For seven decades, Harry Weinberg’s influence in Hawaii has been immense.
In life the brash businessman disrupted preeminent local companies and amassed a real estate fortune. Then upon his death in 1990, the then near-billionaire left a charitable foundation that has benefited Hawaii’s poor and vulnerable to the tune of $12 million annually on average, or about $350 million to date.
Recently, leaders of the Baltimore-based Harry & Jeanette Weinberg Foundation have made major changes to the organization’s Hawaii operations, leading some local business leaders to worry whether the foundation’s historic role in the state would be diminished.
However, foundation officials say their focus and charitable work in the state is being strengthened.
“We are totally committed to Hawaii,” said Corbett Kalama, executive vice president of the foundation in Hawaii.
The changes, which include shrinking the organization’s Hawaii real estate portfolio but also increasing charitable giving in the state, stem from a Hawaii office personnel shake-up last year that left the foundation without a Hawaii-based trustee for the first time since Weinberg’s death 29 years ago.
That trustee, Alvin Awaya, was an accountant who had worked for Weinberg in Honolulu since 1974 and had overseen the foundation’s Hawaii business, which includes around 200 commercial real estate assets.
Awaya relinquished his positions Nov. 30, several months before reaching a mandatory retirement age of 75 for Weinberg Foundation trustees.
Kalama, a veteran First Hawaiian Bank executive and former Kamehameha Schools trustee who joined the foundation in 2013 as vice president of real estate investments and community affairs, took Awaya’s place heading up the Hawaii office but not as a trustee.
As part of the leadership shift locally, the foundation hired a team of asset managers in Honolulu to make changes to the Hawaii real estate portfolio, which represents almost half the foundation’s $2.7 billion value.
Too much Hawaii real estate
Historically, the foundation regarded the debt-free Hawaii real estate as a valuable balance, or hedge, to its collection of stocks, bonds and other financial assets. The new team, however, viewed the real estate, which in 1992 represented 20% of total foundation assets but now hovers around 46% or 47%, as too concentrated.
“From a pure fiduciary sense, I think we’re way off the chart,” said Giorgio Caldarone, a former Kamehameha Schools asset manager and planning director who joined the foundation in September as managing director of the Hawaii portfolio.
Caldarone said real estate holdings for peer institutions are around 20%.
“We’re way heavily allocated to real estate,” he said. “We’re trying to throttle that down.”
Caldarone said no target has been set and that a re-balancing won’t be quick or entail any kind of wholesale withdrawal.
“We’ll always have a very significant portfolio here,” he said.
The portfolio is mainly made up of retail and industrial property leased to tenants but also includes undeveloped resort land and even some fee interests in leasehold residential condominiums.
Nothing in the portfolio is particularly high-profile trophy property. Concentrations can be found in Iwilei, Pearl City, Kunia, Ko Olina, Makaha and Lahaina.
Caldarone calls the portfolio a “scrappy” collection, and in recent years it has generated around $50 million in annual income.
In all, there are about 160 properties made up of about 250 individual parcels. To help enhance the portfolio’s value and revenue generation, three other asset managers — Kirk Horiuchi, Ryan Gilbert and Kelly Manson — were hired to assist Caldarone in the Hawaii office.
So far, the foundation has listed for sale a prime redevelopment site in Waikiki on the corner of Seaside and Kuhio avenues, a dozen parcels around and including the former Willows restaurant in Moiliili, two industrial buildings in Kapolei and four industrial lots in Hilo. Asking prices for the listings total about $50 million.
The foundation also recently sold an Iwilei office and industrial complex for $30 million.
Another recent change has been outsourcing property management work such as maintenance and leasing that had partly been handled in-house under Awaya.
More professional practices
Craig Demchak, a foundation spokesman from Baltimore, said changes in Hawaii are a continuation of efforts in recent years to adopt more traditional corporate practices in a move away from informal operations that reflected Weinberg’s management style.
In a 1992 Washington Post story, the foundation was described as an eccentric, sometimes off-the-cuff operation run by trustees who initially were two Weinberg siblings and three accountants who employed no professional staff.
That structure extended to Hawaii.
“Alvin was a long-respected trustee here who operated this office for many years, and I think it was always a perspective of we respect Alvin’s judgment and guidance in the way that this office and our real estate portfolio here was managed,” Demchak said during a recent visit to the Hawaii office in Kaimuki.
One concern raised by some local business executives was over Hawaii property sales that they thought Weinberg prohibited his foundation from making.
A few news accounts after Weinberg’s death reference such a prohibition, but Kalama said it applied only to property held directly by the foundation when Weinberg died and not to property held by Weinberg companies that became foundation assets, including Honolulu Ltd., 300 Corp. and HRT Realty.
The foundation, which continued to acquire real estate here after Weinberg died, has previously sold property including parcels at Ko Olina and fee interests in a few thousand condos, but not to reduce the portfolio’s size.
Weinberg had a penchant for acquiring real estate, sometimes through indelicate means, and highly regarded such assets that have been key to giving back so much posthumously.
Poor kid builds empire
Born in Austria, Weinberg grew up in Baltimore as one of six children to poor immigrant parents who at times relied on public assistance. He dropped out of school at 12 to work in his father’s car repair shop. He also sold newspapers and later ran his own tire recapping business.
During the Great Depression, Weinberg bought Baltimore real estate at tax sales to improve and sell at a profit.
After World War II a new endeavor investing in and obtaining control of bus companies, first in Baltimore and then Scranton, Pa., led Weinberg to settle in Honolulu.
Weinberg began buying stock in Honolulu Rapid Transit Ltd. in 1956, and gradually amassed enough shares to demand board seats that allowed him to take over the company a few years later.
After taking control, Weinberg used HRT cash to buy stock in a Dallas bus line, which Hawaii regulators unsuccessfully tried to stop. In a similar scheme, Weinberg also acquired a New York bus company.
In operating his bus companies, Weinberg often made changes that led to strikes and prompted municipal governments to buy the businesses. That deal was made in Honolulu in 1971 when then-Mayor Frank Fasi established MTL to take over HRT.
Throughout the 1960s, ’70s and ’80s as a Honolulu resident, Weinberg also accumulated stock in Hawaii’s biggest companies, particularly firms that owned real estate, so he could agitate for changes including seats on the board. Targets he tangled with included Amfac, Dillingham Corp., Alexander & Baldwin, Maui Land & Pineapple Co., Theo H. Davies and Hawaiian Airlines.
One common result was Weinberg parting with a cash profit or real estate in return for his shares.
Weinberg’s business tactics were described as shrewd, surly and ruthless. And then the man, who also was described as the largest individual real estate investor in Hawaii at the time of his death, left his then $900 million fortune to a charitable foundation in his own name and that of his wife, Jeanette, who died a year before him in 1989.
Directed at giving back
Weinberg, who was 82 when he died, directed his foundation to exclusively help the poor. Hawaii was designated as one of three “hometown communities” along with northwestern Pennsylvania and Maryland. Weinberg also directed 25% of foundation giving to predominantly Jewish organizations.
By law, 5% of a foundation’s net worth must be given away every year. For much of the last two decades, annual Weinberg Foundation distributions have been around $100 million, and Hawaii averaged $10 million in recent years.
Many contributions have helped local nonprofits build new facilities, and as a result the Weinberg Foundation name is on more than 80 buildings or parts of buildings around the state.
In 2017, tax records show, about 90 Hawaii organizations received Weinberg Foundation grants, including $1 million contributions to Hale Kipa, Catholic Charities of Hawaii, J. Walter Cameron Center and the Hawaii Island Community Development Corp.
Kalama said he’s heard the concerns about a withdrawal, and said no such thing is happening. In a show of dedication, foundation trustees decided to increase annual giving in Hawaii to $12 million starting this year from $10 million a year in recent years.
Helping direct contributions locally are recent hires Xan Avendano and Marisa Castuera Hayase, who filled the role of the foundation’s longtime grant director in Hawaii, Gailene Wong, who left around the same time as Awaya.
Mitch D’Olier, board chairman of the Harold K.L. Castle Foundation based in Kailua, said the Weinberg Foundation’s Hawaii operations are in good hands with Kalama, who serves on the Castle Foundation board.
“I’m sitting here at my desk right now, and I’m not worried about them going away,” D’Olier said. “I look for them to do more charitable investing in Hawaii, not less.”
Kalama said he feels a strong connection to Weinberg and the foundation, in part because he grew up in a household that sometimes relied on food donations. “I’ve got to make sure we’re a good steward,” he said. “Whenever requests come in, I say, ‘What would Harry do?’ It’s all about impact.”
THE HARRY & JEANETTE WEINBERG FOUNDATION
>> Headquarters: Baltimore
>> Mission: Helping poor and vulnerable populations
BY THE NUMBERS
$2.7 billion
Assets
$1.2 billion
Approximate Hawaii assets in real estate
$100 million
Approximate annual giving
$12 million
Annual giving in Hawaii on average
Harry Weinberg: The businessman’s influence is felt long after his death with the foundation he created
