200+ Families Evicted! Continued (3) - Posted by RT in CA
Posted by RT in CA on February 17, 2002 at 15:13:16:
Is Japanese tycoon cash poor?
By Steve Wiegand and Dale Kasler – Bee Staff Writers
Published 5:30 a.m. PST Saturday, Feb. 16, 2002
He might be a billionaire, but he still needs the money.
At least that’s why Japanese real estate investor Gensiro Kawamoto says he’s ordered the people in the 420 Sacramento-area homes he owns to get out.
In a press release issued Wednesday by his Hawaii-based attorneys, Kawamoto said he needs proceeds from the sales of the single-family houses for “tremendous investment opportunities both in the United States and Japan which are opportunities which present themselves only once every 20 to 30 years.”
Kawamoto, who has gained notoriety for being both bombastic and reclusive – and for being an investor who deals strictly in cash – has refused to say what those investments are, as have his attorneys.
But the suddenness of his announcement to sell the houses here, as well as properties he owns in Santa Rosa and Hawaii, has led to heaps of speculation as to why he is choosing to unload these particular assets – or why a billionaire would be forced to quickly unload assets at all.
Kawamoto “almost certainly experienced a downturn in his fortunes because of the past decade of stagnation in Japan,” said Franck Wiebe, chief economist for the Asia Foundation in San Francisco.
Kawamoto, who in 1988 bought all or most of the five developments in Rocklin, Citrus Heights, Antelope and Orangevale for a reported $60 million, has long been reputed to be among the richest men in Japan.
His fortune was once estimated by Fortune Magazine in 1993 to be as high as $2.7 billion. But in a subsequent list of the world’s billionaires, Forbes Magazine did not list him at all.
“It sounds obviously like he’s got a cash squeeze,” said Richard Katz, editor of The Oriental Economist, a New York-based newsletter. “A lot of people do.”
This includes a lot of rich Japanese real-estate investors.
The Japanese economy is in a 10th year of stagnation and is currently in its third recession in two years, according to Wing Thye Woo, a professor of economics at the University of California, Davis, and an expert on Asian economies.
Woo said the Japanese stock market is at half of its 1992 value, government programs to revive the economy have largely failed and banks that made huge low-interest loans with nothing but real estate as collateral are teetering.
“I think it’s safe to say that a lot of people in Japan who were very very wealthy 10 years ago are very, very not-wealthy today,” he said.
A need for cash, however, doesn’t explain why Kawamoto has decided to hold on to some properties he owns in Hawaii, where the real estate market has been severely depressed for years. Kawamoto, for example, is holding on to 147 acres he owns on Maui, where he plans to build 1,050 residential units.
“If he was in deep trouble, he probably would be selling everything, which we’re not seeing,” said James Hallstrom, a Hawaii real estate appraiser.
Neither Kawamoto nor his attorneys have explained why he wants his houses empty when he puts them on the market, although attorney Carol Asai-Sato said in an interview Thursday from Honolulu that the houses would be listed individually with brokers and not sold en masse to a single buyer.
But it’s generally accepted in real estate circles that an empty house is easier to sell than one with tenants.
And there are theories about Kawamoto’s sudden desire to sell that are based on issues other than cash.
The head of a local rental property management firm that worked for Kawamoto for part of last year feels that recent complaints from some tenants about problems with mold might have helped spark Kawamoto’s desire.
“The only guess I can make as to why they’re pulling out is that they were very concerned about the mold issue,” said Bob Muchado, owner of HomePointe Property Management. “Seeing some of these lawsuits building in the community probably would have made them a little nervous.”
Muchado was referring to a spate of high-profile, multimillion dollar jury awards in mold-related cases, including one in Sacramento where a young couple and their child won a $2.7 million award from their apartment landlord and the property manager.
Muchado, who said he canceled his contract with Kawamoto last year after working for the investor for about seven months, said Kawamoto was self-insured, meaning there’s no deep-pocketed insurance company to cover his court costs or any potential judgment against him.
Whatever his motive, local real estate experts say his timing is good – at least from his standpoint.
“His timing is about right,” said local real estate economist Robert Fountain. "If I were looking to liquidate, I wouldn’t hang on and make sure Sacramento doesn’t go into a recession. There’s always a long shot there might be a worse recession here a year from now.
“I think whatever money he’s made on these, he’s already made it.”
In addition, the local inventory of about 2,300 single-family houses now for sale is relatively low, real estate experts say.
An additional 420 “seems like a lot,” said Michael Lyon, of Lyon & Associates Realtors, “but we’re so deep into a seller’s market that adding 400 homes doesn’t change that. He’s going to do well – there’s probably a 20-30 percent return he’s looking at.”
That, however, is of small comfort to those being forced from their homes and neighborhoods.
Lyon pointed out that many of those facing a move are families, and that the seller’s market in single-family homes means there are relatively few to be rented in the area.
“(In) our housing market – this is probably the worst possible time for this to happen,” Lyon said. “(But) this is the American way, this is, unfortunately, his right.”