Good morning, everyone. I’m Santiago Donato, Investor Relations Officer of IRSA, and I welcome you to the First Quarter 2023 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 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.

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. Matías Gaivironsky, CFO. Please go ahead, sir..

Good morning everybody. We are finished our first Q 2023 with excellent results. We are very happy with the operational performance in all the lines. Our multi-tenant sales are growing. We are achieving higher margins, achieving levels of pre-pandemic. We are very happy with that.

Regarding our hotels, we posted during the quarter a record EBITDA, mainly hosted by Llao Llao hotel that we will see later. Also, we keep selling office floors at very attractive prices. We sold one floor in 200 Della Paolera building that we will see later. And using those funds to deleverage the company, we continue with the process of deleveraging.

And we will see the reduction in our debt during the last two years. As we mentioned before, we finished the exchange offer of our 2023 notes with around 67% acceptances. That was a major event for the company. And also during the quarter, we finished our shares buyback program and also announced the dividend payment that we paid since yesterday.

So, with this, I will turn the call to Santiago Donato, our IRO to see the operating performance of the company..

Thank you, Matías. Starting with shopping malls, we had a great quarter for shopping malls, strong performance showed during this first quarter of 2023.

The portfolio increased a little bit in the last two years as you can see in the graph, which is 336,000 square meters of gross leasable area, mainly due to Alto Palermo and Alto expansions completely under operation today.

Occupancy increased to almost 94% respect to keep increasing to pre-pandemic levels during the whole year on the vacant areas that was mainly liberated by Falabella exit during the pandemic. And a very good figure is the talent sales in real terms that increased by 22% compared to first quarter of 2020 that was not affected by the pandemic.

And EBITDA and EBITDA margins of this segment also recovered to pre-pandemic levels.

On the office segment, portfolio stock reduced by 30,000 square meters comparing first quarter 2022 and first quarter 2023 mainly due to some sales of floors of the central Della Paolera one that was sold in this quarter, then Jorge will explain better and República building that was sold some quarters ago.

Portfolio occupancy reduced slightly in this year and this quarter, mainly explained by the B theory -- the B class A plus and A occupancy reached 82%, while the average rental price stood at levels of $25 per square meter per month.

We are optimistic on the evolution of this segment in the future we have been observing a greater return to office from companies in the recent month and together with that an increase in demand for our rental spaces. And the third segment, rental segments of our portfolio, the hotels had experienced great rate quarter.

We are reaching record EBITDA in the hotels boosted by Llao Llao as Matías mentioned at the very beginning. The hotel segment continue to recover very strongly with higher rates and occupancy, taking advantage of the boom of the tourism post-pandemic, the attractiveness of the country as well, and the FX positive impact.

The Exclusive Resorts Llao Llao in the city of Bariloche that you have in the south of Argentina continues to reduce historical record incomes and occupancy levels. And the hotels in Buenos Aires, they had a really good quarter.

They are evolving favorably, but they still expect greater influx of international tourism and the full recovery of the conventions and corporate events activity to recover their levels of income and occupancy pre-pandemic.

So, we are very happy and glad on the evolution of our rental segment this quarter and we are optimistic on the future evolution by this year. I will now give the word to Jorge Cruces, our Chief Investment Officer to explain some real estate transactions that we did during this quarter..

Thank you, Santiago. Good morning everybody. Most -- the most important thing that we sold during the quarter, it was already mentioned, it was in 200 Della Paolera building, we sold the fifth floor for $12.6 million. That's a very good sale for us.

$10,600 for each square meter, and we -- there's still a lot of interest in demand for more floors in this building. We still have 14 floors remaining. Regarding Costa Urbana, that's our main project that we're developing since December the 21st -- of 2021.

We had been working in the approving of the new zoning regulations with all that we have to be doing regarding the -- and we have -- during these last month, we made the preliminary design phase, we're waiting for the for the city's response regarding the design.

And we also managed to pay the $2 million in cash and the $3 million in surveying bonds and we have already completed that process.

At the moment, we have -- we're submitted to a cadastral survey plan that was going to be -- that's going to allow us what is already approved by the government, that's going to allow us to be owners of each of the plots. And that's going to allow us to pay the three plots that we owe the government regarding the law.

As I said before, we had -- we needed to pay in cash $2 million and surveying bonds, $3 million, and we need to pay three plots. And that's what we're waiting for the government to approve the survey plan.

Last but not least, regarding the collective legal protection action that we received, that's well -- that we received that October the 29th of 2021. The court is currently analyzing the party's arguments and a decision is expected soon.

Then in Córdoba, right beside our Shopping Córdoba, we made a barter agreement, it's worth $2 million and we're going to be receiving in the next 36 months the 16% of the selling of departments in the building.

This is a residential neighborhood, so it's going to be a curtain wall building and it's going to be a very upscale residential building, it's going to be very convenient even for the shopping mall.

Santiago?.

So, going back to our financial numbers. On page eight, we can see the main drivers on the macroeconomic side what happened with inflation and devaluation that affect our financial. We can see that the inflation accelerated during the quarter. This quarter the inflation was around 22% compared with 9% in the previous year.

And the evolution of the FX was only 18% compared with 3% last year. That means that in real terms, the peso appreciated against the dollar by 4% this year and 6% last year. Regarding the blue chip swap in real terms was stable.

So remember that this has an effect in several lines of our financial statements in regarding the FX evolution has an impact on our debt, so we have to value in real terms the dollar denominated debt into pesos. And if we have an appreciation, we have a gain. If we have a depreciation of course, we will have a loss.

This year, we generated a gain because of that and also has an effect on the valuation of our investment properties that we do in pesos term. So going to each of the lines of our financial statement. We will start with the adjusted EBITDA. We can see a sump of 93.8% this year compared with the previous one.

We see an excellent recovery in shopping malls. Although last year, all our operation was fully open. Remember, that was the first quarter after the pandemic, so the last year was not the best year for us. And this year, we are recovering to the pre-pandemic levels, and we are very happy on that. Offices, we have a decrease by around 50%.

Part of that is explained by a lower stock because we sold floors, also has an effect of the FX when we are comparing the previous year numbers adjusted by inflation and since the devaluation this year was lower, that has an impact of around 12% of decrease.

The hotels and an excellent recovery to levels of 659, you can see a better number than our office portfolio is first time ever. And on top of that, we have the sales and development that generated around ARS1.1 billion of cash -- of profit, sorry.

Regarding the margins, we can see on the right part, the shopping malls achieving almost 76% EBITDA margin, Offices 82% and Hotels 33%. These are very good levels compared with our history. Regarding the operating income, as a result of good increase in revenues and in margins, we see a recovery of 88.6% compared with the previous year.

This is excluding the investment property valuation. On the right part, we have the fair value of the investment properties that we are generating a loss of ARS6.6 billion. When we see this number in dollar terms, this is stable. So the portfolio in dollar terms remain stable against the previous quarter.

This effect is related to the macroeconomic situation and the devaluation and inflation. Finally, on page 11, we see the net financial results that are positive, positive in both year, this year has an impact of the FX.

You can see in the in the table in the Line 3, the net FX result that is positive by ARS2.1 billion this year and last year was higher appreciation of the peso. So that generated a more debt in dollar terms that generated 5.2 against the 2.1 this year.

But for me, the most relevant here is the Line 2, the net interest that you can see that almost really we reduce it by the half of the amount that we had last year, achieving ARS1.6 billion against ARS3 billion during the last year. This is the result of the deleverage process that we did during the last 2 years in years.

Finally, the net result of this quarter, we posted a gain of ARS1.3 billion attributable to our controlling shareholders is ARS1.2 billion. Something relevant to mention is the evolution in dollar terms of our rental EBITDA.

On the left part, we can see the quarterly evolution using the pre-pandemic quarters, the worst quarter of the pandemic and what happened after. The blue line – the blue bar is the shopping malls.

On top of that, you have the offices and the hotels and we can see the strong recovery of our shopping malls reaching this quarter $31.1 million of EBITDA on that are very, very good levels, even more than 2019 numbers.

When we see on the right part, the evolution of the last fiscal years and compared with this last 12 months, you see in the last quarter, we already surpassed the levels of 2019. That was our target during the last year.

We believe that we can surpass that figures, because of the malls and because of the hotels as well, and the Office portfolio will remain stable probably, we will see better numbers going forward because of occupation that we expect to occupy more. But the main drivers will be the malls and the hotels.

Going to the debt profile of the company, we are proud of this evolution. We continue the process of deleveraging, probably lower than what we expected at the beginning when we merged with IRSA with IRSA Commercial Properties. At that moment, we estimated a net debt of around $470 million. Today, we are much lower than that. It's $300 million.

The company is generating around $134 million in the last 12 months and probably more during the year. So it's less than -- it's around two times our EBITDA. In terms of LTV, it's around 12%. So we are very conservative numbers on our debt.

The debt amortization schedule remain with important amortizations during the first quarter of the calendar year next year in March, we have some amortizations, the holdout of the exchange offer that we did. There is $120 million and another one of $80 million that expire in March. We already have cash for $154 million.

So it's not a -- we don't have any issue on liquidity. Here, the main challenge is the regulation and what the central bank will allow us if they're going to allow to pay or to buy the dollars or if we have to do other transactions.

But in terms of leaving aside that part if we can sell that debt then the rest of the debt of the company will remain in $200 million or $300 million and with amortizations during the next five years. So we are very happy on this evolution as well. Well, also we were very active on the operational side. We were active on the real estate side.

We were active on the financial side, canceling debt. But for us, it was also an excellent new to start seeing the company buying back shares and paying dividends. That IRSA Commercial Properties was a company that always paid dividends in the past.

We started to do the same in IRSA after seeing the evolution of our debt and we feel comfortable with our liquidity situation. And we announced that the first dividend payment of ARS4.3 billion that we started to pay that last two days ago. So for our local shareholders resisted they already collected the money.

For our AVR shareholders, we estimate that during the next 15 days, they should collect the dollars overall in the accounts of Argentina. So with this, we finish the formal presentation. Now we open the line to receive your questions. Thank you very much..

We will start with the Q&A session. If you have a question you can use the chat or click the bottom labeled raise hand, we will take the questions in the order we will receive them. Here, we have the first regarding the rates at the hotels. If they are official dollars or dollar map.

These are officials and all the information official dollars, and all the information that we express here in the presentation, the official FX..

Regarding the hotels, not only regarding the currency and array. In the hotels, it's very possible to have the rest of the fiscal year. It should be very, very good for the hotels, not only because Argentina is a very nice place to visit, but it's very cheap and dollars at the moment.

And the government is working on -- and making it possible for the tourists to visit the country easier than before with a new law that's going to benefit the tourism, it's going to benefit the tourist in Argentina and possible and the most -- in the possible in the near future, with this new law, it's possible that we might have more flights in Argentina.

So if we have more flights in Argentina, that's for our five-star hotels, that's going to be very beneficial..

And also, there was a positive deal regarding the regulation that now the money that was collected rather Argentina, for instance, all the booking companies that pay dollars abroad, now the company is not forced anymore to enter those dollars at the official exchange rate. So that is also positive for the hotels..

Here is another question. What is your net debt level that you are planning to reach? Today, we don't have a specific target. I would say, that if I will put the target probably is higher than what we have today, but we see an opportunity to keep canceling that.

So if the central bank will allow us to pay in March all the proceeds, probably we will do that. So, maybe we will see the company keep deleveraging, but I feel very comfortable with the current levels. I would say, that it's under leverage.

When we compare this kind of company with other real estate companies around the world in terms of LTV, it's much higher than that. In terms of net debt to EBITDA, probably the company is the average levels of three times, we are below that. So, maybe we will see a reduction in debt, but not because we are worried about the debt..

Is there any additional question?.

Yes, we have one more. Which are your plans, you have plans for the -- to refinance the short-term maturities? Well, we have the $121 million of the holdouts of the exchange offer that we did, our notes, our international notes.

From that $121 million according to the current regulation, the Central Bank will only sell around 40% -- up to 40% of that, that is around $88 million. So we will need to find other sources to generate the dollars for $70 million more or less. It's not allowed to the company just to buy in the blue-chip swap. This is not allowed by the regulation.

So we -- it's not a question of price or FX, it's just a question of regulations. So, we will do -- we will use all our creativity to fulfill the regulation and try to pay, but it's not 100% in our hands, unfortunately. So we will work on that and maybe we will announce some transactions in the near future.

Here a question on the cash level, shown in the presentation, this $150 million. It's mostly pesos, right? Can you give us some color on how you invest this cash position? Would you by default at any cost if Central Bank has not led to by official dollars? Well, the cash position, we have different securities. It's mainly in pesos, it's true.

We have -- since we have to, at the end of the day pay dollars with that cash, so we try to hedge part of the pesos buying dollar linked notes or futures to hedge the cash position. Also, we have some securities on our liquidity position. And regarding the second part of the question, unfortunately, as I said, it's not 100%.

The question was, if we will avoid the default at any cost? I would like to say, yes, because the company pay me for that. But unfortunately, it's not 100% in our hands. We need to fulfill the regulation and it's clear what we can do and what we can't do.

So we will work hard and negotiate with the Central Bank, but unfortunately, it's not in our control 100%. Good. I have two more on the operational. One for Jorge.

Any update on the La Plata building? I think we answered that in the last quarter, if you have any update this quarter? Are there any plans?.

Not really. We -- not really, we're studying to make apartments to try to convert the office building taking the advantage that today it's empty, we're thinking and we're analyzing, if we reconvert that building in residential. We're studying the numbers. We have already the cost of the reconversion.

There's a law in the city of Buenos Aires helps us with that investment, and it's under study at the moment. But we haven't made our decisions yet if we're developing or not, not yet..

The last one here regarding what level do you expect to achieve in the mall occupancy during the course of the year? In general, we do not give any guidance on the future, but we are having closer conversations, and we expect to increase occupancy by the rest of the 2023 more close numbers pre-pandemic, to the levels of pre-pandemic..

Yes. We separated the vacancy in June. We have the small spaces, I would say that the level is already in historical levels, around 98% occupancy in the small spaces.

What we had -- the May vacancy that we have during the pandemic was big surfaces mainly generated by two tenants, Walmart and Falabella that left the country and leave us important site or stores. There is no one turn for that kind of surfaces. So what we did is to divide those surfaces in small pieces and start to rent in a small business.

And we are happy with that. And the evolution was good..

Well, I give one minute more if there is any additional question. Okay. We conclude with this the presentation and the Q&A. I will give back to Matías Gaivironsky for his closing remarks..

Well, thank you very much to participate in this call. We are very happy on the evolution of all the business lines, on the operational, on the financial on real estate. The company will be very active going forward in the next quarter. Our focus is to keep strengthening the operation in our malls, in our hotels, and the office building.

We are working hard in with Costa Urbana and trying to have everything ready to start the project. We have to work during the quarter -- during the next quarter in the refinancing or the resolution of our remaining debt. So, we have the cash to pay, but we need the tools to pay. So, we will work hard on that.

So, thank you very much to join this conference and I'll see you in the next one. Thank you very much..

Thank you.