Kawamoto's reappearance stirs real estate market

By Dan Nakaso
Advertiser Staff Writer

Gensiro Kawamoto has done nothing in the past few weeks but cement his image as an enigmatic billionaire with the power to reshape real estate markets with swift and bold moves.

In the 1980s, Kawamoto became the local face of a Japanese real estate boom that spread across the country, establishing his place in modern Hawai'i lore by driving around O'ahu neighborhoods in a white limousine and buying houses on the spot — in cash.

Kawamoto boldly reappeared on the real estate scene last month with the announcement that he was selling more than 800 homes in Hawai'i and California to raise quick money for new ventures he refused to identify other than to call them "opportunities which present themselves only once every 20 to 30 years."

The suddenness of the move created an uproar in California that prompted no less than the governor, a senator, various legislators and even Japanese business groups to try to get Kawamoto to back off on his plan to evict some 450 tenants from entire subdivisions he owns.

The flurry is "fairly extraordinary for a single individual," said Nick Ordway, a real estate expert and University of Hawai'i finance professor. "Napolean probably caused a lot of people to be evicted from their homes. We've had government evictions for urban renewal plans. But you have to go back to the 1950s for that. So there are precedents for what Kawamoto is doing, but none recently and not by any one individual."

All of the attention focused on Kawamoto in Japan, Hawai'i and California has only contributed to Japan's economic anxiety as one of its richest sons appears to be dumping American real estate. And it's done little to add any new insight into the reclusive Kawamoto's motives and his thinking.

Kawamoto, who was in Japan last week, has remained relatively tight-lipped.

He declined repeated requests for an interview, instead answering some questions through his Honolulu attorney. And since he deals in cash only and has no debt, he leaves a scant paper trail that makes it hard to follow his plans.

Today, it's even difficult to measure Kawamoto's wealth. He was frequently listed by Forbes as one of the world's richest men, but now he no longer provides the magazine with his financial information.

One 1996 estimate speculated that Kawamoto owned almost 3,000 buildings that earned $75 million in monthly rental income, according to Nichi Gai Associates, a Japanese information service/data bank. Today Kawamoto still owns several major buildings in Tokyo's Ginza district, home to some of the most expensive real estate in Japan.

Debt-free billionaire

While the spate of real estate sell-offs has led to some speculation that Kawamoto is having financial difficulty, his attorney, Carol Asai-Sato, says the real estate magnate remains a debt-free billionaire.

Still, the timing of Kawamoto's flurry of home sales comes as global attention continues to focus on Japan's economic problems, particularly a March 31 deadline.

That's when the Japanese government will no longer insure individual bank term deposits of more than 10 million yen, or about $75,000, leading to speculation that Japanese investments will suddenly flee off shore.

"This individual is making these moves at a time when the Japanese economy and individual and institutional investors are quite shaky in Japan," said Sheila Smith, a research fellow at the East-West Center who specializes in Japanese politics. "The crisis scenario is that there's going to be this tremendous escape of Japanese investment. It's the kind of speculation that creates a run-on-the-bank scenario."

Kawamoto's real estate moves, Smith said, "only contribute to the jitteriness inside Japan right now."

Eclectic approach

Kawamoto — born March 1, 1932, in the Fukuoka Prefecture, making him 70 years old last week — has long been a maverick with an eclectic approach. He said through his attorney that he stopped counting birthdays at 50.

He was raised in Kyushu in southern Japan and took over the family kimono shop at 19 but closed it to seek better opportunities in real estate in Tokyo. By 1961 he had started his own Tokyo real estate business and set up Marugen, his current company.

In 1987 he turned his attention to Hawai'i homes and eventually spent at least $85 million buying about 200 Hawai'i properties almost 15 years ago following a trip to Hawai'i in which he said he noticed there were many houses for sale but a shortage of rental properties.

In a 1989 interview with The Advertiser, Kawamoto said his five younger brothers and sisters all led "normal" lives that he sometimes missed out on. "Out of the bunch, (my) parents had just one strange child," he said through an interpreter.

He said his parents criticized him for his demanding eccentricities — drying himself with many towels after a bath or asking his mother to rearrange the food on his plate if he didn't care for the presentation.

Kawamoto said he had eaten every meal in restaurants for the past 35 years. And as his empire grew, Kawamoto expected his parents to make an appointment to see him.

Recluse in Hawai'i

In Hawai'i he was a recluse, a lifelong bachelor who paid $42.5 million for the former Portlock estate of Henry Kaiser — the most expensive real estate purchase at the time. Kawamoto then suddenly walked away when he refused to pay the $1 million per year leasehold fee to the Bishop Estate.

He also paid $19 million for 147 acres in Kihei, Maui, in 1989 and later sold the property for only $1.5 million. Kawamoto then bought the same parcel back in 1998 for $1.15 million.

Ordway uses Kawamoto as an example in class so his students can learn how impulses sometimes end up as expensive mistakes.

"He was overpaying for properties without doing his due diligence," Ordway said. "I certainly wouldn't buy houses the way that he did, paying twice or three times what they're worth."

California uproar

Tomeko Kellner worked off and on as an interpreter for Kawamoto in Hawai'i in the 1980s and remembers him being surrounded by men who seemed to only tell Kawamoto "the things he wanted to hear," she said.

"People around him would just say, 'Yes, yes, yes. Everything's OK,' " Kellner said. "I think that's half of his problem. Everybody treated him like a king."

That internal focus has helped fuel the recent California uproar, as well as controversy in Hawai'i.

Late last year, Kawamoto ripped out the connecting driveways to two neighbors' homes near a 130-acre parcel he owns in Kahalu'u. Kawamoto claimed the residents were trespassing on his land whenever they used the driveways.

So on Christmas Eve, Kawamoto posted no-trespassing signs.

One of the neighbors who needed the driveway is an 83-year-old woman who uses a walker. Despite a neighborhood outcry, Kawamoto maintained his actions were legal. The incident spurred the City Council to last month approve condemnation of three parcels to restore the families' access to their driveways.

The public outcry in California, however, eventually pushed Kawamoto to bend and announce in a short statement last week that he would extend the 30-day eviction notices another 90 days, forcing him to likely tap into cash reserves in Japan to finance his new deal.

Cash for new deal

Kawamoto could put more of his property in the islands on the market to raise cash for the new deal, but his attorney, Asai-Sato, said he won't. Of the 161 condominiums and single-family homes he holds in Hawai'i, less than a third are on the market — "probably because he wants to maintain a presence here," Asai-Sato, said.

But Kawamoto calls no single place his home, Asai-Sato said.

"He has many homes all over," she said.

Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or 525-8085.