MOU Signed for $700M Development in Oman

MUSCAT, OMAN-Alfa International Holdings Corp., a small New York-based public company traded on the Over-The-Counter Bulletin Board (TYBR.OB), is acquiring a small private company, Journey of Light Inc., which last week signed a Memorandum of Understanding with the Sultanate of Oman for the development of an estimated $700-million beachfront tourism and residential real estate project on a long stretch of beachfront near the Muscat International Airport.The acquisition of JOL by Alfa was contingent upon the MOU.As currently planned, the project includes a theme park and exhibitions; hotels; restaurants; commercial and retail businesses; office space and residential units. The project will be developed under a new company–Journey of Light will be the majority partner and the Ministry of Tourism of Oman will be the minority partner–that will own and operate all of the business enterprises in the project and design, build and sell the residential component. As its contribution to the new project company, the Ministry of Tourism of Oman will transfer between 200 acres and 245 acres of beachfront land facing the Gulf of Oman for the tourism and commercial components of the project, as well as some of the residences.Frank Drohan, the president of both Alfa and JOL, tells GlobeSt.com that additional residential land will be provided by the Ministry of Tourism as is necessary to meet the project’s minimum required financial returns as specified in the MOU. Drohan could not reveal the minimum required financial return due to a confidentiality agreement, but did say the total return on investment is expected to be in the high teens.”The residential portion is providing financial viability,” says Drohan. Indeed, because the cultural component–the seven Epcot-like structures and the surrounding exhibition areas–is the more commercially risky piece of the project but one that the government views as a “Landmark” and wanted to control the content. Drohan says the Landmark portion of the project will be placed in a separate company that will be majority owned by the government. The Landmark operations will be underwritten by the government and managed by the project company.Journey of Light first approached the Government of Qatar about developing the project. “We met all the people in the government there and signed a contract to go forth and do a feasibility study,” he says. “We spent $2 million, but as time passed their strategic objectives changed so we changed our strategic objectives and went off to Oman.”The Oman government loved the idea, he says, so he had a DVD made further detailing the project and then made a full presentation to the government’s tourism committee. The government offered up the aforementioned piece of land this spring, and the two sides have been negotiating the MOU since that time. It was signed by all parties last week, Drohan says. “The government of the Sultanate is very focused on environmental, heritage and architectural themes,” he says. “We’re going to integrate the seven jewel-like structures–each based on a different grand intellectual theme such as earth, technology, education and prosperity–with the routism, cultural and entertainment aspects of the project.”Now that the MOU has been signed, Drohan says the next step is to take the project forward to a development agreement, which should take about four months. “We will try to fast track that, because we’ve already done a feasibility study (and environmental review) for Qatar that we can modify for Oman,” he says. “While we do not have a firm contractual agreement as of yet, we feel very positive; there’s two willing parties and there doesn’t seem to be any major stumbling blocks.”