The historic Lenox Inn has just been purchased for $3.1 million. Why will it be back on the market this summer? | Business
LENOX — He’s now the proud owner of The Kemble, the downtown colonial revival inn built in 1881 as a golden age retreat for Frederick Frelinghuysen, President Chester Arthur’s secretary of state.
But Berkshires native Daniel Dus, managing partner and founder of the Shared Estates Asset Fund, hopes to put it back on the property market this summer, at a price to be determined, after about $500,000 in additional renovations.
“That’s always the hardest part,” he conceded. “You want to keep these things forever, but they’re investments and you have to treat them that way.”
Son Kemble Berkshires LLC acquired the property at 2 Kemble St. for $3,125,000 last month from owner Scott Shortt’s company, The Frederick LLC, which filed for bankruptcy protection in June. A judge in US bankruptcy court in Worcester cleared Shortt to continue operating last summer, buying time until the inn’s pending sale to the Shared Estates Asset Fund can be finalized .
A total of 143 individual investors contributed $1,434,000 towards the purchase price, Dus said, with the rest coming from conventional loans. The minimum investment was $1,000 and the average was just under $6,000.
“We’re getting a lot for our investors, and we’ll be able to monetize it, given our unique model,” he said. This model involves property improvements and buyout rentals to groups, creating a robust revenue stream.
Warning that all investment is a risk and that past performance does not guarantee future results, Dus noted that his investors have earned up to 30% a year from his previous Berkshire acquisitions.
Shortt had extensively remodeled the Lenox property, spending around $4.5 million, including his $1.6 million purchase of the inn in 2010. But, in June, he defaulted on a 2,000 mortgage. $6 million after drastic revenue losses related to the coronavirus pandemic from spring 2020.
“We’re super excited to be in Lenox,” said Dus, a solar industry executive with renewable energy company iSun who grew up in Richmond and Becket. His previous real estate purchases through the “sharing economy” were for historic properties in Lee, Williamstown and South Egremont.
“We love the history and history of the Kemble property,” he said. “The JP Morgan family spent time there when building Ventfort Hall. President Arthur had visited, so it’s an amazing story to tell. Properties like this are so unique.
On a practical level, Dus, 42, described the hostel as “extremely well built, we love the bones of this property. Frederick Olmsted was consulted on the landscaping, and the back porch landscaping is what really seals the deal – the views are incredible.
The Kemble was designed and built as the Frelinghuysen estate by Boston high-society architects Arthur Rotch and George Tilden. Later it was a dormitory for the Lenox School for Boys, which closed in 1972, and was first converted into a hostel in 1991, according to the Lenox Historical Society.
Citing nearby galleries, restaurants and cultural attractions, such as museums and Tanglewood, Dus pointed out that “having that quality of space and privacy as well is just a ton of value for our target audience of tenants”.
First, it is providing guests with three additional bedrooms to the current nine-bedroom property — space that had been used by Shortt to house summer employees, Dus told The Eagle this week. Along with a few cosmetic upgrades, Dus aims to expand the hostel’s patio, adding a fire pit and a pickelball court.
The hostel operates in the short-term rental market, offering group accommodation through AirBnb, Vrbo and other online platforms, primarily for special occasions and gatherings. Current off-season rates to redeem the property are $1,985 per night, but this summer the inn will bring in $3,785 per night on weekdays, with a high of $4,250 on weekends, Dus said.
So far, Dus has booked 70 nights for a total of $250,000 in revenue. He hopes for group redemptions totaling at least 250 evenings, “even 365 if we can, even if it’s a bit ambitious,” he admits.
He stressed that The Kemble, like his other Berkshire acquisitions, are not timeshares. Investors are co-owners of a property, earning a return based on the amount of their investment, based on revenue and assuming a possible profitable sale of the property. Co-ownership investors can get a 15% discount on a stay – 20% if they reside in Berkshire County.
The Kemble is Dus’ fourth acquisition under its crowdfunding model, but he stressed that it certainly won’t be the last.
“We are laser focused on Great Estates,” he said, noting that his next target will be revealed “very soon.”