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The Pineapple of Case's Eye

By Catherine Yang Honolulu-native Stephen M. Case is now the second-largest landowner in Hawaii, after the Bishop Estate. The former CEO of AOL (TWX) bid his home-state aloha when he started making investments in Maui Land & Pineapple (MLP) in 1999 and later on in Kauai-based Lihue Plantation and also Grove Farm, where his grandfather had worked as treasurer.

But it wasn't until Case decided in January, 2003, to resign as chairman of Time Warner that he did more than just surf by his holdings as a passive investor. In February of that year, he reviewed his Hawaiian investments with fellow Hawaii native and former AOL exec David C. Cole, who founded the nation's largest organic farm, Sunnyside Farms near Washington, Va. By fall, publicly traded Maui Land, in which Case holds more than a 40% stake, had named Cole CEO.

"MOVE THE NEEDLE." The duo was off to update the company for the next century, practicing sustainable agriculture, eco-friendly resort development, and Hawaiian cultural preservation. Case views his Hawaiian projects as a blend of for-profit business and philanthropy. "Hawaii is small enough to make a difference," he says. "You can move the needle here.

At Maui Land, Case and Cole started by retrofitting the pineapple business, increasingly battered by low-cost fruits from Asia and the Caribbean. Now, MLP is shifting its production to higher-price organic pineapples, skirting commodity markets by targeting the upscale, health-conscious consumer. Pineapples still account for half the outfit's 2004 operating revenues.

But the biggest challenge has been overhauling Maui Land's Kapalua Resort, which has lost the luster of its glory days. Instead of turning the old Kapalua Bay Hotel into condos, as many other developers are doing with excess properties, Maui Land and partners Marriott International (MAR) and Case's Exclusive Resorts vacation club are investing $300 million to build a new hotel in its place.

RETURNING SON. The twist: Instead of 3,000 acres devoted to the resort, as before, they're allocating 23,000 -- or 80% of Maui Land's property -- most of which will be a nature preserve of dramatic cliffs, valleys, and beach connected by 100 miles of trails. "We're anticipating what visitors of the next generation are looking for," says Cole. "We will derive value through the scarcity of development."

The resort will also add a new wellness center -- the country's second Miraval spa, which Case also controls -- to provide therapies from massage to addiction recovery.

Maui Land also wants to give guests more than the usual tourist fare by employing knowledgeable locals who can convey authentic Hawaiian culture. To attract these employees, the company plans to build a nearby community with some affordable housing and two new schools.

Case is now only starting to overhaul Grove Farm and Lihue Plantation. He has also invested in a ferry to run passengers and goods between the Hawaiian islands. If all these investments pan out as envisioned, residents of the Aloha State will be glad that a native son has returned with money in his pocket. By Catherine Yang in Washington

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