Good morning, everyone. I’m Santiago Donato, Investor Relations Officer of IRSA, and I welcome you to the Third Quarter of Fiscal Year 2022 Results Conference Call.

First of all, I would like to remind you that both audio and a slide show may be accessed through company’s Investor Relations Web site 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 Web site.

After management remarks, there will be a question-and-answer session for analysts and investors. 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. Please go ahead, sir..

Good morning. It's a pleasure to share with you the main events of the third quarter of the fiscal year 2022. We are just going ahead with the merger with IRSA CP, it's successfully advanced, and we are very happy with that.

It's a transaction that we've been thinking for years, but after so many years of thoughts we implemented, and after the shareholder meeting, and with no objections by the SEC and theComisión Nacional de Valores, next step will be the exchange of shares of the two companies.

So, that's a real achievement in all sense; management, directorships, less companies listed, rationales in taxes, it brings all the goodies. On front of the rental, we have been seeing a big -- very good recovery in shopping malls and hotels during this period.

With higher revenues and better occupancy, the tenant sales have improved more than 20% in real terms, compared to pre-pandemic times. And we are very happy to see the flow of people. I mean, we have to see that in the two years of pandemic, we have many, many month the shopping centers closed. I think that's very, very good news.

And also to see the fully booked; this is a very good feeling. Regarding to assets, I think it's been a fantastic time, the last quarter. Sales and development, we sold five floors of the Della Paolera building, the new building we develop in the neighborhood of Catalinas, we sold them for more than $52 million.

And, in April, we also sold 100% of the República building in block for $131 million. And that's -- I think it comes in the next quarter, but it's showing the liquidity of the assets that we've been accumulating over the last three decades.

On the financial front, we launched, in March 2022, a share repurchase plan for up to ARS1 billion, and we already achieved the repurchase of 7.3% of the program. We think if we compare at the price we are selling in the market compared to the value of per square meter in the company, we are really re-buying at a very large discount.

So, this first three quarters of the years, we achieved a lot, with the merge, with Costa Urbana, with the sales of real estate units.

And I think that many, many good news in an environment of shaky markets and shaky world, I think that my perception of Argentina is very positive for this year, to start, especially because of the incredible low leverage Argentinean people. I always repeat that we have less than 1% of debt-to-GDP in all our portfolio of real estate of the country.

We achieved a very long-term refinancing and very low interest rate for the country, which is part of the pandemic low interest rates. And I think, after the world printed money enormously, I think that what we are seeing now is the cycle of inflation. And in inflation, the only thing that becomes very big demand is the real assets.

And in that, I think the commodity is number one. And as Argentina is a producer of commodities, especially agriculture, I think that the cycle is very positive, and Argentina is between the few countries that will have a benefit of this year in growth of GDP because of this effect.

Thank you for joining this conference, and I leave you with Matías, who will give you all the details in respect to accounting. Thank you very much for joining us..

Thank you, Eduardo. Good morning, everybody. So, if we move to page three, we can see the recent developments on the merge approval status. We just finished with all the legal steps, so the public -- the public register, here in Argentina, has just inscribed the merge. So, now, we are in conditions to do the exchange of the shares.

So, probably in the next two weeks we will fulfill all the steps to exchange the shares and the list IRCP from Nasdaq and Buenos Aires Stock Exchange, so IRSA will remain the only listed company, as the main real estate company for Argentina.

The total outstanding shares will be 810 million shares plus the warrant, so this will be finished in the next two weeks. Now, if we move to the operating side, we can see very good evolution in shopping malls, after two years of crisis because of the pandemic. Now, we start to see the recovery of the industry. We are happy in terms of occupancy.

We are seeing better numbers than the previous quarters, and the evolution of very good. We hope to see better numbers going forward. You will remember that we have three big spaces empty because three companies left Argentina or closed their operations; Falabella, , and Walmart.

And we are occupying all those steps -- all those spaces, so we see a very good evolution in occupancy. And mainly in real sales -- sales in real terms adjusted by inflation, we are surpassing previous quarters.

So, of course, the last years, because of the pandemic, but also when we compare with the quarter of '19 -- the same quarter in 2019, we see a 21% increase in real terms. So, if you see in the bottom-right, we see the evolution from 55% below, the last quarter was 7.6% above, and now 21%. So, we are very happy with that evolution.

In the next page, we can see the expansion of Alto Palermo. We have been disclosing this in the last quarters, but last quarter we already opened most of the new spaces. Now, we expect to open the final part, the food hall in the next quarter, that we already commercialized that space. And we will open a new concept of the traditional food court.

And now we modifying in a food hall with more services. And then we will close the old food court, and renew that part with new stores. So, we are happy with this. The occupation is fully occupied, all the new space. So, we see this as a very successful expansion of our -- one of our main shopping centers.

In the case of the office buildings in the next page, we see the reduction of the portfolio because of the disposals that we did in the past quarters. And in this quarter, we sold some floors in the Catalinas building, that we will explain in the next page, and also the República building.

So, we expect to finish the fiscal year with 83,000 square meters. And we are happy on the performance of the disposal. Now, we are selling at very good prices. You know that we are active in our portfolio. Our strategy is not just to accumulate square meters, and if we see good prices to sell we will do it.

In terms of occupation, remain stable in the AAA and A category, and in the B category we are suffering a little more, the new trend in some areas of Buenos Aires.

We have one building in Downtown Buenos Aires that is empty, so that 30% reflect that building, and also our building in Philips, close to Dot shopping center, in terms of price per square meter, remained stable at $25 per square meter.

So, if we see in page seven, and we believe that is the most important in the strategy of the offices, we have been selling a lot. In this quarter, we sold five floors of Della Paolera building at the official exchange rate $8,800 per square meters.

Here, one metric that we will like to see is that we sold, so far, 11 floors of this building for $110 million. And when we see the cost of construction plus the cost of the land, that number is exactly the same, it's $110 million.

So, we remain with 18,000 square meters, that if we see at the average price per square meter that we have been selling, that was $8,300 per square meter, that give us like $150 million more of value above the cost of construction. Page eight; we see what we did in the case of República building.

This was one iconic office building in the Downtown or in the area of Catalinas we sold in block all the building for $131.8 million. From that number, $105 million we collected in cash. And 20% would receive a plot of land between Buenos Aires and La Plata is 20 kilometer away of the city of Buenos Aires of.

And so, we have now this plot of land with a construction capacity of more than 500,000 square meters that we can develop a mixed use project. So, this is new for us. We are studying what to do in this plot of land. So, probably in the next quarters we will give more details on our plans. But, we saw the opportunity to sell all these building.

It’s an iconic building. It’s a very good building, but it’s little old. So, we believe that we can replace that surface in a new building probably with a construction cost lower or replacement cost lower than the disposal. So, we thought that this was a good opportunity to sell.

And in the next page, in page nine, we see the one of the latest acquisition. So, we have been selling a lot during the last two years. This was an opportunity to acquire something. This plot of land is a building in front of Alto Palermo, one of our main shopping centers that was sold by the City of Buenos Aires was an action -- was an auction, sorry.

And, we decided to participate and offer $20 million at the official exchange rate for that plot of land that consist in a building with 8000 square meters. We have capacity to expand this building.

And probably our idea is to replace these with a mixed use project, probably will have some retail in the basement and -- in the main floor and offices above. This is an area that we know very well. And we have in front Alto Palermo, so we will have probably some synergies with the shopping. So, we are happy with the acquisition.

The price per square meters that we paid, we think is attractive. So, we hope to see a development going forward. Something important to mention is that in the auction one of the conditions was to give a rent or give free-of-charge for the use to City of Buenos Aires for 30 month. So, we will receive the property in 30 months.

We can’t just start construction right now. So, we will have to wait. So, probably in that period we will develop the plan and decide exactly the project. On Page 10, we can see our hotel’s operation. After the pandemic, that was a disaster for us. We start to see a recovery mainly in the Llao Llao hotel.

So, the Llao Llao was in some remodeling work in rooms. So, leaving aside those rooms, we have 90% occupancy in Llao Llao, so that is very, very high. Llao Llao is performing very well. And in terms of overall occupancy, we can see the 35%, still some lag in the Buenos Aires hotels. This is mainly hotels for business tourism.

So, those are lagging a little more. But, Llao Llao is performing very well. So, if we go to the financial side Page 12, we can see we are finishing the nine-month period as of March. We are finishing with a gain of ARS11 billion compared with a loss of ARS22.8 billion of the previous year. The previous year was affected by the pandemic.

In that nine-month period almost six months our shopping centers were closed. So, it’s not a good comparison. If we compare with the previous one in nine months of 2020, the loss was ARS9.2 billion.

If we analyze the main drivers of the net income gain, we can see the main effect in line four, the change in the fair value of our investment properties that I will explain in the next pages. But there we can see a negative effect of ARS11 billion in this fiscal year, this fiscal year '22.

And if we see during the quarter, in the first column, we see a net negative effect of ARS37 billion, so that it was very important, and I know we'll explain the reasons. Here something else to mention is the net financial results that we see a positive result of ARS9.6 billion.

And also something important is then income tax, we are seeing for first time in many, many quarters, a negative result in the current taxes of ARS5.9 billion, this is related mainly to the inflation adjustment on the tax side that is generating a negative result. We don't believe that this tax will be effectively paid in cash.

So, we are thinking in different strategies and probably as we did in IRSA commercial property that is disclosed in our financial statements, probably we will go to the justice and ask not to pay that in cash. We basically, we have tax credits that are historical, and with levels of inflation of 60%.

We believe that the company has the right to adjust that tax grade by inflation. So, we will probably work on that in the coming quarter.

So, if we go to next page, something important to understand these numbers is to understand what happened with the FX and the inflation, FX during the year that evaluation of the Pesos at the official exchange rate was only 16%, when the inflation index was 40%.

So, in real terms, we have an appreciation of the Peso of the official exchange rate and also about the Bluechip swap in the dollar map we can see that the evaluation also was 16% with an inflation of 40%. That means the map in real terms also declined 17%.

To understand the effects of that, all the assets that the company has that are broadly dollar denominated assets, but when we have to express that in Pesos, since we have an appreciation of the Pesos that is generating losses, so on the size of the assets, this effect generate losses, but on the side of the liabilities, where we have dollar denominated debt that generate profits.

So, that is the line of the change in the fair value that is in Pesos term is decreasing, and in the debt is increasing. In terms of in real dollars, we see their portfolio stable. So, when we value these in dollar terms during the year, we see a slight appreciation in the shoppings, stable in offices.

And then we have the revaluation of course the one other that we did in the last quarter that generated a profit in dollar terms. When we go to the adjusted EBITDA, more the main driver, the operational driver, we see in the shopping malls and a strong recovery during the quarter and during the quarter of 72% in the nine months period of 147%.

And we still lag pre-pandemic level, the pre-pandemic level is we are 12% below in offices, we see a decline. This is more related to two drivers, one the reduction in the stock and the second one that this segment generates profits or revenues tied to the official exchange rate.

And when we compare that with inflation that is lower, so concerning that, we've generated more or less the same rent in dollar terms, in Pesos term is lower now when we adjust the previous quarter by inflation. In the hotels, we also see the recovery during the three months and the nine months.

And I still lag the nine month period where the hotels in the city of Buenos Aires perform much better than what is performing now. Sales and developments here we have the realization of the responses of the offices.

So, they were the quarter we have the impact of the five floors that we sold in Della Paolera and in the nine month period when we compare, we have also in the previous year, we have the effect of the two buildings that we sold. Remember that we sold some building and the 50% of the Boston Tower.

Going in a little more details in shoppings and offices in the next page, we can see in dollar terms, what is the evolution of our EBITDA, the company's recovering good levels of cash generation during the last two quarters we generated $25 million in each quarter. So, that is more than the pre-pandemic levels. So, we are happy with that recovery.

In the offices here we have more breakdown on the comparison between the last year and this year and the different drivers that generated the decline. Part is the square meters that we sold, part are the new square meters that we have in Della Paolera. Some is related to vacancy and a little related to their rent price.

Then in page 16, we have the net financial results as I mentioned, the final line is ARS9.6 billion of gain and the main effect is in Line 2 that generated in during the nine month period, ARS10.7 billion of profit. That is the net exchange related to our dollar denominated debt that we expressed that into Pesos generated a profit.

In terms of the interest losses, we are seeing lower numbers here related to the decrease in the leverage that we will see in the coming pages. But the company is reducing leverage. So, we will reduce also our interest burden going forward.

In page 17, we try to show here the net asset value of the company of course, with all the distortions of the FX, is sometimes it's difficult, but this is all information related on our financial statements. So, this is how we show or how we value all the properties in our books and dividing by the official exchange rate.

So, this is Pesos on our books divided by the official exchange rates. So, sometimes investors do some adjustment because of on, how they value the assets in real dollars. But this is to give you, how we construct this number is using all at the official exchange rate.

So, we can see that the gross asset value of the company remain at a levels of ARS2.3 billion with a net debt decreasing to $445 million at official exchange rate that give us a net asset value of $1.8 billion at the official exchange rate with an LTV of only 19.6%.

As Eduardo mentioned at the beginning, we launched a buyback program for ARS1 billion.

Here we have some limitations in terms of the size of the program and how fast, we can go and acquire some limitations because of the rules of the CMB that allow us to buy up to 25% of the volume of the last 90 days, but we believe that this is a good deployment of cash, we are buying back shares that implicitly has a value per square meter much lower than what we are selling every time that we sell any property of the portfolio.

Finally, in page 19, we have the evolution of the net debt. I remember when we launched the merge, we gave some sort of soft commitment to reduce the leverage from 570 to 470. So, we already surpassed that. We have now a net debt, as of March, of $447 million, that is a 40% reduction from levels in 2020.

And also, as I mentioned, we sold the República building for $100 million cash, so this number, going forward, will reduce more to levels of $347 million, and probably we will see more disposals of -- the company will continue to deleverage strongly. So, this is the consequence of the disposals that we are doing.

The amortization schedule remains challenging. We have the main amortizations in -- during the next fiscal year, so we will work in order to extend the tenure of the debt going forward. So, with this, we finish the formal presentation. Now, we open the line to receive your questions..

Well, let's start with the Q&A session. We have some questions here in the chat.

Can you please clarify the breakdown of EBITDA in dollar terms in the quarter and last 12 months? Sorry, I will repeat the question; can you please clarify the breakdown of EBITDA in dollar terms in the quarter and last 12-month?.

Yes, the last 12 months, the -- we saw levels of $110 million of EBITDA. From that, 61% is related to malls, 16% is related to offices, 4% related to hotels, and 26% related to sales and development.

Remember, that in sale, that we are using the adjusted EBITDA, so we clean the adjusted EBITDA from the results of in -- the fair value of investment properties if we don't sell. But when we sell we mark the fact of the disposal.

And in the quarter, the EBITDA of malls was $25 million, offices $5 million, hotel $3 million, and sales and development $19 million..

. Go ahead Alvaro with your question..

Hi, Matías, Santiago, hope you're well. One question on sort of use of proceeds and development, generally, so after the República sale, you just mentioned, Matías, you get down to healthier leverage levels. But -- and my question really is on this new plot of land that was acquired alongside the sale.

How should we think about development on that, the mixed use development potential on that plot of land, how can we compare it to Costa Urbana from a timing standpoint? And then also on Costa Urbana specifically, if there has been any developments, just to think of when we might see development, and would it be a lot faster than what we've seen at Costa Urbana or is it something that's going to take a long time? That would be my question.

Thank you..

Thank you, Alvaro. I believe that in terms of priority, we will see faster news in Costa Urbana, rather than the new project, the new land. So, we -- as you know, we received the approval in December of Costa Urbana. So, we are working hard to define the project and define the stages of commercialization and development.

So, all the team is working on that. Those are not very fast processes. Now, we -- since we define the project, we approved the final developments and then start the construction, and then start to see high levels of CapEx, that will take time.

It's not for the next fiscal year, probably will take two years to start seeing levels of CapEx higher than soft cost of the project. So, we are not anticipating any major CapEx for the next year in Costa Urbana and also in the new land.

The new land, probably we can do different type of developments or strategies, so not necessary the company will the project..

Super clear. And then you mentioned that we should expect more asset sales. I know you can’t say much obviously. But, maybe if you can help us on where on sort of if it’s going to be more offices more likely than not or maybe some retail portion of the portfolio or hotels? Anything you can mention would be helpful. Thank you very much..

Alvaro, what I say it’s hard to say. You know that our strategy always is to disclose when we do things and not before. I believe that we are pretty good doing things. I have been doing a lot during the two years. And if you see the levels of disposal during the last year was very, very high. So, I prefer to announce disposals when we do the things.

But, as I mentioned our strategy is not to re-accumulators of real estate. In Argentina because of the cost of capital, we need to be very active. So, if we see good levels on offers of any of our assets, we will analyze. So, no, we are not in love with any of the assets..

Great. Many thanks..

Thank you, Alvaro. We have here a question also related to CapEx. I think Matías answered the one what do we expect for the rest of 2021.

But, why was the CapEx $27 million in this quarter?.

The $27 million is related to acquisition of the the new plot of land in front of Alto Palermo that cost us $20 million that is basically the most part of the CapEx. And the rest was the finalization of Alto Palermo. We are finishing the development of expansion of Alto Palermo. And that was the probably the main part of the $7 million..

Next question comes from Augustine.

Has the company made any recommendation to the Board to refinance next year debt? Do you plan to go the international market, make an exchange offer, or other option?.

Thank you, Augustine. We are working on that. As you know, there is a rule of the Central Bank that is in place up to December this year that the companies with obligation in dollars to refinance up to 60% of the size of the. And the Central Bank allowed to pay 40%.

Unfortunately that rule established that the company has excess only 45 days before of the expiration. And so that is for us March next year. So, probably we will have excess in February. So, we are working trying to think how to do this and not to wait until February. So, we hope to see some news in the next time..

Next question.

Are you considering a dividend for shareholders this year?.

We will define this at the end of the year. This is a year where we have first the challenge on the debt side to refinance the debt. So, the level of liquidity so far of the company is good. So, as you know the strategy before with IRCP was always to pay dividend. So, that is probably a good guidance on what we did when we can pay.

But we will define when we see the end of the year the results and liquidity and the stage of the debt refinancing..

One more question from Mariana Cruz from BTG Pactual.

Can you please give me more color on what do you expect to see a recovery in the Class B offices occupancy?.

I introduced - here I am with Jorge Cruces, our CIO. So, Jorge, you can answer better than me thus far..

Good morning, we're kind of surprised with the Class B office building, within the near, in the neighborhoods we're close to residential. So, those Class B, close to residential, we're not in Downtown, but in residential locations, Class B is performing very well, even in some cases even better than before COVID.

In Downtown, Class B is not performing as well. And we'll see how that comes out in the future. But we can say that Class B buildings in the nearby residential neighborhoods are performing quite well..

Okay, good.

We go to the next one; they ask here to give more details on the prospect of Costa Urbana?.

Costa Urbana, we are advancing as it was determined by law when this happened in December, where next week we are going to be presenting the first project that we had in our schedule, we are also analyzing commercial wise, the stages of the future development and infrastructure, we're analyzing within those stages that, the different stages of infrastructure, and everything is, we are on schedule, at this time where it hasn't been so much time.

So, we're still on schedule. We'll see in the near future if we can continue be -- to continue to be on our schedule..

And related to the approval after the approval there was legal proceeding protection action from some organization that tried to stop the approval challenging that the City of Buenos Aires deal like this process of approval on not on the right way.

The company and the city, there was an action against mainly the city, the city and also the company appealed for that and we have any now we don't have any restriction that, there was only a final resolution from another court.

From our side, and from the city side, we are confident that we did everything well, so we don't expect that action to have a major impact on the approval..

Okay, that's all the questions that we see here in the chat or in the ones that raise hand, if there is any additional question, we wait some minutes we can do some more. Okay, if there are no more questions, we conclude the Q&A session and we turn back to Matías Gaivironsky, our CFO for his closing remarks..

Thank you. So, we see a very good quarter, very active in all the fronts, very active on the operational, very active in buying and selling, very active on the financial side.

So, the company is recovering very well after the pandemic, we see levels of EBITDA increasing, good levels of cash generation, deleveraging the company very optimistic on the rental recovery in the next quarter in shopping malls and hopefully with the end or with the reduction of the effect of the pandemic, we will see better numbers also in the hotels.

Next days probably we will finish the merge. So, everything is well for to finish this fiscal year with very good results. So, thank you very much for your participation. We will keep in touch..