LENOX — The Kemble Inn, a historic downtown landmark, could be the latest to join the Shared Estates Asset Fund portfolio, a group of high-end vacation properties.
The inn, owned by Scott Shortt’s The Frederick LLC, since 2010, had been on the market for the past year, with an initial asking price of $4.6 million. Shortt purchased the property for $1.6 million and spent $2.7 million on extensive modernization and renovations.
Daniel Dus, founder and managing director of Shared Estates, is offering $3.2 million for the property, he told The Eagle. Dus, who grew up in Richmond and Becket, acknowledged multiple complexities before the deal can be sealed. He holds a purchase-and-sale agreement with Shortt, who would retain a minority interest in the property.
But, the inn is scheduled to be put up for auction June 30 by Aaron Posnik & Co. of West Springfield, a leading specialist in “asset recovery.” The inn’s mortgage holder, MA Opportunity Investments LLC, of Waltham, is seeking repayment on the loan it holds for the 3-acre property at 2 Kemble St. The company took over the $2,560,000 mortgage from Adams Community Bank on April 15, according to documents on file at the Berkshire Middle Registry of Deeds.
One way to suspend the auction would be a bankruptcy filing by Shortt’s company or a postponement of the scheduled foreclosure, according to legal sources.
Shortt’s attorney, Andrea O’Connor, of the Fitzgerald Law Firm in East Longmeadow, a specialist in commercial and consumer bankruptcy and insolvency cases, declined to comment.
LENOX — The Kemble Inn, a historic Gilded Age mansion, currently a high-end bed-and-breakfast, is slated for a public auction this month, in r…
Shared Estates Asset Fund is a real estate developer that buys and sells vintage estates through crowdsourced investments, then markets them for vacation rentals.
Dus said that he could not disclose specific financing arrangements for the inn’s purchase, pending filings with the Securities and Exchange Commission if crowdsourced funding will be used.
“I can say that this is our business model, to equity crowdfund for each of the properties that we do in order to make these community-owned assets,” he said. “It is our DNA to do that, and we plan to do that on every property that we acquire.”
For the Kemble Inn acquisition, he also predicted “a minority of bank notes” to help offset the ownership costs and “optimize the returns for our investors” since interest rates are at historic lows.
Dus also cited a 90- to 120-day period of “due diligence” for inspections and reviews of the property and assessing the cost of renovations.
“We feel highly confident that we can close funding for each of our properties and have a highly successful financing process for all of our projects,” he said, citing the existing base of investors and a general partnership at his company.
Last November, Dus, 42, sold The Playhouse at Foxhollow on the former George Westinghouse estate in Lenox, for $1.3 million. He had purchased it for $340,000 in 2014 and mounted an extensive restoration effort.
He also is renovating The Freeman Berkshires, a 14-room mansion on a 40-acre estate his company purchased recently on Bow Wow Road in Egremont. Dus renamed the former Applegate Farm, dating from the late 1800s, in honor of Elizabeth Freeman, of Sheffield, the first female slave to successfully sue for her freedom in Massachusetts.
The purchase price was $1.6 million — $80,000 in cash and $1.5 million in seller financing. Toward the total cost of $2.4 million for redevelopment, Dus raised $890,000 from 141 investors, who own preferred equity stock with a potential long-term profit.
Investors can rent a suite for a 15 percent to 20 percent discount once rooms go on the short-stay, online vacation rental market at an average nightly rate of $1,548, with premium one-night stays costing $3,500.
Assuming the Shared Estates acquisition goes through, another transformation of the Kemble Inn is in the works.
“We’ll be doing quite a bit to the property,” Dus said. Acknowledging Shortt’s “really phenomenal renovation” of the two main floors, including nine upgraded suites, he cited work to be completed on the third floor, with four additional bedrooms to be modernized, and in the basement.
“We’ll bring those up to the same standard,” he said. Also planned are outdoor amenities, including extensive bluestone patios, walkways, fire pits, swimming pool, a tennis court and a small vineyard.
“We’re going to invest heavily in the exterior of the building and make it a really usable outdoor space,” Dus said. The inn will be enhanced with fine art originals, virtual reality gaming rooms and an extensive sculpture garden.
To market the property, Dus expects to offer room rentals as well as full buyouts of the property, depending on the time of year. Shortt had been renting the inn to groups during the past year.
Dus said he has been working on a purchase of the Kemble for more than a year through conversations with Shortt.
“It was clear he was interested in finding an exit at some point sooner rather than later,” Dus said.
“To have been a custodian of such a beautiful, historic estate is humbling and has been one of the great joys of my life,” Shortt said in a prepared statement. “I’m excited that Shared Estates will preserve the historic nature of the property, while bringing it into the reach of a broader audience. Additional investment in the property is well-timed with the growing demand for travel in beautiful rural destinations.”
For the sale to go through, the mortgage holder has to approve Shared Estates as the buyer, Dus pointed out. Either the loan would be paid in full or another solution, such as bankruptcy filing, would be negotiated between Shortt and MA Opportunity Investments, the holder of the note.
The Colonial Revival estate was built in 1881 as a seasonal home for Frederick Frelinghuysen, secretary of state under President Chester A. Arthur. The Great Estates mansion, totaling 15,000 square feet, including the walkout basement level, is in a residential zone adjacent to the downtown village’s business district.
“The equity crowdfunding that is core to our model also creates the opportunity for Berkshire County residents to invest in fractional ownership of luxury properties, allowing everyone to benefit from the strong tourist economy we’ve grown up with,” Dus said.