Alejandro Elsztain - Second Vice President Daniel Elsztain - Chief Operating Officer Matías Gaivironsky - Chief Financial Officer.

Jonathan Rosenthal - Newfoundland Alejandra Aranda - Itau.

Good morning everyone and welcome to IRSA’s First Quarter 2016 Results Conference Call. Today’s live webcast, both audio and slide show, may be accessed through the Company’s Investor Relations website at www.irsa.com.ar/ir by clicking on the banner, Conference Call.

The following presentation and the earnings release issued last week are also available for download on the Company website. After management’s remarks, there will be a question-and-answer session for analysts and investors. At that time, further instructions will be given.

[Operator Instructions] You will also have the option of sending your question via webcast by clicking on the question to host tool. 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. Alejandro Elsztain, Second Vice President. Please go ahead, sir..

Hello. Good morning, everybody. We are beginning our conference call of the first quarter of 2016. If we go to the first page, we can see our main highlights for the quarter. The revenues from sales lease and services for the year were almost ARS 730 million, 21% higher than last year.

The EBITDA of the Company was almost ARS 780 million, 14% higher to last year numbers. The net income went to a loss of ARS 316 million compared to a again of last year of ARS 135 million. The mall business, the shopping centers industry, we achieved a growth of 37.8% comparing to last year numbers to a number of ARS 420 million.

The office segment to ARS 48 million, it’s increase of 581%; this is because we transferred the business -- it is not comparing year-to-year, it’s actually the same because we transferred in the middle of the year, the office buildings to the Company and that’s the reason.

The mall tenant sales increased 44.5% but if we compare exactly the same-store sales was 36%. This is because of the entrance of the two new shopping centers, the Alto Comahue and Arcos. Office leases remained stable at the level of $25.3 per square meter. We had a gain on the sale of the investment properties for ARS 156 million.

We sold almost 6,000 square meters of Intercontinental Plaza building. The levels of occupancy in both businesses are still high, 98.9% in shopping, 96.4% in office buildings.

As to the balance sheet, this is after the 30th September; we had the sale of Maipú building for $3 million paid outside for a gain for ARS 25.6 million to be recognized in next quarter.

In the case of IDBD, our partner Extra Holdings sold its investment, IFISA was the buyer increasing the stake for 31% increase remained at 49% resulting and we have the changing valuation because of the cost and because of the lawsuit we had.

And now Matías is going to explain why we recognized ARS 660 million lost in the recognition of that change of valuation method. I will introduce now to Daniel Elsztain, our COO, speaking about Commercial Properties..

Thank you, Alejandro. Good morning everyone. On page number four, we can see our strong operating figures, on the top of the page. Shopping center sales, our tenants were doing very well in this quarter. We see an increase of 44.5% increase. The first effect is because the inclusion of the two new shopping centers.

If we compare same-store sales, we see an increase of 36.3% that’s big increase. And the first comment I can make is because we are comparing the last year quarter, we have the low base. On top of that we have very good sales and the electronic consumer appliances also had peak, they were not coming so good.

So, that is explaining basically why it increased in sales in our shopping our centers. We also see, on the bottom of the page, we see that we increased our stock by inclusion of these two new shopping centers for about 23,000, 24,000 square meters. And our occupancy is a little bit up, went to 98.9%.

So stock is up, occupancy is a little bit up, sales went up, and we also increased business [ph] of course because of the inclusion of the two new shopping centers. On the next page, we can see our today existing development of the second phase of Distrito Arcos Premium Outlet.

As you remember, we opened during this year the first phase and we’re very happy the shopping is performing very well; actually it’s performing better than expected. And we are going to finish, during this fiscal year, the second phase, the total approximately investment is about ARS 74 million with an expansion of about 3,500 square meters of GLA.

And the development is in progress. We already signed agreements for the tenants of our 60% of the tenants, [indiscernible]. And everyone is very -- at the high expectation on the opening because this is really the conclusion and the shopping center is doing very well. As you remember, this is our flagship and premium outlet shopping center.

So we believe, this is a good model and we have a lot of things to do. Also we often the museum of photography [ph] in the shopping center in the second quarter and it’s a museum, we owe the cities. We had a commitment to do some cultural events and the shopping center is doing very, very well.

On the next page, we will see small expansion and this is just an example of what we’re doing in our portfolio.

When we see a shopping center that is performing well and we have availability of square meters to grow, we do it -- we are growing on Alto Rosario shopping center in the City of Rosario, we’re having an expansion of 650 square meters of GLA, its CapEx of ARS 15 million.

This will be finished its construction by the middle of next year of 2016, maybe even before that. And we already have agreement signed for the 100% of the new stores that will be opening in this shopping center.

On page seven, speaking about the office industry, IRSA Commercial Properties today is running, I mean we are not comparing with the previous quarter, because the previous quarter we only had one building, so it’s not really to compare.

But we can say today the occupancy on our shopping, sorry in our office building is 96.4% and our monthly leases are about 25.3%. Well we are seeing its’ a trend that the rent is going a little up, we’re pushing rents up, as the market is pushing rents up.

And the big figure, we can see that the prices on selling office building really changed the trend during this year. During 2015, we see that the prices were going down, not much, we’re talking about record prices compared with the part of Argentina market, but the trend now changed and is going up again.

As an example, we sold, and Alejandro mentioned, we saw Intercontinental Plaza building, we believe about 6,000 square meters sold for ARS 324 million that is second floor at about $5,800 per square meters at a 5.2% cap rate, which is -- I mean it’s very low for the Argentine past history of selling office buildings.

On page number eight, this is what we could grow at the IRSA Commercial Properties level. We have a portfolio of 334,000 square meters of GLA in shopping centers. We have SAR on the shopping centers to grow almost 1.7 times.

We could go to 567,000 square meters in both, being new development and expansions on the current shopping centers and which I show you, our [Technical Difficulty], Rosario, we’re starting to do that process, because it’s the low hanging apples that we can create value in our portfolio, on the -- as I said Rosario and Arcos, both.

On the office buildings, we also have today portfolio of 80,000 square meters of GLA and we could grow with today’s existing land, this is not by any single new acquisition; we could almost double the size of our office portfolio. Now, we’re going to talk, I mean on page number 10.

We saw already what IRSA Commercial Properties has, shopping centers, office buildings and available land bank to growth, the rest, the other diversified assets that IRSA whole has is hotels.

Hotels is a very small piece in our portfolio, occupancy was very similar to last year; RevPAR was very similar to last year but the exchange rate is not helping this business. So, we see that expenses went higher, went up more than revenue. And the income was a little bit below our expectations.

Nevertheless, this is a very small component of our portfolio. We do believe that the future movement on currency will help this business and the trend in value of rooms -- I mean price per key trend will start to go up.

Also in IRSA, we still have a very big land bank, us being prepared working to get permit and working on the land bank to make and create value on the land bank. Also we have under reset international segment. First of all -- I believe that we will speak later; we still have Condor Hospitality Trust and the listed buildings here.

And the last piece is Banco Hipotecario which IRSA owns 29.99%. This is a sale that occurred after the close of the quarter but we inform about its sale. We had a sale of $3 million that was paid across the country.

This is a total of about 864 square meters, two floors above it with four parking lots and the price is about $3,500 per square meters that’s the 5.5 cap rate. And we recognized the gain about ARS 26 million on the sale. This building belongs to IRSA. We only have now remaining 2,000-2,100 square meters and this is held for sale.

On page 12, we could see the international opportunistic investments. The listed building is performing very-very good. When we bought it and we started to operate in 2013, it was 86% occupied; today it’s about 95.5% occupied. The rent is going up.

The average not that much because the majority was still all listed but the new lists are really very good numbers in 80s or maybe going across the 90s on the top of the tower.

On Condor Hospitality Trust, it was a change in name, was renamed from Supertel Hospitality to Condor Hospitality as its new management; there were appointed CEO, CFO and new CAO that have been taking place for the last five-six months and this is really big change.

They’re having trials -- they check on selling very small economic segment hotels and moving to select service hotels that achieve better margins and they have various scales to operate. Now, I introduced to Matías Gaivironsky, CFO of the Company..

Good morning, everybody. Going to page 13, here we have the description of our investment in IDB. The latest development on IDB were the acquisition from IFISA of our former partner Extra, so nowadays Dolphin controls 49% of IDB; IFISA controls 31.7% of IDB.

Remember that if IFISA is the parent company of Cresud where our Chairman, Eduardo Elsztain has his stake on the company and other control 19.3% of IDB. In the bottom right of the page, you have the commitment and the investment that we did so far. We have commitments for the rest of the year, 2015 until December.

We have underwriting commitment of ILS 200 million. So, this week we are discussing the terms and conditions of the instruction, probably will be a rights offering that will be offered to the market and then we will have the underwriting as public doesn’t participate, so we are discussing that in Israel this week.

So, today I can’t give you more information because developing that are happening right now. The tender offer obligation, we have the obligation to launch tender offer for ILS 250 million by the end of this year and ILS 262 million by the end of the next year.

There is an important development around this tender offer obligation; there was a presentation in the court from the arrangement practice of the former bankruptcy process on the parent Company of IDB, it’s IDBH. Remember that when we enter, we enter through a bankruptcy process.

And the main issue was that the arrangement trustee present a clarification of who has the right to participate in the tender offer. So, we have a decision from the court, it’s a first instance decision that the court said that the only participants of those tender offers are the minority shareholders. We appeal that decision to the Supreme Court.

We believe that part of our share has the right to participate in those tender offers. So, we went to the Supreme Court to discuss that. But according to the first decision from the judge, we have to change our valuation matters on the shares of IDB. So far, we recognize the value of IDB according to market matter.

So, every quarter, we -- the amount out of shares that we have multiply by the price of the shares in the Tel Aviv Stock Exchange. So it seems that today instead of having only one class of shares with only one price, this decision create in fact two classes of share.

So now, our shares have different rights or appeal that has different rights under it. So, we have to create our own valuated matter on the shares. Basically, what we are using is to analyze the value of the shares -- the implicit value of the shares deducting the tender offer obligation. So, we will have our own valuation matter so far.

So, that creates a loss, and increase in our ILS 410 million against the previous quarter. So, we recognize as an additional loss due to this change in the valuation method.

So today, our investment is recorded as of September 30, 2015 to ARS 1.375 million and we have the tender offer obligation, the 50% of the tender offer obligation for ARS 516.6 million. Going to page 14, there is a description of our investment in Banco Hipotecario.

The investment generated ARS 68.8 million; it’s 58% higher than the previous quarter of the last year. And our market value of the investment in Banco Hipotecario totaled $203 million. Remember that we are not recognizing mark-to-market in the valuation, we have the equity matter, but here is the description of the financial value of the asset.

Going to page 15, this is the breakdown of financial results of IRSA Commercial Properties; this is not on a consolidated basis on IRSA, this is IRSA Commercial.

So, as Daniel described, revenues increased very well in both, of course in offices, because we have different portfolio than the previous year; and in shopping center that is comparable, we grew 37.4%; the same in EBITDA, 37.8% in shopping centers and offices, 581% that is inclusion of the rent of the office assets.

EBITDA margin month-end similar levels in the shopping centers, very good level 78.8%; in office it’s 77.3%. Here we start to allocate different cost of IRSA Commercial Properties in the two segments, so now we are allocating more cost to the office segment. So that is the reason of the decrease in margin.

EBITDA breakdown this quarter, we have probably an extraordinary gain from the sales of assets. We saw that the asset -- there some floors in the Intercontinental Plaza building that create an extraordinary gain. So for that reason, the sales and development increased to 23.9%, but shopping centers remained a main important part of the portfolio.

Also, IRSA Commercial Properties declared a dividend in the last shareholders meeting for ARS 283 million that is dividend yield of 2.4% that will be paid next week on the 17th of November. Going to IRSA consolidated results. Here we divided between the rental segment and most part came from IRSA Commercial Properties, increased 27% from 321 to 408.

Sales and development increased 13.9%. Last year, remember that we sold Madison building that generated ARS 307 million gain. In this quarter, we sold mainly the assets from the Intercontinental Plaza that part was recognized at the level of IRSA Commercial Properties and part at IRSA level.

Remember that when transfer assets from an intercompany like IRSA to IRSA Commercial Properties, we don’t recognize any gain, so only we recognize gain when we sell to third parties. So now that IRSA Commercial Properties sold to third-party, IRSA also recognize a gain at the standalone basis.

Others international and financials, here we can see a decrease from 11.2% in the previous year, that mainly was Madison and we recognized rent from Madison that this year we don’t have the building and also we have higher expenses at the level of international, that is mainly the cost associated to IDB.

Going to page 17, as I just explained, all the operational results, we have an increase from ARS 640 million to ARS 724 million. The results of associated and joint ventures, here we have mainly the big difference that is mainly the decrease in the valuation of IDB, the ARS 400 million of loss.

Then the net financial results, here we don’t have further valuation, so the valuation of this year compared with the previous year was almost the same, 3%; interest cost was almost the same. So, the main difference between the two years, are the valuation of Supertel, now Condor that is we are recognizing according to the market.

And there we have a decrease in the price of the shares, so that generate a loss of around ARS 200 million when you compare with the previous year.

The previous year we recognized a gain of ARS 100 million; this year we recognized a loss of ARS 100 million, so the difference is ARS 200 million and also we have a difference in valuation of bonds that we used to have in portfolio, so those are the main difference in the net financial results.

So with that, we finish this quarter with a net loss of ARS 316 million attributable to controlling shareholders is a loss of ARS 275 million and non-controlling interest ARS 40 million, against a ARS 135 million of the previous year. Going to the page 18, here we have the breakdown of our debt.

Remember that the use of standalone basis, we have the two international bonds but also we have the credit from IRSA Commercial Properties from the asset sale. So, IRSA Commercial Properties owe IRSA $246.4 million that maturities that we have in 2017 and part of the 2020.

And at the IRSA Commercial Properties level, the net debt is around ASA 454 million and net debt much lower than that around ARS 311 million. And we are starting the market and we see an opportunity to restructure and extend amortization for 2017 and replacing intercompany loan with the market is something that we plan to do during the next year.

So, with this, we finish the presentation. So now, we are open to answer your questions..

And the floor is now open for questions. [Operator Instructions] Our first question today comes from the line of [indiscernible] from Morgan Stanley. Your line is open..

So, on IDBD, as I understand and the way the new valuation methodology works is that you’re taking the market cap and then you’re subtracting the value of the tender offer obligation and value that tender offer obligation is based on the methodology that you’ve created.

Am I understanding it correctly?.

Yes, you simplified a little; it’s a little more complex that because there is no clear price of the tender offer. So, we have to start with the valuation of the shares and try to deduct the pool option. In that methodology, we are using a scenario.

Basically the part of the put we are using Black and Scholes but then we apply different scenarios and chances for each scenario. So, we still have 50% chances that we will be succeed in the Supreme Court appeal in that valuation method. But yes, you described it well the idea.

But then to give you an idea, we are recognize that the price of the shares around ILS 1.2 per share while price of the share today is ILS 2.2..

So net, it’s about half of the value almost that will be in the tender offer?.

Sorry, can you repeat the question?.

We can follow up later with the details. I also had another question on the potential development pipeline for malls. So, in your presentation you say that the potential development pipeline for the malls could CGLA double for this portfolio.

I was wondering when would you expect these developments to start taking place, and what returns either IRRs or yield on cost are you targeting?.

As you probably know, it’s changing every week and Argentina now is in very much enthusiastic mode because the election is coming. We expect the decrease in the cost of capital of the country. So, this will allow us to speed all of our growth in our existing and new shopping centers.

So, we are now probably presenting the next -- you know that always we present when we launch, not before. Now, we are discussing one project in Dutch [ph] that probably will be third of an expansion.

So, we are looking for internal rate of return surpassing 10% and we are expecting the decrease on the cost of capital for the country for increasing the speed for our expansions..

[Operator Instructions] And our next question comes from the line of Jonathan Rosenthal from Newfoundland. Your line is open..

Hi guys. How you’re doing? I was going through some Israeli head buy-ins and [indiscernible]. There are actually three bidders for the insurance asset at a substantial premium to at least existing market prices. What I’m wondering is I think the three bidders are Chinese.

And in light of that, will this affect the timing of the closure of this transaction, because the way I interpret it is if you’re able to sell a stake, this will pretty much ring fence future cash needs for your Israeli investment. So, if you could give us any color on that, to the extent that you can, that would be most helpful. Thanks..

Yes, it’s true that there are three offers. There is a process that is in place now. Today, we are not controlling that process or there is a trustee that is managing that disposal. There are three offers that came as far as we know from Chinese companies. So, there is a process of the additions right now.

So, we can’t assure the timing for the transaction. There is -- the regulator has to approve in Israel any kind of acquisition of an insurance company. So, there is some steps that should be covered. In terms of the pricing yes, the price is much higher than the price of the share today.

The shares are trading at the market cap of around ILS 3.2 billion; the offers are around ILS 4.5 billion or more. So yes, they are significantly higher than the market. But we don’t control the timing of the process. So, the process will be managed by the trustee and there are some legal stages that we will monitor of course..

And then one other kind of head buy then I’d like clarified that IDB development is more in the replacement of the share offer with the bond sale. And I guess the company’s holding talks with bondholders currently.

Who is in-charge of these talks as well? Is it the creditors or who is representing the company? And how is this possible, if kind of you guys already committed or the company is already committed to issue equity.

I mean what’s been it for the bondholders to replace the share offer with more leverage, more debt?.

Okay. I will try to answer the question. There are things that I can’t comment, because….

I know it’s not a fair question, I just -- any incremental clarification helpful..

Yes. As I described we have a commitment to launch the tender offer and we have an underwriting commitment of the offering. Mainly why we give the underwriting commitment is because the company needs the money before the year-end of ILS 200 million. So, part will go to pay debt, part will go to exercise warrant on BAC.

So, it’s ILS 100 million each, more or less. If the company has the money and they don’t need the capital increase, probably they can decide not to issuing equity. So, if they have another sources like what you described, if we should more debt or the company needs money, probably they can replace the capital increase.

There are some negotiations around the tender offer obligation. And there are some -- there is a claim in the justice we appeal in the Super Court, so there are some developments around the tender offer obligations and there are negotiations around that. It’s the only thing that I can comment.

But if the company -- regarding who participates in that negotiation is not any obligation from the company, the tender offer is an obligation from Dolphin, so people from Dolphin are in-charge of the negotiation and its with the arrangement trustees.

And how will be the approving process of that is more uncertain, because there are third-parties and probably they should approve or should verify any agreement that we reach with arrangement practice..

Our next call comes from the line of Alejandra Aranda from Itau. Your line is open..

I have three questions if I may. First of all, I would like to know how you’re seeing commercial dynamics evolving next year, especially given that we saw your tenants going up on the shopping malls.

If you could tell us a little bit of what you’re thinking and with your relationships with the tenants what they’re viewing, especially if you could elaborate between differences that you may see between first half and second half of the year? Then my second question would be on other projects or segments that you’re seeing in Argentina specifically.

I know you’re coming out with a bond on Hipotecario right after the elections.

So, if you could comment on other opportunities that you’re seeing? And the third, back to IDBD; is there a timing, for the Supreme Court ruling?.

We’ll start with the projection for next year. We still don’t know what will happen in terms of pricing from our tenants if the valuation happens. And that will trigger -- we mentioned sales in terms of pesos sold. So, we don’t know what’s going to be the main effect. So far, we have not seen -- after the quarter, we have not seen any big change yet.

And we also think a trend of international retailers, the big retailers coming to Buenos Aires asking us for potential locations. So, there will be a mixture. At the end, we don’t know. Whatever happens will happen in the first quarter but our shoppings are very stable and we’ll follow the trend of the market and the macro-economy of the country.

In terms of the projects, we are producing a lot of cash, the company is a cash producer and also we have opportunities on the market which leverage the company and we did it recently and we can keep on doing, if the opportunity comes.

And as Alejandro mentioned, we have many-many opportunities that we still have in our portfolio and opportunities to buy. We are not announcing because we have not made any decision yet but as you know us, every time we see the opportunities we try to take them and we know how to take them.

And regarding IDB, Matías?.

Regarding the Banco Hipotecario, the offering, there is increasing confidence from Argentina I think from the investors. Banco Hipotecario has amortization next year and they are trying to replace the bonds in the market. So, they announced the transaction to close after the elections.

There is -- probably it’s more a question for Banco Hipotecario regarding the timing. But what I can comment from here is that we see an increasing confidence from the investors and people that are asking for good quality credits to invest. So, we start to be confident on that trend in Argentina.

And there is one of our projects for the next year regarding our debt, so this is something that we will try to do next year. And regarding the timing of IDB, Supreme Court decision, the justice in Israel is really fast.

So there we have an audience probably next -- probably there the first date of December but I can’t give you exact date because we don’t control. Probably they will try to rule before the year-end that is the day that we have to pay and launch the tender offer..

Just one on the project side on a more general topic, is there anything that you’re -- any sector that you’re finding more enticing or that you think -- that you’re thinking more of or just you’re signing the same wait and time to every single sector?.

We are probably trying to do both, you know that we were selling some of our office buildings and now we are thinking on client to quality [ph] because there are some projects they’re yielding very well. And so we are going probably to be launching the office buildings and the shopping centers at the same time..

Thank you very much,.

Thank you very much gentlemen. Operator, I think we have to leave. We have another conference call very soon. Thank you very much to everyone. This is the time of changes in the country. The elections are very soon. The country is under a lot of eyes that they’re looking for opportunities. We expect the real estate to be very strong.

We expect to be building a lot for the next quarter. So, thank you very much for everyone and have a very good day..

Thank you. This concludes today’s presentation. You may now disconnect your line at this time. And have a nice day..