Santiago Donato: Good afternoon, everyone. I am Santiago Donato, Investor Relations Officer at IRSA, and I welcome you to the Q1 2027 results conference call. First of all, I would like to remind you that both audio and slideshow may be accessed through the 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. If you want to make a question, please use the chat. 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 risk and uncertainties, and actual results may differ materially.
Santiago Donato: Please refer to the detailed notes in the company's earnings release regarding forward-looking statements. I will now turn the call over to Mr. Matías Gaivironsky, CFO.
Matías Gaivironsky: Thank you, Santi. Good afternoon, everybody. We are finishing the Q1 of the year with a net loss on the final line that is mainly related to the fair value of our investment properties. We will see later that the macroeconomic situation of Argentina, that the inflation was higher than the devaluation, generated that loss. Regarding the rental EBITDA, we saw a decrease of 2% against last year in pesos term, but if we measure that number in dollars, that is 20% above last year. About the shopping mall portfolio, we expect by the end of the fiscal year 2027 to finish the two projects that we are launching, and we will reach around 19 assets. There was some strong performance and high occupancy in the malls, that Santi will explain later. Regarding the offices, there is a slight decline in occupancy.
Matías Gaivironsky: We received one floor of one building, so it is only one floor, the vacancy. About Ramblas del Plata, we keep commercializing the project, and Jorge will explain later, but we signed three new land swaps during the quarter and one after the quarter end. Very happy with the progress of Ramblas del Plata. Finally, about the dividend, we started the payment of dividends. We already paid in Buenos Aires, and in New York will be soon for our ADR holders. There was a cash distribution of ARS 211 million that was a yield of 11%. With this, I introduce Santiago Donato to continue the presentation.
Santiago Donato: Thank you, Matías. Well, moving to the shopping malls performance, here we can see occupancy increase almost 0.6 points from 97% last year to 97.6%. Very strong occupancy, close to 98%. We increased the portfolio with the recent acquisitions, Los Gallegos by the end of the year, by the end of 2026. Oeste Outlet that we incorporated to the portfolio last year, but now we are in the process of refurbishment and positioning into a premium outlet. We are going to open it by the end of this year, so Q2 2027. We did also some expansions in our current malls. We are reaching 408,000 sq m this quarter, and we plan to add these two new malls. Well, Oeste is already under construction, but will open by the end of the year.
Santiago Donato: By the end of the fiscal year 2027, we are going to add Distrito Diagonal in La Plata Shopping Mall. Tenant sales, as you can see there, tenant sales evolution and our revenues at IRSA. Tenant sales declined 6% in real terms year-over-year. This is mainly explained by a price effect rather than weaker activity in the shopping malls, because as you can see, their visitors remain very strong. 24 million people visit our malls in this quarter. This is 1.6% above last year. Tickets are also increasing by 7% this quarter comparing to last year. Very good. In revenues, as we have like 90% fixed rent component, we have surpassed inflation in almost 1%.
Santiago Donato: Something important to highlight is that inflation of apparel has been performing below the average of inflation, and these sales are adjusted by the general inflation. Apparel represents around 50% of our tenant mix. Very strong performance of shopping malls in revenues, in EBITDA the same, in line with inflation, and very strong occupancy as well. On the office portfolio, this is quite similar. We remain with 58,000 sq m of GLA. Occupancy a little bit down because of the vacancy of one floor in DOT building next to DOT Baires Mall. Rent quite stable in dollar terms, $25 per square meter per month. This is the premium portfolio. If we add the B category that we have the coworking there at Philips, this is a little bit higher. The Workplace by IRSA, this coworking is performing very well.
Santiago Donato: The total rent per square meter increased to levels of $27 when we add this co-working, this Workplace by IRSA. We are increasing, we have the project in the expansion of Zetta building that will add by the next 2 years another 15,000 square meters of GLA to the office portfolio. On the hotels, we have seen a good year. Last year was quite good. This year, the quarter is even improving. We have reached 66% occupancy in the whole portfolio, in the 3 hotels. Remember that we have the Llao Llao Resort in Bariloche and the 2 hotels in Buenos Aires. Corporate events are doing very well. The hotels in Buenos Aires, as you can see there, increased occupancy by almost 70% with rates stable.
Santiago Donato: In the case of Llao Llao, it is in the process of some renovation in some rooms, so there we exclude these rooms that are under that process. It is in levels of 62%, which is average, and rates going up in levels of $500 the room. The hotel is probably, it is a marginal segment in our portfolio, but it is doing quite well, generating in an annualized basis around $10 million EBITDA. Having said that, I will give the word to Jorge Cruces for the investments and the CapEx on the pipeline.
Jorge Cruces: Thank you, Santiago. Now, let us take a look at our main construction projects. At Oeste Outlet, the redevelopment is entering its final stage. Construction has now reached 90%, so we are pleased to report that we remain on track for the official opening next month. The total investment, including both the acquisition of the asset and CapEx, is around $22 million. The shopping center will include 71 commercial units, combining stores and stands, which are already 100% leased. In the meantime, the shopping center will have 24,000 square meters of GLA. It should grow in the future. Oeste Outlet is a modern outlet center designed to offer a unique shopping experience with brands such as Nike, Adidas, Puma, Levi's, Miniso, and Carter's. Distrito Diagonal. Moving on to La Plata, construction of the city's first large-scale shopping center continues to make solid progress.
Jorge Cruces: The project will have 22,000 square meters of GLA and should become a retail destination for La Plata and surroundings. Overall construction has reached 55%, with an average of 400 workers on site. Retail units will start to be delivered to tenants as from January. This is an important milestone for the project. This shopping center represents the first phase of our long-term vision for La Plata. Looking ahead, we plan to complement it with residential and mixed-use developments that will further expand the project and create additional value. The Zetta expansion. The Zetta building expansion continues to move forward. Construction is concurrently focused on the concrete structure. We are also in the bidding process for several construction packages worth around $13 million. Once these contracts are awarded, about 70% of the project will be under contract. The expansion will add more than 15,000 square meters of GLA.
Jorge Cruces: Today, the building has around 32,000 square meters of GLA and serves as Mercado Libre's headquarters. Upon completion, the building will offer more than 47,500 square meters of GLA. Mercado Libre will be occupying 72%. Edificio El Plata. On the iconic 9 de Julio Avenue, just steps from the Obelisk, this development will have 721 residential units and 18 retail spaces, totaling approximately 35,000 square meters of sellable area. The project is part of the city's downtown revitalization program, which provides tax incentives to support new residential developments in the area. Work on site continues to move forward. We are in the bidding process for the supply and installation of elevators, as well as the curtain wall. At the same time, we continue to make good progress in sales. So far, we have sold more than 100 units for nearly $17 million. Rambla del Plata.
Jorge Cruces: Let's move to Rambla del Plata, our largest development. It is located on the Río de la Plata waterfront, right next to Puerto Madero. The project will create a new mixed-use district with residential buildings, hotels, retail spaces, and a lot of public areas, including a big park. Altogether, more than 690,000 square meters of sellable area. Current activities are focused on the installation of key utilities, including water, sewage, electricity, and gas networks. Road and stormwater infrastructure works under phase 1 have been completed, and we are now finalizing the tender process for phase 2 and part of phase 3. Water, sewage, and electrical networks have reached approximately 50% completion, while work on the gas network continues to advance. To date, we have awarded contracts worth $12.5 million, and progress on those works has already reached 80%.
Jorge Cruces: By the end of the quarter, we had completed 20 transactions with a total value of $130 million, reaching sales of 81% of the expanded stage 1. Recently, on 29 October, we signed an additional swap for lot N05 with Uno en Uno. The transaction was valued at $8.7 million and will provide IRSA with approximately 2,500 square meters of sellable area. Overall, we have now completed 21 transactions totaling $138 million. As a result of these agreements, IRSA will receive nearly 36,000 square meters of sellable area. We only have five lots remaining in this stage. Now, I'll give the floor back to our CFO, Mr. Matías Gaivironsky.
Matías Gaivironsky: Thank you, Jorge. As I mentioned before, this quarter, if we can move to the next page, this quarter, we saw that inflation was a little higher than the devaluation of the FX. So, was an inflation of 6% compared with a devaluation of 2%. That generates some impacts that I will try to explain in the next pages. Last year, if we compare what happened in the same quarter last year, that was in the middle of the midterm elections in Argentina, there was volatility in the FX. There was a devaluation on the official exchange rate of 15%, while the inflation in that quarter was the same, 6%. That means that we have that devaluation. So go into the next page.
Matías Gaivironsky: Well, first, regarding the adjusted EBITDA on the rental segment, as I mentioned, there was a slight decrease in pesos term, 2%, 1% in shopping malls, 11.3% in offices. If we measure that number in dollar terms, it is completely different. You know that we generate dollars, basically, dollar link in the offices. Since we are adjusting last year number with inflation, compared with these numbers in pesos of this year, that generate that the loss. So if we measure everything in dollars, we will have an increase of 20% compared with the previous year. Regarding margins are stable compared with the last year, slight decrease in shopping malls and offices, but nothing relevant to mention there. About the change in the fair value of the investment properties, there we can see the main driver of the decline compared with the previous year.
Matías Gaivironsky: As I mentioned, again, we value our investment properties basically a proxy of dollars. Since there was no devaluation and we have to publish the numbers in pesos term, that generate the loss. So if we measure the properties in dollar terms remain very stable compared with the previous quarter, so nothing relevant there. Last year was completely the opposite. There was a devaluation, so since we are long dollars, the devaluation in pesos terms generated that gain. Moving to the next page, the other component that also is affected by the different of the effects and inflation is the net financial results. This year, we have a loss of ARS 9 billion that basically we have a gain related to net FX result, since we have there to express in pesos term our dollar-denominated debt.
Matías Gaivironsky: Since we have an appreciation of the peso, that generate a profit. Against last year, that was the opposite. So it was a loss of ARS 38.8 billion. About the income tax, as we always mention, every time that we have to post a loss in the investment properties, we have to post a loss also in the deferred tax. The opposite, when we have an appreciation of the investment properties, then we have to express a loss in the income tax. So that is for that reason is the difference. With all these numbers and explanations, we close the quarter with a net loss of ARS 6.3 billion compared with the profit of last year. Here we include the evolution of our rental EBITDA in dollar terms.
Matías Gaivironsky: The last 12 months is a record high in terms of the recurrent part of our business, that is shopping malls, offices, and hotels, reaching $205 million. About our debt, no major news about the debt side, but regarding our cash position, we just paid the dividends these days. So we will see a decrease in the cash position, and that means that we will see an increase in the net debt position to $445.8 million. In terms of ratios, that is almost 2.2x our EBITDA and only 16.6% LTV with a coverage ratio of 8.4x. So we feel comfortable that probably during the year we will increase a little more the debt, probably to the levels of $500 million because we have a CapEx this year that is probably one of the most aggressive during the last, I would say, 10 years.
Matías Gaivironsky: We will see a slight increase going forward, but we feel very comfortable. We can reduce that debt very fast if we do not continue with the same pace of CapEx, and also the dividend payment that this year was high compared with the previous year. We feel comfortable that we can manage very well the debt position. As you can see on the right side, most of our debt is in the long term, so no major pressure in the short term. About the dividends, as I mentioned, we just paid the $137 million, ARS 211 billion. In terms of dividend yield, that was almost 11%. Probably this is the fifth year in a row that IRSA has paid more than 10% dividend yield. Probably the highest dividend payer of Argentina during the last five years.
Matías Gaivironsky: We feel very comfortable with the capital structure and the cash position. For that reason, we decided to increase the dividend this year. Also, it is a little more efficient in terms of the capital structure about the tax shield that we will generate with a little more debt. Remember that last year, IRSA started to pay taxes again after using all the tax credit. We believe that with this capital structure, we will be a little more efficient. With this, we finish the formal presentation. Now we open the line for the Q&A session.
Santiago Donato: Thank you. Well, we initiate the Q&A session. If you have a question, please use the chat. You can write, and we are going to take it in the order we receive them. First question here we have from Sophia from Latin Securities. "How much CapEx should we expect for the year, for fiscal year 2027? Given the ongoing projects and the CapEx expected next year, should we expect dividend distributions to remain at current levels?
Matías Gaivironsky: We gave the guidance of CapEx during the year. Probably we will have around $150 million altogether. With all the projects that we have and some remain payments on existing acquisitions that we already did. We have to pay some installments. Altogether will be $150 million. That is if we do not buy anything new. If we buy something else, probably that number could increase. About the dividend distribution, well, if we analyze the last year and specifically this year, probably it is a little higher than the average. Every time that we decide the dividend, we analyze what is our CapEx needs, what is our cash position, the debt position, and the structure of our debt. For this year, we feel comfortable to increase a little.
Matías Gaivironsky: But going forward, probably that number will be, if I have to give a guidance, probably it is more on the average of our history. That is more around $70 million per year. But as you know, we do not have a fixed dividend policy. We like to pay dividends. If we have excess of cash, we like to return to our shareholders. But we do not have the fixed policy. So we will see every October, that is the month of our shareholders meeting, the proposal of the next year.
Santiago Donato: Next question. "With your strong balance sheet, are share buybacks under consideration in addition to dividends? If so, would it be proposed next October?
Matías Gaivironsky: We can do it if we want before October. So this is upon our board of directors' decision. So far, we decided to pay the dividend so any shareholder can buy back the shares by their self, not directly from us. But it is something that we did it many times in the past, so makes sense. We believe that the price of the shares has an enormous discount, so could make sense to do it. Although, as I mentioned, we just paid a dividend yield of 11%, so we use part of the cash for the dividend.
Santiago Donato: We give some minutes more for any additional question. There are no more questions. Then we return back to Matías for his closing remarks.
Matías Gaivironsky: Thank you, Santi. I think there is not much more to add from my side. We remain optimistic about the year ahead. So many projects, a lot going on. We expect to continue with Ramblas del Plata, and we hope to start seeing cranes for the buildings starting next year. So very happy on what is going on there. We really appreciate your interest and participation. Thank you very much for joining us today, and see you next quarter.
Operator: Goodbye.
