Sharing luxury in the shared economy. Carbon Neutral.
Shared Estates Asset Fund (the Sponsor) has a mission to democratize and preserve the world’s finest historic real estate by creating modern, luxurious and sustainable properties for rental in the sharing economy. With the rise of the sharing economy, driven by companies such as Airbnb and VRBO, no one needs to own a large country home to use only a week or two per year.
We make it possible for our guests to enjoy modern luxury properties for less per person than the price of basic hotel accommodations. We repurpose each of our properties to make them models of sustainable travel with carbon neutral operations and no single-use amenities. And we make it possible for the community to participate in ownership - anyone over the age of 18 can invest into our projects through our crowdfunded investment offerings and thus share in the profits, a privilege that has traditionally been out of reach for anyone not already wealthy.
We are currently focusing our acquisition strategy on the Berkshires of Western Massachusetts, which offer a rare, robust, year-round vacation rental market. This region has a unique inventory of luxury estates dating back to the 1800s and early 1900s. The area enjoyed its industrial and cultural heyday in the 19th and early 20th century but lost tens of thousands of jobs as major industrial companies like General Electric shuttered offices and manufacturing centers. As a result, there are many estates that are dramatically under-utilized, haven’t been renovated in decades and are even in danger of structural failure. Our plan is to bring a number of these luxury and historic properties within reach of middle-class family gatherings, at a lower cost per person than standard hotel rooms. Through rehabilitation of historic properties from a vibrant past, creation of sustainable jobs and fueling the robust local tourist economy, we aim to strengthen the rural Berkshire County economy and expand wealth creation opportunities more broadly within the community.
The Kemble Berkshires is the fourth property our team is tackling. Previous acquisitions include:
The Playhouse, 850 Summer Street, Lee, Massachusetts. Originally built by George Westinghouse, this property was developed and operated by the management team and recently sold, returning more than a 30% annualized return to investors. The Playhouse achieved the #1 vacation rental spot in this market and has been featured on the Netflix series, “World’s Most Amazing Vacation Rentals.”
The Brookman, 121 Treadwell Hollow Road, Williamstown, MA. This 6,000-square-foot estate on 40 acres was developed by legendary actor Christopher Reeve. We acquired the property for $900,000, invested roughly $500,000 into renovations, and have listed it at $2,500,000. The property booked over $202,000 of rental income in its first 60 days on VRBO.
The Freeman Berkshires, 46 Bow Wow Road, Egremont, MA. This project renovation is on schedule after a successful $890,000 raise on the Small Change platform in early 2021. The Freeman Berkshires is an 11,400 square foot country estate on forty-one acres with tennis courts and a large pond.
We’re raising funds to purchase and renovate our next property, The Kemble Berkshires, located at 2 Kemble Street, Lenox 01240 in Massachusetts.
We've paid $250,000 in deposit money to the Seller, which will be converted into membership interest and treated exactly the same as investor capital. The property, one of the last Massachusetts Great Estates, is a 13-bedroom, 15,000 square foot mansion built in 1881 for a U.S Secretary of State. It has been operated as an inn for many years, approaching $1 million in revenue in 2019.
Located in downtown Lenox, roughly 100 miles from both Boston and New York City, the Property provides easy access to Great Barrington, Stockbridge and more with breathtaking views of Stockbridge Bowl from the property itself.The town of Lenox is a world-renowned center for health, wellness and the arts. Along with its Tanglewood music venue, this is the summer home of the Boston Symphony Orchestra. Summer cottages in Lenox have been occupied by many famous families, including the Vanderbilts, Morgans, Astors, Cunards, Winthrops, Wartons, Choates, and Olmsteds.
The town of Lenox adopted zoning rules to encourage the preservation and restoration of Great Estate Buildings and land inherited from the estate system of the early 1900s, by the allowance of limited uses by right. The Kemble was designated a Great Estate at a Lenox town zoning board meeting in 2011. The Great Estate properties, as listed in Section 8.10.3 of the Lenox Zoning Bylaw, are considered unique historic buildings with important open spaces, vistas, gardens and landscaping constructed in the early 1900s. Uses by right include inns limited to 20 rooms and indoor and outdoor event venues with outdoor events of up to 175 people.
Our plan is to make the property available for year-round nightly rental of the entire estate, along with special event bookings and unique room rentals. Single rooms in Lenox rent for as much as $1,500 per night during performance and holiday seasons. Renting The Kemble Berkshires promises to be a cost-effective and high-quality option for small to medium groups.
The property is in good condition, with over $2.7 million in renovations in the early 2010s. Our plan is to upgrade key features and apply our hallmark modern minimalist design and “living art gallery” aesthetic. While we’ll preserve historic property features, we’ll bring new relevance to the property with on-trend elements, textures and materials that today’s sophisticated and diverse travelers look for - an “instagrammable” location for their special gathering.
Our renovation focus will be on the interior spaces not updated in prior renovations - four bedrooms and common area space on the third floor - along with extensive exterior work on the grounds of the property. Renovation work will include refinishing hardwood floors, repainting most common areas, and bringing the interior to a bright, modern-minimalist finish. Renovation plans for the third floor, which has some of the most breathtaking views, include a games room, virtual reality gaming center, pool, foosball table and four additional bedrooms, increasing the bedroom count from 9 to 13 (a 44% increase in revenue-generating bedrooms.) We also plan to refinish some sections of the large basement, adding commercial kitchen amenities to facilitate large gatherings.
To date, the grounds have remained largely undeveloped. We plan to add a 3,000 square foot bluestone patio, pool, tennis court and lounge area as well as a one-acre vineyard and gardens for property-to-table produce. Landscaping will be substantially updated, including the addition of mature cypress trees, edible landscaping and more. Our goal is to create a best-in-class, better-than-resort feel, within walking distance to one of the Berkshire’s most desirable towns.
Massachusetts Licensed General Contractor, Jason Dus Construction, will complete all construction work to building code and construction industry standards.
The current owner of the property continues to book post-closing rentals on our behalf, with over $53,000 of revenues already contracted in summer 2022 at an average of $4,883 per night. Renovations will begin in the off-season after acquisition around February 2022 to maximize annual revenues. We will continue pre-booking reservations for the 2022 spring and summer season and will continue hosting guests immediately after acquisition. Modernization of the property will include new lighter color paint throughout and new furniture. Since most of this renovation is lighter than deep construction, we anticipate total renovations will take three to four months. Additional bedrooms on the third floor will receive more extensive improvements down to the studs.
The above-described improvements require only limited architectural work and drawings as they are primarily cosmetic in nature. No zoning approvals are required
Throughout 2022, during the warmer months, we plan to complete extensive redevelopment of the grounds including landscaping with a large bluestone patio, walking sculpture garden, tennis courts, pool, and other amenities depending on final fundraising goals. These features have been carefully selected based on our experience increasing property values by making them more “Instagrammable” and ultimately selling for a higher price.
Daniel Dus is the Managing General Partner of Shared Estates Asset Fund, GP, the Sponsor and Manager of, Shared Estates Asset Fund 1, LLC, which in turn is the Manager of the The Kemble Berkshires. Daniel is currently President at the number three commercial and industrial solar contractor in the U.S., according to Solar Power World. Previously, Daniel ran the U.S. solar energy business for a $100B+ multinational conglomerate, and has contracted roughly $1 billion of construction projects in 17 states. Daniel holds an MBA, is a Stanford Certified Project Manager and a Villanova Certified Master Lean Blackbelt with a focus on project financial management. He grew up in the Berkshires, where many of his family still reside. He is committed to the economic redevelopment of this beautiful region and to creating opportunities for all residents to reinvest in their local real estate market.
Orion Parrott is a General Partner of Shared Estates Asset Fund, GP. He is a serial entrepreneur and Berkeley MBA. After living in Massachusetts where he worked as a Raytheon Systems Engineer, he spent the last seven years building businesses in tech and finance on the West Coast. His last venture was a mortgage software company that received investment from Y Combinator, the world’s number one startup accelerator. Orion has successfully owned and operated rental property for over 20 years. He previously served as Treasurer on the board of a California 501c3 dedicated to preserving mid-century modern architecture. Orion’s role on the team includes finance, operations, compliance and marketing.
Other general partners include Anna Battoe, Jason Dus and David and Shanon Eriwn.
Anna Battoe is an attorney (J.D. - University of Florida, Fredric Levin College of Law) and trained accountant (B.A. - University of Iowa, Tippie College of Business). She has spent the past eight years working in banking regulatory compliance, both directly for a large financial institution and prior to that, serving a range of financial institutions through a consulting firm. Previously, she interned in private accounting with The United States Treasury (Bureau of the Public Debt, Office of Chief Counsel) and United States Securities and Exchange Commission (SEC).
David Erwin is an accomplished software designer and programmer, currently a Lead Technologist at the New York Times. Shannon is a marketing and client relations specialist, including working at the School of Visual Arts in marketing, alumni and development roles. David and Shannon will assist in deployment of the Fund’s online presence and booking platforms.
Jason Dus is a Massachusetts licensed General Contractor. Jason has overseen tens of millions of dollars of turnkey construction work in the target market, and will lead rehabilitation of Fund properties.
The Berkshires is a cultural tourist destination, noted as a center for the visual and performing arts, home to the largest yoga center in the US, the largest museum of contemporary art and the country’s #1 liberal arts college – all nestled in a beautiful bucolic setting.
Renowned local art museums include the Norman Rockwell Museum, the Clark Art Institute, the Massachusetts Museum of Contemporary Art (Mass MoCA), and the Williams College Museum of Art. Performing-arts institutions in the Berkshires include Tanglewood Music Center and Boston University Tanglewood Institute in Lenox, the summer home of the Boston Symphony Orchestra; Shakespeare & Company in Lenox; summer theatre festivals such as the Berkshire Theatre Festival in Stockbridge; and America's first and longest-running dance festival, Jacob's Pillow.The area is also home to the Kripalu Center of Stockbridge, "North America's largest residential facility for yoga, holistic health and education.”
As a result, the Berkshires are home to a large and growing tourist economy. Tourist spending in the Berkshires was recorded by the Massachusetts Office of Travel and Tourism as $420 million in 2017. Its unique cultural centers have resulted in the development of some of the leading U.S. resorts, spas and hotels, such as Blantyre, Canyon Ranch, Miraval (formerly Cranwell) and the Wheatleigh. None of these properties are available to lease as entire estate, or shared rental, and the cost of events at these venues reaches into the tens of thousands of dollars.
About group travel
"Visiting with family and friends is the type of travel people have missed most and this is currently the most important to them. ...Many people are choosing to explore private villas for these trips as they provide privacy from other guests, room to gather together, and often excellent amenities..."
Group travel includes birthdays, anniversaries, reunions, extended family vacations, corporate retreats and more. In business travel, the group travel segment is the largest and fastest growing at more than 4.5% compounding annually since 2017 and predicted to continue through 2023. A variety of attributes of group travel make it an attractive market focus for us.
Group rental demand is increasing. In 2021, vacation villa rental demand is rising due to COVID-19.
Reliable source of travel revenues. Groups continue to travel regardless of economic downshifts. Groups plan well in advance of their trip, usually 6-12 months ahead; reservations are secured ahead of time.
Groups travel year-round. Other tourists are tied to prime travel seasons, but groups have different motivations for travel and often seek low-season or mid-week trips to fit their needs.
Groups result in high exposure, future interest, and repeat business. As trends and lifestyles change, so do the types of groups that travel. Destinations benefit from new travelers that range from niche travel clubs fulfilling a mission to affinity groups such as women’s, performance and voluntourism groups. By the numbers, stays by these large parties result in properties obtaining more exposure over time than smaller venues; for example, the 7,000 square foot PLAYHOUSE (case study below) has hosted over 2,000 guests since it opened in 2016 – with many of these guests also becoming repeat guests. Some have already booked their fourth stay at the venue in as many years.
One decision maker delivers more travelers. Every “planner” represents a range of 20-40 potential travelers. These planners are the social networkers, organizers, coordinators, leaders or facilitators that a large family, group of friends or company has working to plan and schedule travel.
Underserved market. Historically, large groups have been limited to block-bookings of large hotels, motels or bed & breakfasts. There is a stark limitation of available inventory of stand-alone large format short term rentals. A national search of VRBO/HomeAway, filtered for properties with 19 or more bedrooms, produces only about 40 results, and fewer than a dozen are high end.
Our properties deliver premium amenities and finishes at a distinct cost advantage to alternative group travel options such as hotels, motels and bed & breakfast properties. For example, a group of 25 travelers might save more than $8,000 for a five-night stay:
|Cost Comparison||Hotel||Shared Estate|
|Number of occupants||25||25|
|Number of rooms required (average occupancy of 2)||13||13|
|Average nightly rate||$400||N/A|
|Group of 25||$5,200||$3,490|
|Cost of 5-night stay||$26,000||$17,450|
The Company is engaged in a Regulation Crowdfunding (Reg CF) offering (the Offering) to raise money to purchase and renovate and operate The Kemble Berkshires as a shared estate.
We are trying to raise a maximum of $1,950,000, but we will move forward with the Project and use investor funds if we are able to raise at least $1,100,000 (the “Target Amount”). If we have not raised at least the Target Amount by October 31, 2021, EST (the “Target Date”), we will terminate the Offering and return 100% of their money to anyone who has subscribed.
The minimum you can invest in the Offering is $1,000. Investments above $1,000 may be made in $500 increments (e.g., $1,500 or $2,000, but not $1,136). An investor may cancel his or her commitment up until 11:59 pm on October 29, 2021 (i.e., two days before the Target Date). If we have raised at least the Target Amount we might decide to accept the funds and admit investors to the Company before the Target Date; in that case we will notify you and give you the right to cancel.
As of October 25, 2021, we have raised the Target Amount of $1,100,000. Notifications will be sent to each current investor upon registration of this Form CA with the SEC, requesting reconfirmation of their investment commitment and giving them the right to cancel. With the notification process complete, on November 1, 2021, we will accept the funds and admit Investors to the Company. After we accept the funds, we will continue the Offering until we have raised the maximum amount.
- Luxury for everyone. Renovation of an historic luxury estate for middle class family gatherings.
- Sharing economy. Lower cost per person than standard hotel rooms.
- Sustainable. Carbon neutral, no single-use amenities, reclaimed building materials.
- Robust vacation market. Year-round tourist activities.
- Cultural epicenter. MASS MoCA, Tanglewood and Jacob's Pillow are among the many cultural neighbors.
- Local commitment. Sponsor plans to donate 1% of total rental income to The Lenox Library.
Total acquisition and renovations costs of approximately $4,518,157 are expected to be financed with a bank loan of approximately $2,318,157 million plus equity.
The anticipated equity requirement is $2,200,00 and the Sponsor has already invested $250,000 as a deposit, which will be converted to membership interest on the same terms as Small Change Investors. The remainder will be raised through this offering.
The Company expects to repay all equity from cash flow in approximately five years. The preferred return will continue to be paid through the end of term -- the sale of the property -- currently expected to be in 10 years or less.
During the holding period the Company expects cash flow from operations to increase from approximately $411,542 in year one to approximately $1,100,000 in year ten. You download a detailed sources and uses budget here and a 10 year operating pro-forna here.
Under the LLC Agreement, all distributions will be made annually, in the following order of priority, after bank loans have been repaid:
- First, the Available Cash shall be distributed to the Investor Members, including the Sponsor as Investor Member, until they have received their Preferred Return of 8% for the current year.
- Second, the balance of the Available Cash, if any, shall be distributed to the Investor Members, including the Sponsor as Investor Member, until they have received any shortfall in the Preferred Return for any prior year.
- Third, the balance of the Available Cash, if any, shall be distributed to the Investor Members, including the Sponsor as Investor Member, until they have received a full return of their Unreturned Investment.
- Fourth, the balance of the Available Cash, if any, shall be distributed as follows until Investor Members, including the Sponsor as Investor Member, have received an amount equal to twice (200% of) their original investment in total
- 80% to the Investor Members, including the Sponsor as Investor Member; and
- 20% to Sponsor as a promoted interest.
- Fifth, the balance of the Available Cash, if any, shall be distributed:
- 60% to the Investor Members, including the Sponsor as Investor Member; and
- 40% to Sponsor as a promoted interest.
In addition, the Company plans to offer investors a 15% discount to the nightly rate at The Kemble Berkshires for up to seven nights per year. That discount will be increased to 20% for residents of Berkshire County.
A crowdfunding investment involves risk. You should not invest any funds in this offering unless you can afford to lose your entire investment.
In making an investment decision, Investors must rely on their own examination of the Companies and the terms of this offering, including the merits and risks involved. These securities have not been recommended or approved by any federal or state securities commission or regulatory authority. Furthermore, these authorities have not passed upon the accuracy or adequacy of this document. The U.S. Securities and Exchange Commission does not pass upon the merits of any securities offered or the terms of this offering, nor does it pass upon the accuracy or completeness of any offering document or literature related to this offering. These securities are offered under an exemption from registration; however, the U.S. Securities and Exchange Commission has not made an independent determination that these securities are exempt from registration.
There are numerous risks to consider when making an investment such as this one and financial projections are just that - projections. Returns are not guaranteed. Conditions that may affect your investment include unforeseen construction costs, changes in market conditions, and potential disasters that are not covered by insurance. You can download a more expansive list of potential risks here.
COVID-19 has so far had a significant negative impact on the economy overall with regards to increased unemployment, reduced consumer and travel spending, and challenges to hospitality businesses such as hotels and restaurants. The rural redevelopment plan of the Company has not been hindered by COVID-19 but in fact has been reaffirmed by long term expected changes in market demand. Because of the unprecedented nature of this 100-year event, the Company discloses here both positive and negative potentialities that may result.
- Local regulations may restrict or prohibit travel to or from other areas.
- Restaurants and local amenities may be less available to potential renters encouraging them to stay at their permanent residence. Cultural performances and museums may become unavailable.
- People may be less willing to travel by air to remote destinations.
- People may be concerned about rental accommodations being fully sanitized before their stay.
These conditions are subject to change and we don’t know how long these negative effects may continue.
- Demand for rural real estate rentals has increased and may continue to do so. AirBnB reported a 25% increase in bookings for rural destinations in 2020 over 2019. This trend resulted in stronger bookings of our first Shared Estate, The Playhouse, profitably sold in 2020, and may result in higher nightly rates and more nights booked.
- Demand for rural real estate has also increased and may lead to a higher exit sale price for the Property. In 2020, sales are up 14% and pending listings are up 53% compared to 2019. The website theBerkshireedge.com has called it a “buying frenzy” in the Berkshires.
- As people seek to isolate themselves from urban environments, demand for all types of rural accommodations has increased.
- Many more people are working from home and may need more space than available in their current primary residence. As people spend more time at home, demand for larger properties has increased and may continue to do so. Demand for amenities outside the property may decrease.
- More responsible travel, such as sustainable travel and eco-tourism, is anticipated in 2021 as a response to Covid-19.
These conditions are subject to change and we don’t know how long these positive effects may continue.