on HUGE’s new facility over the summer, the organization’s space has been transformed from a vast open area to a fully functional performance and education venue with the help of Shelter Architecture and RJ Marco Construction. Included is a 125-seat black box theater, an ADA-accessible tech booth, two large classrooms, a green room, dedicated storage space for props and other materials needed for the organization’s programming, three ADA-accessible bathrooms, and a large lobby with a bar that will further increase the revenue HUGE accrues with each performance.
“By being able to expose more people to improv, we have an opportunity to grow as an organization in a way we couldn’t before. But that also gives us the chance to make more people feel like the theater is a place they belong.”
“The performance space itself is larger than what we had before, with much higher ceilings that provide even more of a sense of space,” says Dillon. “And then our classrooms are larger too, with much better insulation for sound, which is a big deal for us. We have a large pipeline of people who want to take classes who have been on waiting lists, and we’ll be able to expose more of them to improv with the additional space. At the bar, we’ve installed windows looking into the theater on one end and the lobby on the other, which will allow us to serve people on both sides. Overall, everything about the new space is less cramped, more airy, and better suited for where we are as an organization right now and where we’re headed as we continue to grow.”
That’s also true of the facility itself, which has an additional 9,000 square feet of space for HUGE to expand into over time, which could include more classrooms, a second performance space, and/or renting space to other arts organizations and community-based nonprofits. Until then, it’s providing another source of revenue for the organization by being leased back to the building’s previous owner until it relocates.
“There simply wasn’t any additional space to do more than we were doing in our old location, and now there are a lot of options for us moving forward,” says Dillon. “By being able to expose more people to improv, we have an opportunity to grow as an organization in a way we couldn’t before. But that also gives us the chance to make more people feel like the theater is a place they belong, whether performing or attending a show. We’re excited to be able to break down those barriers with a welcoming, joyous space that contributes to a more vibrant community as a whole.”