Brue Baukol lays out plans for 18,000 acres of newly acquired Kaua‘i land

PORT ALLEN — With the exchange of more than $250 million, Colorado-based investment firm Brue Baukol Capital Partners became Kaua‘i’s third-largest private landowner in June 2022.

The firm’s holdings now include 10,000 acres of conservation land in Wainiha Valley, 5,000 acres of agricultural land on the South Shore, the luxury second-home development in Kukui‘ula, and 2,000 acres of surrounding property — a total of more than 18,000 acres.

The land was unloaded by former “Big Five” sugar plantation turned property management company Alexander & Baldwin, which has held it for decades.

What’s going to change under the new ownership?

Not much, according to Brue Baukol founder and CEO Chad Brue, who spoke to The Garden Island last week on his plans for the land.

Brue characterized his firm’s role as “stewardship,” more focused on maintaining the land than pursuing significant new developments.

In Kukui‘ula, the luxury home development will progress according to the plans that Alexander & Baldwin’s and DMB Development have had in the works since the early 2000s. There are currently 49 luxury homes under construction at the site.

“Not any major changes. Little things, like we’ve added additional seating around the dining facility, we’ve expanded around the pool area, but nothing major,” said Brue, who recently bought his own home in the development. “We’ll execute that plan, but there’s nothing significant that’s different from what they’re doing already.”

Brue said all of the 260 Kukui‘ula employees were offered their jobs back after the sale.

On the agricultural land on the South Shore, Brue said they would keep all current tenants and focus on maintaining and expanding agriculture, and eventually building some form of affordable housing. They are also eying a site in ‘Ele‘ele as a possible location for retail.

As for the largest section of land in Wainiha, the company has recently renewed an agreement with the Nature Conservancy to manage most of the property.

“For us to do something on the North Shore, I don’t know if I’d live that long,” said Brue. “It’s not going to happen.”

The sale

Founded in 2011, Brue Baukol has invested more than $1 billion globally, with developments from Colorado to Connecticut to the Turks and Caicos. It is currently led by Brue and real estate investor Geoff Baukol, who serves as president.

The firm is made up of several hundred individual investors, whose names Brue did not disclose.

“They’re small business owners, individuals, not institutional firms, pension funds or endowments,” he said.

They are also all people with deep pockets. The minimum buy-in for investors is $100,000, and Brue said that most contributed between $250,000 and $300,000.

Brue Baukol’s interest in Kaua‘i began when a broker they had worked with on another sale offered them the opportunity to buy Alexander & Baldwin’s Kukui‘ula development. The deal closed in November 2021 at $183.5 million, making up the majority of Brue Baukol’s financial stake in the island.

“After we bought Kukui‘ula, A&B called us and said, ‘Hey, do you want to be the steward of the rest of our 18,000 acres of land?’” said Brue. “I said ‘Let me absorb this first,’ but yes I would be interested.”

The second deal went through in June 2022 for $74 million, according to Alexander & Baldwin’s quarterly report released after the sale.

The massive sale was part of a long-term strategy from Alexander & Baldwin, which has been gradually unloading its agricultural and conservation landholdings throughout the Hawaiian Islands.

“They wanted to simplify their operations and concentrate on commercial real estate,” said Trinette Kaui, who worked for Alexander & Baldwin for 39 years before joining Brue as the director of land assets. “That was the driving force behind the sale.”

With the sale, Alexander & Baldwin’s interest in the island is hugely diminished, with Kaui reporting they now control about 100 acres of land. This interest is mostly commercial, including Port Allen Marina and the Shops at Kukui‘ula as some of their major holdings.

Opportunity zone land

Much of this land is located within Kaua‘i’s two opportunity zones, part of a Trump-era policy that offers a series of tax breaks to encourage investment in low-income areas.

Due to the kinks in the census data used to identify these regions, Kaua‘i’s two opportunity zones include relatively well-off areas on the North Shore and the private luxury home community in Kukui‘ula. This means that luxury development in high-end areas could possibly receive massive subsidies from the federal government.

While he did not discount the possibility of pursuing an opportunity zone project in the future, Brue said his firm did not have any currently in the works. He also said the firm did not have any affiliation with an opportunity zone fund — the financial vehicle used to facilitate those kind of investments.

“It wasn’t a motivating factor that any of this land was in an opportunity zone. We focused more on the fact that the Kukui‘ula land was already zoned and entitled,” said Brue.

Whether Brue Baukol is involved or not, home sites in Kukui‘ula can be developed as opportunity zone projects by their individual owners. As long as the property is used for commercial activity (including as a vacation rental or luxury apartment), it is eligible for those tax breaks.

With the purchase, Brue Baukol takes Alexander & Baldwin’s spot in the group of private landowners who have long held huge swaths of the island. As of 2017 — the latest that the state published comprehensive data on the subject — the top spots were held by the Robinson family with 50,000 acres, and Grove Farm with 33,000 acres.

As for expanding on their holdings, Brue said it was unlikely to happen soon.

“We’re focused on the land we have right now, and focused on how to improve upon it,” he said. “It’s not to say that if somebody brought us an opportunity we wouldn’t look at it, but in terms of acquiring land, it’s not on our radar at this point.”

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Guthrie Scrimgeour, reporter, can be reached at 808-647-0329 or gscrimgeour@thegardenisland.com.

This article was edited to correct the name of the firm Brue Baukol Capital Partners, which was referred to at one point as Brue Baukol Capital Group.