Pieces of Japanese billionaire Genshiro Kawamoto’s legacy along Kahala Avenue can still be seen in remnants of house foundation slabs, broken walls, abandoned tennis courts and rubble-filled swimming pools. But recently, something else is emerging: a wave of renewal.
A transformation has been gradually spreading since Kawamoto relinquished 30 residential properties 18 months ago on the prestigious Oahu street lined with mansions and historic million-dollar homes.
Among new owners of former Kawamoto properties are a professional poker player, a contractor and a waste management business owner from Hawaii, along with South Korea’s wealthiest person, a Russian, a car-racing money manager from Michigan and an Australian billionaire.
The new owners are pumping millions of dollars into construction and landscaping.
To date, 20 of the 30 parcels that local real estate investment firm Alexander & Baldwin Inc. acquired in bulk from Kawamoto in late 2013 have been resold for more than $100 million, including two deals in escrow.
"There is a renaissance going on, thank goodness," said Anita Bruhl, a 35-year Kahala Community Association member who despised how Kawamoto treated his properties. "Now we’re going to have some beautiful homes go up with sane people."
Kawamoto, an enigmatic figure and wealthy commercial property owner in Japan who first jolted Hawaii’s real estate market in the 1980s when he used "pocket money" to buy nearly 200 Oahu homes mainly in Hawaii Kai and Kailua, descended on Kahala about a decade ago after liquidating his initial collection.
The eccentric tycoon, now 83, spent close to $180 million snapping up about 30 properties on the tony street mostly between 2003 and 2006.
In 2006, Kawamoto announced a "charity project" to make the street less exclusive by removing walls, creating public gardens, converting a few homes into art museums and providing nine homes to disadvantaged Native Hawaiian families.
"My focus in Hawaii is not about making money," he said in a written statement announcing the plan. "I entitled this project as ‘Kahala Avenue Mission’ to show my appreciation for Hawaii."
Kawamoto, who spent most of his time in Japan and did his Kahala work sporadically during visits, perplexed or infuriated many neighbors with his actions that included letting vegetation and homes deteriorate. Though he demolished close to 10 homes, he also left some with broken windows and fetid pools.
The city issued 70 violation notices to Kawamoto for his Kahala properties since 2005 and collected about $50,000 in fines.
Kawamoto did let three Hawaiian families live in three homes for free. Then he began work on the gardens by installing dozens of statues on parcels he merged into two mega-estates.
The statues — a mix of muscled lions, nude Grecian bodies and pagodas — were regarded as an odd and tacky display by many, including some neighbors who believed Kawamoto was trying to demean their community.
An abrupt halt to the makeover occurred in March 2013 when officials in Japan arrested Kawamoto on tax evasion charges, barring him from overseas travel.
Japanese media reports said prosecutors alleged Kawamoto evaded about $9 million in corporate taxes from his Marugen group companies that operate more than 50 buildings in Japan, including many in the upscale Ginza district of central Tokyo.
Kawamoto was unavailable for comment for this story. However, Steve Sombrero, president of Hawaii real estate brokerage firm NAI ChaneyBrooks who arranged the Kawamoto-A&B deal and met with the billionaire in Japan about two weeks ago, said Kawamoto remitted the unpaid taxes that he claimed were a subsidiary’s oversight.
"It’s all been paid off, but he’s waiting for the government to clear his case," Sombrero said. "The court system in Japan is a very slow process."
The travel prohibition, which is still in effect, was a factor in Kawamoto accepting the A&B buyout that Sombrero said included a provision preventing Kawamoto from buying more Kahala property for a long time.
"If he does come back, you won’t be seeing him buying property in Kahala," Sombrero said.
A&B acquired the 30 Kahala properties and four in Windward Oahu and on Maui in two deals for a combined $128 million in late 2013. The sale amounted to at least a $50 million loss for Kawamoto.
The Kahala collection, which included a roughly equal number of homes and vacant lots, represented about 16 percent of all the residential parcels on the street.
A&B’s aim was to profit from reselling the sordid portfolio, and the firm quickly auctioned the statues, art and furnishings Kawamoto left behind. A&B also helped the three Hawaiian families relocate and committed to pay their rent for one year.
The first A&B flip closed fast — about three weeks after the bulk acquisition — and involved a lot sold for $4.4 million to Bob Armstrong, the CEO of Honolulu-based Armstrong Builders who has partnered with A&B on other projects.
Armstrong rebuilt walls, removed a rock-filled pool and planted grass on his lot.
The sale to Armstrong was one of eight A&B made in 2013.
Ryne Holliday, a former University of Hawaii basketball player who now plays poker for a living and is married to a physician, also snapped up one of A&B’s early offerings. Holliday and his wife paid $2.7 million for a home that still had a working pool. "We really scored here," he said.
Other early resales included two homes on one lot sold for $3.4 million to Clyde Kaneshiro, president of Oahu’s largest private trash hauler, Honolulu Disposal Service, and two adjacent oceanfront lots sold for $13 million to Lee Kun-Hee, the chairman of Samsung who Forbes ranks as Korea’s richest person with an $11.6 billion net worth.
Another billionaire, Australian Lindsay Fox, bought two lots next to his longtime home for $4.6 million and converted the site — once scattered with rubble and pagoda statuesthat at least one passer-by mistook for a neglected cemetery — into a well-manicured, roughly half-acre lawn.
Next door, two homes that city records value at close to $1 million apiece are in an early stage of construction on two oceanfront parcels. A&B sold the lots in 2013 for $22.2 million to John and Susan Ocampo, co-founders of Gaas Labs, a U.S. communications semiconductor industry investment fund.
More recent sales include a $19.4 million oceanfront lot sold in November to Boo Han Holdings, a subsidiary of Singapore’s largest private property developer, Far East Organization.
And in March, Tony Dong, chief investment officer of Michigan-based Munder Capital Management, paid $15.2 million for a vandalized mansion on an oceanfront lot.
Dong, who a Barron’s magazine story said likes to race cars, could demolish the home and rock-filled pool but would have to set new construction back further from the ocean, which makes the existing structures valuable for restoration.
One former Kawamoto home that is definitely a million-dollar teardown is a mansion built in 1987 by late Parker Ranch owner Richard Smart. A developer bought the property earlier this month for $4.6 million and plans to build and sell a new luxury home on the site.
To date, A&B’s 20 sales amount to $120 million. That’s $8 million shy of what the firm paid for all 30.
A&B projects that it could take in another $65 million to $81 million selling the 10 remaining properties.
The most expensive property left to sell is a 17,408-square-foot oceanfront residence nicknamed "Big Blue" for its blue roof tiles. It is priced at $22 million.
Anne Hogan Perry, one of three Coldwell Banker Pacific Properties agents who teamed up to sell most of the homes for A&B, said the job has been extra rewarding because it is helping undo blight.
"It’s so exciting to see the avenue come back," she said.
Tracy Allen, who with Perry joined Beth Chang to do business as the "Team of the Avenue," said neighbors have even given them hugs. "They’re so happy to have their neighborhood back," she said.
