“Since launching in 1992, our studio has been a cornerstone of Pilates in San Francisco and has played a seminal role in the industry’s growth in the U.S.,” says EHS Pilates owner Tracey Sylvester. “We’ve operated from our historic location since 2000 and I’ve always wanted to own the building. Now, thanks to TMC and the SBA 504 loan, my dream has come true!”
The road to ownership wasn’t easy as Tracey stewarded the studio through monumental challenges, including a fire and the COVID-19 pandemic. Along with her outstanding team, she persevered and today, she’s strengthening the foundation and future of this legacy business.
Bringing authentic Pilates to the Mission District
EHS Pilates was founded as Ellie Herman Studios by master instructor Ellie Herman. She trained under students of Joseph Pilates, who emigrated to the U.S. in the 1950s and founded the wellness program that bears his name. In addition to building a dedicated clientele, Ellie created instructor-certification programs, wrote industry-leading manuals, and trained hundreds of people to bring authentic Pilates to people throughout the U.S. and around the world.
Tracey joined the studio as its business manager in 2004, four years after Ellie had relocated the studio from its original location to a larger, leased property at 1452 Valencia Street in San Francisco. The move vastly increased space and capacity within a 100+-year-old building that formerly housed a machine shop.
Continuing the legacy
“After years of building up a global company, I’d wanted to have my own small business and be part of a community of like-minded people with shared goals,” Tracey says. She and the studio’s lead instructor, Nancy Myers, purchased the business in 2007. They renamed it Energy Health Strength to retain the ‘EHS’ brand recognition and honor the founder’s legacy. In 2016, Tracey became sole owner while Nancy continues as the visionary for its Pilates offerings.
Today, the studio’s certified instructors offer more than 100 group, semi-private, and private lessons weekly, as well as online programs. Their classes include bodywork on the studio’s traditional equipment and specialized programs for post-rehab strengthening, active aging, pre- and post-natal work, sports conditioning, and more.
“We serve everyone from those just trying it out to seasoned trainers who have been with the studio since its founding,” Tracey adds.
Third time’s a charm for EHS Pilates
“Ellie had wanted to sell the building to us, but since we had just purchased the business, we weren’t able to also buy the property at that time,” Tracey explains.
“It was bought by Paul Cammney, who became a good friend, in addition to a terrific landlord,” Tracey says. “He was great to us, including when the building had a fire in 2014 and we had to move to another location for two years. He knew it was my dream to buy the building and he was ready to sell in 2020 but then, once again, the timing was off – like all fitness studios, we had to close during the pandemic and any funds saved for the purchase were diverted to keeping the business alive until we could reopen and rebuild.”
“He was ready again five years later,” she says, “and I had a month to create a viable deal.”
Business advocacy leads to key connections
“Since joining the studio in 2004, I’ve been deeply involved in various small business advocacy organizations in and around San Francisco’s Mission District,” Tracey says. Among the platforms that she and the organizations fight for are longer-term commercial leases, up to 10 years, so that more small businesses can gain stability and not be forced to accept extreme rent increases or relocate every year or two, which can be devastating for small businesses.
Still, Tracey knew that the best way to stabilize occupancy costs and build long-term financial strength was through ownership of the business’s commercial property.
“The broker representing the building’s sale was Eli Ceryak of Bridgeview CRE, who I knew through our business-advocacy connections,” Tracey says. “His firm represented us for the purchase, too – I believe that when you have trusted relationships, you go with those.”
TMC’s experience and connections save the deal
Eli also knew TMC Senior Vice President Anna O’Brien. He recommended that Tracey get in touch with Anna about an SBA 504 loan.
SBA 504 loans are outstanding options for owners who want to purchase commercial property for their small businesses. They offer low down payments – usually just 10%, although Tracey opted to put down $310,000 toward the $1.32 million purchase. They also include repayment terms up to 25 years, with a fixed interest rate throughout the life of the loan, all of which make ownership more affordable. The loans are made in partnership with the owner, a bank, and a Certified Development Company (CDC) – and for Tracey’s deal, that was TMC Financing.
“We initially worked with my longtime commercial bank. However, just before final approval, the bank backed out because they didn’t understand our industry and its revenue cycles, so they felt it was too risky,” Tracey explains.
That could have upended the deal entirely but instead, she says, “Anna and TMC white-knuckled through and found a bank, CalPrivate, to partner on the deal and see it through.” She says that without Anna and the TMC team, her business would have once again lost the opportunity to secure their legacy property – and, under a new landlord, EHS might have been forced to leave the location it has had since 2000.
Anna adds, “Tracey and EHS had everything needed for a straightforward purchase and we believe in her and her business. We weren’t going to throw in the towel just because one bank shied away – that’s when our experience and connections really come into play for our clients.”
TMC Financing and the SBA 504 loan: Property ownership and more
“To me, this is about so much more than a real estate deal,” Tracey admits. “It’s about securing the future of a legacy business in our area and our industry. It’s about more than 30 people who work with us now, the hundreds that we’ve trained in the past, and the countless instructors that we’ll certify as we move forward. It’s about the thousands of clients who are living healthier lives thanks to EHS Pilates. It’s about supporting a woman-founded, woman-owned business and securing the future of a building with more than a century of history that won’t be lost to new development.”
“TMC has helped to secure our future,” she adds. “I can’t say enough about how happy I am with how it worked out and how grateful I am that my connections led to TMC.”
If you’d like to learn more about buying owner-occupied commercial real estate for your small business, TMC can help. To learn more, contact us today.
About TMC Financing
TMC Financing is a nonprofit 501(c)(4) Certified Development Company (CDC) with a mission to promote economic development and job creation by helping small businesses access affordable financing. Since its founding in 1981, TMC has provided approximately $16 billion in SBA 504 commercial real estate financing to over 8,000 small businesses across Arizona, California, Hawaii, Nevada, and Oregon. These efforts have helped create more than 63,000 jobs. TMC is recognized as the #1 SBA 504 lender in the nation, offering long-term, fixed-rate financing that empowers small business owners to purchase, construct or refinance real estate and major fixed assets to grow their operations.