IRSA Inversiones y Representaciones SA Q1 FY2025 earnings call

• Adjusted EBITDA was ARS 46.9 billion, 8.8% below previous quarter. Net loss was ARS 109 billion due to non-cash valuation of investment properties. - Tenant sales showed a 7% QoQ recovery but were 12% below last year. - Office occupancy at 98%, shopping malls at 97%. - Acquired land adjoining Alto Avellaneda shopping mall. - Paid dividends of ARS 90 billion (8% yield) and distributed treasury shares. - Real estate projects: Ramblas Del Plata acquisition, Nexo Dot, La Plata Distrito Diagonal, City Block 35 in progress.

Shopping Mall: Adjusted EBITDA stable; occupancy at 97%; tenant sales slightly recovered by 7% QoQ but still 12% below last year. Office: Occupancy reached 98%, premium portfolio at 98%, sold some floors, managed 58,000 sqm of A+/A offices. Hotel: Occupancy dropped from 66% to 55%, rates decreased, EBITDA 8.8% below previous quarter due to lower tourism inflow and FX competitiveness.

• Expect tenant sales to continue recovering vs previous quarter, with better numbers anticipated in Q3/Q4 FY25 as real wages improve. - Confident in real estate market recovery driven by mortgage industry launch and tax amnesty, leading to potential for monetizing portfolio and launching new projects.

• Peso appreciation causing non-cash losses in investment property valuations when converted to pesos. - Tourism inflow and FX rates impacting Hotel segment performance.

Q: With the next quarter being seasonally strong for shopping malls, do you expect tenant sales to show a further recovery compared to the same period of last year? And given the significant reduction in office assets in recent years, are there plans to rebuild or expand the office portfolio? Or is exiting from this segment a possibility?

A: Let me address the first part about tenant sales. That was a volatile year. Now, when we analyze what happened in the last quarters with consumption, there was like one environment in the -- with the previous administration, there was an acceleration of consumption and acceleration of inflation. So, if you remember, after the elections, December 10, when Milei took office, there was a big change in the environment. So when -- the next quarter, when we will compare numbers, we will still have the first 2 months of the previous -- the comparison will be -- the first 2 months will be against the last administration and a booming consumption and the last 20 days with the new environment. We believe that we will keep seeing recovery against the previous quarter. Probably, in the comparisons against the last year, we will see weaker number probably in December. But we expect to see like this quarter -- now, the previous quarter, the drop was 18%; this quarter, 12%. And we hope to see better numbers in the coming quarter. And then, the third and the fourth quarter of this fiscal year will be much better because the point of comparison will be with the new administration, and we started to see recovery in real wages. So we hope to see better numbers after that. And regarding the second part about our office portfolio, we don't have the ambition -- as we always mentioned, we are not just an accumulator of properties because of Argentina. Now, we have to be active managing our portfolio. So when we see good opportunities to sell, you will see us selling. And if we see good opportunities to develop or to buy things, we will buy or develop. We don't have a target of saying, okay, we want to have at least X square meters in the office portfolio or go back and recover the same portfolio than before. Our analysis will be, if we see a good opportunity to acquire in any segment, we will acquire or we will develop. But if not, we don't have any pressure to recover the same portfolio to achieve certain numbers.

Q: How is the processing of Ramblas Del Plata progressing? What are the next steps? What has changed since the last earnings in September?

A: Well, mainly regarding commercial-wise, the interest of developers, it's very strong. So, soon, we're going to start signing barter agreements and selling agreements. So I think that's the main difference in the last month. And mainly, we've been -- as I said before, we're about to get the environmental approval certificate, so we're going to start with the works. But I think mainly -- what mainly happened since the Real Estate Expo until now has been commercialized. It's been very interesting seeing how developers are very interested in our -- in the development.