Queen Liliuokalani Trust
The trustees for the Queen Liliuokalani Trust say their land strategy is quite simple: Buy nothing, sell nothing. And so far the formula’s worked just fine. Frank Jahrling, vice president of First Hawaiian Bank’s trusts and investments division, says the trust had a value of about $400,000 in 1935 and has since skyrocketed to its current value of roughly $300 million. “The only properties that we have are properties that were owned by the queen in 1917,” he says. “That’s how well Hawaii’s done since 1935.”
Jahrling represents First Hawaiian Bank (a corporate trustee since 1937) and handles assets and investments, while trustees David Peters and Thomas Kaulukukui Jr. focus on the kingpin of the trust, the Queen Liliuokalani Children’s Center. Established in 1917, the Children’s Center is dedicated to providing support and services to orphan and destitute children of Hawaiian ancestry.
The perpetual status of the trust means its trustees are looking at long-term investment in the Islands. Although there are no intentions right now to purchase any new property, the trust is continuing to develop portions of its 6,294 acres on the Big Island. Most recently, a parcel in Kona was rezoned from limited industrial to mixed industrial and commercial use, reflecting the trusts’ openness towards a diversified portfolio. The trust may benefit greatly from the decision to diversify, following a drastic decrease in visitor arrivals to the Islands after September’s terrorist attacks on the United States. “A lot of the money that the trust earns is from percentage rents from the hotels that are on our land in Waikiki,” says Jahrling. “So when there is a downturn in tourism we are greatly affected.”
Correspondingly, Jahrling says the budget for the Children’s Center will likely remain flat this year, as it has for the past three years. “We’ve been on a flat budget because the economy hasn’t been that great, and after the recent attacks we’re probably looking at a slowdown,” he says. “But it shouldn’t affect the Children’s Center that much.”
Douglas D. Wilson, senior vice president of First Hawaiian Bank’s trust and investment division, says that trustees for any type of charitable trust usually have a lower risk tolerance level, slightly insulating them from any sharp economic changes. However Jahrling says in today’s volatile economy, any risk is a high one. “I don’t know if you can define being invested 90 percent in land, low-risk. We’re obviously dependent a lot upon the economy here in Hawaii,” says Jahrling.
Do you like what you read? Subscribe to Hawaii Business Magazine »