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Operator: Good morning, everyone. I’m Santiago Donato, Investor Relations Officer of IRSA, and I welcome you to the Fiscal Year ’23 Results Conference Call. First of all, I would like to remind you that both audio and slide show may be accessed through company’s Investor Relations website at www.irsa.com.ar by clicking on the banner webcast link. The following presentation and the earnings release are also available for download on the Company website. After management remarks, there will be a question-and-answer session for analysts and investors. [Operator Instructions] Before we begin, I would like to remind you that this call is being recorded and that information discussed today may include forward-looking statements regarding the company’s financial and operating performance.

All projections are subject to risks and uncertainties and actual results may differ materially. Please refer to the detailed note in the Company’s earnings release regarding forward-looking statements. I will now turn the call over to Mr. Eduardo Elsztain, CEO, for his opening remarks.

Eduardo Elsztain: Thank you very much, Santi. Welcome to our annual year 2023 results conference call. I am very glad to be closing another great year for IRSA, one of the historic one. The rental business had a great performance, mainly in shopping malls and hotels. They both increased sales. In terms of assets, we sold office assets at very good prices in terms of pesos and in dollars. We made progress to launch our most ambitious project, Costa Urbana, which is a project that we have in the portfolio for more than two decades and a half, and we achieved permits after long patience. We successfully concluded a debt refinancing process, which positions us favorably for a new phase of growth in the coming years. I would say that the level of reducing debt has been one of the most impressive in three years and half that we are running the company.

In terms of revenues, we increased revenues and occupancy in the three rental segments, in the malls, in the office, and in the hotels. We have been also very active in the real estate transactions. We acquired assets. We acquired a building in an auction in Paseo Colon property for $7.8 million at the price, which is really liquidation price. And we have been selling more than $161 million, including nine floors of the tower of the building we did in Catalinas. And after the fiscal year finished, we sold the first building we bought in IRSA, Suipacha building to the University of CEMA and we sold 50% shares of Quality, which is owner of the warehouses in San Martin plot. As I mentioned before, we have been very active in the financial front as well.

What we did is conclude all the refinancing debt process, including the exchange of the Series II notes for $360 million and reduced our net debt by 67% since year 2020. Today, net debt is $247 million. And that will be explained in more detail by Mati later. We also lowered our average financing cost of all the bonds. And this has been incredible, because not only reduced, but we also got an upgrade in the credit agents. And the other thing is, we could show a value to our shareholders, distributing dividends twice this fiscal year for a total amount of $124 million. And we repurchased our own shares and approximately we bought 1.7% of the capital stock in the buyback programs. In the last meeting — in the last Board meeting, we called for a shareholder meeting in order to distribute a new dividend for the sum of up to ARS65,000 million and distribute the treasury shares that we bought back in the program.

I would say after mentioning all the main highlights that I want to emphasize that IRSA has a team of management, which has been long term in an environment of inflationary and a printing money economy. And I repeat always what I say, real assets, real estate, farms is the best way to defend when you have the economy printing and printing and printing. So, we have shown the real value of the assets in a period like this where we could do both things, growing operational, growing in sales, keeping value and then leverage the company as we never did before. And I hope you keep supporting the Company in the future as you did until today. I want you to now continue with the team, the rest of the team which is Mati, Santi and Jorge to see the details of all the annual results.

Thank you very much for joining us today in the morning.

Santiago Donato: Thank you, Eduardo. Moving to the rental segment and [go forward] (ph) operations. We can see here the evolution of tenant sales in real terms for shopping centers, our main line of business. Remember that represents approximately 70% of our EBITDA. This grew 16% in the year in real terms. So, it’s a great performance explained by more visitors, higher apparel inflation. Remember that apparel represents like 50% of our tenant mix and the strong recovery also of entertainment and food court sales. When we compare to the pre-pandemic levels, we are about 27% in real terms. So our business is very, very healthy, and we hope we can keep these levels of sales visitors and occupancy as well in our shopping malls portfolio.

Here, we can see the evolution of occupancy. Remember that with all the pandemic and the exit of Walmart first and then Falabella from Argentina, our minimum occupancy in those times were approximately 89%. We have recovered a lot. And during the last year, particularly, we grew like 4 points occupancy in our malls. We have almost all the portfolio full and we expect to keep growing in the future. This is a very, very good level of occupancy, similar to the ones pre-pandemic and historical levels of the IRSA. On the office market, as Eduardo mentioned, we have been selling more during the year. We sold eight floors of the Santo Della Paolera building, our latest development here in Buenos Aires. And after the end of the quarter, we sold Suipacha and one additional floor of the Santo Della Paolera.

So today, we have a total stock of around 72,000 square meters post those sales and consolidating a premium portfolio after the sale of Suipacha was a B class category. Now we have only one B class building, the Philips Building, in the picture there of occupancy and rents, we have just the A plus and A buildings that represents 90% and 95% of our total portfolio is showing good levels of occupancy even above than the market in Buenos Aires, we are 87% with a vacancy of 17 points and there we have just [13] (ph). And we have also good levels of rents stable comparing to last year in levels of $26 per square meter per month. Hotels was record during this year, a new good year for hotels after many years of operations closed, the whole 2020, and big part — and the recovery was very gradual in this segment was very, very effective during the pandemic.

Now, we are in very good levels of occupancy 60 — almost 5% average the peak hotels. Remember that we own 50% of [Llao Llao] (ph) in the city of Bariloche, one of the most exclusive resorts in the region, LatAm and we also own two hotels, Libertador and Intercontinental in Buenos Aires, both of them recovered strongly during this year and are showing very good figures in terms of rates per room and occupancy. Regarding ESG progress, we have been making a lot of progress in the — in our commitments assumes in the three fronts, environmental, social and governance. Our recent news is that we certified LEED for Santo Della Paolera building and now Santo Della Paolera and Santo building the two most modern and latest development of the offices in premium offices of the company are certified LEED.

This is 74% of our portfolio of premium offices in Buenos Aires. So it’s great news. And also, we were very active on the social part directly and through Fundacion IRSA, we have made more than 200 social actions, benefiting more than 100,000 people and investing even much more than last year 21% about in real terms, our social investment. On the government’s front, I would say that we celebrate the 75th anniversary of BYMA, it was one of the first companies and of course in the real estate segment listed on the local stock exchange. And we have a long-term relationship with BYMA, and we hope we can keep with very good relationship with them. And we integrated its sustainability index as well. This is great for IRSA. We are one of the 20 companies with the best performance on ESG together with other 20 in the country.

On the digitalization front, well, regarding — this is our investment in ¡appa!. ¡appa! is our loyalty app that enhances the shopping experience of our visitors offering benefits and discounts, links to their preferences, events, actions. It keeps growing. It’s doing well. It’s growing in terms of users of accumulated transactions. They surpassed 3.5 million accumulated transactions. Users are 1.8 million in the last month. This is 39% growth year-over-year. So, we are happy with this. We think that these times of technology and digitalization we need to keep complementing physical retail with digitalization in order to offer all the solutions to our visitors in the mall through this app, that is the app for the retail and for the malls in Argentina.

So, I will now turn the — I will give the word to Jorge Cruces for the real estate transactions and the business of sales and development.

Jorge Cruces: Thank you, Santiago. Good morning, everybody. Well, we — regarding real estate acquisitions, we bought a building in an auction, it’s a block and a half away from Casa Rosada, the national government headquarters. We bought it at a great price, less than $600 official dollars for each square meter. And it has a beautiful view to the park and to Puerto Madero. Actually, it’s walking distance to Puerto Madero. This part of the city is changing. It’s changing fast because there’s a highway nearby and now that highway is an under — an underground highway. There’s even a construction — two constructions actually of two premium residential developments nowadays in the area. If we review the investment in 200 Della Paolera, we have continued to sell 200 Della Paolera.

We invested a total amount of $112 million. Our revenue from sales has been $259 million, evaluation of remaining stock of $88 million that comes up to be — that’s $235 million of profit, 210%. Of course, we’re really proud of this — of this investment. Regarding sales, we have sold the Maipu building. The Maipu building was vacant. And that was an opportunity for us to sell it in block. It wouldn’t be easy to sell it one floor at a time. It’s a beautiful building, but in a downtown location that hasn’t recovered after COVID and may not recover for some time. Our first office building acquisition. You get a kind of emotional about it, but business is business. And it’s going to turn out being the main building of one of the most important universities in Argentina.

So, we’re happy for all of us. We also sold our stake in Quality. It’s, as Eduardo said, it’s a big plot of land with warehouses. We’re going to focus in developing and other kinds of developments, marketing, positioning, project funding, mainly better gain margins like Costa Urbana, we’re going to talk later, made us decide selling quality. We sold it at $20.9 million. And with $21.5 million upfront, these are hard dollars. Regarding Costa Urbana, on March, the cadastral authorities filed the approval of the cadastral survey plan. Also in March, the court issued the ruling out of the collective legal action. On April, the first drafts of the notarial deeds for transferring ownership to the city of the plot of land for the 37.9 hectares of public park and the three lots were handed to the government’s clerk’s office.

This is the second step in the process of creating the land registrations in the cadastral database of the city for issuing the titles of ownership and enable the user to sell and transfer the plots. We are working on the environmental impact assessment that has been submitted to the Environmental Protection Agency, and we will be holding a public hearing for its approval by the beginning of December. We are finishing the architectural and engineering documents of the infrastructure and public space project to be submitted to the city authorities by the beginning of October. We continued with the residential swaps this fiscal year, close to 3,900 square meters. Today’s total amount of square meters to be received is close to 8,900 square meters.

Now, Mati, our CFO, is going to continue with our financial results.

Matias Gaivironsky: Thank you, Jorge. Good morning, everybody. So, if we jump to page 16, first I would like to mention what happened with the macro-economy in Argentina in order to understand our figures. You can see in the center of the graph that inflation accelerated from the previous year to reaching levels of 116% compared with 64%. On the FX side, on the official exchange rate, we have an evaluation of 100%. That means that in real terms, we have an appreciation of the pesos of 5% compared with 20% of the last year. That is important to understand what happened with prices of our investment properties when we value the investment properties in our books and also to restate our dollar-denominated debt in pesos. On the blue chip swap side, on the MEP FX evolution, there was an evaluation of 93%.

That means 10% in real terms compared with 8% in the previous year. So, we’re going to see later some FX related to that. About our adjusted EBITDA, we can see a decline of 40% from the previous year from ARS59 billion to ARS36 billion pesos. This is related to three different things. The first one is the sales and development segment, another segment that this year decreased from ARS25.1 billion to a loss of ARS6.5 billion. The last year, we sold more than this year, so the last year was an extraordinary year in terms of sales. Remember that we sold the entire Republica building and we posted an important gain related to that. Also, during this year, we have two one-shot effects. One is related to salaries and Board member fees. And the other is related to a claim that we received from our investment in Israel that we discussed in December.

We decided to make a provision of around $23 million — was $20 million. We increased in this quarter to $23 million that is posted in the other segment. So, if we leave aside those effects, the more recurrent part that is our rental EBITDA increased by 25%, reaching ARS42.5 billion in this fiscal year. Margins are increasing. The shopping malls increased from 70%, almost 71% to 74.5%. In the office segment, here, we have the impact of all the disposals, so the fixed part now is a little higher than before in terms of margins. So, the offices went to 75% compared with 80% last year and hotels remain stable at 25%. So, related to those effects, we can see that the operating income, leaving aside the effect of the fair value of investment properties effect, is a reduction of 15% from ARS26.9 billion to ARS23 billion.

If we analyze the fair value of our investment properties here, we have a major effect with a loss of ARS49 billion compared with a gain last year of ARS29 billion. To understand here what happened, we have to see the evolution of the macro-economy of Argentina. Here, we are recognizing results in pesos terms, in real pesos. If we analyze what happened with the evaluation of our investment properties in dollar terms, it is stable in the three segments, in malls, in offices and land bank. We have probably almost the same numbers in dollar terms. But when we translate those dollars into pesos and because the devaluation was lower than the inflation, and here we are adjusting pesos by inflation, that is the main reason or the only reason why we are recognizing this kind of loss during the year.

Then we have two other significant effects on the — before the net income. One is related to the net financial results. We can see a decline. Both are gains. Both are gains. The previous year was ARS25.5 billion. This year is ARS15.5 billion. The main difference is related to the table below the graph, the first line, the net effects results that during the last year since the appreciation of the peso was much higher than this year. Last year, we posted a gain of ARS31 billion compared with ARS6.7 billion this year. We also reduced significantly our debt, so the combination of the major appreciation plus a decline of the debt explains that difference. Related to the net interest, we are reducing our interest payments. We can see there, there was a reduction from ARS16.6 billion to ARS11 billion.

And finally, the last line that is the fair value of financial assets, this is related to the evolution of different securities that we have to manage our liquidity that generated an important gain this year of ARS7.4 billion. The final effect is related to the income tax. We discussed that in the previous quarter or two quarters ago that was a positive effect that was generated related to some decision of the Supreme Court related to other companies that allow the companies to adjust by inflation, the tax credit and also recognize a positive result on the adjustment of the tax balance sheet with inflation, that generated an important gain for us of ARS66 billion. We decided to recognize the gain after we received or we saw the rule of the Supreme Court allowing the companies to do what we have been doing on the tax basis, but not on the accounting basis.

So now, we recognized that gain. So finally, with the net result, we posted a net result of ARS58 billion pesos during this fiscal year. So, analyzing what happened with our rental EBITDA, we are very happy with this evolution. We — now we have in the last 12 months EBITDA of some $167 million compared with $131 million pre-pandemic in 2019. About our debt. So today, we have our debt that is distributed in the coming years. It’s not concentrated anymore in a single year. This is much more tied to our own cash generation. So the net debt went to levels of $247 million. We can see here the evolution. There was a significant reduction from $755 million in the middle of the pandemic with all our malls closed to levels of $248 million currently.

So this is an LTV of 10%, a net debt to EBITDA of 1.5 times with a coverage ratio that is very, very high. So, we feel that this capital structure is very conservative and will allow us to keep growing. Remember that this is as of June 30. So after this, we sold Quality and we sold [indiscernible]. So the liquidity is still improving and our net debt will go down only with these two effects. Then as Eduardo mentioned, there is the call for our shareholders meeting to approve a new dividend. So related to that, we have the liquidity to pay the dividends. So this in terms of net debt will increase a little because of that, because of the dividend, but it’s still very, very conservative. Well, as I just mentioned, the evolution of the dividend payments, we can see on the graph that we decided during the pandemic and during the tough years to reduce our dividend to almost zero.

Last year, after refinancing all our debt and cancelling most part of our debt, we decided to be more aggressive on the dividend. We paid an important dividend of $124 million during the fiscal year. And for the new fiscal year, that is 2024, we just called the shareholders meeting to approve a dividend that will be important again. It’s in terms of dividend yield is around 15% dividend yield. So, this is an extraordinary and very significant dividend again. Also, we were very active on buying back shares. So, we did one program that we finished during the fiscal year. That was the first program of ARS1,001 billion. Then we approve a new program of ARS5 billion. From that program, we already invested almost ARS2 billion and we just announced that we increase the maximum price that we can pay for our shares to levels of ARS720 per share or $9 per ADR.

So, we will continue to acquire shares as part of this program. Also, one of the points in the agenda of the next shareholders meeting is the approval of distributing our own shares to our shareholders. So, we will distribute all the shares that are on treasury. That is around 1.7% of our stock. So with this, we finish the formal presentation. So now, we open the line to receive your questions.

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A – Santiago Donato: Okay. We start with the Q&A session. [Operator Instructions] So, well — first question here comes from [indiscernible]. We ask you for the case — in the case the country goes to a dollarization of the currency, if you think that is likely to occur. And how that could work in the country?

Matias Gaivironsky: I would prefer to answer the question on the business side. I don’t know if that will work for the country or not. I’ll leave that for the politicians. For the Company, we will have to adjust the agreements. At the end of the day. Real estate in Argentina were always quote in dollars. People think in dollars, the transactions are in dollars and prices were always fixed in dollar terms. So, I don’t see that as a major change. In terms of our revenues, both offices and hotels are agreements that are in dollars. At the end of the day, they pay the official exchange rate. So if we’re in dollars, we will receive the dollars. And related to our main cash generation, that is most our agreements are in pesos today tied to inflation.

It’s a combination between a fixed amount and a percentage of tenant sales. So if there is a change in the currency, I assume that inflation probably won’t be a major issue anymore. And so, our agreements should increase in terms of the tenant sales that will increase by the evolution of the economy. So, we don’t anticipate a major disruption, if we have a change in the regime in the monetary regime. It’s not clear yet what could happen and when it could happen. So it’s not a major concern for us today.

Santiago Donato: Next question. Can you give a little bit more color on the extraordinary compensation for the Board this fiscal year?

Matias Gaivironsky: Yes, this is a one-shot effect that is not related with just this fiscal year. Well, say that this was a three-year cycle where the Company were very active in many, many transactions. We sold more than $500 million dollars of assets. We simplified our corporate structure with the merge of IRSA and IRSA commercial properties, generating a huge synergy in terms of costs, payments, taxes, everything. There was also an extraordinary work related to the renegotiation and refinancing of our debt. We cancelled debt, generating a lot of value and at the same time, selling assets that help us to add a lot of value on those transactions. Also, there was extraordinary work in our own capital structure, acquiring shares and paying dividends for more than $150 million. So there was a cycle of three years. The increase in fees are related to that cycle. So, it’s one short effect related to that.

Santiago Donato: Here, there is a question related to the rationale of — well the split, it’s not a split of shares and when that is expected to take place?

Matias Gaivironsky: Well, the split is more a technical issue. I would say that it will take place in the coming days. We are waiting for the approval of the CMB, a final approval that probably will happen in the next days. At the end of the day, this won’t have any impact for our shareholders. Will be a change in the way that our shares trade, but won’t have an impact on — an economy impact. We did this in order to be ready or to pay more dividends. There was a smart way to have a technical issue that we have on our own, on the dividend distribution and because of that, we are changing that way that our shares trade, but won’t have any impact for our shareholders.

Santiago Donato: Here, there is a question. I think you answered [indiscernible] on the financing of the proposed — on the funding of the proposed dividend. Just want to understand the performance figures in terms of leverage after the dividend.

Matias Gaivironsky: Well, if we go directly, the dividend will be ARS64 billion. It’s not clear yet, if we’re going to pay in only one installment or in different installments. So, we will decide that between now or our shareholders meeting will decide that in the next month. So if we consider that the ARS64 billion in real dollars around $85 million, we have these proposals after the fiscal year for $24 million, $25 million. That means that we still have to resort to use other sources for $60 million. And the company today has more liquidity than that. So, we can use our own cash to pay the dividend, or we can use another sources, but we are defining that since now until the shareholders meeting.

Santiago Donato: What is your current assessment of NAV per share per GDS? Well, this figure will show it always expressed at the official FX. You’re going to see it in our presentations as of fiscal year ’23, this is $2.1 billion. It’s around $25, $26 per GDS, but this is all at official. So you have the problem here with the gaps on the dollars, but it’s a bigger just to have in an idea or in mind. I think the rest of the questions were answered in some way. If you have any additional questions, we give some minutes for additional questions. The Argentine macro situation. And looking forward to next year in 2024, how it will impact the business?

Matias Gaivironsky: It’s a little uncertain what could happen in Argentina. Next year, we have elections in the coming months. It seems that we will have a change in the regime. What we are happy to see the discussions behind the candidates and it seems that Argentina should enter in a new trend and a more normal situation where we have a lot of imbalances that should be corrected. We see probably a first trend to accommodate all relative prices that could impact on the economy and probably we will see a slowdown on the economy at the beginning because there are many, many things that should be corrected that will have an impact in consumption in some way. So we are analyzing that. Then the rest, I believe that the company is very well prepared in terms of our current capital structure to face all the changes that could happen in the economy.

We don’t know today what will be the currency. We don’t know what will be the proposals. But I think having the company with the lowest level of leverage ever, I would say is a good way to face what could happen in the future. And also the company is very well prepared for future expansion. We haven’t launched projects — big projects in the last years, so we work more in our capital structure, but the company is ready to grow. We have plenty of projects to launch. So we hope to see a normal economy. If we have a normal economy, the cost of capital for the companies will be lower, and we can speed up the process of new development.

Santiago Donato: Some additional questions regarding the dividend level, if this is recurring or there is an element on the tax decision from the Supreme Court that is boosting this dividend level is the tax gain and one-off?

Matias Gaivironsky: Well [indiscernible] I won’t say that this kind of dividend is recurrent. I would say that if we analyze the history of IRSA Commercial Properties, every time that we can pay dividends we pay, but we don’t want to say or to fix the dividend to a policy because of the volatility of Argentina. This year, when we analyze the next year CapEx plus the current debt, plus the current levels of liquidity, we feel comfortable to maximize the dividend to our shareholders. But in the future, the decision will be taken, analyzing all those drivers. Related to the tax decision, it’s not related to the Supreme Court, nothing. So we have the results. We can pay, and it’s not related to that order.

Santiago Donato: And another one from Alvaro from BTG. Why are you distributing repurchased shares and not canceling them?

Matias Gaivironsky: Well, this is something, Alvaro, this is — I don’t think that this is technical. At the end of the day, the consequences of the two is the same. Now we can cancel or we can distribute, at the end of the day is the same. I think we used to distribute all what we acquire is something that we did it in the past, and we are repeating. But it’s not — I think it’s more like something that we have been doing, that’s something that one alternative is better than the other. So we prefer to do this.

Santiago Donato: The last one, regarding the net debt after the disposals and the dividends, at which level it will be the target related to the leverage of the company?

Matias Gaivironsky: I would say that the current level of debt is lower than the optimal point. So after — as I said, we have to pay a dividend that is around — sorry, is around $85 million. We sold properties after the end of the quarter. for around $25 million. So let’s say that from the number that you are seeing there, we will increase debt for around $60 million — that is without accounting the cash generation or the rest of the cash generation that today, we are generating around $10 million per month.

Santiago Donato: Well, with this, I think we cover all the questions. We conclude the Q&A session and the presentation. We thank you very much for participating. And I will turn back now to Matias for his closing remarks.

Matias Gaivironsky: Thank you, Santi. Thank you everybody for your participation and your support. We are very happy with all the performance in the last years. We believe that — and we are very happy with the tremendous execution and everything that we did in terms of real estate on the financial side and on the operational side. So, we hope to see a normal economy going forward and see IRSA growing again in new projects. So thank you very much, and have a good day. Bye.