Fri | Aug 14, 2020

Dolphin Cove strikes deal with hotel developer

Published:Sunday | March 22, 2020 | 12:30 AMKarena Bennett - Business Reporter

A foreign developer has struck a deal with Dolphin Cove Limited to acquire a 23-acre property that it owns, and which houses one of its ­marine parks in Hanover, under a lease-to-purchase arrangement.

The foreign company is expected to develop a hotel at the site.

The agreement reached on March 3 was inked between Dolphin Cove’s subsidiary, Dolphin Cove (Negril) Limited and Reserve Investments Limited, according to disclosures in the Jamaican company’s annual earnings report.

The owners behind Reserve Investments were not disclosed, but record searches indicate they may either be Mexican or Spanish. Dolphin Cove is itself majority owned by Mexico’s World of Dolphins.

The arrangement allows for a one-year lease of the Hanover site to Reserve, pending planning approvals for the hotel, which once obtained, will see the hotel developer purchasing the property, which is located in the Hanover parish capital of Lucea. Dolphin Cove will continue operating the marine park at the site.

“At this stage, what we have signed is an option to purchase with them, and they are proceeding with getting approvals to construct a hotel that will incorporate Dolphin Cove as a main attraction in the middle of the hotel,” Chairman & CEO of Dolphin Cove Stafford Burrowes told the Financial Gleaner.

Burrowes described Reserve Investments only as a Spanish-speaking company with a history in the development of hotels. The company has so far deposited to Dolphin Cove US$100,000 ($136 million) for lease of the property up to March 2, 2021, but may find itself paying a further sum of US$100,000 to the marine park operator, given the coronavirus outbreak, if the option-to-purchase period is extended into another year.

“A foreign company can’t come here and buy a very expensive piece of land and run the risk of not getting approvals for it, so they are being very wise in taking the option to purchase. We can’t sell it for a certain time period while they go through the process of getting all the approvals,” Burrowes said.

While tight-lipped on details, Burrowes, who founded Dolphin Cove and retains minority holdings after selling the business in 2015, described the planned hotel as a large family resort over which Reserve Investments is now in discussions with the National Environment & Planning Agency, among other government institutions, for the necessary approvals.

“If the option to purchase is taken up, what it will do for us – besides getting paid for the land that we are not using – is that it will have to be a family hotel, and as a family hotel, we would expect that the hotel will provide us with a lot of interaction with the dolphins,” Burrowes said.

Under the option-to-purchase agreement, Dolphin Cove has retained the right to operate the dolphin attraction at Lucea and will also be compensated should the park need to be closed for any reason during construction.

“They will have an arrangement for us to maintain full operation of the Dolphins, host the guests of the hotel and outside people. So what we will be getting if it goes through is a nice injection of cash for the land that we bought years ago that has now become very valuable,” Burrowes said.

Dolphin Cove has traded on the junior market of the Jamaica Stock Exchange since December 2010. The marine park closed its 2019 financial year with profit of US$1.6 million, down 31 per cent relative to 2018, while revenue was flat at US$14.9 million.