6-K 1 a6kirsa.htm PRIMARY DOCUMENT a6kirsa
 
United States
 
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
FORM 6-K
 
REPORT OF FOREIGN PRIVATE ISSUER
 
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
 
For the month of April 2021.
 
Commission File Number 001-13542
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
(Exact name of registrant as specified in its charter)
 
IRSA Investments and Representations Inc.
 
(Translation of registrant’s name into English)
 
Carlos Della Paolera 261
 
(C1001ADA) Ciudad Autónoma de Buenos Aires, Argentina
 
(Address of principal executive office)
 
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F Form 40-F
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____
 
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached Form 6-K to security holders.
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____
 
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
 
 
 
 
TABLE OF CONTENTS
 
 

 

 
 
 
 
 
 
 
EXPLANATORY NOTE
 
IRSA Inversiones y Representaciones Sociedad Anónima (“IRSA,” the “Company,” “we,” “our” or “us”) is filing this report on Form 6-K (this “Form 6-K”) pursuant to SEC Financial Reporting Manual, Rule 6220.6, which requires that if financial information reporting revenues and income for an annual or interim period more current than otherwise required by Item 8 of Form 20-F is made available to shareholders, exchanges, or others in any jurisdiction, that information should be included in a registration statement. Pursuant to such rule, we are filing as Exhibit 99.1 to this Form 6-K our unaudited condensed interim consolidated financial statements as of December 31, 2020 and for the six-month periods ended December 31, 2020 and 2019. Note that (i) our audited consolidated financial statements as of June 30, 2020 and 2019 and for the fiscal years ended June 30, 2020, 2019 and 2018, and (ii) our unaudited condensed interim consolidated financial statements as of September 30, 2020 and for the three-month periods ended September 30, 2020 and 2019, as each were filed as exhibits to our Form 6-K filed on January 5, 2021, have not been further restated as of the measuring unit current as of December 31, 2020, pursuant to SEC Financial Reporting Manual, Rule 6720.5, which provides that if interim financial information more current than otherwise required by SEC rules is included in a registration statement solely to comply with Instruction 3 to Item 8.A.5 of Form 20-F, it is not required that prior periods be restated. This Form 6-K should be read in conjunction with our Form 6-K filed on January 5, 2021 and our annual report on Form 20-F filed on November 16, 2020.
 
IRSA’s audited consolidated financial statements as of June 30, 2020 and 2019 and for the fiscal years ended June 30, 2020, 2019 and 2018 included in Exhibit 99.1 to our Form 6-K filed on January 5, 2021 were recast to: (a) present the audited consolidated financial statements in the measuring unit current at the end of the reporting period as of September 30, 2020 (the most recent period for which financial statements were included in such Form 6-K); and (b) reflect IRSA’s loss of control of IDB Development Corporation, Ltd. (“IDBD”) and Discount Investment Corporation, Ltd. (“DIC”) on September 25, 2020 and, consequently, the deconsolidation of such investees since that date. See “Presentation of Financial and Certain Other Information.” Our Audited Consolidated Financial Statements included as Exhibit 99.1 to our Form 6-K filed on January 5, 2021 amend and replace in their entirety the audited consolidated financial statements of IRSA included in IRSA’s annual report on Form 20-F for the fiscal year ended June 30, 2020 (our “2020 Form 20-F”) originally filed with the U.S. Securities and Exchange Commission (the “SEC”) on November 16, 2020, and the other information in such Form 6-K amends and replaces information set forth in our 2020 Form 20-F to the extent the information contained in our 2020 Form 20-F conflicts with the information contained therein.
 
 
 
1
 
 
 
 
DISCLAIMER REGARDING FORWARD-LOOKING STATEMENTS
 
This Form 6-K includes forward-looking statements, principally under “Risk Factors,” “Information on the Company” and “Operating and Financial Review and Prospects.” We have based these forward-looking statements largely on our current beliefs, expectations and projections about future events and financial trends affecting our business. Many important factors, in addition to those discussed elsewhere in this Form 6-K, could cause our actual results to differ substantially from those anticipated in our forward-looking statements, including, among other things:
 
Factors that could cause actual results to differ materially and adversely include but are not limited to:
 
changes in general economic, financial, business, political, legal, social or other conditions in Argentina and Latin America or changes in developed markets or emerging markets or both;
 
changes in capital markets in general that may affect policies or attitudes toward lending to or investing in Argentina or Argentine companies, including volatility in domestic and international financial markets;
 
inflation and deflation;
 
ongoing economic impacts of the COVID-19 pandemic on the Argentine economy;
 
measures adopted by the Argentine Government in response to the COVID-19 pandemic;
 
impact on our business of the COVID-19 pandemic;
 
economic consequences of the pandemic and the related impact on our business and financial condition;
 
fluctuations in the exchanges rates of the peso and in the prevailing interest rates;
 
increases in financing costs or our inability to obtain additional financing on attractive terms, which may limit our ability to fund existing operations and to finance new activities;
 
current and future government regulation and changes in law or in the interpretation by Argentine courts;
 
price fluctuations in the real estate market;
 
political, civil and armed conflicts;
 
adverse legal or regulatory disputes or proceedings;
 
fluctuations and declines in the aggregate principal amount of Argentine public debt outstanding, default of sovereign debt;
 
government intervention in the private sector and in the economy, including through nationalization, expropriation, labor regulation or other actions;
 
restrictions on transfer of foreign currencies and other exchange controls;
 
increased competition in the shopping mall sector, office or other commercial properties and related industries;
 
potential loss of significant tenants at our shopping malls, offices or other commercial properties;
 
our ability to take advantage of opportunities in the real estate market on a timely basis;
 
 
 
2
 
 
 
 
restrictions on energy supply or fluctuations in prices of utilities in the Argentine market;
 
our ability to meet our debt obligations;
 
shifts in consumer purchasing habits and trends;
 
technological changes and our potential inability to implement new technologies;
 
deterioration in regional, national or global businesses and economic conditions;
 
changes on the applicable regulations to currency exchange or transfers;
 
incidents of government corruption that adversely impact the development of our real estate projects;
 
fluctuations and declines in the exchange rate of the peso, the U.S. dollar against other currencies; and
 
the risk factors discussed under “Risk Factors” in our 2020 Form 20-F.
 
You can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “estimates,” “anticipates,” “could,” “target,” “projects,” “contemplates,” “potential,” “continue” or similar expressions. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, the effects of future regulation and the effects of competition. Forward-looking statements speak only as of the date they were made, and we undertake no obligation to update publicly or to revise any forward-looking statements after we furnish this Form 6-K because of new information, future events or other factors. In light of the risks and uncertainties described above, the forward-looking events and circumstances discussed in this Form 6-K might not occur and are not guarantees of future performance.
 
You should not place undue reliance on such statements which speak only as of the date that they were made. These cautionary statements should be considered in connection with any written or oral forward-looking statements that we might issue in the future.
 
AVAILABLE INFORMATION
 
We file annual and current reports and other information with the SEC. You may obtain any report, information or other document we file electronically with the SEC at the SEC’s website (http://www.sec.gov) or at our website (http://www.irsa.com.ar). The information contained in our website is not incorporated by reference herein and does not form part of this Form 6-K.
 
 
 
3
 
 
 
PRESENTATION OF FINANCIAL AND CERTAIN OTHER INFORMATION
 
In this Form 6-K, references to “IRSA,” the “Company,” “we,” “us” and “our” means IRSA Inversiones y Representaciones Sociedad Anónima and its consolidated subsidiaries, unless the context otherwise requires, or where we make clear that such term refers only to IRSA and not to its subsidiaries.
 
The terms “Argentine government” and “government” refer to the federal government of Argentina, the term “Central Bank” refers to the Banco Central de la República Argentina (the Argentine Central Bank), the terms “CNV” and “CNV Rules” refer to the Comisión Nacional de Valores (the Argentine National Securities Commission) and the rules issued by the CNV, respectively. In this Form 6-K, when we refer to “peso,” “pesos” or “ARS” we mean Argentine pesos, the legal currency of Argentina, and when we refer to “U.S. dollar,” “U.S. dollars” or “USD” we mean United States dollars, the legal currency of the United States.
 
References to “GDSs” are to the Global Depositary Shares, each representing 10 shares of our common stock, issued pursuant to the deposit agreement, dated as of March 18, 1997 (the “deposit agreement”), between us, The Bank of New York, as depositary (the “GDS Depositary”), and the owners and holders of the GDSs issued from time to time thereunder, and references to “GDRs” are to the Global Depositary Receipts, which represent the GDSs.
 
Financial Statements
 
We prepare and maintain our financial books and records in pesos and in conformity with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”), and the CNV Rules. Our fiscal year begins on July 1 and ends on June 30 of each year.
 
The following have been filed as exhibits to this Form 6-K:
 
our unaudited condensed interim consolidated financial statements as of December 31, 2020 and for the six-month periods ended December 31, 2020 and 2019 (our “Q2 Unaudited Condensed Interim Consolidated Financial Statements” and, together with our Audited Consolidated Financial Statements and our Unaudited Condensed Interim Consolidated Financial statements as of September 30, 2020 and for the three-month periods ended Septeember 30, 2020 and 2019, our “Financial Statements”).
 
Our unaudited condensed interim consolidated financial statements have been approved by our Board of Directors on February 12, 2021.
 
Deconsolidation of IDBD and DIC
 
Prior to September 25, 2020, we managed our business and operations in Israel through our subsidiaries IDBD and DIC. On September 25, 2020, the District Court in Tel Aviv-Jaffa (the “Court”), in response to a petition from IDBD’s creditors, declared the insolvency of IDBD and initiated liquidation proceedings (the “Liquidation Proceedings”). The Court appointed a trustee for IDBD’s shares and receivers for DIC’s and Clal’s shares.
 
Under IFRS 10 “Consolidated Financial Statements” (“IFRS 10”), an investor controls an investee if and only if the investor has all the following: (a) power over the investee; (b) exposure, or rights, to variable returns from its involvement with the investee; and (c) the ability to use its power over the investee to affect the amount of the investor’s returns. Based on the facts and circumstances outlined above, our management believes that, as from September 25, 2020, IRSA lost control over IDBD and DIC (as this term is defined by IFRS 10). Accordingly, (a) our investment in IDBD and DIC has been deconsolidated in our Unaudited Condensed Interim Financial Statements as of September 30, 2020 and for the three-month periods ended September 30, 2020 and 2019, and (b) our Audited Consolidated Financial Statements have been restated to reflect the deconsolidation of IDBD and DIC.
 
Functional and Presentation Currency; Adjustment for Inflation
 
Our functional and presentation currency is the peso, and our Financial Statements filed as exhibits to this Form 6-K are presented in pesos.
 
 
4
 
 
 
IAS 29, Financial Reporting in Hyperinflationary Economies (“IAS 29”) requires that the financial statements of an entity whose functional currency is one of a hyperinflationary economy be measured in terms of the current unit of measurement at the closing date of the reporting period, regardless of whether they are based on the historical cost method or the current cost method. This requirement also includes the comparative information of the financial statements.
 
In order to conclude that an economy is “hyperinflationary,” IAS 29 outlines a series of factors, including the existence of an accumulated inflation rate in three years that is approximately or exceeds 100%. As of July 1, 2018, Argentina reported a cumulative three-year inflation rate greater than 100% and therefore financial information published as from that date should be adjusted for inflation in accordance with IAS 29. Therefore, our Financial Statements and the financial information included in this Form 6-K have been presented in terms of the measuring unit current at the end of the reporting period as of September 30, 2020. For more information, see “—Financial Statements” and Note 2.1 to our Audited Consolidated Financial Statements.
 
Effective July 1, 2018, we adopted IFRS 15, Revenues from contracts with customers (“IFRS 15”) and IFRS 9, Financial instruments (“IFRS 9”) using the modified retrospective approach, so that the cumulative impact of the adoption was recognized in the retained earnings at the beginning of the fiscal year starting on July 1, 2018, and the comparative figures were consequently not modified. Accordingly, certain comparisons between periods may be affected. See Note 2.2 to our Audited Consolidated Financial Statements and “Operating Review and Prospects—New Accounting Pronouncements” for a more comprehensive discussion of the effects of the adoption of these new standards.
 
Currency Translations
 
We have translated some of the peso amounts contained in this Form 6-K into U.S. dollars for convenience purposes only. Unless otherwise specified or the context otherwise requires, the rate used to convert peso amounts to U.S. dollars is the seller exchange rate quoted by Banco de la Nación Argentina of ARS 84.15 per USD 1.00 as of December 31, 2020. The seller exchange rate quoted by Banco de la Nación Argentina was ARS 92.38 per USD 1.00 as of April 8, 2021. The U.S. dollar equivalent information presented in this Form 6-K is provided solely for the convenience of the reader and should not be construed as implying that the peso amounts represent, or could have been or could be converted into, U.S. dollars at such rates or at any other rate. See “Local Exchange Market and Exchange Rates” and “Risk Factors—Risks relating to Argentina—Continuing inflation may have an adverse effect on the economy and our business, financial condition and the results of our operations” in our 2020 Form 20-F.
 
Market Share Data
 
Information regarding market share in a specified region or area is based on data compiled by us from internal sources and from publications such as Bloomberg, the International Council of Shopping Centers, the Argentine Chamber of Shopping Centers (Cámara Argentina de Shopping Centers), and the INDEC.
 
Certain Measurements
 
In Argentina the standard measure of area in the real estate market is the sqm (m2, or “sqm”), while in the United States and certain other jurisdictions the standard measure of area is the square foot (sq. ft.). All units of area shown in this Form 6-K (e.g., gross leasable area of buildings (“GLA” or “gross leasable area”), and size of undeveloped land) are expressed in terms of sqm. One sqm is equal to approximately 10.8 square feet. One hectare is equal to approximately 10,000 sqm and to approximately 2.47 acres.
 
As used herein, GLA in the case of shopping malls refers to the total leasable area of the property, regardless of our ownership interest in such property (excluding common areas and parking and space occupied by supermarkets, hypermarkets, gas stations and co-owners, except where specifically stated).
 
 
5
 
 
 
 
Rounding Adjustments
 
Certain numbers and percentages included in this Form 6-K have been subject to rounding adjustments. Accordingly, figures shown for the same category presented in various tables or other sections of this Form 6-K may vary slightly, and figures shown as totals in certain tables may not be the arithmetic aggregation of the figures that precede them.
 
 
6
 
 
 
SELECTED CONSOLIDATED FINANCIAL DATA
 
The following table presents our selected financial data as of December 31, 2020 and 2019 and for the six-month periods ended December 31, 2020 and 2019. The selected interim consolidated statement of income and comprehensive income data and the selected interim consolidated statement of cash flow data for the six-month periods ended December 31, 2020 and 2019 and the selected interim consolidated statement of financial position data as of December 31, 2020 have been prepared in accordance with IAS 34, Interim Financial Reporting (“IAS 34”), as issued by the IASB and have been derived from our Q2 Unaudited Condensed Interim Consolidated Financial Statements included as an exhibit to this Form 6-K. The results of our operations for the six-month period ended December 31, 2020 are not necessarily indicative of the results to be expected for the full fiscal year ending June 30, 2021.
 
Our Q2 Unaudited Condensed Interim Consolidated Financial Statements and the selected financial information set forth below is presented in the measuring unit current at the end of the reporting period as of December 31, 2020 (the most recent period for which financial statements were included in this Form 6-K).
 
You should read the information below in conjunction with our Financial Statements, including the notes thereto.
 
Summarized Consolidated Financial and Other Information
 

 
For the six months ended December 31
 
 
 
2020
 
 
2020
 
 
2019
 
 
 
(in millions of USD) (i) (ii)
 
 
(in millions of ARS; except per share data)
 
CONSOLIDATED STATEMENT OF INCOME AND OTHER COMPREHENSIVE INCOME
 
 
 
 
 
 
 
 
 
Revenues
  59 
  4,951 
  10,916 
Costs
  (31)
  (2,629)
  (4,006)
Gross profit
  28 
  2,322 
  6,910 
Net gain from changes in fair value of investment properties
  110 
  9,266 
  5,293 
General and administrative expenses
  (18)
  (1,515)
  (1,590)
Selling expenses
  (9)
  (787)
  (758)
Other operating results, net
  (1)
  (109)
  (1)
Profit from operations
  109 
  9,177 
  9,854 
Share of loss of associates and joint ventures
  (5)
  (453)
  (1,513)
Income before financial results and income tax
  104 
  8,724 
  8,341 
Finance income
  1 
  68 
  148 
Finance cost
  (38)
  (3,167)
  (3,912)
Other financial results
  38 
  3,164 
  (5,769)
Inflation adjustment
  14 
  1,171 
  331 
Financial results, net
  15 
  1,236 
  (9,202)
Profit / (loss) before income tax
  119 
  9,960 
  (861)
Income tax expense
  (48)
  (4,004)
  (2,720)
Profit / (loss) for the period from continuing operations
  71 
  5,956 
  (3,581)
Profit / (Loss) from discontinued operation
  (85)
  (7,120)
  10,192 
(Loss) / Profit / for the period
  (14)
  (1,164)
  6,611 
Other comprehensive income:
    
    
    
Items that may be reclassified subsequently to profit or loss:
    
    
    
Currency translation adjustment
   
  (35)
  (778)
Other reserves
  3 
  285 
   
Other comprehensive income / (loss) from continued operations
  3 
  250 
  (778)
Other comprehensive income / (loss) from discontinued operations
  (100)
  (8,395)
  10,838 
Tota other comprehensive income / (loss) for the year
  (97)
  (8,145)
  10,060 
Total comprehensive income / (loss) for the year
  (111)
  (9,309)
  16,671 
Total comprehensive income / (loss) from continued operations
  74 
  6,206 
  (4,359)
Total comprehensive income / (loss) from discontinued operations
  (185)
  (15,515)
  21,030 
Total comprehensive income / (loss) for the year
  (111)
  (9,309)
  16,671 
 
    
    
    
(Loss) / profit for the period attributable to:
    
    
    
 
 
7
 
 
 
 
Equity holders of the parent
  (7)
  (584)
  (1,936)
Non-controlling interest
  (7)
  (580)
  8,547 
 
    
    
    
Profit / (loss) from continued operation attributable to:
    
    
    
Equity holders of the parent
  60 
  5,054 
  (3,800)
Non-controlling interest
  11 
  902 
  219 
 
    
    
    
Total comprehensive income / (loss) attributable to:
    
    
    
Equity holders of the parent
  (40)
  (3,356)
  (5,314)
Non-controlling interest
  (71)
  (5,953)
  21,985 
 
    
    
    
Total comprehensive income / (loss) from continued operation attributable to:
    
    
    
Equity holders of the parent
  105 
  8,789 
  14,421 
Non-controlling interest
  (31)
  (2,583)
  (18,780)
 
    
    
    
Profit per common share from continued operation attributable to equity holders of the parent:
    
    
    
Basic
  (0.01)
  (1.02)
  (3.37)
Diluted
  (0.01)
  (1.02)
  (3.37)
 
    
    
    
Total profit per common share attributable to equity holders of the parent:
    
    
    
Basic
  0.10 
  8.79 
  (6.61)
Diluted
  0.10 
  8.76 
  (6.61)
 
 

 
For the six months ended December 31
 
 
 
2020
 
 
2020
 
 
2019
 
 
 
(in millions of USD) (i) (ii)
 
 
(in millions of ARS; except per share data)
 
CASH FLOW DATA
 
 
 
 
 
 
Net cash generated from operating activities
  52 
  4,403 
  22,844 
Net cash generated from investing activities
  611 
  51,381 
  18,815 
Net cash used in financing activities
  (468)
  (39,357)
  (62,336)
 
 

 
As of December 31
 
 
 
2020
 
 
2020
 
 
2019
 
 
 
(in millions of USD) (i) (ii)
 
 
(in millions of ARS; except per share data)
 
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
 
 
 
 
 
 
 
 
 
ASSETS
  12.31.2020 
  12.31.2020 
  06.30.2020 
Non-current assets
    
    
    
Investment properties
  1,953 
  164,276 
  272,713 
Property, plant and equipmen
  40 
  3,330 
  45,219 
Trading properties
  18 
  1,476 
  5,820 
Intangible assets
  16 
  1,315 
  33,299 
Right-of-use assets
  8 
  680 
  23,801 
Investment in associates and joint ventures
  162 
  13,580 
  89,161 
Deferred income tax assets
  3 
  214 
  759 
Income tax and Minimum Presumed Income Tax credit
  - 
  25 
  30 
Restricted assets
  - 
  - 
  2,242 
Trade and other receivables
  27 
  2,242 
  27,719 
Investments in financial assets
  9 
  772 
  4,210 
Derivative financial instruments
  - 
  - 
  170 
Total non-current assets
  2,236 
  187,910 
  505,143 
Current Assets
    
    
    
Trading properties
  1 
  52 
  2,776 
Inventories
  1 
  69 
  5,613 
Restricted assets
  - 
  - 
  7,441 
Income tax credit
  2 
  146 
  368 
Group of assets held for sale
  - 
  - 
  49,951 
Trade and other receivables
  89 
  7,609 
  44,516 
Investments in financial assets
  33 
  2,732 
  23,291 
Financial assets and other assets held for sale
  - 
  - 
  4,047 
Derivative financial instruments
  - 
  6 
  253 
Cash and cash equivalents
  19 
  1,605 
  108,294 
 
 
8
 
 
 
 
Total Current Assets
  145 
  12,219 
  246,550 
TOTAL ASSETS
  2,381 
  200,129 
  751,693 
SHAREHOLDERS’ EQUITY
    
    
    
Capital y reservas atribuible a los accionistas de la sociedad controlante
    
    
    
Share capital
  7 
  575 
  575 
Treasury stock
  - 
  2 
  2 
Inflation adjustment of share capital and treasury stock
  194 
  16,335 
  16,335 
Share premium
  207 
  17,426 
  17,426 
Additional paid-in capital from treasury stock
  1 
  116 
  114 
Legal reserve
  16 
  1,333 
  581 
Special reserve
  134 
  11,271 
  11,271 
Other reserves
  281 
  23,522 
  7,064 
Retained earnings
  (6)
  (473)
  15,098 
Total capital and reserves attributable to equity holders of the parent
  834 
  70,107 
  68,466 
Non-controlling interest
  264 
  22,174 
  78,535 
TOTAL SHAREHOLDERS’ EQUITY
  1,098 
  92,281 
  147,001 
LIABILITIES
    
    
    
Non-current liabilities
    
    
    
Trade and other payables
  17 
  1,440 
  2,600 
Lease liabilities
  9 
  725 
  16,031 
Borrowings
  488 
  40,942 
  356,932 
Derivative financial instruments
  - 
  22 
  66 
Deferred income tax liabilities
  502 
  42,177 
  52,778 
Employee benefits
  - 
  - 
  536 
Salaries and social security liabilities
  - 
  31 
  234 
Provisions
  1 
  120 
  3,671 
Total non-current liabilities
  1,017 
  85,457 
  432,848 
Current liabilities
    
    
    
Trade and other payables
  86 
  7,206 
  35,562 
Group of liabilities held for sale
  - 
  - 
  26,621 
Lease liabilities
  1 
  59 
  5,835 
Salaries and social security liabilities
  4 
  376 
  4,920 
Borrowings
  172 
  14,531 
  93,891 
Derivative financial instruments
  1 
  78 
  1,342 
Provisions
  2 
  135 
  2,924 
Income tax and minimum presumed income tax ("MPIT") liabilities
  - 
  6 
  749 
Total current liabilities
  266 
  22,391 
  171,844 
TOTAL LIABILITIES
  1,283 
  107,848 
  604,692 
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
  2,381 
  200,129 
  751,693 
 
 
 
2020
 
 
2020
 
 
2019
 
OTHER FINANCIAL DATA
 
(in millions of USD) (i) (ii)
 
 
(in millions of ARS; except per share data)
 
Basic net (loss)/ income per common share from continuing operations (1)
  (0.01)
  (1.02)
  (3.37)
Diluted net (loss)/ income per common share from continuing operations (2)
  (0.01)
  (1.02)
  (3.37)
Basic net (loss)/ income per GDS from continuing operations (1) (3)
  (0.12)
  (10.20)
  (33.70)
Diluted net (loss)/ income per GDS from continuing operations (2) (3)
  (0.12)
  (10.20)
  (33.70)
Basic net (loss)/ income per common share
  0.10 
  8.79 
  (6.61)
Diluted net (loss)/ income per common share
  0.10 
  8.76 
  (6.61)
Basic net (loss)/ income per GDS
  1.05 
  87.90 
  (66.10)
Diluted net (loss)/ income per GDS
  1.04 
  87.60 
  (66.10)
Diluted weighted – average number of common shares
  578,676,471 
  578,676,471 
  578,676,471 
Depreciation and amortization
  3 
  229 
  318 
Capital expenditures
  21 
  1,745 
  6,612 
Working capital
  (121)
  (10,172)
  74,706 
Ratio of current assets to current liabilities
  0.01 
  0.55 
  1.43 
Ratio of shareholders’ equity to total liabilities
  0.01 
  0.86 
  0.24 
Ratio of non current assets to total assets
  0.01 
  0.94 
  0.67 
Dividend paid
  25 
  2,064 
  276 
Dividends per common share
  0.04 
  3.59 
  0.48 
Dividends per GDS
  0.43 
  35.90 
  4.80 
Number of common shares outstanding
  576,453,601 
  576,453,601 
  574,940,605 
Capital Stock
  575 
  575 
  575 
 
(i)            
Totals may not sum due to rounding.
 
9
 
 
 
 
(ii)            
Solely for the convenience of the reader we have translated peso amounts into U.S. dollars at the seller exchange rate quoted by Banco de la Nación Argentina as of December 31, 2020, which was ARS 84.15 per USD 1.00. We make no representation that the peso or U.S. dollar amounts actually represent, could have been or could be converted into U.S. dollars at the rates indicated, at any particular rate or at all. See “Local Exchange Market and Exchange Rates.” Totals may not sum due to rounding.
(1)            
Basic net income per share is calculated by dividing the net income available to holders of common shares for the period / year by the weighted average number of shares outstanding during the period / year.
(2)            
Diluted net income per share is calculated by dividing the net income for the year by the weighted average number of ordinary shares including treasury shares.
(3)            
Determined by multiplying the amounts per share by ten (one GDS is equal to ten common shares). Dividend amounts, corresponding to fiscal years ending on June 30 of each year, are determined by the annual shareholders’ meeting, which takes place in October of each year.
 
The following table presents our selected financial data as of September 30, 2020 and for the three-month period ended September 30, 2020, restated as of the measuring unit current as of December 31, 2020, by applying the change in the Argentine consumer price index during the fourth quarter of 2020. The selected financial data as of September 30, 2020 have been prepared in accordance with IAS 34, Interim Financial Reporting (“IAS 34”), as issued by the IASB, and have been derived from our financial statements filed as Exhibit 99.2 to our Form 6-K filed on January 5, 2021. The results of our operations for the three-month period ended September 30, 2020 are not necessarily indicative of the results to be expected for the full fiscal year ending June 30, 2021.
 
 
 
For the three monthsended September 30,
 
 
 
2020
 
 
 
 (in millions of ARS; except per share data)
 
 
 
Restated for inflation as of Dec 31, 2020 (i)
 
 
Restated for inflation as of Sept 30, 2020
 
CONSOLIDATED STATEMENT OF INCOME AND OTHER COMPREHENSIVE INCOME
 
 
 
 
 
 
Revenues 
  1,791 
  1,609 
Costs 
  (1,221)
  (1,097)
Gross profit 
  570 
  512 
Net gain from changes in fair value of investment properties 
  26,818 
  24,089 
General and administrative expenses 
  (717)
  (644)
Selling expenses 
  (501)
  (450)
Other operating results, net 
  (20)
  (18)
Profit from operations 
  26.150 
  23,489 
Share of profit of associates and joint ventures 
  164  
  147  
Income before financial results and income tax 
  26,314 
  23,636 
Finance income 
  62 
  56 
Finance cost 
  (1,773)
  (1,593)
Other financial results 
  695 
  624 
Inflation adjustment 
  (32)
  (29)
Financial results, net 
  (1,048)
  (942)
Profit before income tax 
  25,266 
  22,694 
Income tax expense 
  (8,859)
  (7,958)
Profit from continuing operations 
  16,407 
  14,736 
Profit / (Loss) from discontinued operation 
  (7,120)
  (6,396)
Profit / (Loss) for the period 
  9,287 
  8,340 
Other comprehensive income (loss):
    
    
Items that may be reclassified subsequently to profit or loss:
    
    
Currency translation adjustment 
  (6,494)
  (5,833)
Net change in fair value of hedging instruments 
   
   
Revaluation reserve 
  2,175 
  1,954 
Items that may not be reclassified subsequently to profit or loss, net of income tax
    
    
Actuarial loss from defined benefit plans 
   
   
Other comprehensive income / (loss) from continuing operations
  (4,319)
  (3,879)
Other comprehensive income / (loss) from discontinued operations 
  (5,337)
  (4,794)
Total other comprehensive income / (loss) for the period 
  (9,656)
  (8,673)
Total comprehensive income / (loss) for the period 
  (369)
  (333)
 
    
    
Total comprehensive income / (loss) from continuing operations 
  12,087 
  10,857 
Total comprehensive income / (loss) from discontinued operations 
  (12,457)
  (11,190)
Total comprehensive income / (loss) for the period 
  (370)
  (333)
 
    
    
Total comprehensive income / (loss) attributable to:
    
    
Equity holders of the parent 
  3,245 
  2,914 
 
 
10
 
 
 
 
Non-controlling interest 
  (3,615)
  (3,247)
 
    
    
Profit / (loss) from continuing operations attributable to:
    
    
Equity holders of the parent 
  13,004 
  11,679 
Non-controlling interest 
  3,403 
  3,057 
 
    
    
Total profit / (loss) attributable to:
    
    
Equity holders of the parent 
  7,367 
  6,615 
Non-controlling interest 
  1,920 
  1,725 
 
    
    
Profit / (loss) per common share from continuing operations attributable to equity holders of the parent:
    
    
Basic 
  12.80 
  11.50 
Diluted 
  12.71 
  11.42 
 
    
    
Total profit / (loss) per common share attributable to equity holders of the parent:
    
    
Basic 
  22.61 
  20.31 
Diluted 
  22.45 
  20.17 
 
    
    
 
    
    
Total comprehensive income / (loss) from continued operation attributable to:
    
    
Equity holders of the parent 
  16,737 
  15,034 
Non-controlling interest 
  (4,650)
  (4,177)
 
    
    
 
    
    
CASH FLOW DATA
    
    
Net cash generated by / (used in) operating activities 
  3,743 
  3,362 
Net cash generated by / (used in) investing activities 
  46,135 
  41,441 
Net cash generated by / (used in) financing activities 
  19,659 
  17,659 
 
 
 
As of September 30,
 
 
 
2020
 
 
 
(in millions of ARS)
 
 
 
Restated for inflation as of Dec 31, 2020 (i)
 
 
Restated for inflation as of Sept 30, 2020
 
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
Non-current assets
 
 
 
 
 
 
Investment properties 
  185,335 
  166,478 
Property, plant and equipment 
  2,603 
  2,338 
Trading properties 
  1,478 
  1,328 
Intangible assets 
  1,320 
  1,186 
Right-of-use assets 
  691 
  621 
Investment in associates and joint ventures 
  14,159 
  12,718 
Deferred income tax assets 
  165 
  148 
Income tax and Minimum Presumed Income Tax credit 
  29 
  26 
Restricted assets 
   
   
Trade and other receivables 
  2,094 
  1,881 
Employee benefits 
   
   
Investments in financial assets 
  563 
  506 
Financial assets and other assets held for sale 
   
   
Derivative financial instruments 
   
   
Total non-current assets 
  208,437 
  187,230 
Current Assets
    
    
Trading properties 
  243 
  218 
Inventories 
  72 
  65 
Restricted assets 
  9 
  8 
Income tax credit 
  117 
  105 
Group of assets held for sale 
   
   
Trade and other receivables 
  5,564 
  4,998 
Investments in financial assets 
  3,761 
  3,378 
Financial assets and other assets held for sale 
   
   
Derivative financial instruments 
  18 
  16 
Cash and cash equivalents 
  4,895  
  4,397  
Total Current Assets 
  14,679  
  13,185  
TOTAL ASSETS 
  223,116 
  200,415 
SHAREHOLDERS’ EQUITY
    
    
Shareholders’ equity attributable to equity holders of the parent
    
    
Share capital 
  575 
  575 
Treasury stock 
  2 
  2 
Inflation adjustment of share capital and treasury stock 
  16,336 
  14,615 
Share premium 
  17,426 
  15,653 
Additional paid-in capital from treasury stock 
  116 
  104 
Legal reserve 
  581 
  522 
Special reserve 
  11,271 
  10,124 
Other reserves 
  9,577 
  8,603 
Retained earnings 
  22,462  
  20,177  
Total capital and reserves attributable to equity holders of the parent 
  78,346 
  70,375 
 
 
11
 
 
 
 
Non-controlling interest 
  26,010  
  23,364  
TOTAL SHAREHOLDERS’ EQUITY 
  104,356 
  93,739 
LIABILITIES
    
    
Non-current liabilities
    
    
Trade and other payables 
  1,943 
  1,745 
Lease liabilities 
  652 
  586 
Borrowings 
  35,588 
  31,967 
Derivative financial instruments 
  32 
  29 
Deferred income tax liabilities 
  46,892 
  42,121 
Employee benefits 
   
   
Salaries and social security liabilities 
  37 
  33 
Provisions 
  161  
  145  
Total non-current liabilities 
  85,305 
  76,626 
Current liabilities
    
    
Trade and other payables 
  5,574 
  5,007 
Lease liabilities 
   
   
Group of liabilities held for sale 
  155 
  139 
Salaries and social security liabilities 
  263 
  235 
Borrowings 
  27,243 
  24,471 
Derivative financial instruments 
  67 
  60 
Provisions 
  120 
  108 
Income tax and minimum presumed income tax (“MPIT”) liabilities 
  33  
  30  
Total current liabilities 
  33,455  
  30,050  
TOTAL LIABILITIES 
  118,760  
  106,676  
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 
  223,116 
  200,415 
 
    
    
 
 
 
 
As of and for the three months ended September 30,
 
 
 
2020
 
 
 
(in millions of ARS; except for number of shares, per share and GDS data and ratios)
 
 
 
Restated for inflation as of Dec 31, 2020 (i)
 
 
Restated for inflation as of Sept 30, 2020
 
OTHER FINANCIAL DATA
 
 
 
 
 
 
Basic net (loss)/ income per common share from continuing operations(1) 
  12.80 
  11.50 
Diluted net (loss)/ income per common share from continuing operations(2) 
  12.71 
  11.42 
Basic net (loss)/ income per GDS from continuing operations(1) (3) 
  128.00 
  115.00 
Diluted net (loss)/ income per GDS from continuing operations(2) (3) 
  127.10 
  114.20 
Basic net (loss)/ income per common share 
  22.61 
  20.31 
Diluted net (loss)/ income per common share 
  22.45 
  20.17 
Basic net (loss)/ income per GDS 
  226.10 
  203.10 
Diluted net (loss)/ income per GDS 
  224.50 
  201.70 
Diluted weighted – average number of common shares 
  578,676,471 
  578,676,471 
Depreciation and amortization 
  136 
  122 
Capital expenditures 
  1,338 
  1,202 
Working capital 
  (18,776)
  (16,865)
Ratio of current assets to current liabilities 
  0.44 
  0.44 
Ratio of shareholders’ equity to total liabilities 
  0.88 
  0.88 
Ratio of non-current assets to total assets 
  0.93 
  0.93 
Dividend paid 
   
   
Dividends per common share 
   
   
Dividends per GDS 
   
   
Number of common shares outstanding 
  576,056,589 
  576,056,589 
Capital Stock 
  575 
  575 
 
(i) 
Figures restated to the measuring unit current as of December 31, 2020, by application of the change in the Argentine consumer price index during the fourth quarter of 2020. Financial data is derived from our unaudited financial statements filed as exhibits to our Form 6-K filed on January 5, 2021.
(1) 
Basic net income per share is calculated by dividing the net income available to holders of common shares for the period / year by the weighted average number of shares outstanding during the period / year.
(2) 
Diluted net income per share is calculated by dividing the net income for the year by the weighted average number of ordinary shares including treasury shares.
(3) 
Determined by multiplying the amounts per share by ten (one GDS is equal to ten common shares). Dividend amounts, corresponding to fiscal years ending on June 30 of each year, are determined by the annual shareholders’ meeting, which takes place in October of each year.
The following table presents our selected financial data as of June 30, 2020 and for the year ended June 30, 2020, restated as of the measuring unit current as of December 31, 2020, by applying the change in the Argentine consumer price index during the fourth quarter of 2020. The selected financial data as of June 30, 2020 have been prepared in accordance with IAS 34, Interim Financial Reporting (“IAS 34”), as issued by the IASB, and have been derived from our financial statements filed as Exhibit 99.1 to our Form 6-K filed on January 5, 2021.
 
 
12
 
 
 
 
 
 
For the fiscal year endedJune 30,
 
 
 
2020
 
 
 
(in millions of ARS
millions of ARS; except per share data)
 
 
 
Restated for inflation as of Dec 31, 2020 (i)
 
 
Restated for inflation as of Sept 30, 2020
 
CONSOLIDATED STATEMENT OF INCOME AND OTHER COMPREHENSIVE INCOME
 
 
 
 
 
 
Revenues 
  16,966 
  15,240 
Costs 
  (7,079)
  (6,359)
Gross profit 
  9,887 
  8,881 
Net gain from changes in fair value of investment properties 
  40,426 
  36,313 
General and administrative expenses 
  (2,633)
  (2,365)
Selling expenses 
  (1,454)
  (1,306)
Other operating results, net 
  (27)
  (24)
Profit from operations 
  46,199 
  41,499 
Share of profit of associates and joint ventures 
  8,651  
  7,771  
Income before financial results and income tax 
  54,850 
  49,270 
Finance income 
  255 
  229 
Finance cost 
  (7,380)
  (6,629)
Other financial results 
  (7,411)
  (6,657)
Inflation adjustment 
  108 
  97 
Financial results, net 
  (14,428)
  (12,960)
Profit before income tax 
  40,422 
  36,310 
Income tax expense 
  (8,033)
  (7,216)
Profit / (Loss) from continuing operations 
  32,389 
  29,094 
Profit / (Loss) from discontinued operation 
  (3,948)
  (3,546)
Profit / (Loss) for the year 
  28,441 
  25,548 
Other comprehensive income (loss):
    
    
Items that may be reclassified subsequently to profit or loss:
    
    
Currency translation adjustment 
  579 
  520 
Net change in fair value of hedging instruments 
   
   
Revaluation reserve 
   
   
Items that may not be reclassified subsequently to profit or loss, net of income tax
    
    
Actuarial loss from defined benefit plans 
   
   
Other comprehensive income / (loss) from continuing operations
  579 
  520 
Other comprehensive income / (loss) from discontinued operations 
  16,419  
  14,748  
Total other comprehensive income / (loss) for the year 
  16,998  
  15,268  
Total comprehensive income / (loss) for the year 
  45,439 
  40,816 
 
    
    
Total comprehensive income / (loss) from continuing operations 
  32,968 
  29,614 
Total comprehensive income / (loss) from discontinued operations 
  12,471  
  11,202  
Total comprehensive income / (loss) for the year 
  45,439 
  40,816 
 
    
    
Total profit / (loss) attributable to:
    
    
Equity holders of the parent 
  17,077 
  15,340 
Non-controlling interest 
  11,364 
  10,208 
 
    
    
Profit / (loss) from continuing operations attributable to:
    
    
Equity holders of the parent 
  24,564 
  22,065 
Non-controlling interest 
  7,825 
  7,029 
 
    
    
Total comprehensive income / (loss) attributable to:
    
    
Equity holders of the parent 
  15,897 
  14,280 
Non-controlling interest 
  29,542 
  26,536 
 
    
    
Total comprehensive income / (loss) from continued operation attributable to:
    
    
Equity holders of the parent 
  25,143 
  22,585 
Non-controlling interest 
  7,825 
  7,029 
 
    
    
Total profit / (loss) per common share attributable to equity holders of the parent:
    
    
Basic 
  42.69 
  38.35 
Diluted 
  42.44 
  38.12 
 
    
    
Profit / (loss) per common share from continuing operations attributable to equity holders of the parent:
    
    
Basic 
  29.68 
  26.66 
Diluted 
  29.50 
  26.50 
 
    
    
CASH FLOW DATA
    
    
Net cash generated by / (used in) operating activities 
  37,289 
  33,495 
Net cash generated by / (used in) investing activities 
  48,711 
  43,755 
Net cash generated by / (used in) financing activities 
  (91,235)
  (81,952)
 
 
 
13
 
 
 
 
 
For the fiscal year endedJune 30,
 
 
 
2020
 
 
 
(in millions of ARS)
 
 
 
Restated for inflation as of Dec 31, 2020 (i)
 
 
Restated for inflation as of Sept 30, 2020
 
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
Non-current assets
 
 
 
 
 
 
Investment properties 
  272,713 
  244,966 
Property, plant and equipment 
  45,219 
  40,618 
Trading properties 
  5,820 
  5,228 
Intangible assets 
  33,299 
  29,911 
Right-of-use assets 
  23,801 
  21,379 
Investment in associates and joint ventures 
  89,161 
  80,089 
Deferred income tax assets 
  758 
  681 
Income tax and Minimum Presumed Income Tax credit 
  30 
  27 
Restricted assets 
  2,242 
  2,014 
Trade and other receivables 
  27,718 
  21,379 
Employee benefits 
   
   
Investments in financial assets 
  4,210 
  3,782 
Financial assets and other assets held for sale 
   
   
Derivative financial instruments 
  170  
  153  
Total non-current assets 
  505,141 
  453,746 
Current Assets
    
    
Trading properties 
  2,775 
  2,493 
Inventories 
  5,612 
  5,041 
Restricted assets 
  7,441 
  6,684 
Income tax credit 
  368 
  331 
Group of assets held for sale 
  49,950 
  44,868 
Trade and other receivables 
  44,515 
  39,986 
Investments in financial assets 
  23,292 
  20,922 
Financial assets and other assets held for sale 
  4,048 
  3,636 
Derivative financial instruments 
  253 
  227 
Cash and cash equivalents 
  108,295  
  97,276  
Total Current Assets 
  246,549  
  221,464  
TOTAL ASSETS 
  751,690 
    
SHAREHOLDERS’ EQUITY
    
    
Shareholders’ equity attributable to equity holders of the parent
    
    
Share capital 
  575 
  575 
Treasury stock 
  2 
  2 
Inflation adjustment of share capital and treasury stock 
  16,335 
  14,614 
Share premium 
  17,426 
  15,653 
Additional paid-in capital from treasury stock 
  112 
  101 
Legal reserve 
  581 
  522 
Special reserve 
  11,267 
  10,121 
Other reserves 
  7,067 
  6,348 
Retained earnings 
  15,100  
  13,564  
Total capital and reserves attributable to equity holders of the parent 
  68,465 
  61,500 
Non-controlling interest 
  78,535  
  70,544  
TOTAL SHAREHOLDERS’ EQUITY 
  147,000 
  132,044 
LIABILITIES
    
    
Non-current liabilities
    
    
Trade and other payables 
  2,599 
  2,335 
Lease liabilities 
  16,031 
  14,400 
Borrowings 
  356,932 
  320,616 
Derivative financial instruments 
  66 
  59 
Deferred income tax liabilities 
  52,778 
  47,408 
Employee benefits 
  535 
  481 
Salaries and social security liabilities 
  234 
  210 
Provisions 
  3,670  
  3,297  
Total non-current liabilities 
  432,845 
  388,806 
Current liabilities
    
    
Trade and other payables 
  35,561 
  31,943 
Lease liabilities 
  26,621 
  23,912 
Group of liabilities held for sale 
  5,826 
  5,242 
Salaries and social security liabilities 
  4,919 
  4,419 
Borrowings 
  93,891 
  84,338 
Derivative financial instruments 
  1,343 
  1,206 
Provisions 
  2,925 
  2,627 
Income tax and minimum presumed income tax (“MPIT”) liabilities 
  749  
  673  
Total current liabilities 
  171,845  
  154,360  
TOTAL LIABILITIES 
  604,690  
  543,166  
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 
  751,690 
  675,210 
 
    
    
 
 
 
14
 
 
 
 
 
As of and for the fiscal year endedJune 30,
 
 
 
2020
 
 
 
 (except for number of shares, per share and GDS data and ratios)
 
 
 
Restated for inflation as of Dec 31, 2020 (i)
 
 
Restated for inflation as of Sept 30, 2020
 
OTHER FINANCIAL DATA
 
 
 
 
 
 
Basic net (loss)/ income per common share from continuing operations(1) 
  29.68 
  26.66 
Diluted net (loss)/ income per common share from continuing operations(2) 
  29.50 
  26.50 
Basic net (loss)/ income per GDS from continuing operations(1) (3) 
  296.80 
  266.60 
Diluted net (loss)/ income per GDS from continuing operations(2) (3) 
  295.00 
  265.00 
Basic net (loss)/ income per common share 
  42.69 
  38.35 
Diluted net (loss)/ income per common share 
  42.44 
  38.12 
Basic net (loss)/ income per GDS 
  429.90 
  383.50 
Diluted net (loss)/ income per GDS 
  424.40 
  381.20 
Diluted weighted – average number of common shares 
  578,676,471 
  578,676,471 
Depreciation and amortization 
  578 
  519 
Capital expenditures 
  13,243 
  11,896 
Working capital 
  74,704 
  67,104 
Ratio of current assets to current liabilities 
  1.43 
  1.43 
Ratio of shareholders’ equity to total liabilities 
  0.24 
  0.24 
Ratio of non-current assets to total assets 
  0.67 
  0.67 
Dividend paid 
  266 
  239 
Dividends per common share 
  0.46 
  0.42 
Dividends per GDS 
  4.63 
  4.20 
Number of common shares outstanding 
  576,056,589 
  576,056,589 
Capital Stock 
  575 
  575 
 
(i) 
Figures restated to the measuring unit current as of December 31, 2020, by application of the change in the Argentine consumer price index during the fourth quarter of 2020. Financial data is derived from our audited financial statements filed as exhibits to our Form 6-K filed on January 5, 2021.
(1) 
Basic net income per share is calculated by dividing the net income available to holders of common shares for the period / year by the weighted average number of shares outstanding during the period / year.
(2) 
Diluted net income per share is calculated by dividing the net income for the year by the weighted average number of ordinary shares including treasury shares.
(3) 
Determined by multiplying the amounts per share by ten (one GDS is equal to ten common shares). Dividend amounts, corresponding to fiscal years ending on June 30 of each year, are determined by the annual shareholders’ meeting, which takes place in October of each year.
 
 
15
 
 
 
LOCAL EXCHANGE MARKET AND EXCHANGE RATES
 
The Argentine government has established a series of exchange control measures that restrict the free disposition of funds and the transfer of funds abroad. These measures significantly curtail access to the foreign exchange market Mercado Único y Libre de Cambios (“MULC”) by both individuals and private sector entities. This makes it necessary, among other things, to obtain prior approval from the Banco Central de la República Argentina (the “Central Bank”) to enter into certain foreign exchange transactions such as payments relating to royalties, services or fees payable to related parties of Argentine companies outside Argentina. For more information about exchange controls see, “Item 10. Additional Information—D. Exchange Controls” in our 2020 Form 20-F.
 
The following table shows the maximum, minimum, average and closing exchange rates for each applicable period to purchases of U.S. dollars.
 
 
 
Maximum(1)(2)
 
 
Minimum(1)(3)
 
 
Average(1)(4)
 
 
At closing(1)
 
Fiscal year ended:
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2018 
  28.8000 
  16.7500 
  19.4388 
  28.8000 
June 30, 2019 
  45.8700 
  27.1600 
  37.8373 
  42.3630 
June 30, 2020 
  70.3600 
  41.5000 
  59.5343 
  70.3600 
Month ended:
    
    
    
    
July 31, 2020 
  72.2200 
  70.4200 
  71.3795 
  72.2200 
August 31, 2020 
  74.0800 
  72.4200 
  73.1980 
  74.0800 
September 30, 2020 
  76.0800 
  74.1500 
  75.1036 
  76.0800 
October 30, 2020 
  78.2200 
  76.1500 
  77.4843 
  78.2200 
November 30, 2020 
  81.2100 
  78.5900 
  79.0814 
  81.2100 
December 2020 
  84.0500 
  81.3300 
  82.5383 
  84.0500 
January 2021 
  87.2300 
  84.6000 
  85.8755 
  87.2300 
February 2021 
  89.7200 
  87.5000 
  88.5745 
  89.7200 
March 2021 
  91.9000 
  89.9900 
  90.9659 
  91.9000 
April 2021(through April 8, 2021) 
  92.2800 
  92.1400 
  92.2075 
  92.2800 
 
Source: Banco de la Nación Argentina
(1) 
Average between the offer exchange rate and the bid exchange rate according to Banco de la Nación Argentina’s foreign currency exchange rate.
(2) 
The maximum exchange rate appearing in the table was the highest end-of-month exchange rate in the year or shorter period, as indicated.
(3) 
The minimum exchange rate appearing in the table was the lowest end-of-month exchange rate in the year or shorter period, as indicated.
(4) 
Average exchange rates at the end of the month.
 
 
16
 
 
 
INFORMATION ON THE COMPANY
 
History and Development of the Company
 
General Information
 
Our legal and commercial name is IRSA Inversiones y Representaciones Sociedad Anónima. We were incorporated and organized on April 30, 1943, under Argentine law as a stock corporation (sociedad anónima), and we were registered with the Public Registry of Commerce of the City of Buenos Aires (Inspección General de Justicia or “IGJ”) on June 23, 1943, under number 284, on page 291, book 46 of volume A. Pursuant to our bylaws, our term of duration expires on April 5, 2043.
 
Our common shares are listed and traded on the Bolsas y Mercados Argentinos (“BYMA”) and our GDSs representing our common shares are listed on the New York Stock Exchange (“NYSE”). Our headquarters are located at Carlos M. Della Paolera 261, 9th Floor, Ciudad Autónoma de Buenos Aires (C1091AAQ), Argentina. Our telephone is +54 (11) 4323-7400. Our website is www.irsa.com.ar. Information contained in or accessible through our website is not a part of this Form 6-K.
 
We assume no responsibility for the information contained on these sites. Our depositary agent for the GDSs in the United States is The Bank of New York Mellon whose address is 240 Greenwich Street, New York, NY 10286, and whose telephone numbers are +1-888-BNY-ADRS (+1-888-269-2377) for U.S. calls and +1-201-680-6825 for calls outside U.S.
 
History
 
From our Operations Center in Argentina we manage our businesses in Argentina and our international investment in Condor Hospitality Trust, Inc., a hotel-focused real estate investment trust (“Condor”).
 
In July 1994, we acquired a controlling interest in IRSA CP, our main subsidiary in Argentina, and in January 14, 2010, we acquired from Parque Arauco S.A. a 31.6% stake in IRSA CP. Consequently, we increased our shareholding in IRSA CP to 94.9%. On October 27, 2017, we completed the sale in the secondary market of 2,560,000 ADSs of IRSA CP, which represented 8.1% of IRSA CP. As of June 30, 2020, our holding in IRSA CP was 80.65% and as of November 30, 2020, after the dividend payment in kind with IRSA CP shares, our holding in IRSA CP was 79.92%.
 
Shopping Malls (through our subsidiary IRSA CP)
 
We are engaged in the acquisition, development and management of Shopping Malls through our subsidiary IRSA CP and its subsidiaries.
 
Since 1996, we have expanded our real estate activities in the shopping mall segment, through the acquisition and development of shopping malls.
 
As of June 30, 2020, through our subsidiary IRSA CP, we own 15 shopping malls in Argentina: Alto Palermo, Abasto Shopping, Alto Avellaneda, Alcorta Shopping, Patio Bullrich, Dot Baires Shopping, Soleil Premium Outlet, Distrito Arcos, Alto NOA Shopping, Alto Rosario Shopping, Mendoza Plaza Shopping, Córdoba Shopping Villa Cabrera, La Ribera Shopping, Alto Comahue Sopping and Patio Olmos (operated by a third party), totaling 333,062 sqm.
 
Offices (through our subsidiary IRSA CP)
 
We own, develop and manage office buildings throughout Argentina, directly and indirectly through our subsidiary IRSA CP.
 
 
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During 2005, attractive prospects in office business led us to make an important investment in this segment by acquiring Bouchard 710 building in fiscal year 2005, covering 15,014 sqm of rentable premium space. On July 30, 2020, our subsidiary IRSA CP sold an unrelated third party of the entire building, located at Plaza Roma, in the City of Buenos Aires, for a total amount of USD 87.2 million approximately.
 
During 2007, we made several significant acquisitions in the Offices segment. We purchased Bouchard Plaza building, also known as “Edificio La Nación,” located in the downtown of the City of Buenos Aires, and during 2015, we completed the sale of all of the floors in Edificio La Nación. In 2007, we also bought Dock del Plata building with a gross leasable area of 7,921 sqm, located in the exclusive area of Puerto Madero, already sold in its entirety, in December 2015. In addition, we acquired a 50% interest in an office building including current leases with a gross leasable area of 31,670 sqm, known as Torre BankBoston, which is located in Buenos Aires, and was designed by the recognized architect Cesar Pelli (who also designed the World Financial Center in New York and the Petronas Towers in Kuala Lumpur).
 
In 2007, through Panamerican Mall S.A., subsidiary of IRSA CP, we started the construction of one of our most important projects called “Polo Dot,” a Shopping Mall, an Office Building and different plots of land to develop three additional office buildings (one of them may include a hotel). This project is located in Saavedra neighborhood, at the intersection of Avenida General Paz and the Panamerican Highway. First, the Shopping Mall Dot Baires was developed and opened on May, 2009 and then the Office Building was opened in July 2010, which meant our landing on the growing corridor of rental offices located in the North Zone of Buenos Aires. In addition, on June 5, 2017, the Company through IRSA CP, reported the acquisition of the historic Philips Building, adjacent to the Dot Baires Shopping Mall, located in Saavedra neighborhood in the City of Buenos Aires. It has 4 office floors, a total gross leasable area of approximately 7,755 sqm which has a remaining construction capacity of approximately 20,000 sqm. Likewise, through PAMSA, we developed the Zetta building, A+ and potentially LEED building, which was inaugurated on May, 2019, it has 11 office floors with a profitable area of 32,173 sqm, fully leased at the opening date.
 
In April 2008, we acquired one of the most emblematic building in the City of Buenos Aires, known as “Edificio República.” This property, also designed by the architect César Pelli, is a premium office building in the downtown area of the City of Buenos Aires, which added approximately 19,885 gross leasable sqm to our portfolio.
 
On December 22, 2014, we transferred to our subsidiary IRSA CP, 83,789 sqm of five buildings of our premium office portfolio and a reserve of land. The premium office buildings transferred included Edificio República, Torre Bank Boston, Edificio Intercontinental Plaza, Edificio Bouchard 710 and Edificio Suipacha and the land reserve “Intercontinental II” with the potential to develop up to 19,600 sqm, each located in the City of Buenos Aires. The acquisition was carried out as part of our strategy to expand our business of developing and operating commercial properties in Argentina and to create a unique and unified portfolio of rental properties consisting of the best office buildings in the City of Buenos Aires and the best shopping malls in Argentina. The total value of the transaction was USD 308.0 million, based on third party appraisals.
 
As of December 31, 2020, we own 7 premium office buildings of rental office property totaling 114,475 sqm of gross leasable area. On November 5, 2020, our subsidiary IRSA CP sold four floors and fifteen parking spaces of the Boston Tower and on November 12, 2020, it sold three floors and fifteen parking spaces of Boston Tower. For more information, see “Recent Developments – Boston Tower Floor’s sale” in our 2020 Form 20-F.”
 
Sales and developments
 
Since 1996, we have also expanded our operations to the residential real estate market through the development and construction of apartment tower complexes in the City of Buenos Aires and through the development of private residential communities in the greater Buenos Aires.
 
We own an important 70-hectare property facing the Río de la Plata in the south of Puerto Madero, 10 minutes from downtown Buenos Aires, called “Solares de Santa María.” We are owners of this property in which we aim to
 
 
18
 
 
 
develop an entrepreneurship for mixed purposes, i.e. our development project involves residential complexes as well as offices, stores, hotels, sports and sailing clubs, services areas with schools, supermarkets and parking lots. For more information regarding the status see “B. Business Overview - Sale and Development of Properties and Land Reserves - Mixed uses - Solares de Santa María – City of Buenos Aires.”
 
In March 2011, we bought the Nobleza Piccardo warehouse, through a subsidiary in which we have a 50% stake. This property is located in the city of San Martín, Province of Buenos Aires, and due to its size and location represents an excellent venue for the future development of different segments. The total plot area is 160,000 sqm. The master plan was carried out by the prestigious Gehl Studio (Denmark), generating a modern concept of a new urban district which is being carried out to a preliminary project / project phase through the Mc Cormack Architecture Studio and Associates and internal and external teams.
 
We are currently developing the project called “Polo Dot,” through PAMSA, subsidiary of IRSA CP, located in the commercial complex adjoining to Dot Baires Shopping Mall. The project will consist of three office buildings (one of them may include a hotel and recently opened Zetta building) on land reserves we own through IRSA CP and the expansion of Dot Baires Shopping by approximately 15,000 sqm of gross leasable area. In the first phase, we developed the Zetta building which was inaugurated on May 2019. The second stage of the project consists of two office/ hotel buildings that will add 38,400 sqm of GLA to the complex. We have noticed an important demand for premium office spaces in this new commercial center and we are confident that we will be able to generate a quality enterprise similar to the ones that the company has done in the past with attractive income levels and high occupancy.
 
Likewise, we are moving forward with the construction of Catalinas Building, which is expected to have approximately 35,000 sqm of gross leasable area consisting of 30 office floors and 316 parking spaces, and will be located in the “Catalinas” area in the City of Buenos Aires, one of the most sought after neighborhoods for premium office development in Argentina. IRSA CP acquired from us certain units in the building and owns 30,832 sqm consisting of 26 floors and 272 parking spaces in the building. On December 4, 2015, we sold to Globant 4,636 sqm corresponding to four office floors. Construction work started in late 2016, and is currently expected to be completed in approximately three years. IRSA CP reported with an unrelated third party the assignment and transfer of the right to deed with delivery of possession of two medium-height floors for a total area of approximately 2,430 sqm and 16 parking spaces units in the building. As of June 30, 2020, we had completed 95% of the construction work.
 
On March 22, 2018 we acquired through IRSA CP, directly and indirectly, 100% of a land of approximately 78,000 sqm of surface located in Camino General Belgrano, between 514 street, avenue 19 and 511 street, in La Plata, Province of Buenos Aires. The objective of this acquisition is to develop a mix uses project given that the land offers location and scale adequate characteristics for the commercial development in a place of great potential.
 
On July 2018, we acquired through IRSA CP “La Maltería S.A.,” a wholly-owned subsidiary of IRSA CP which is directly or indirectly controlled by the company in a 100%, a property of 147,895 sqm of surface and approximately 40,000 sqm of built surface known as “Maltería Hudson,” located in the intersection between Route 2 and Buenos Aires - La Plata highway, main connection route to the south of Greater Buenos Aires and the Atlantic Coast, in the City of Hudson, province of Buenos Aires. The purpose of this acquisition is the future development of a mixed-use project, with a total constructive capacity of approximately 177.000 sqm, given that the property has location and scale characteristics for a real estate development with great potential.
 
Hotels
 
In 1997, we entered the hotel market through the acquisition of a 50% interest in the Llao Llao Hotel near Bariloche Province of Rio Negro and 76.3% in the Intercontinental Hotel in the City of Buenos Aires. In 1998, we also acquired Libertador Hotel in the City of Buenos Aires and subsequently sold a 20% interest in it to an affiliate of Sheraton Hotels, and during the fiscal year 2019, we acquired the interest of 20% and reaching 100% of the capital of Hoteles Argentinos S.A.U and beginning to operate the hotel directly under the name “Libertador.”
 
 
19
 
 
 
International
 
In July 2008, we decided to expand internationally into the United States, taking advantage of certain investment opportunities generated after the global financial crisis. We acquired a 49% interest in Metropolitan 885 3rd Ave (“Metropolitan”), whose main asset is a 34-story building with 59,000 sqm of gross leasable area named Lipstick Building, located at 885 Third Avenue, New York. On August 7, 2020, as a consequence of negotiations conducted in the context of an increased lease price effective as of May 2020, Metropolitan signed an agreement with the owner of the Ground Lease to terminate the commercial relationship, leaving the administration of the building. For this reason, as of June 30, 2020, Metropolitan no longer recognizes the liability associated with the ground lease, as well as all the assets and liabilities associated with the building and the operation of the administration. For more information see “Recent Developments – Lipstick Building.”
 
In March 2012, we entered into an agreement with Supertel Hospitality Inc. whereby we invested approximately USD 20 million. In 1994, Supertel Hospitality Inc completed its initial public offering, and in 2015 changed its name to “Condor Hospitality Trust” (“Condor”). Condor is a REIT listed in Nasdaq focused on medium-class hotels located in various states of the United States of America, managed by various operators and franchises. As of December 31, 2020, we hold an 18.9% interest and voting rights in Condor. The Company entered into an agreement to sell such shares, whose sale process has been delayed. For more information see “Investment in Condor Hospitality Trust”
 
Others
 
Over the years, we have acquired 29.91% of Banco Hipotecario. Banco Hipotecario has historically been Argentina’s leading mortgage lender, provider of mortgage-related insurance and mortgage loan services.
 
Significant acquisitions, dispositions and development of business
 
Sale of floors from Boston Tower
 
 
On July 15, 2020, IRSA CP entered into a preliminary sale agreement (with delivery of possession) with respect to a medium-height floor from Boston tower located at Della Paolera 265, Catalinas district, City of Buenos Aires, covering a total area of approximately 1,063 sq. meters and 5 parking lots located in the building. The price of the transaction was ARS 477.7 million (USD 6.7 million), which has been paid in full.
 
 
On August 25, 2020, IRSA CP executed a preliminary sale agreement (with delivery of possession) with respect to 5 floors from Boston tower located at Della Paolera 265, Catalinas district, City of Buenos Aires, covering a total area of approximately 6,235 sq. meters and 25 parking lots located in the building. The price of the transaction was ARS 2,562 million (USD 34.7 million), which has been paid in full.
 
 
On November 5, 2020, IRSA CP has signed a purchase and sale agreement with possession of 4 floors of the Boston Tower located at 265 Della Paolera in the Catalinas District in the Autonomous City of Buenos Aires for a gross rental area of approximately 3,892 square meters and 15 parking lots located in the building. The price of the transaction was ARS 1,812 million (USD 22.9 million).
 
 
On November 12, 2020, IRSA CP has entered into a purchase and sale agreement with an unrelated third party pursuant to which it has sold 3 floors of the Boston Tower located at 265 Della Paolera in the Catalinas District in the Autonomous City of Buenos Aires for a gross rental area of approximately 3,266 square meters, a commercial space located on the ground floor of approximately 225 square meters and 15 parking lots located in the building. The price of the transaction was ARS 1,521 million (USD 19.1 million).
 
Bouchard sale
 
On July 30, 2020, IRSA CP sold the entire “Bouchard 710” building, located in the Plaza Roma district of the City of Buenos Aires. The tower has a gross leasable area of 15,014 sq. meters divided into 12 floors for office
 
 
20
 
 
 
use and 116 parking lots. The price of the transaction was approximately ARS 6,300 million (USD 87 million), which has been paid in full.
 
Lipstick Building, New York, United States
 
On August 7, 2020, Metropolitan signed an agreement with the owner of the Ground Lease through which it terminated the relationship, leaving the administration of the building. Accordingly, at June 30, 2020, the Group derecognized Metropolitan’s liabilities associated with the ground lease, as well as all the assets and liabilities associated with the building and the administration of the building; and made an agreement with the owner of the Ground Lease that states that Metropolitan is completely released from responsibilities, except for (i) claims for liabilities prior to June 1, 2020 from people who have performed work or provided services in the Building or to Metropolitan and (ii) claims from people who have had an accident on the property dated after August 7, 2020.
 
Condor Merger Agreement
 
On July 19, 2019, Condor entered into a merger agreement with Nextponint Hospitality Trust. In accordance with the contractual terms, each Condor common share, with a par value of USD 0.01 per share, was canceled prior to the merger and became the right to receive a cash amount equivalent to USD 11.10 per share. ordinary action. Additionally, in accordance with the terms and conditions of the merger agreement, each Class E convertible share was automatically canceled and became the right to receive a cash amount equivalent to USD 10.00 per share.
 
The closing of the transaction, which had been scheduled for March 23, 2020, did not occur.
 
On October 14, 2020, Condor entered into an agreement with Nextponint Hospitality Trust and some of its affiliates ("NHT Parties") to resolve any and all claims between them related to the aforementioned merger agreement.
 
According to this agreement, NHT and its affiliates shall make three payments to Condor in three instalments ending on December 30, 2020 and totalling USD 7.0 million. The total compensation for breach of the contract has been collected.
 
As of the date of presentation of the Q2 Unaudited Condensed Interim Consolidated Financial Statements, the Company has 2,245,100 ordinary shares and 325,752 Series E shares of Condor.
 
Loss of control of IDBD
 
At the end of September 2020, the Group has lost control of IDBD, deconsolidating the related assets and liabilities and reclassifying the operations from this operations center to discontinued operations.
 
The following table details the net assets disposed of, as presented in the Unaudited Condensed Interim Consolidated Financial Statements as of September 30, 2020 and for the three-month periods ended September 30, 2020 and 2019:
 
 
21
 
 
 
 
 
09.30.2020
 
ASSETS
 
(In million of ARS)
 
Investment properties
  93,794 
Property, plant and equipment
  38,292 
Trading properties
  6,136 
Intangible assets
  29,161 
Right-of-use assets
  20,629 
Investments in associates and joint ventures
  38,654 
Deferred income tax assets
  453 
Income tax credit
  340 
Restricted assets
  6,703 
Trade and other receivables
  56,408 
Investments in financial assets
  25,249 
Derivative financial instruments
  294 
Inventories
  3,760 
Group of assets held for sale
  43,909 
Cash and cash equivalents
  115,963 
TOTAL ASSETS
  479,745 
Borrowings
  339,376 
Lease liabilities
  18,908 
Deferred income tax liabilities
  12,975 
Trade and other payables
  25,363 
Income tax liabilities
  475 
Provisions
  5,661 
Employee benefits
  498 
Derivative financial instruments
  498 
Salaries and social security liabilities
  3,532 
Group of liabilities held for sale
  22,985 
TOTAL LIABILITIES
  430,271 
TOTAL NET ASSETS
  49,474 
Non-controlling interest
  (49,886)
Result for loss of control
  (412)
Recycling of currency translation adjustment and other reserves
  (2,797)
Total result for loss of control (*)
  (3,209)
 
(*) included within discontinued operations
 
Distribution of dividends in kind
 
On October 26, 2020, the Ordinary and Extraordinary Shareholders’ Meeting of IRSA, approved, a dividend distribution in kind for the equivalent amount of ARS 484 million (representative of ARS 0.84 per share) payable in shares of IRSA CP. IRSA CP’s quoted price per share as of October 23, 2020, was considered and, it amounted to 320 pesos per share. As a result, 1,512,500 shares were distributed. This transaction was accounted for as a change in equity generating a reduction of the equity attributable to the controlling shareholders for ARS 673 million restated for inflation as of the date of this financial statements. As of December 31, 2020, our interest in IRSA CP amounts to 79.92%.
 
Manibil Sale
 
On December 22, 2020, the Company sold 217,332,873 ordinary Class B shares, nominative not endorsable, with a nominal value of ARS 1 and entitled to one vote per share owned by the Company, representing 49% of the stock capital of Manibil S.A., a company dedicated to real estate developments. The price for the sale of the shares amounts to ARS 576.9 million. The operation was completed in February 2021, for which the Company is no longer a shareholder of Manibil S.A.
 
Business Overview
 
Operations and principal activities
 
Founded in 1943, IRSA Inversiones y Representaciones Sociedad Anónima is one of Argentina’s leading real estate companies and the only Argentine real estate company whose shares are listed both on BYMA and on the NYSE.
 
 
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We are engaged, directly and indirectly through subsidiaries and joint ventures, in a range of diversified activities, primarily in real estate, including:
 
i. the acquisition, development and operation of shopping malls,
 
ii. the acquisition and development of office buildings and other non-shopping mall properties primarily for rental purposes,
 
iii. the development and sale of residential properties,
 
iv. the acquisition and operation of luxury hotels,
 
v. the acquisition of undeveloped land reserves for future development or sale, and
 
vi. selective investments outside Argentina.
 
We operate our business in Argentina through seven segments, namely “Shopping Malls,” “Offices” “Sales and Developments,” “Hotels,” “International” and “Corporate” and “Others” as further described below:
 
Our “Shopping Malls” segment includes the operating results from our portfolio of shopping malls principally comprised of lease and service revenue from tenants. Our Shopping Malls segment had assets of ARS 54,593 million and ARS 58,703 million as of December 31, 2020 and 2019, respectively, representing 29.53% and 42.14% of our operating assets for the Operations Center in Argentina at such dates, respectively. Our Shopping Malls segment generated operating loss of ARS 3,966 million and an operating income of ARS 984 million for the fiscal years ended December 31, 2020 and 2019, respectively.
 
Our “Offices” segment includes the operating results from lease revenues of offices, other rental spaces and other service revenues related to the office activities. Our Offices segment had assets of ARS 70,222 million and ARS 42,600 million as of December 31, 2020 and 2019, respectively, representing and 37.99% and 30.58% of our operating assets for the Operations Center in Argentina at such dates, respectively. Our Offices segment generated an operating income of ARS 8,558 million and an operating income of ARS 5,679 million for the fiscal years ended December 31, 2020 and 2019, respectively.
 
Our “Sales and Developments” segment includes the operating results of the development, maintenance and sales of undeveloped parcels of land and/or trading properties. Real estate sales results are also included. Our Sales and Developments segment had assets of ARS 45,971 million and ARS 36,816 million as of December 31, 2020 and 2019, respectively, representing 24.87% and 26.43% of our operating assets for the Operations Center in Argentina. Our Sales and Developments segment generated an operating income of ARS 5,442 million and ARS 3,447 million for the financial years ended December 31, 2020 and 2019, respectively.
 
Our “Hotels” segment includes the operating results of our hotels mainly comprised of room, catering and restaurant revenues. Our Hotels segment had assets of ARS 2,133 million and ARS 2,250 million as of December 31, 2020 and 2019, respectively, representing 1.15% and 1.62% of our operating assets for the Operations Center in Argentina, respectively. Our Hotels segment generated an operating loss of ARS 410 million and an operating income of ARS 328 million for the fiscal years ended December 31, 2020 and 2019, respectively. 
 
Our “International” segment includes investments that mainly operate in the United States in relation to the lease of office buildings and hotels in that country. We intend to continue evaluating investment opportunities outside Argentina as long as they are attractive investment and development options. Our International segment had assets of ARS 1,969 million and net liabilities of ARS 9,886 million as of December 31, 2020 and 2019, respectively. Our International segment generated operating loss of ARS 3 million and ARS 75 million for the fiscal years ended December 31, 2020 and 2019, respectively.
 
“Corporate” segment. Since fiscal year 2018, we have decided to disclose certain corporate expenses related to the holding structure in a separate “Corporate” segment. This segment generated a loss of ARS 325million and ARS 317 million for the fiscal years ended December 31, 2020 and 2019, respectively.
 
 
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Our “Others” Segment includes the entertainment activities through La Arena and La Rural S.A. and the financial activities carried out by Banco Hipotecario for both. Our “Others” segment had assets of ARS 9,972 million and ARS 8,817 million as of December 31, 2020 and 2019, respectively, representing 5.39 and 6.33% of our operating assets for the Operations Center in Argentina, respectively. Our Others segment generated an operating income of ARS 473 million and of ARS 244 million for the fiscal years ended December 31, 2020 and 2019, respectively.
 
Operations Center in Argentina
 
Shopping Malls
 
As of December 31, 2020, IRSA CP owned a majority interest in and operated, a portfolio of 15 shopping malls in Argentina, six of which are located in the City of Buenos Aires (Abasto, Alcorta Shopping, Alto Palermo Shopping, Patio Bullrich, Dot Baires Shopping and Distrito Arcos), two are located in the greater Buenos Aires area (Alto Avellaneda and Soleil Premium Outlet), and the rest are located in different provinces of Argentina (Alto Noa in the City of Salta, Alto Rosario in the City of Rosario, Mendoza Plaza in the City of Mendoza, Córdoba Shopping Villa Cabrera and Patio Olmos (operated by a third party) in the City of Córdoba, La Ribera Shopping in Santa Fe (through a joint venture) and Alto Comahue in the City of Neuquén).
 
The shopping malls we operate comprise a total of 333,460 square meters of GLA (excluding certain spaces occupied by hypermarkets which are not our tenants). Total tenant sales in our shopping malls, as reported by retailers, were ARS 27,497 million for fiscal year 2020 and ARS 61,514 million for fiscal year 2019, a decrease of 55.3% in real terms (-19.2% in nominal terms). The greatest impact of this drop was evidenced in the fourth quarter of the year because of the closure of operations due to the lockdown decreed in Argentina on March 20, 2020 as a consequence of COVID19. Tenant sales at our shopping malls are relevant to our revenues and profitability because it is an important factor in determining rent our tenants pay. Sales also affect tenant’s overall occupancy costs as a percentage of that tenant’s sales.
 
Portfolio’s occupancy decreased to 88.3%, mainly due to the exit of Falabella in Alto Avellaneda and DOT Baires Shopping. Excluding this effect, occupancy reached 94.0%.
 
The following table shows certain information about IRSA CP’s shopping malls as of December 31, 2020:
 
Shopping malls
Date of acquisition/development
Location
 
GLA (sqm)(1)
 
 
Number of stores
 
 
Occupancy rate(2)
 
 
Our ownership interest(3)
 
 
Rental revenue
 
 
 
 
 
 
 
 
 
 
 
(%)
 
 
(%)
 
 
(in million of ARS)
 
Alto Palermo
Dec-97
City of Buenos Aires
  18,655 
  135 
  96.8 
  100.0 
  314 
Abasto Shopping(4)
Nov-99
City of Buenos Aires
  36,794 
  162 
  97.1 
  100.0 
  194 
Alto Avellaneda
Dec-97
Buenos Aires Province
  38,800 
  126 
  67.6 
  100.0 
  127 
Alcorta Shopping
Jun-97
City of Buenos Aires
  15,812 
  112 
  98.2 
  100.0 
  209 
Patio Bullrich
Oct-98
City of Buenos Aires
  11,396 
  89 
  90.2 
  100.0 
  58 
Dot Baires Shopping
May-09
City of Buenos Aires
  48,805 
  166 
  63.2 
  80.0 
  180 
Soleil Premium Outlet
Jul-10
Buenos Aires Province
  15,156 
  79 
  97.8 
  100.0 
  80 
Distrito Arcos
Dec-14
City of Buenos Aires
  14,335 
  65 
  100.0 
  90.0 
  146 
Alto Noa Shopping
Mar-95
City of Salta
  19,313 
  85 
  99.7 
  100.0 
  90 
Alto Rosario Shopping(4)
Nov-04
City of Rosario
  33,682 
  139 
  94.9 
  100.0 
  298 
Mendoza Plaza Shopping
Dec-94
City of Mendoza
  43,123 
  127 
  96.9 
  100.0 
  122 
Córdoba Shopping
Dec-06
City of Córdoba
  15,357 
  104 
  95.5 
  100.0 
  95 
La Ribera Shopping
Aug-11
City of Santa Fé
  10,530 
  70 
  96.5 
  50.0 
  8 
Alto Comahue
Mar-15
City of Neuquén
  11,702 
  95 
  92.2 
  99.9 
  161 
Patio Olmos(5)
Sep-07
City of Córdoba
   
   
   
   
   
Total
 
 
  333,460 
  1,554 
  88.3 
    
  2,081 
 
 
24
 
 
 
(1) Corresponds to gross leasable area in each property. Excludes common areas and parking spaces.
(2) Calculated dividing occupied square meters by leasable area as of the last day of the fiscal year.
(3) Company’s effective interest in each of its business units.
(4) Excludes Museo de los Niños (which represents 3,732 square meters in Abasto and 1,261 square meters in Alto Rosario).
(5) IRSA CP owns the historic building of the Patio Olmos shopping mall in the Province of Córdoba, operated by a third party and does not include the rental revenues of Patio Olmos, for more details see “Accumulated rental income”.
 
The following table shows information about IRSA CP’s expansions and IRSA CP’s future expansions on current assets as of December 31, 2020:
 
Expansions
 
Ownership interest
 
 
Surface
 
Locations
 
 
(%)
 
 
(sqm)
 
 
Alto Palermo Adjoining Plot
  100 
  3,900 
City of Buenos Aires
Subtotal current expansions
    
  3,900 
 
Other future expansions(1)
    
  98,055 
 
Subtotal future expansions
    
  98,055 
 
Total Shopping Malls
    
  101,955 
 
Patio Bullrich - Offices / Hotel
  100 
  10,000 
City of Buenos Aires
Philips Building
  100 
  20,000 
City of Buenos Aires
Subtotal future expansions
    
  30,000 
 
Total offices
    
  30,000 
 
 
    
    
 
Total expansions
    
  131,955 
 
(1) 
Includes Alto Palermo, Paseo Alcorta, Alto Avellaneda, Soleil, Alto Noa, Alto Rosario, Mendoza, Córdoba y La Ribera Shopping
 
Rental income
 
The following table sets forth total rental income for each of IRSA CP’s shopping malls for the fiscal years indicated:
 
 
 
As of December 31, (1)
 
 
 
 
2020
 
 
2019
 
 
 
(in millions of ARS )
 
Alto Palermo 
  314 
  812 
Abasto Shopping 
  194 
  712 
Alto Avellaneda 
  127 
  512 
Alcorta Shopping 
  209 
  435 
Patio Bullrich 
  58 
  245 
Dot Baires Shopping 
  180 
  541 
Soleil Premium Outlet 
  80 
  207 
Distrito Arcos 
  146 
  457 
Alto Noa Shopping 
  90 
  149 
Alto Rosario Shopping 
  298 
  417 
Mendoza Plaza Shopping 
  122 
  249 
Córdoba Shopping Villa Cabrera 
  95 
  151 
La Ribera Shopping(2) 
  8 
  50 
Alto Comahue 
  161 
  261 
Subtotal 
  2,081 
  5,199 
Patio Olmos (3) 
  4 
  5 
Adjustments and eliminations (4)                                                                                 
  (142)
  (244)
Total 
  1,943 
  4,961 
(1) 
Includes base rent, percentage rent, admission rights, fees, parking, commissions, revenue from non-traditional advertising and others. Does not include Patio Olmos.
(2) 
Through our joint venture Nuevo Puerto Santa Fé S.A.
(3) 
IRSA CP owns the historic building where the Patio Olmos shopping mall is located in the province of Cordoba. The property is managed by a third party.
(4) 
Includes indirect incomes and eliminations between segments. In 2019 and 2018, revenue from Buenos Aires Design are included. End of concession December 5, 2018.
 
 
25
 
 
 
The following table sets forth IRSA CP’s revenue from cumulative leases by revenue category for the fiscal years presented:
 
 
 
 As of December 31,
 
 
 
 
2020
 
 
2019
 
 
 
(in millions of ARS)
 
Base rent 
  1,026 
  2,533 
Percentage rent 
  463 
  1,443 
Total rent 
  1,489 
  3,976 
Non-traditional advertising 
  42 
  129 
Revenues from admission rights 
  327 
  619 
Fees 
  55 
  64 
Parking 
  8 
  259 
Commissions 
  70 
  125 
Other 
  71 
  27 
Subtotal(1)
  2,081 
  5,200 
Patio Olmos 
  4 
  5 
Adjustments and eliminations(2) 
  (142)
  (244)
Total 
  1,943 
  4,961 
 
 
26
 
 
 
(1)
Does not include Patio Olmos
 
(2)
Includes indirect incomes and eliminations between segments. .
 
Tenant retail sales
 
For the 2021 fiscal year, IRSA CP’s shopping mall tenants’ sales reached ARS 27,497 million, a decrase of 55,3% in real terms compared to the previous fiscal year (-19.2% in nominal terms).
 
Tenant sales at the shopping malls located in the City of Buenos Aires and Greater Buenos Aires recorded year-on-year decreases of 64.5% in real terms (-28.4% in nominal terms), down from ARS 43,197 million to ARS 15,328 million during fiscal year 2021, whereas shopping malls in the interior of Argentina decreased approximately 33.6% in real terms (+2.6% in nominal terms) in comparison with the previous fiscal year, from ARS 18.316 million to ARS 12.168 million during fiscal year 2020.
 
The following table sets forth the total retail sales of IRSA CP’s shopping mall tenants for the fiscal years indicated:
 
 
 
As of December 31(1)
 
 
 
 
2020
 
 
2019
 
 
 
(in millions of ARS)
 
Alto Palermo 
  2,514 
  7,813 
Abasto Shopping 
  2,164 
  7,791 
Alto Avellaneda 
  1,630 
  6,962 
Alcorta Shopping 
  1,971 
  4,616 
Patio Bullrich 
  1,451 
  3,043 
Buenos Aires Design (1) 
  - 
    
Dot Baires Shopping 
  1,811 
  6,077 
Soleil Premium Outlet 
  1,493 
  3,247 
Distrito Arcos 
  2,293 
  3,649 
Alto Noa Shopping 
  1,910 
  2,545 
Alto Rosario Shopping 
  4,208 
  6,167 
Mendoza Plaza Shopping 
  3,521 
  4,483 
Córdoba Shopping Villa Cabrera 
  1,472 
  1,938 
La Ribera Shopping(2) 
  481 
  1,284 
Alto Comahue 
  578 
  1,899 
Total 
  27,497 
  61,514 
(1) Retail sales based upon information provided to us by retailers and prior owners. The amounts shown reflect 100% of the retail sales of each shopping mall, although in certain cases we own less than 100% of such shopping malls. Includes sales from stands and excludes spaces used for special exhibitions.
(2) End of concession term was December 5, 2018
(3) Owned by Nuevo Puerto Santa Fé S.A., in which we are a joint venture partner.
 
Total sales by type of business
 
The following table sets forth the retail sales of IRSA CP’s shopping mall tenants by type of business for the fiscal years indicated:
 
 
 
As of December 31,(1)
 
 
 
 
2020
 
 
2019
 
 
 
(in millions of ARS )
 
Department Store 
  979 
  3,294 
Clothes and footwear 
  16,275 
  34,691 
Entertainment 
  50 
  1,828 
Home and decoration 
  721 
  1,249 
Home Appliances 
  1,672 
  6,597 
Restaurants 
  4,448 
  8,232 
Miscellaneous 
  248 
  671 
Services 
  3,104 
  4,952 
Total 
  27,497 
  61,514 
 
 
 
 
 
27
 
 
 
(1) Includes sales from stands and excludes spaces used for special exhibitions.
 
Occupancy rate
 
The following table sets forth the occupancy rate of IRSA CP’s shopping malls expressed as a percentage of gross leasable area of each shopping mall for the fiscal years indicated:
 
 
 
As of December 31,
 
 
 
2020
 
 
2019
 
 
 
(%)
 
 
 
 
 
 
 
 
Alto Palermo 
  96.8 
  99.5 
Abasto Shopping 
  97.1 
  99.8 
Alto Avellaneda 
  67.6 
  99.2 
Alcorta Shopping 
  98.2 
  98.4 
Patio Bullrich 
  90.2 
  93.4 
Dot Baires Shopping 
  63.2 
  74.5 
Soleil Premium Outlet 
  97.8 
  97.8 
Distrito Arcos 
  100.0 
  94.7 
Alto Noa Shopping 
  99.7 
  99.2 
Alto Rosario Shopping 
  94.9 
  99.5 
Mendoza Plaza Shopping 
  96.9 
  99.9 
Córdoba Shopping Villa Cabrera 
  95.5 
  97.6 
La Ribera Shopping 
  96.5 
  95.5 
Alto Comahue 
  92.2 
  95.7 
Total (1) 
  88.3 
  94.9 
(1)
As of June 30, 2020, the occupancy rate decreased mainly due to 12,600 square meters vacancy generated by Walmart in Dot Baires Shopping. Excluding this effect, the occupancy would have been 96.0%.
 
 
28
 
 
 
Rental price
 
The following table shows the annual average rental price per square meter of our shopping malls for the fiscal years indicated:
 
 
 
As ofDecember 31,(1)
 
 
 
 
2020
 
 
2019
 
 
 
(in ARS)
 
Alto Palermo 
  11,453 
  30,870 
Abasto Shopping 
  3,088 
  14,387 
Alto Avellaneda 
  1,557 
  10,536 
Alcorta Shopping 
  10,516 
  19,535 
Patio Bullrich 
  3,093 
  14,922 
Dot Baires Shopping 
  1,171 
  7,800 
Soleil Premium Outlet 
  4,083 
  11,356 
Distrito Arcos 
  8,831 
  24,416 
Alto Noa Shopping 
  4,023 
  6,771 
Alto Rosario Shopping 
  7,257 
  10,217 
Mendoza Plaza Shopping 
  2,336 
  4,857 
Córdoba Shopping Villa Cabrera 
  5,372 
  8,072 
La Ribera Shopping 
  388 
  3,937 
Alto Comahue 
  12,997 
  21,229 
 
(1) Corresponds to consolidated annual accumulated rental prices according to the IFRS divided by gross leaseable square meters. Does not include revenues from Patio Olmos.
 
Lease expirations(1)(2)
 
Includes information as of June 30, 2020 due to the fact that, during the six-month period ended on December 31, 2020, a large portion of our shopping centers were unable to open to the public or did so with under sanitary restrictions, as provided by DNU 297/2020 and subsequent extensions, which made it impossible to renew expired rental contracts and/or to sign new contracts.
 
The following table sets forth the schedule of estimated lease expirations for our shopping malls for leases in effect as of June 30, 2020, assuming that none of our tenants excercises its option to renew or terminate its lease prior to expiration:
 
 
 
As of June 30, 2020
 
 
Agreements’ Expiration
 
Number ofagreements(1)
 
 
Square meters to expire
 
 
Due toexpire(%)
 
 
Total leasepayments(in millions of ARS)(3)
 
 
Agreements(%)
 
Vacant Stores 
  113 
  22,684 
  6.8 
 
 
 
 
 
 
Expired in-force 
  246 
  53,600 
  16.1 
  486 
  18.4 
As of June 30, 2021 
  424 
  68,355 
  20.5 
  763 
  28.9 
As of June 30, 2022 
  383 
  48,719 
  14.6 
  589 
  22.3 
As of June 30, 2023 
  278 
  38,916 
  11.7 
  418 
  15.8 
As of June 30, 2024 and subsequent years
  118 
  100,788 
  30.3 
  383 
  14.5 
Total 
  1,562 
  333,062 
  100.0 
  2,639 
  100.0 
(1) Includes vacant stores as of June 30, 2020. A lease may be associated with one or more stores.
(2) Does not reflect our ownership interest in each property.
(3) The amount expresses the annual base rent as of June 30, 2020 of agreements due to expire.
 
            
Five largest tenants of the portfolio
 
Includes information as of June 30, 2020 due to the fact that, during the quarter ended on December 31, 2020, a large portion of our shopping centers were unable to open to the public or did so under sanitary restrictions, as provided by DNU 297/2020 and subsequent extensions, which made it impossible to renew expired rental contracts and/or to sign new contracts.
 
 
29
 
 
 
The five largest tenants of the portfolio (in terms of sales) account for approximately 16.6% of their gross leasable area as of June 30, 2020 and represent approximately 9.8% of the annual basic rent for the fiscal year ending on that date.
 
The following table describes our portfolio’s five largest tenants:
 
Tenant
Type of Business
 
Sales
 
 
Gross Leaseable Area
 
 
Gross Leaseable Area
 
 
 
 
(%)
 
 
(sqm)
 
 
(%)
 
Zara
Clothes and footwear
  7.5 
  10,771 
  3.2 
Falabella
Department store
  5.4 
  28,892 
  8.7 
Nike
Clothes and footwear
  4.0 
  7,610 
  2.3 
Fravega
Home appliances
  3.2 
  3,524 
  1.1 
Mc Donald’s
Restaurant
  2.5 
  4,400 
  1.3 
Total
 
  22.5 
  55,197 
  16.6 
 
New leases and renewals
 
Includes information as of June 30, 2020 due to the fact that, during the quarter ended on Decmeber 31, 2020, a large portion of our shopping centers were unable to open to the public or did so under sanitary restrictions, as provided by DNU 297/2020 and subsequent extensions, which made it impossible to renew expired rental contracts and / or to sign new contracts.
 
The following table shows certain information about IRSA CP’s leases agreement as of June 30, 2020:
 
 
 
Number of agreements renewed
 
 
Annual base rent (in millions of ARS)
 
 
Annual admission rights (in millions of ARS)
 
 
Average annual baserent per sqm (ARS)
 
 
Number of non-renewed agreements(1)
 
 
Non-renewed agreements(1) annual base rent amount (in millions of ARS)
 
Type of business
 
 
 
 
 
 
 
 
 
 
New andrenewed
 
 
Formeragreements
 
 
 
 
 
 
 
Clothing and footwear 
  268 
  478 
  95 
  12,781 
  10,103 
  578 
  1,122 
Restaurant 
  72 
  107 
  15 
  13,466 
  11,877 
  130 
  226 
Miscellaneous(2) 
  56 
  112 
  26 
  6,741 
  25,798 
  147 
  318 
Home 
  32 
  61 
  8 
  8,484 
  9,762 
  54 
  128 
Services 
  28 
  47 
  4 
  8,636 
  10,927 
  12 
  59 
Entertainment 
  11 
  19 
  0 
  1,224 
  1,455 
  14 
  73 
Supermarket 
  1 
  5 
  0 
  1,222 
  2,950 
  1 
  9 
Total 
  468 
  829 
  148 
  7,057 
  8,123 
  936 
  1,935 
(1) Includes vacant stores as of June 30, 2020. Gross leasable area with respect to such vacant stores is included under the type of business of the last tenant to occupy such stores.
(2) Miscellaneous includes anchor store.
 
Principal Terms of our Leases
 
Under the Civil and Commercial Code of Argentina, the term of the locations cannot exceed twenty years for the residential destination and fifty years for the other destinations.
 
Leasable space in our shopping malls is marketed through an exclusive arrangement with our wholly owned subsidiary and real estate broker Fibesa S.A., or “Fibesa.” We use a standard lease agreement for most tenants at our shopping malls, the terms and conditions of which are described below. However, our largest or “anchor” tenants generally negotiate better terms for their respective leases. No assurance can be given that lease terms will be as set forth in the standard lease agreement.
 
Rent amount specified in our leases generally is the higher of (i) a monthly Base Rent and (ii) a specified percentage of the tenant’s monthly gross sales in the store, which generally ranges between 3% and 12% of tenant’s gross sales. In addition, pursuant to the rent escalation clause in most of our leases, a tenant’s Base Rent generally increases between 18% and 28% on a semi-annually and cumulative basis from the thirteenth (13th) month of effectiveness of the lease. Although many of our lease agreements contain price adjustment provisions, these are not based on an
 
 
30
 
 
 
official index nor do they reflect the inflation index. In the event of litigation, there can be no assurance that we will be able to enforce such clauses contained in our lease agreements. These terms and conditions have not been applied during a period when the shopping malls remained closed due to the Social, Preventive and Mandatory Isolation decreed by the government of Argentina as a result of the novel COVID-19 virus since IRSA CP decided to defer the billing and collection of the Base Rent until September 30, 2020, with some exceptions and IRSA CP alsos suspended collection of the collective promotion fund during the same period, prioritizing the long-term relationship with its tenants.
 
In addition to rent, we charge most of our tenants an admission right, which must be paid upon execution of the lease agreement and upon its renewal. The admission right is normally paid as a lump sum or in a small number of monthly installments. If the tenants pay this fee in installments, the tenants are responsible for paying the balance of any such unpaid amount if they terminate the lease prior to its expiration. In the event of unilateral termination and/or resolution for breach by the tenants, tenants will not be refunded their admission payment without our consent. We lease our stores, kiosks and spaces in our shopping malls through our wholly-owned subsidiary Fibesa. We charge our tenants a fee for the brokerage services, which usually amounts to approximately three months of the Base Rent plus the admission right.
 
We are responsible, except in the mall Distrito Arcos, for providing each unit within our shopping malls with electricity, a main telephone switchboard, central air conditioning and a connection to a general fire detection system. We also provide the food court tenants with sanitation and with gas systems connections. In Distrito Arcos, the connections are managed by the tenants. Each tenant is responsible for completing all necessary installations within its rental unit, in addition to paying direct related expenses, including electricity, water, gas, telephone and air conditioning. Tenants must also pay for a percentage of total expenses and general taxes related to common areas. We determine this percentage based on different factors. The common area expenses include, among others, administration, security, operations, maintenance, cleaning and taxes.
 
We carry out promotional and marketing activities to draw consumer traffic to our shopping malls. These activities are paid for with the tenants’ contributions to the Collective Promotion Fund, or “CPF,” which is administered by us. Tenants are required to contribute 15% of their rent (Base Rent plus Percentage Rent) to the CPF. We may increase the percentage tenants must contribute to the CPF with up to 25% of the original amount set forth in the corresponding lease agreement for the contributions to the CPF. We may also require tenants to make extraordinary contributions to the CPF to fund special promotional and marketing campaigns or to cover the costs of special promotional events that benefit all tenants. We may require tenants to make these extraordinary contributions up to four times a year provided that each extraordinary contribution may not exceed 25% of the tenant’s preceding monthly lease payment.
 
Each tenant leases its rental unit as a shell without any fixtures and is responsible for the interior design of its rental unit. Any modifications and additions to the rental units must be pre-approved by us. We have the option to charge the tenant for all costs incurred in remodeling the rental units and for removing any additions made to the rental unit when the lease expires. Furthermore, tenants are responsible for obtaining adequate insurance for their rental units, which must cover, among other things, damage caused by fire, glass breakage, theft, flood, civil liability and workers’ compensation.
 
Insurance
 
We and our subsidiary IRSA CP carry all-risk insurance for the shopping malls and other buildings covering property damage caused by fire, terrorist acts, explosion, gas leak, hail, storms and wind, earthquakes, vandalism, theft and business interruption. In addition, we carry liability insurance covering any potential damage to third parties or property caused by the conduct of our business throughout Argentina. We and our subsidiary IRSA CP are in compliance with all legal requirements related to mandatory insurance, including insurance required by the Occupational Risk Law (Ley de Riesgos del Trabajo), life insurance required under collective bargaining agreements and other insurance required by laws and executive orders. IRSA CP’s and our history of damages is limited to one single claim resulting from a fire in Alto Avellaneda Shopping in March 2006, which loss was substantially recovered from our insurers. These insurance policies contain specifications, limits and deductibles which we believe are adequate to the risks to which we are exposed in our daily operations. We and our subsidiary IRSA CP also maintain liability insurance covering the liability of our directors and corporate officers.
 
 
31
 
 
 
Control Systems
 
IRSA CP has computer systems equipped to monitor tenants’ sales (except stands) in all of its shopping malls. IRSA CP also conduct regular audits of our tenants’ accounting sales records in all of our shopping malls. Almost every store in its shopping malls has a point of sale that is linked to our main server. IRSA CP uses the information generated from the computer monitoring system to prepare statistical data regarding, among other things, total sales, average sales and peak sale hours for marketing purposes and as a reference for the internal audit. Most of its shopping mall lease agreements require the tenant to have its point of sale system linked to our server. During this fiscal year, we signed an agreement to renew our payment terminals with contactless technology (Clover).
 
Competition
 
We are the largest owner and operator of shopping malls, offices and other commercial properties in Argentina in terms of gross leaseable area and number of rental properties. Given that most of our shopping malls are located in highly populated areas, there are competing shopping malls within, or in close proximity to, our targeted areas, as well as stores located on avenues or streets. The number of shopping malls in a particular area could have a material effect on our ability to lease space in our shopping malls and on the amount of rent that we are able to charge. We believe that due to the limited availability of large plots of land and zoning restrictions in the City of Buenos Aires, it is difficult for other companies to compete with us in areas through the development of new shopping malls. Our principal competitor is Cencosud S.A. which owns and operates Unicenter Shopping and the Jumbo hypermarket chain, among others.
 
The following table shows certain information concerning the most significant owners and operators of shopping malls in Argentina, as of December 31, 2020.
 
Entity
Shopping malls
Location
 
GLA
 
 
Marketshare(1)
 
 
 
 
 
 
 
 
(%)
 
IRSA CP 
Alto Palermo
City of Buenos Aires
  18,655 
  1.44 
Abasto Shopping(2)
City of Buenos Aires
  36,794 
  2.83 
Alto Avellaneda
Province of Buenos Aires
  38,800 
  2.98 
Alcorta Shopping
City of Buenos Aires
  15,812 
  1.22 
Patio Bullrich
City of Buenos Aires
  11,396 
  0.88 
Dot Baires Shopping(4)
City of Buenos Aires
  48,805 
  3.75 
Soleil
Province of Buenos Aires
  15,156 
  1.17 
Distrito Arcos
City of Buenos Aires
  14,335 
  1.10 
Alto Noa(2)
City of Salta
  19,313 
  1.49 
Alto Rosario(3)
City of Rosario
  33,682 
  2.59 
Mendoza Plaza
City of Mendoza
  43,123 
  3.32 
Córdoba Shopping
City of Córdoba
  15,357 
  1.18 
La Ribera Shopping
City of Santa Fe
  10,530 
  0.81 
Alto Comahue
City of Neuquén
  11,702 
  0.90 
Subtotal 
 
 
  333,460 
  25.65 
Cencosud S.A. 
 
 
  277,203 
  21.33 
Other operators 
 
 
  689,189 
  53.02 
Total 
 
 
  1,299,852 
  100.00 
(1) Corresponding to gross leaseable area in respect of total gross leaseable area. Market share is calculated dividing sqm over total sqm.
(2) Does not include Museo de los Niños (3,732 sqm).
(3) Does not include Museo de los Niños (1,261 sqm).
(4) Our interest in PAMSA is 80%:
Source: Argentine Chamber of Shopping Centers.
 
Seasonality
 
IRSA CP’s business is directly related with seasonality, affecting the level of our tenants’ sales. During summer holidays (January and February) our tenants’ sales reach their minimum level, whereas during winter holidays (July) and in December (Christmas) they reach their maximum level. Clothing stores generally change their collections in spring and autumn, positively affecting our shopping malls’ sales. Sales at discount prices at the end of each season are also one of the main sources of impact on our business.
 
 
32
 
 
 
Offices
 
According to Colliers International, as of December 31, 2020, the A+ and A office inventory increased compared to 2019 to 1,848,808 sqm. The vacancy rate was steady at approximately 15.9% during the fourth quarter of 2020. These values indicate that the market is healthy in terms of its operations, allowing an optimum level of supply with robust values.
 
Compared to the previous quarter, lease prices for Premium Offices decreased to USD 25.2 per square meter (1.2% as compared to the previous quarter), and showed similar values to those of the same period last year, which was USD 25.1 per square meter. The prices for A+ properties were USD 27.1 per square meter for the fourth quarter of 2020. In this context, North zone of Ciudad de Buenos Aires presents as the zone with higher prices per square meter, reaching an average of USD 30.3. Likewise, the industry reported a 5.0% decrease in rental prices for A properties compared to the third quarter of 2020, reaching an average of USD 22.6 per square meter.
 
Management of office buildings
 
We generally act as the manager of the office properties in which we own an interest. We typically own the entire building or a substantial number of floors in the building. The buildings in which we own floors are generally managed pursuant to the terms of a condominium agreement that typically provides for control by a simple majority of the interests based on owned area. As building manager, we handle services such as security, maintenance and housekeeping, which are generally outsourced. The cost of the services is passed through to, and paid for by, the tenants, except in the case of our units that have not been leased, if any, for which we bear the cost. We market our leasable area through commissioned brokers or directly by us.
 
Leases
 
We usually lease our offices by using contracts with an average term between three to ten years. Contracts for the rental of office buildings and other commercial properties are generally stated in U.S. dollars. Rental rates for renewed periods are negotiated at market value.
 
Properties
 
The following table sets forth certain information regarding IRSA CP’s office buildings, as of December 31, 2020: 
 
 
Date of acquisition/development
 
GLA (sqm)(1)
 
 
Occupancy rate(2)
 
 
Ownership interest
 
 
Total rental income as of December 31, 2020
 
 
 
 
 
 
 
(%)
 
 
(%)
 
 
(in thousands
of ARS)
 
Offices
 
 
 
 
 
 
 
 
 
 
 
 
 
AAA & A buildings
 
 
 
 
 
 
 
 
 
 
 
 
 
República Building 
Dec-14
  19,885 
  76.6 
  100 
  237,415 
Bankboston Tower(5) 
Dec-14
  - 
  - 
  - 
  96,195 
Intercontinental Plaza(3) 
Dec-14
  2,979 
  100.0 
  100 
  66,583 
Bouchard 710(6) 
Dec-14
  - 
  - 
  - 
  34,557 
Dot Building 
Nov-06
  11,242 
  77.1 
  80 
  111,423 
Zetta 
Jun-19
  32,173 
  84.7 
  80 
  377,599 
261 Della Paolera – Catalinas (7) 
Dec-20
  28,714 
  74.6 
  100 
  82,632 
Total AAA & A buildings
 
  94,993 
  79.5 
    
  1,006,404 
B buildings
 
    
    
    
    
Philips 
Jun-17
  8,017 
  93.1 
  100 
  62,929 
Suipacha 652/64 
Dec-14
  11,465 
  31.2 
  100 
  22,119 
Total B buildings
 
  19,482 
  56.7 
    
  85,048 
Total Offices
 
  114,475 
  75.6 
    
  1,091,452 
Other rental properties(4)
 
    
    
    
  23,496 
Total Offices and Others
 
    
    
    
  1,114,948 
 
 
33
 
 
 
(1) Corresponds to the gross leasable area of each property as of June 30, 2020. Excludes common areas and parking spaces.
(2) Calculated by dividing occupied square meters by leasable area as of June 30, 2020.
(3) We own 13.2% of the building that has 22,535 square meters of gross leasable area.
(4) Includes rental income from all those properties that are not buildings intended for rent, but that are partially or fully rented (Philips Deposit, Anchorena 665 and San Martin Plot)
(5) On July 15, 2020, our subsidiary IRSA CP sold one floor and five parking spaces, on August 26, 2020, it sold five floors and twenty five parking spaces, on November 5, 2020, it sold fours floor and fifteen parking spaces and on November 12, 2020, it sold three floors and fifteen parking spaces. For more information, see “Recent Developments – Boston Tower Floor’s sale - Signature of a Purchase ticket regarding Boston Tower floor with possession”.
(6) On July 30, 2020, IRSA CP sold the entire building. For more information see: “Recent Developments – Bouchard 710 Building sale”.
(7) Includes 664 leasable square meters of the basement.
 
 Occupancy rate
 
The following table shows our offices occupancy percentage(1) as of the end of fiscal years ended December 31:
 
 
 
Occupancy rate (1)
 
 
 
 
As of December 31,
 
 
 
 
2020
 
 
2019
 
 
 
(%)
 
Offices:
 
 
 
 
 
 
República Building 
  76.6 
  90.3 
Bankboston Tower (2) 
  - 
  100.0 
Intercontinental Plaza 
  100.0 
  100.0 
Bouchard 710(3) 
  - 
  100.0 
Suipacha 652/64 
  31.2 
  86.2 
DOT Building 
  77.1 
  78.1 
Philips Building 
  93.1 
  69.8 
Zetta Building 
  84.7 
   
261 Della Paolera – Catalinas (4) 
  74.6 
  - 
Total 
  75.6 
  90.0 
(1)
Leased square meters pursuant to lease agreements in effect as of June 30, 2020, 2019 and 2018 over gross leasable area of offices for the same fiscal years.
(2)
On July 15, 2020, our subsidiary IRSA CP sold one floor and five parking spaces, on August 26, 2020, our subsidiary IRSA CP sold five floors and twenty five parking spaces, on November 5, 2020, it sold four floors and fifteen parking spaces and on November 12, 2020, it sold three floors and fifteen parking spaces. For more information, see “Recent Developments – Boston Tower Floor’s sale - Signature of a Purchase ticket regarding Boston Tower floor with possession”.
(3)
On July 30, 2020, our subsidiary IRSA CP sold the entire building. For more information see: “Recent Developments – Bouchard 710 Building sale”.
(4)
Includes 664 leasable square meters of the basement.
 
 
34
 
 
 
 
Annual average income per surface area as of December 31, 2020 and 2019 (1):
 
 
Income per square meter (1)
 
 
 
 
As of December 31,
 
 
 
 
2020
 
 
2019
 
 
 
(ARS/sqm)
 
República Building 
  15,585 
  14,501 
Bankboston Tower(2) 
  - 
  14,061 
Intercontinental Plaza 
  22,353 
  9,141 
Bouchard 710(3) 
  0 
  16,390 
Suipacha 652/64 
  6,185 
  4,706 
Dot Building 
  12,852 
  13,435 
Philips Building 
  8,429 
  8,461 
Zetta Building
Catalinas
  13,853 
  14,132 
261 Della Paolera 
  3,859 
  - 
(1)
Calculated by dividing annual rental income by the gross leasable area of offices based on our interest in each building as of June 30 for each fiscal period.
 
(2)
On July 15, 2020, our subsidiary IRSA CP sold one floor and five parking spaces,on August 26, 2020, our subsidiary IRSA CP sold five floor and twenty five parking spaces, on November 5, 2020, it sold four floor and fifteen parking spaces and on November 12, 2020, it sold four floors and fifteen parking spaces. For more information, see “Recent Developments – Boston Tower Floor’s sale - Signature of a Purchase ticket regarding Boston Tower floor with possession”.
 
(3)
On July 30, 2020, our subsidiary IRSA CP sold the entire building. For more information see: “Recent Developments - Bouchard 710 Building sale”.
 
New agreements and renewals
 
Includes information as of June 30, 2020 due to the fact that, during the six-momth period ended on December 31, 2020, a large portion of the offices were unable to open to the public or did so under sanitary restrictions, as provided by DNU 297/2020 and subsequent extensions, which made it impossible to renew expired rental contracts and / or to sign new contracts.
 
The following table sets forth certain Information on lease agreements as of June 30, 2020:
 
Building
 
Number of lease agreements (1)(5)
 
 
Annual rental price(In million of ARS) (2)
 
 
Rental price per new and renewed sqm (3)
 
 
Rental price per previous sqm (ARS) (3)
 
 
Number of lease agreements not renewed
 
 
Lease agreements not renewed Annual rental price (In million of ARS) (4)
 
Bouchard 710(6)
  - 
  - 
  - 
  - 
  1 
  14 
Bankboston Tower(7)
  2 
  34 
  1,891 
  1,933 
  - 
  - 
Republica Building
  3 
  133 
  1,703 
  1,777 
  2 
  25 
DOT Building
  1 
  17 
  882 
  851 
  - 
  - 
Philips Building
  3 
  35 
  896 
  - 
  - 
  - 
Suipacha 664
  1 
  25 
  1,046 
  1,046 
  - 
  - 
Total Offices
  10 
  244 
  1,369 
  1,206 
  3 
  39 
(1) 
Includes new and renewed lease agreements executed in FY 2019.
(2) 
Lease agreements in U.S. dollars converted to Pesos at the exchange rate prevailing in the first effective month of the agreement, multiplied by 12 months.
(3) 
Monthly value.
(4) 
Lease agreements in U.S. dollars converted to Pesos at the exchange rate prevailing in the last effective month of the agreement, multiplied by 12 months.
(5) 
It does not include lease agreements over parking spaces, antennas or terrace area.
(6) 
On July 30, 2020, our subsidiary IRSA CP sold the entire building. For more information see: “Recent Developments – Bouchard 710 Building sale”
(7) On July 15, 2020, our subsidiary IRSA CP sold one floor and five parking spaces and on August 26, 2020, our subsidiary IRSA CP sold five floor and twenty five parking spaces, on November 5, 2020, it sold four floor and fifteen parking spaces and on November 12, 2020, it sold four floors and fifteen parking spaces. For more information, see “Recent Developments – Boston Tower Floor’s sale - Signature of a Purchase ticket regarding Boston Tower floor with possession”.
 
Includes information as of June 30, 2020 due to the fact that, during the six-momth period ended on December 31, 2020, a large portion of the offices were unable to open to the public or did so under sanitary restrictions, as provided by DNU 297/2020 and subsequent extensions, which made it impossible to renew expired rental contracts and / or to sign new contracts.
 
35
 
 
 
 
The following table sets forth the schedule of estimated lease expirations for our offices and other properties for leases in effect as of June 30, 2020. This data is presented assuming that none of our tenants exercises its option to renew or terminate its lease prior to expiration (most leases have renewal clauses):
 
Expiration year
 
Number ofleases dueto expire(1)
 
 
Square meters ofleases due toexpire (sqm) (3)
 
 
Square meter ofleases due toexpire(%)
 
 
Annual rentalincome amountof leases due toexpire(in million ofARS)(2)
 
 
Annual rentalincome amountof leases toexpire(%)
 
As of June 30, 2020 
  4 
  9,454 
  9 
  57 
  3 
As of June 30, 2021 
  22 
  24,983 
  25 
  679 
  33 
As of June 30, 2022 and thereafter
  33 
  65,149 
  65 
  1,345 
  65 
Total 
  59 
  99,586 
  100 
  2,081 
  100 
(1)
Includes offices with leases that have not been renewed as of June 30, 2020.
(2)
It does not include square meters used by IRSA CP.
(3)
It does not include square meters or revenues from parking spaces.
 
Hotels
 
According to the Hotel Vacancy Survey (EOH) prepared by INDEC, at December 31, 2020, overnight stays at hotel and parahotel establishments were estimated at 2.6 million, 42.1% shorter than the same month the previous year. Overnight stays by resident and nonresident travelers decreased by 66.3% and 97.4%, respectively. The Room Occupancy Rate in june was 15.0%. Moreover, the Bed Occupancy Rate for the same period was 18.6%.
 
Future confirmations on the relaxation of social isolation, the opening of airports for national and international flights, land borders and normal interprovincial traffic will contribute to the slow normalization. With the reopening, an initial occupancy is expected, oscillating between 5% and 15%, growing gradually.
 
The crisis in the sector has motivated palliative measures by national and provincial authorities, necessary measures that partially contribute to sustainability. In a complementary way, the management of each one of the hotels makes its best efforts to adapt operationally to the context.
 
As of December 31, 2020, we kept our 76.34% interest in Intercontinental hotel, 100% interest in Libertador hotel and 50.00% interest in Llao Llao.
 
The following chart shows certain information regarding our luxury hotels:
 
Hotels
Date of Acquisition
 
IRSA’s Interest
 
 
Number of rooms
 
 
Occupancy (%)(1)
 
 
Average Price per Room ARS (2)
 
 
Period Sales as of December 31(in millions of ARS)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2020
 
 
2019
 
Intercontinental(3)
11/01/1997
  76.34%
  313 
  7.6%
  9,021 
  32.06 
  622.51 
Libertador (4)
03/01/1998
  100%
  200 
  5.8%
  3,570 
  6.44 
  255.18 
Llao Llao (5)
06/01/1997
  50.00%
  205 
  11%
  26,341 
  80.97 
  848.22 
Total
 
    
  718 
  8.05%
  14,654 
  119.47 
  1,726 
(1) 
Accumulated average in the twelve-month period.
(2) 
Accumulated average in the twelve-month period.
(3) 
Through Nuevas Fronteras S.A.
(4) 
Through Hoteles Argentinos S.A.U.
(5) 
Through Llao Llao Resorts S.A.
 
Hotel Llao Llao, San Carlos de Bariloche, Province of Rio Negro
 
In June 1997 we acquired the Hotel Llao Llao from Llao Llao Holding S.A. Fifty percent is currently owned by the Sutton Group. The Hotel Llao Llao is located on the Llao Llao peninsula, 25 kilometers from the City of San Carlos de Bariloche, and it is one of the most important tourist hotels in Argentina. Surrounded by mountains and lakes, this hotel was designed and built by the famous architect Bustillo in a traditional alpine style and first opened in 1938. The hotel was renovated between 1990 and 1993 and has a total constructed surface area of 15,000 sqm and 158 original rooms. The hotel-resort also includes an 18-hole golf course, tennis courts, fitness facility, spa, game
 
 
36
 
 
 
 
room and swimming pool. The hotel is a member of The Leading Hotels of the World, Ltd., a prestigious luxury hospitality organization representing 430 of the world’s finest hotels, resorts and spas. The Hotel Llao Llao is currently being managed by Compañía de Servicios Hoteleros S.A., operator, among others, of the Alvear Palace Hotel, a luxury hotel located in the Recoleta neighborhood of Buenos Aires. During 2007, the hotel was subject to an expansion and the number of suites in the hotel rose to 205 rooms.
 
Hotel Intercontinental, City of Buenos Aires
 
In November 1997, we acquired 76.34% of the Hotel Intercontinental. The Hotel Intercontinental is located in the downtown City of Buenos Aires neighborhood of Montserrat, near the Intercontinental Plaza office building. Intercontinental Hotels Corporation, a United States corporation, currently owns 23.66% of the Hotel Intercontinental. The hotel’s meeting facilities include eight meeting rooms, a convention center and a divisible 588 sqm ballroom. Other amenities include a restaurant, a business center, a sauna and a fitness facility with swimming pool. The hotel was completed in December 1994 and has 313 rooms.  
 
 Hotel Libertador, City of Buenos Aires
 
In March 1998 we acquired 100% of the Sheraton Libertador Hotel from Citicorp Equity Investment for an aggregate purchase price of USD23 million. In March 1999, we sold a 20% interest in the Sheraton Libertador Hotel for USD4.7 million to Hoteles Sheraton de Argentina.
 
During the fiscal year 2019, we acquired 20% of the shares of Hoteles Argentinos S.A.U. (“HASAU”), reaching 100% of the capital stock of HASAU and beginning to operate the hotel directly under the name “Libertador”. The hotel is located in downtown Buenos Aires. The hotel contains 193 rooms and 7 suites, eight meeting rooms, a restaurant, a business center, a spa and fitness facilities with a swimming pool.
 
Bariloche Plot, “El Rancho,” San Carlos de Bariloche, Province of Río Negro
 
On December 14, 2006, through our hotel operator subsidiary, Llao Llao Resorts S.A., we acquired a land covering 129,533 sqm of surface area in the City of San Carlos de Bariloche in the Province of Río Negro. The total price of the transaction was USD 7 million, of which USD 4.2 million were paid in cash and the balance of USD 2.8 million was financed by means of a mortgage to be paid in 36 monthly, equal and consecutive installments of USD 0.086 million each. The land is in the border of the Lago Gutiérrez, close to the Llao Llao Hotel in an outstanding natural environment and it has a large cottage covering 1,000 sqm of surface area designed by the architect Ezequiel Bustillo.
 
Sale and Development of Properties and Land Reserves
 
Residential Development Properties
 
The acquisition and development of residential apartment complexes and residential communities for sale is one of our core activities. Our development of residential apartment complexes consists of the new construction of high-rise towers or the conversion and renovation of existing structures such as factories or warehouses. In connection with our development of residential communities, we frequently acquire vacant land, develop infrastructure such as roads, utilities and common areas, and sell plots of land for construction of single-family homes. We may also develop or sell portions of land for others to develop complementary facilities such as shopping areas within residential developments.
 
In the six-month period ended December 31, 2020, revenues from development and sale of properties amounted to ARS 358 million, compared to ARS 626 million posted in the six-month period ended December 31, 2019.
 
Construction and renovation works on our residential development properties are performed, under our supervision, by independent Argentine construction companies that are selected through a bidding process. We enter into turnkey contracts with the selected company for the construction of residential development properties pursuant to which the selected company agrees to build and deliver the development for a fixed price and at a fixed date. We are generally not responsible for any additional costs based upon the turnkey contract. All other aspects of the construction, including architectural design, are performed by third parties.
 
Another modality for the development of residential undertakings is the exchange of land for constructed square meters. In this way, we deliver undeveloped pieces of land and another firm is in charge of building the project. In this case, we receive finished square meters for commercialization, without taking part in the construction works.
 
 
37
 
 
 
The following table shows information about IRSACP’s land reserves as of December 31, 2020:
 
 
 
Ownership Interest (%)
 
Date of acquisition
 
Land Surface (sqm)
 
 
Buildable surface (sqm)
 
 
GLA (sqm)
 
 
Salable Surface (sqm)
 
 
Book Value (in millions of ARS)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RESIDENTIAL - BARTER AGREEMENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONIL - Güemes 836 – Mz. 99 & Güemes 902 – Mz. 95 & Commercial stores - Buenos Aires(6)
  100 
Jul-96
   
   
   
  1,461 
  78 
Total Intangibles (Residential)
    
 
   
   
   
  1,461 
  78 
 
    
 
    
    
    
    
    
LAND RESERVES:
    
 
    
    
    
    
    
Catalinas - City of Buenos Aires(4)(5)
  100 
May-10
  3,648 
  58,100 
  28,051 
   
   
Subtotal offices
    
 
  3,648 
  58,100 
  28,051 
   
   
Total under Development
    
 
  3,648 
  58,100 
  28,051 
   
   
UOM Luján - Buenos Aires
  100 
May-08
  1,160,000 
  464,000 
   
   
  1,337 
San Martin Plot (Ex Nobleza Piccardo) - Buenos Aires
  50 
May-11
  159,996 
  500,000 
   
   
  3,830 
La Plata - Greater Buenos Aires
  100 
Mar-18
  78,614 
  116,552 
   
   
  1,304 
Caballito plot - City of Buenos Aires
  100 
Jan-99
  23,791 
  86,387 
  10,518 
  75,869 
  4,391 
Subtotal Mixed-uses
    
 
  1,422,401 
  1,166,940 
  10,518 
  75,869 
  10,862 
Coto Abasto air space - City of Buenos Aires(2)
  100 
Sep-97
   
  21,536 
   
  16,385 
  41 
Córdoba Shopping Adjoining plots - Córdoba(2)
  100 
Jun-15
  8,000 
  13,500 
   
  2,160 
  40 
Neuquén - Residential plot - Neuquén(2)
  100 
Jun-99
  13,000 
  18,000 
   
  18,000 
  95 
Subtotal residential
    
 
  21,000 
  53,036 
   
  36,545 
  176 
Polo Dot commercial expansion – City of Buenos Aires
  80 
Nov-06
   
   
  15,940 
   
  1,904 
Paraná plot - Entre Ríos (3)
  100 
Aug-10
  10,022 
  5,000 
  5,000 
   
   
Subtotal retail
    
 
  10,022 
  5,000 
  20,940 
   
  1,904 
Polo Dot - Offices 2 & 3 - City of Buenos Aires
  80 
Nov-06
  12,800 
   
  38,400 
   
  3,659 
Intercontinental Plaza II - City of Buenos Aires
  100 
Feb-98
  6,135 
   
  19,598 
   
  1,497 
Córdoba Shopping adjoining plots - Córdoba(2)
  100 
Jun-15
  2,800 
  5,000 
  5,000 
   
  30 
Subtotal offices
    
 
  21,735 
  5,000 
  62,998 
   
  5,186 
Total future developments
    
 
  1,475,158 
  1,229,976 
  94,456 
  112,414 
  18,128 
Other land reserves(1)
    
 
  1,899 
   
  7,297 
  262 
  1,897 
Total land reserves
    
 
  1,477,057 
  1,229,976 
  101,753 
  112,676 
  20,025 
(1) 
Includes Zelaya 3102-3103, Chanta IV, Anchorena 665, Condominios del Alto II, Ocampo parking spaces, DOT adjoining plot and Mendoza shopping adjoining plot.
(2) 
These land reserves are classified as Trading Properties, therefore, their value is maintained at historical cost. The rest of the land reserves are classified as Investment Property, valued at market value.
(3) 
Sign of the deeds pending subject to certain conditions.
(4) 
The sale agreements for 86.93% of the property under development have been signed between IRSA and IRSA CP and the remaining units have been sold to Globant, also through an agreement. The deed of sale with both entities has not yet been signed. The aforementioned fair value corresponds only to the land.
(5) 
On June 10, 2020, IRSA CP informed with an unrelated third party the assignment and transfer of the right to deed with delivery of possession of two floors of medium height of the tower under construction "200 Della Paolera" located in the Catalinas district of the Autonomous City of Buenos Aires for a total area of approximately 2,430 m2 and 16 parking units located in the building.
(6) 
Classified as Intangible Assets, therefore, their value is kept at historical cost.
 
 
The following table shows information about IRSACP’s expansions on its current assets as of December 31, 2020:
 
Expansions
 
Ownership interest
 
 
Surface
 
Locations
 
 
(%)
 
 
(sqm)
 
 
Alto Palermo Adjoining Plot
  100 
  3,900 
City of Buenos Aires
Subtotal current expansions
    
  3,900 
 
Other future expansions(1)
    
  98,055 
 
Subtotal future expansions
    
  98,055 
 
Total Shopping Malls
    
  101,955 
 
Patio Bullrich - Offices / Hotel
  100 
  10,000 
City of Buenos Aires
Philips Building
  100 
  20,000 
City of Buenos Aires
Subtotal future expansions
    
  30,000 
 
Total offices
    
  30,000 
 
 
    
    
 
Total expansions
    
  131,955 
 
 
 
 
38
 
 
 
 
The following chart shows information about IRSA’s land reserves as of December 31, 2020:
 
 
 
IRSA's Interest
 
Date of acquisition
 
Land surface (sqm)
 
 
Buildable surface (sqm)
 
 
Saleable surface (sqm)
 
 
Book Value (ARS millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LAND RESERVES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
La Adela - Buenos Aires(3)
  100%
8/1/2014
  9,868,500 
  3,951,227 
  - 
  1,903 
Puerto Retiro - BA City (1)
  50%
5/18/1997
  82,051 
  246,153 
  - 
  - 
Solares Santa María - BA City(3)
  100%
7/10/1997
  716,058 
  716,058 
  - 
  27,818 
Subtotal Mixed-uses
    
 
  10,666,609 
  4,913,438 
  - 
  29,721 
Caballito Block 35 -BA City (4)
  100%
10/22/1998
  9,879 
  57,192 
  30,064 
  472 
Zetol – Uruguay (4)
  90%
6/1/2009
  - 
  - 
  64,080 
  370 
Vista al Muelle – Uruguay (4)
  90%
6/1/2009
  - 
  - 
  60,360 
  321 
Subtotal Residential
    
 
  9,879 
  57,192 
  154,504 
  1,163 
Total Future Developments
    
 
  10,676,488 
  4,970,630 
  154,504 
  30,884 
Another Land Reserves (2)(3)(4)
    
 
  5,249,941 
  - 
  4,713 
  623 
Total Land Reserves
    
 
  15,926,429 
  4,970,630 
  159,217 
  31,507 
 
    
 
    
    
    
    
(1) 
This landplot is under judicial litigation and it is fully allowanced.
(2) 
Includes Pilar R8 Km 53, Pontevedra, Mariano Acosta, Merlo and San Luis plot, and Llao Llao plot.
(3) 
These properties (La Adela, Solares Santa María, Pilar R.8 Km 53, Pontevedra, Mariano Acosta, Merlo and San Luis) are valuated as Fair Value.
(4) 
These properties (Caballito Block 35, Zetol, Vista al Muelle and Llao Llao plot) are valuated as Cost adjusted for inflation.
 
Residential Properties (available for sale)
 
In the residential market, we acquire undeveloped properties strategically located in densely populated areas of the City of Buenos Aires, particularly properties located near shopping malls and hypermarkets or those to be constructed. We then develop multi-building high-rise complexes targeting the middle- and high- income market. These are equipped with modern comforts and services, such as open “green areas,” swimming pools, sports and recreation facilities and 24-hour security.
 
Condominios del Alto II – City of Rosario, Province of Santa Fe (IRSA CP)
 
The Condominios del Alto II project will be composed of two opposite building blocks, commercially divided into 10 sub-blocks. The project consists of a total of 189 apartments distributed in 6 stories and 195 parking spaces located in two basements. The amenities include a swimming pool with solarium, a multiple use room, sauna, a gym with dressrooms and a laundry. As of the date of this Annual Report, the works in parcel H have been completed and all the units subject to the barter have been received, with six parking spaces available for sale.
 
Horizons, Vicente López, Olivos, Province of Buenos Aires.
 
The IRSA-CYRELA Project, developed over two adjacent blocks, was launched in March 2008 under the name Horizons. Horizons is one of the most significant developments in Greater Buenos Aires, featuring a new concept in residential complexes given its emphasis on the use of common spaces. This project includes two complexes with a total of six buildings: one complex faces the river and consists of three 14-floor buildings, the “Río” complex, and the other one, facing Libertador Avenue, consists of three 17-floor buildings, it is known as the “Parque” complex, thus totaling 59,000 square meters built of saleable area distributed in 467 units (excluding the units to be delivered as consideration for the purchase of the lands). Horizons is a unique and style-innovating residential complex offering 32 amenities, including a meeting room, work zone, heated swimming pools, mansion with spa, sauna, gym, children room, teen room, thematically landscaped areas, and aerobic trail. The showroom was opened to the public in March 2008 with great success. As of December 31, 2020, all the units were sold and the stock available for sale consisted of 1 parking space and 19 storage spaces.
 
Pereiraola (Greenville), Hudson – Province of Buenos Aires
 
In April de 2010 we sold Pereiraola S.A., a company owner of certain lands adjacent to Abril Club de Campo that comprised 130 hectares, for USD11.7 million. The purchaser would develop a project that includes the fractioning into lots, a condo-hotel, two polo fields, and apartment buildings. The delivery to the Company of 39,634 square
 
 
39
 
 
 
meters of lots amounting to approximately USD3 million was included in the sale price. As of December 31, 2020, all lots had been transferred.
 
Intangibles – Units to be received under barter agreements
 
Conil – Avellaneda, Province of Buenos Aires (IRSA CP)
 
These plots of land we own, through IRSA CP, face Alto Avellaneda shopping mall, totaling 2,398 square meters distributed in two opposite corners and, according to urban planning standards, around 6,000 square meters may be built. Its intended use, either through our own development or sale to a third party, is residential with the possibility of a retail space as well. In November 2014, a barter deed was executed to carry out a residential development, in consideration of which IRSA CP will receive 1,389 square meters of retail stores located on the ground floors of blocks 99 and 95 at Güemes 836 and Güemes 902, respectively. The barter was valued at USD0.7 million. Considerations for block 95 and 99 were estipulated to be delivered in January 2018 and September 2018, respectively. In June 2018 an extension to the barter agreement was signed. In consideration for the delay and as compensation, IRSA CP will receive an additional apartment (55.5 square meters) and one parking lot (14 square meters). 
 
Zetol S.A. and Vista al Muelle S.A. – District of Canelones – Uruguay
 
In the course of fiscal year 2009 we acquired a 100% ownership interest in Liveck S.A., a company organized under the laws of Uruguay. In June 2009, Liveck had acquired a 90% stake in the capital stock of Vista al Muelle S.A. and Zetol S.A., two companies incorporated under the laws of Uruguay, for USD 7.8 million. The remaining 10% ownership interest in both companies is in the hands of Banzey S.A. These companies have undeveloped lands in Canelones, Uruguay, close to the capital city of Uruguay, Montevideo.
 
We intend to develop in these 13 plots, with a construction capacity of 182,000 sqm, an urban project that consists of the development and comercialization of 1,860 apartments. Such project has the “urban feasibility” status for the construction of approximately 200,000 sqm for a term of 10 years, which was granted by the Mayor’s Office of the Canelones department and by its Local Legislature. Zetol S.A. and Vista al Muelle S.A. agreed to carry out the infrastructure works for USD 8 million as well as minimum amount of sqm of properties. The satisfaction of this commitment under the terms and conditions agreed upon will grant an additional 10-year effective term to the urban feasibility status.
 
The total purchase price for Zetol S.A. was USD 7 million; of which USD 2 million were paid. Sellers may opt to receive the balance in cash or through the delivery of units in the buildings to be constructed in the land owned by Zetol S.A. equivalent to 12% of the total marketable meters to be constructed.
 
Besides, Vista al Muelle S.A. owned since September 2008 a plot of land purchased for USD 0.83 million. Then, in February 2010, plots of land were acquired for USD 1 million. In December 2010, Vista al Muelle S.A. executed the title deed of other plots for a total amount of USD 2.66 million, of which USD 0.3 million were paid. The balance will be repaid by delivering 2,334 sqm of units and/or retail stores to be constructed or in cash.
 
On June 30, 2009, the Company sold a 50% stake in Liveck S.A. to Cyrela Brazil Realty S.A. for USD1.3 million. On December 17, 2010, together with Cyrela Brazil Realty S.A. we executed a stock purchase agreement pursuant to which we repurchased from Cyrela Brazil Realty S.A. a 50% shareholding in Liveck S.A. for USD 2.7 million. Accordingly, as of June 30, 2016, our stake, through Tyrus, in Liveck is 100%.
 
As a result of the plot barter agreements executed in due time between the IMC, Zetol S.A. and Vista al Muelle S.A. in March 2014, the parcel redistribution dealing was concluded. This milestone, as set forth in the amendment to the Master Agreement executed in 2013, initiates the 10-year term for the investment in infrastructure and construction of the buildings mentioned above. Construction capacity of the 13 plots is 182,000 sqm.
 
On November 15, 2018, the translation deed of sale of the first plot where the first Tower of Departments, Villas and single and double parking spaces is currently being built has been signed, the total exchange price was USD 7,298,705 equivalent to 16% of all of the marketable built meters in the first Tower. 12% of it has been used to cancel part of the price balance maintained to date with the sellers of the plots acquired by Zetol S.A in June 2009. The estimated delivery date of the units is January 2022.
 
 
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Canteras Natal Crespo, La Calera – Province of Córdoba
 
On June 26, 2013, we sold 100% of our interest in Canteras Natal Crespo S.A. representing 50% of its capital stock, to Euromayor S.A. de Inversiones for USD 4,215,000 according to the following payment schedule: USD 3,815,000 in cash and USD 400,000 through the transfer of almost 40,000 sqm for business purposes within the project to be developed in the site known as Laguna Azul. Delivery of the non-monetary consideration, which consist in 30,000 sqm, is pending. In December 2019, an agreement was reached with the counterpart that allowed the resale of the non-monetary consideration to an unrelated third party for a total value of USD 450,000.
 
Projects under Development
 
Alto Palermo Expansion (IRSA CP)
 
We keep working on the expansion of Alto Palermo shopping mall, the shopping mall with the highest sales per square meter in our portfolio, that will add a gross leasable area of approximately 3,900 square meters and will consist in moving the food court to a third level by using the area of an adjacent building acquired in 2015. Work progress as of December 31 2020 was 71% and construction works are expected to be finished by June 2021. 
 
200 Della Paolera - Catalinas building (IRSA CP)
 
The building under construction will have 35,000 sqm of GLA consisting of 30 office floors and 316 parking spaces and will be located in the “Catalinas” area in the City of Buenos Aires, one of the most sought-after spots for Premium office development in Argentina. The Company owns 30,832 square meters consisting of 26 floors and 272 parking spaces in the building. As of December 31, 2020, work progress was 98.5%.
  
Mixed uses
 
Ex UOM – Luján, Province of Buenos Aires (IRSA CP)
 
This 116-hectare plot of land is located in the 62 Km of the West Highway, in the intersection with Route 5 and was originally purchased by IRSA from Birafriends S.A. for USD 3 million on May 31, 2008. In May 2012, the Company acquired the property through a purchase and sale agreement entered into between related parties, thus becoming the current owner. Our intention is to carry out a mixed-use project, taking advantage of the environment consolidation and the strategic location of the plot. At present, dealings are being carried out so as to change the zoning parameters, thus enabling the consummation of the project.
 
Ex Nobleza Piccardo Plant – San Martín, Province of Buenos Aires (IRSA CP)
 
This plot of land is owned by Quality Invest. On May 31, 2011, Quality Invest S.A. and Nobleza Picardo S.A.I.C. y F. (Nobleza) executed the title deed for the purchase of a plot of land extending over 160,000 square meters located in the District of San Martín, Province of Buenos Aires, currently intended for industrial purposes and suitable in terms of characteristics and scales for mixed-use developments. 
 
The Master Plan, by which it is projected to develop a large-scale integral urbanization (residential, commercial, etc.), which includes the construction of approximately 540,000 m2, was endorsed by the Municipality of San Martin through Decree 1589/19 and registered before the General Directorate of Urbanism and Directorate of Urban Planning of the Municipality. Likewise, the subdivision plan in accordance with the urban indicators was presented to the Directorate of Cadastre of the Province of Bs. As.
 
Additionally, during this fiscal year, the pre-feasibility requirements began to be processed with public bodies. The one corresponding to the Hydraulic Directorate of the Province is in the process of approval, and in the next fiscal year, we will begin the rest of the presentations before the service companies, to obtain the pre-feasibilities of electric power, gas, water and overturning. of effluents.
 
Córdoba Shopping Mall Project (IRSA CP)
 
The Company owns a few plots adjacent to Córdoba Shopping Mall with a construction capacity of approximately 17,300 square meters in the center of the City of Córdoba.
 
In May 2016, a preliminary barter agreement was signed for 13,500 square meters out of the total construction capacity, subject to certain conditions, for a term of one year, at the end of which the deed will be signed. It will be a mixed residential and office project and, as part of the consideration, the Company will receive 2,160 square meters
 
 
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in apartments, parking spaces, shopping space, plus IRSA CP will assume the management of permits, unifications and subdivisions in 3 plots. The consideration will be delivered by May 2022 for Torre I and by July 2024 for Torre II. The value of the barter was USD 4 million.
 
La Plata Plot of land (IRSA CP)
 
On March 22, 2018 the Company has acquired, directly and indirectly, 100% of a plot of land of 78,614 square meters located in the city of La Plata, Province of Buenos Aires. The price of the transaction was USD7.5 million, which have been fully paid.
 
The price of the operation was set at the amount of USD 7,5 million which have been fully paid. The purpose of this acquisition is the future development of a mixed-use project, given that the property has characteristics for a commercial development in a high potential district.
 
On January 21, 2019, Ordinance No. 11767, approved by the Honorable Deliberative Council of La Plata on December 26, 2018, has been promulgated. With said promulgation, the uses and indicators requested to develop a project of 116,553 sqm are formally confirmed by said Ordinance.
 
On September 24, 2020, the agreement that validates Ordinance No. 11767 was signed between the Mayor Dr. Julio Garro and the Director of the Real Estate Business, Dr. Daniel Elsztain, where the uses within the property are fixed, they may be: Shopping and entertainment center, Offices, Hotels, Housing, Medical Assistance Center and any other use authorized by the Planning Code of the City of La Plata.
 
The Master plan was consolidated with 16 lots, which are already in process to obtain the corresponding subdivision, by Geodesia in the Province of Buenos Aires.
 
Caballito Plot – City of Buenos Aires
 
On December 23, 2019, the Company transferred Parcel 1 of the land reserve located at Av. Avellaneda and Olegario Andrade 367 in the Caballito neighborhood of the City of Buenos Aires to an unrelated third party.
 
Plot 1 has an estimated surface of 3,221 sqm where a 10 floors residential building will be developed for a total area of 11,400 sqm, together with a commercial ground floor of 1,216 sqm and a basement of 138 parking spaces (“Building 1”).
 
The amount of the operation was set at USD 5.5 million to be paid in future functional units of Building 1, which represent the equivalent of 23.53% of the owned square meters, with a minimum guaranteed of 2,735 sqm composed for 1,215.62 commercial sqm, 1,519.68 residential sqm and a certain number of parking spaces that represent 22.50% of the own sqm with that destination and never less than 31 units.
 
The consideration is guaranteed by a mortgage on Plot 1 and Building 1 and the buyer has an Option to acquire Plot 2 of the same property until August 31, 2020 and Plots 3 and 4 until March 31, 2021, subject to certain suspensive conditions.
 
On July 20, 2020, IRSA CP was notified of the filing of a protection action (amparo) that is processed before the Administrative and Tax Litigation Jurisdiction of the City of Buenos Aires, where the plaintiff has requested the nullity of: 1) Administrative act that grants the certificate of environmental aptitude and 2) Administrative act that registered the plans. On October 1, 2020, the Chamber confirmed the precautionary measure. The Government of the City of Buenos Aires appealed the measure by filing an Appeal of Unconstitutionality. For more information, see “ITEM 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal or Arbitration Proceedings—Caballito.”
 
La Adela – Buenos Aires
 
During 2015 the company acquired the “La Adela” land reserve with an area of approximately 1,058 hectares, located in the District of Luján, Province of Buenos Aires, that was previously owned by Cresud for a total amount of ARS 210 million. Given its degree of development and closeness to the City of Buenos Aires, we intend to develop a new real estate project.
 
Puerto Retiro – City of Buenos Aires
 
At present, this 8.3 hectare plot of land, which is located in one of the most privileged areas of the city, near Catalinas, Puerto Madero and Retiro and is the only privately owned waterfront property facing directly to Río de la
 
 
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Plata, is affected by a zoning regulation defined as U.P. which prevents the property from being used for any purposes other than strictly port activities.
 
During fiscal year 1998, the Company initiated negotiations with the authorities of the Government of the City of Buenos Aires in order to obtain a rezoning permit for the property, allowing a change in the use of the property and setting forth new regulations for its development.
 
In turn, Tandanor filed a civil action against Puerto Retiro S.A. and the other defendants in the criminal case for violation of Section 174 (5) based on Section 173 (7) of the Criminal Code. Such action seeks -on the basis of the nullity of the decree that approved the bidding process involving the Dársena Norte property- the restitution of the property and a reimbursement in favor of Tandanor for all such amounts it has allegedly lost as a result of a suspected fraudulent transaction involving the sale of the property. Puerto Retiro has presented the allegation on the merit of the evidence, highlighting that the current shareholders of Puerto Retiro did not participate in any of the suspected acts in the criminal case since they acquired the shares for consideration and in good faith several years after the facts told in the process. Likewise, it was emphasized that the company Puerto Retiro is foreign - beyond its founders - to the bidding / privatization carried out for the sale of Tandanor shares. The pronouncement of the sentence is pending.
 
On September 7, 2018, the Oral Federal Criminal Court No. 5 rendered a decision. According to the sentence read by the President of the Court, Puerto Retiro won the preliminary objection of limitation filed in the civil action. However, in the criminal case, where Puerto Retiro is not a party, it was ordered, among other issues, the confiscation (decomiso) of the property owned by Puerto Retiro known as Planta I. The grounds of the Court`s judgement will be read on November 30, 2018. From that moment, all the parties might file the appeals.
 
On December 27, 2018, an action for annulment was filed against the judgment that ordered the confiscation of the property named “Planta 1”. On March 1, 2019 we were notified of the "in limine" rejection of the action for annulment filed. Subsequently, on March 8, 2019, a motion for restitution was filed against said resolution. On March 19, 2019, we were notified of the Court's decision that rejected the replacement and declared the appeal filed in a subsidiary inadmissible. On March 22, 2019, a complaint was filed for appeal denied (before the Federal Criminal Cassation Chamber), the caul was granted, which is why the appeal filed is currently pending. In that sense, in April the appeal was maintained and subsequently, its foundations were expanded.
 
On February 21, 2020, an electronic document was received from the Federal Court of Criminal notifying the decision rejecting the appeals brought by Puerto Retiro against the verdict of the Federal Oral Court 5 that provided for the confiscation of the property Plant I and the distribution of costs in the order caused as regards the exception for the limitation of civil action brought by Puerto Retiro to which the Oral Court took place. Against that decision of appeal, Puerto Retiro was brought in a timely and form of Federal Extraordinary Appeal. In addition, Federal Criminal Cassation Chamber upheld the above limitation period by rejecting, to that effect, the appeal brought by the National State and Tandanor.
 
In the face of the evolution of the legal cases affecting it and based on the reports of its legal advisors, the Management of Puerto Retiro has decided to record an impairment equivalent to 100% of the book value of its investment property, without prejudice to the reversal of the same in the event that a favorable judgment is obtained in the actions brought.
 
Solares de Santa María – City of Buenos Aires
 
Solares de Santa María is a 70-hectare property facing the Río de la Plata in the south of Puerto Madero, 10 minutes from downtown Buenos Aires. We are owners of this property in which we intend to develop an entrepreneurship for mixed purposes, i.e. our development project involves residential complexes as well as offices, stores, hotels, sports and sailing clubs, services areas with schools, supermarkets and parking lots, and we would need to obtain all the necessary permits and authorizations
 
On October 30, 2012 a new agreement was executed with the Government of the City of Buenos Aires, replacing all prior agreements, and such has been submitted to the Legislature for its consideration. The agreement provided that if by February 28, 2014 the agreement was not approved would become invalidated.
 
During 2016, a new Agreement was executed with the Executive Branch of the City of Buenos Aires, including a new Bill of Law. The new Bill of Law was submitted to the Legislative Branch of the City of Buenos Aires for consideration and was approved by the relevant commissions; yet, during legislative year 2018 it was reserved and remained without legislative treatment. As a consequence, at the end of the 2018 legislative session, the lack of
 
 
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treatment triggered the automatically invalidity of the above mentioned and executed Agreement with the Executive Branch of the City of Buenos Aires, which include such Bill of Law.
 
As of the date of this Annual Report, efforts are still being made both in the CABA with the Government as well as in the CABA Legislature in order that the project Law may be treated on the premises, for its treatment and subsequent legislative approval.
 
Residential
 
Coto Residential Project (IRSA CP)
 
The Company owns the right to construct above the premises of the Coto hypermarket that is close to Abasto Shopping in the heart of the City of Buenos Aires which we acquired in September 24, 1997. We estimate it has a construction capacity of 23,000 square feet (it also includes the right to receive certain parking units). The premises are located within the area between Agüero, Lavalle, Guardia Vieja and Gallo streets, in the Abasto neighborhood.
 
On October 25, 2019, IRSA CP transferred to a non-related third party the rights to develop a residential building (“Tower 1”) on Coto Supermarket airspace located in Abasto neighborhood in the City of Buenos Aires. Tower 1 will have 22 floors of 1 to 3 rooms apartments, totaling an area of 8,400 sqm.
 
The amount of the operation was set at USD 4.5 million: USD 1 million in cash and the balance in at least 35 apartment units, which represent the equivalent of 24.20% of the owned square meters, with a minimum guaranteed of 1,982 sqm.
 
In a 30 month-period since the signature, when certain conditions have been met, IRSA CP must transfer to the same unrelated third party the rights to build a second apartment building.
 
Neuquén Residential Plot– Neuquén, Province of Neuquén (IRSA CP)
 
Through Shopping Neuquén S.A., we own a plot of 13,000 square meters with construction capacity of 18,000 square meters of residential properties in an area with significant growth potential. This area is located close to the shopping mall Alto Comahue, the hypermarket currently in operation and a hotel to be constructed.
 
Caballito Plot – City of Buenos Aires
 
On June 29, 2011, we and TGLT, a residential developer, entered into an agreement to barter for the development of a plot of land located at Méndez de Andes street in the neighborhood of Caballito in the City of Buenos AiresA neighborhood association named Asociación Civil y Vecinal SOS Caballito secured a preliminary injunction which suspended the works to be carried out by TGLT in the abovementioned property. On April 2018 TGLT and us terminated the barter agreement and we recovered the land. In July 2018, the Supreme Court of Justice issued a favorable final decision allowing the construction of 57,192 sqm of apartments on the plot.
 
Offices
 
Polo Dot 2nd and 3rd Stages – City of Buenos Aires (IRSA CP)
 
These two parcels of 6,400 square meters with a construction capacity of 33,485 square meters each, are located adjoining to where the extension of Dot Baires Shopping is planned. In April 2018, both plots were unified into a single one of 12,800 square meters.
 
Intercontinental Plaza II Plot - City of Buenos Aires (IRSA CP)
 
In the heart of the neighborhood of Monserrat, just a few meters from the most trafficked avenue in the city and the financial center, is the Intercontinental Plaza complex consisting of an office tower and the exclusive Intercontinental Hotel. In the current plot of 6,135 square meters a second office tower of 19,600 square meters and 25 stories could be built to supplement the tower currently located in the intersection of Moreno and Tacuarí streets.
 
 
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Other Land Reserves
 
Other Land Reserves – Pilar, Pontevedra, Mariano Acosta, Merlo, San Luis Plot, Llao Llao Plot and Casona Abril remaining surface
 
We grouped here those plots of land with a significant surface area the development of which is not feasible in the short term either due to their current urban and zoning parameters, their legal status or the lack of consolidation of their immediate environment. This group totals around 7 million sqm.
 
Isla Sirgadero
 
On September 3, 2015, the entire property of 10,083,270 sqm was sold to several companies for USD3.9 million, payable in 16 quarterly installments, plus an installment in kind, land resulting from the final blueprint, equivalent to 10% of the surface area. Delivery of the non-monetary consideration, consisting in 1,083,327 sqm, is pending.
 
International
 
Lipstick Building, New York, United States
 
The Lipstick Building is a landmark building in the City of New York, located at Third Avenue and 53th Street in Midtown Manhattan, New York. It was designed by architects John Burgee and Philip Johnson (Glass House and Seagram Building, among other renowned works) and it is named after its elliptical shape and red façade. Its gross leasable area is approximately 58,000 sqm and consists of 34 floors.
 
On August 7, 2020, as a consequence of negotiations conducted in the context of an increased lease price effective as of May 2020, Metropolitan signed an agreement with the owner of the Ground Lease to terminate the commercial relationship, leaving the administration of the building. For this reason, as of June 30, 2020, Metropolitan no longer recognizes the liability associated with the ground lease, as well as all the assets and liabilities associated with the building and the operation of the administration. For more information see “Recent Developments – Lipstick Building”.
 
Investment in Condor Hospitality Trust
 
We maintain our investment in the Condor Hospitality Trust Hotel REIT (NYSE: CDOR) mainly through our subsidiary Real Estate Investment Group VII (“REIG VII”), in which we hold a 100% interest. Condor is a REIT listed in NYSE focused on medium-class hotels located in various states of the United States of America, managed by various operators and franchises.
 
Condor's investment strategy is to build a branded premium, select service hotels portfolio within the top 100 Metropolitan Statistical Areas ("MSA") with a particular focus on the range of MSA 20 to 60. Since the beginning of the reconversion of the hotel portfolio in 2015, Condor has acquired 14 high quality select service hotels in its target markets for a total purchase price of approximately USD277 million. In addition, during this time, it has sold 53 legacy assets for a total value of approximately USD161 million.
 
On July 19, 2019, Condor signed an agreement and merger plan with a company not related to the group. As agreed, each Condor ordinary share, whose nominal value is USD 0.01 per share will be canceled before the merger and will become the right to receive a cash amount equivalent to USD 11.10 per ordinary share. Additionally, in accordance with the terms and conditions of the merger agreement, each Series E convertible share will be automatically canceled, and its holders will become entitled to receive a cash amount equal to USD 10.00 per share. The closing of the acquisition, scheduled for March 23, 2020, did not occur.
 
On October 12, 2020, Condor executed an agreement with Nextponint Hospitality Trust and some of its affiliates (“NHT Parties”) to resolve and settle any and all claims between them related to the merger agreement mentioned hereinabove.
 
According to the agreement with NHT Parties shall make three payments to Condor in three instalments ending the last payment on December 30, 2020 and totalling USD 7,0 million. This amount was fully collected.
As of the date of presentation of the Q2 Unaudited Consolidated Interim Condensed Financial Statements, the Company had 2,197,023 common shares and 325,752 Series E shares.
 
 
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Others
 
Our interest in Banco Hipotecario
 
As of December 31, 2020, we held a 29.91% interest in Banco Hipotecario. Established in 1886 by the argentine government and privatized in 1999, Banco Hipotecario has historically been Argentina’s leading mortgage lender, provider of mortgage-related insurance and mortgage loan services. All of its operations are located in Argentina where it operates a nationwide network of 63 branches in the 23 Argentine provinces and the City of Buenos Aires, and 12 additional sales offices throughout Argentina.
 
Banco Hipotecario is an inclusive commercial bank that provides universal banking services, offering a wide variety of banking products and activities, including a wide range of individual and corporate loans, deposits, credit and debit cards and related financial services to individuals, small-and medium-sized companies and large corporations. As of December 31, 2020, Banco Hipotecario ranked seventeenth in the Argentine financial system in terms of totals assets and twelfth in terms of loans. As of December 31, 2020, Banco Hipotecario’s shareholders’ equity was ARS 17,947.6 million, its consolidated assets were ARS 137,541.9 million, and its net income for the Fiscal Period ended December 31, 2020 was ARS 970.6 million. Since 1999, Banco Hipotecario’s shares have been listed on the Buenos Aires Stock Exchange in Argentina, and since 2006 it has had a Level I ADR program.
 
Banco Hipotecario continues its business strategy of diversifying its loan portfolio. As a result, non-mortgage loans granted by the bank to the non-financial private sector were ARS 40,522.8 million as of December 31, 2020. Non-performing loans represented 16.3% of its total portfolio as of December 31, 2020.
 
In recent years, Banco Hipotecario has diversified its funding base and has become one of the most frequent issuers of corporate debt in Argentina based on the percentage of its total funding, by developing presence in the domestic and international capital markets, and it has also increased its deposit base. Its financial indebtedness as a percentage of its total funding was 23.0% as of December 31, 2020.
 
Its subsidiaries include BACS Banco de Crédito y Securitización S.A., a bank specialized in investment banking, asset securitization and asset management; BACS Administradora de Activos S.A.S.G.F.C.I., a mutual investment fund management company; BHN Sociedad de Inversión S.A., which controls BHN Vida S.A., a life insurance company; and BHN Seguros Generales S.A., a property insurance company.
 
By virtue of communications "A" 6939 and "7035" of the BCRA, the distribution of dividends is suspended until December 31, 2020.
 
 Other Assets
 
La Rural (Exhibition and Convention Center)
 
LRSA holds usufruct rights for the commercial operation of the emblematic Predio Ferial de Palermo (Palermo exhibition center) in the City of Buenos Aires. We own 35% of the equity of LRSA.
 
In July 2016, we acquired from FEG Entretenimientos S.A. 25% of the shares of EHSA, in which we already held 50% of the share. We also acquired a 1.25% interest in ENUSA from Mr. Marcelo Figoli. The aggregate acquisition price for such acquisitions was ARS 66.5 million. Immediately after this acquisition, we sold 5% of the shares of EHSA to Mr. Diego Finkelstein, who already owned a 25% equity interest. The sale amount was agreed at ARS 13.5 million. As a result, we now hold 70% of the shares of EHSA and Mr. Diego Finkelstein holds the remaining 30%.
 
EHSA holds, directly and indirectly, 100% of the shares of OASA and 95% of the shares of ENUSA. OASA holds 50% of the voting stock of LRSA and SRA holds the remaining 50%. In addition, OASA manages LRSA pursuant to agreements entered into with SRA that include the right to appoint the chairman of the board of LRSA—with deciding vote on certain key governance matters—and the chief executive of LRSA. ENUSA is mainly engaged in organizing entertainment events for trade fairs.
 
On August 4, 2017, a 15-year concession for the Exhibition and Convention Center of the City of Buenos Aires was executed by the joint venture La Rural S.A., OFC S.R.L., Ogden Argentina S.A. and Entretenimiento Universal S.A. - Union Transitoria, which was granted pursuant a public bidding process. The members of the joint venture hold the following interests: (a) LRSA 5%; (b) OFC SRL 20%; (c) OASA 55%; and (d) EUSA 20%.
 
 
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The shareholders of LRSA are Sociedad Rural Argentina and OASA, each of which owns 50% equity interest. OASA and EUSA are controlled by EHSA. Consequently, we indirectly hold a 50.00% interest in the joint venture.
 
The Exhibition and Convention Center has a surface area of approximately 22,800 sqm and may accommodate approximately 5,000 attendees. It has a main exhibit hall and an ancillary hall, offices and meetings rooms, arranged in three underground levels that were designed to blend into the landscape extending from the School of Law of the University of Buenos Aires to Parque Thays.
 
Also, La Rural S.A. continues to work on the consolidation of the commercial development of the “Convention Center of Punta del Este”, through its equity participation in the company that holds the concession until 2041.
 
As a result of the measures adopted by Argentina’s national Government in response to the COVID-19 pandemic, La Rural, the Buenos Aires and Punta del Este Convention Centers have been closed since March 20, 2020, the date on which social, preventive, and mandatory isolation was decreed by the government of Argentina to combat the impact of the COVID-19. All the planned congresses are suspended, a large part of the fairs and conventions were postponed, while the shows scheduled at the DirecTV Arena were mostly canceled. The reopening date of these establishments is uncertain, as well as the future agenda of fairs, conventions and shows.
 
TGLT (real estate)
 
TGLT is a real estate company listed on the BYMA which is mainly engaged in residential development projects in Argentina and Uruguay. We hold a 30.2% interest in TGLT.
 
On August 1, 2017, we exercised our preemptive subscription and accretion rights and purchased 22,225,000 Subordinated Notes Convertible into Newly Issued Shares of TGLT for an aggregate amount of USD22,225,000 (USD 1.00 par value) due 2027.
 
On August 8, 2019 has executed with TGLT certain contracts tending to collaborate in the process of financial restructuring of said company through its recapitalization. On December 11, 2019, and in compliance with the contracts signed with TGLT on August 8, 2019, IRSA CP made the exchange of all the Convertible Notes it had of TGLT. Likewise, it subscribed preferred shares making a contribution in kind of the 100% of the shares of the company La Maltería S.A., owner of the property known as Maltería Hudson, for a value of USD 24 million.
 
As a result of the aforementioned exchange and capitalization, IRSA Commercial Properties obtained 21,600,000 Class A preferred shares and 24,948,798 Class B preferred shares that are added to its holding of 3,003,990 ordinary shares.
 
On February 10, 2020, the TGLT Board of Directors determined the mandatory conversion of its Convertible Negotiable Obligations and preferred shares with immediate effect, this is how IRSA CP converted its Class A and B preferred shares of TGLT into ordinary shares of the company. As a consequence of this transaction, IRSA CP owns as of March 31, the amount of 279,502,813 ordinary shares of TGLT, representing 30.2% of its capital stock.
 
DirecTV Arena
 
DirecTV Arena is an indoor stadium with unique features designed to host top-level international events, including sporting events and concerts. The price set for the transaction was USD4.2 million. Through these types of investments, our equity stake in LRSA and through the new Convention Center of the City of Buenos Aires, we continue to expand our exposure to conventions, sporting events and entertainment, which could generate synergies with our core shopping mall business.
 
As is publicly known, the DirecTV Arena stadium has been closed since March 20, the date on which social, preventive, and mandatory isolation was decreed in Argentina due to COVID-19. All the planned congresses are suspended, a large part of the fairs and conventions were postponed, while the shows scheduled at the DirecTV Arena were mostly canceled. The reopening date of these establishments is uncertain, as well as the future agenda of fairs, conventions and shows.
 
 
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Pareto
 
On October 8, 2018, the company Pareto S.A. was incorporated, with the social purpose of design, programming and development of software, mobile and web applications.
 
As of December 31, 2020, IRSA CP's participation in PARETO S.A. It was 69.96% and after the closing it increased its stake to 91.96%.
 
Pareto is a 100% digital customer loyalty system that promotes benefits and discounts in all our shopping mall.
 
Appa, Pareto’s app is a 100% digital customer loyalty system that promotes benefits and discounts across all our shopping malls. The app is also used to pay Parking lots giving customers the most convenient and fast check out available. The plan is to extend these frictionless payments method in gastronomic and apparel stores too.
 
Legal Framework
 
Regulation and Government Supervision
 
The laws and regulations governing the acquisition and transfer of real estate, as well as municipal zoning ordinances, apply to the development and operation of our properties. Currently, Argentine law does not specifically regulate shopping mall leases. Since our shopping mall leases generally diverge from ordinary commercial leases, we have developed contractual provisions which are tailored to the commercial relationship with our shopping mall tenants.
 
Leases
 
Argentine law imposes certain restrictions on property owners, including:
 
a minimum lease term of three years for all purposes, except in particular cases such as embassy, consulate or international organization venues, room with furniture for touristic purposes for less than three months, custody and bailment of goods, exhibition or offering of goods in fairs or in cases where due to the circumstances, the subject matter of the lease requires a shorter term.
 
Lease term limits
 
Under the Argentine Civil and Commercial Code lease terms may not exceed 20 years (for residential purpose) or fifty years (all other purposes). Generally, terms in our leases range from three to ten years.
 
Rescission rights
 
The Argentine Civil and Commercial Code provides that tenants may terminate leases with other destiny than home destiny, early after the first six months of the effective date. Such termination is subject to penalties which range from one to one and a half months of rent. If the tenant terminates the agreement during the first year of the lease, the penalty is one and a half month’s rent and if termination occurs after the first year of lease, the penalty is one month’s rent.
 
Other
 
The Argentine Civil and Commercial Code, among other rules, repealed the Urban Lease Law No. 23,091, which set forth a rule similar to the one described above, but established the obligation to give at least 60 days’ prior notice of exercise of the tenant’s unilateral termination right. There are no court rulings to date with respect to the new regulations related to: (i) the tenant’s unilateral termination right; or (ii) the possibility of agreeing a penalty different from that described above upon such termination.
 
While current policy discourages government regulation of leases, there can be no assurance that additional regulations will not be imposed in the future by Congress, including regulations similar to those previously in place.
 
 
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Furthermore, most of our leases provide that the tenants pay all costs and taxes related to the property in proportion to their respective leasable areas. In the event of a significant increase in such costs and taxes, the government may respond to political pressure to intervene by regulating this practice, thereby adversely affecting our rental income.
 
The Argentine Civil and Commercial Code enables landlords to pursue what is known as an “executory proceeding” if a tenant fails to pay rent when due. In executory proceedings, debtors have fewer defenses available to prevent foreclosure, making these proceedings substantially shorter, as the origin of the debt is not in question and the trial should focus on the formalities of the contract. The Argentine Civil and Commercial Code also permits special eviction proceedings, which are carried out in the same way as ordinary proceedings. The Argentine Civil and Commercial Code also requires that a residential tenant receive at least 10 days’ prior notice when a landlord demands payment of rent due if a breach prior to eviction occurs but does not impose any such requirement for other leases. However, court cases pending resolution and numerous procedural hurdles have resulted in significant delays to eviction proceedings in the commercial context, which generally last from six months to two years from the date of filing of the suit for eviction.
 
Development and use of the land
 
In the City of Buenos Aires, where the vast majority of our properties are located, we are subject to the following regulations:
 
Buenos Aires Urban Planning Code
 
The Buenos Aires Urban Planning Code (Código de Planeamiento Urbano de la Ciudad de Buenos Aires) generally restricts the density and use of property and regulates physical features of improvements to property, such as height, design, set back and overhang, consistent with the city’s urban planning policy. The Secretary of Urban Planning of the City of Buenos Aires (Secretaría de Planeamiento Urbano) is responsible for implementing and enforcing the Buenos Aires Urban Planning Code.
 
Buenos Aires Building Code
 
The Buenos Aires Building Code (Código de Edificación de la Ciudad de Buenos Aires) complements the Buenos Aires Urban Planning Code regulating the use and development of property in the City of Buenos Aires. The Building Code requires developers to obtain building permits, including submitting architectural plans for review of the Secretary of Work and Public Services, to monitor regulatory compliance.
 
Buenos Aires Authorizations and Licenses Code
 
The Authorizations and Licenses Code (Código de Habilitaciones de la Ciudad de Buenos Aires) sets forth the conditions under which authorizations or licenses to operate may be granted. The General Bureau of Authorizations and Licenses is responsible for implementing and enforcing the Authorizations and Licenses Code. Outside the city of Buenos Aires, our real estate activities are subject to similar municipal zoning, building, occupation and environmental regulations, which must also comply with national standards. In some jurisdictions we may also be subject to regulation of large commercial areas, which require approval of the location of these areas. We believe that all of our real estate properties are in material compliance with relevant laws, ordinances and regulations.
 
Sales and ownership
 
Real Estate Installment Sales Law
 
The Real Estate Installment Sales Law No. 14,005, as amended by Law No. 23,266 and Decree No. 2015/85, or “Real Estate Installment Sales Act,” imposes a series of requirements on contracts for the sale of subdivided real estate property including, for example, that the purchase price for a property is payable in installments. The law requires, among other things:
 
 
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Registration of intent to sell the property in subdivided plots with the Real Estate Registry in the jurisdiction where the property is located. Registration is only permitted for unencumbered property. Mortgaged property may only be registered if creditors agree to divide the debt in accordance with subdivided plots. Creditors may be judicially compelled to agree to the partition.
 
Preliminary registration with the Real Estate Registry of the purchase instrument within 30 days after its execution.
 
Once the property is registered, the installment sale must be completed in a manner consistent with the Real Estate Installment Sales Act. If a dispute arises over the title between the purchaser and third party creditors of the seller, the installment purchaser who has duly registered the purchase instrument will have title to the plot. The purchaser can demand conveyance of title after at least 25% of the purchase price has been paid, although the seller may record a mortgage over the subject property to secure payment of the balance of the purchase price.
 
After paying of 25% of the purchase price or advancing of at least 50% of construction, the Real Estate Installment Sales Act prohibits termination of the sales contract for failure by the purchaser to pay the balance of the purchase price but gives the seller the right to enforce under any mortgage on the property.
 
Buildings Law
 
Buildings Law No. 19,724 (Ley de Pre horizontalidad) was repealed by the Argentine Civil and Commercial Code which provides that for purposes of execution of sales agreements for units under construction, the owner or developer must purchase insurance in favor of prospective purchasers against the risk of frustration of the development pursuant to the agreement for any reason. A breach of this obligation precludes the owner from exercising any right against the purchaser—such as demanding payment of any outstanding installments due—unless he/she fully complies with their obligations, but does not prevent the purchaser from exercising its rights against the seller.
 
Protection of the Disabled
 
The Law for Protection of the Disabled No. 22,431, enacted on March 16, 1981, as amended, provides that properties under construction or that are being remodeled must provide access for handicapped persons. Public spaces, entrances, hallways, elevators and common use facilities must be designed to provide mobility for impaired individuals. Buildings developed before enactment of the Protection for the Disabled Law must be reformatted to provide requisite access. Buildings that, because of their architectural design, may not be adapted to the use by the physically impaired, are exempted from these requirements.
 
Other regulations
 
Consumer relations, consumer or end user protection
 
Article 42 of the Argentine Constitution establishes that consumers and users of goods and services have a right to protection of health, safety and economic interests in a consumer relationship. Consumer Protection Law No. 24,240, as amended, regulates several issues concerning the protection of consumers and end users in a consumer relationship, in the arrangement and execution of contracts. The Consumer Protection Law, and the applicable sections of the Argentine Civil and Commercial Code are intended to regulate the constitutional right conferred under the Constitution on the weakest party to the consumer relationship and prevent potential abuses deriving from the stronger bargaining position of vendors of goods and services in a market economy where standard form contracts are widespread.
 
These laws deem void and unenforceable contractual provisions included in consumer contracts, that:
 
deprive obligations of their nature or limit liability for damages;
 
 
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imply a waiver or restriction of consumer rights and an extension of seller rights; and
 
impose the shifting of the burden of proof from the consumer to the seller in order to protect the consumers.
 
In addition, the Consumer Protection Law imposes penalties ranging from warnings to the forfeiture of concession rights, privileges, tax regimes or special credits to which the sanctioned party may be entitled, including closing down establishments for a term of up to 30 days.
 
The Consumer Protection Law and the Argentine Civil and Commercial Code define consumers or end users as the individuals or legal entities that acquire or use goods or services, free of charge or for a price for their own final use or benefit or that of their family or social group. The protection under the laws afforded to consumers and end users encompasses the entire consumer relationship, from the offering of the product or service, to cover more than just those relationships established by means of a contract. Providers of goods and services include those who produce, import, distribute or commercialize goods or supply services to consumers or users (but excludes professionals whose services require a college degree or higher who are required to register in officially recognized professional organizations).
 
The Argentine Civil and Commercial Code defines a consumer agreement as one that is entered into between a consumer or end user and an individual or entity that manufactures goods or provides services to consumers for private, family or social use. The Consumer Protection Law imposes a range of penalties for violation of its provisions, from warnings to the forfeiture of concession rights, and establishes joint and several liability of each participant in the chain of distribution or whose trademark on the thing or service for damages caused to consumers derived from a defect or risk inherent in the thing or the provision of a service.
 
The Consumer Protection Law excludes the services supplied by professionals that require a college degree and registration in officially recognized professional organizations or by a governmental authority. However, this law regulates the advertisements that promote the services of such professionals.
 
The Consumer Protection Law determines that the information contained in the offer addressed to undetermined prospective consumers binds the offeror during the period when the offer is made until its public revocation. Further, it determines that specifications included in advertisements, announcements, prospectuses, circulars or other media bind the offeror and are considered part of the contract entered into by the consumer.
 
Pursuant to Resolution No. 104/2005 issued by the Secretariat of Technical Coordination reporting to the Argentine Ministry of Treasury, Consumer Protection Law adopted Resolution No. 21/2004 issued by the Mercosur’s Common Market Group, persons engaged in internet commerce must disclose precisely the characteristics of the products and/or services offered and the sale terms. Failure to comply with the terms of the offer is deemed an unjustified denial to sell and may give rise to sanctions.
 
On September 17, 2014, the Argentine Congress enacted Law No. 26,993 called “Conflict Resolution in Consumer Relationships System” law that provides for creation of new administrative and judicial procedures. The law created a bicameral administrative system: the Preliminary Conciliation Service for Consumer Relations (Servicio de Conciliación Previa en las Relaciones de Consumo), or “COPREC,” and the Consumer Relations Audit, and a number of courts assigned to the resolution of conflicts between consumers and providers (Fuero Judicial Nacional de Consumo). The amount of any filed claim may not exceed a fixed amount equivalent to 55 adjustable minimum wages, as determined by the Ministry of Labor, Employment and Social Security. The claim must be filed with the administrative agency. If an agreement is not reached, the claimant may file the claim in court. While COPREC is currently in full force and effect, the court system (Fuero Judicial Nacional de Consumo) is still pending. Therefore, any current claim must be filed with existing courts. A considerable number of claims pending against us are expected to be settled within the framework of this system.
 
 
 
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Antitrust Law
 
Law No. 27,442, as amended, or the “Antitrust Law,” prevents collusive practices by market participants and requires administrative approval for transactions that according to the Antitrust Law constitute an economic concentration. According to this law, mergers, transfers of goodwill, acquisitions of property or rights over shares, capital or other convertible securities, or similar transactions by which the acquirer controls or substantially influences a company, are considered as an economic concentration. Whenever an economic concentration involves a company or companies and the aggregate volume of business in Argentina of the companies concerned exceeds 100 million mobile units, the respective concentration must be submitted for approval to the CNDC. The request for approval may be filed, either prior to the transaction or the implementing of the control take.
 
For the purpose of determining the volume of the business mentioned on the paragraph before, the CNDC will annually inform the amount in legal currency that will apply during the corresponding year. For that purpose, the CNDC will consider the mobile unit value current at the last business day of the previous year. When a request for approval is filed, the CNDC may (i) authorize the transaction, (ii) subordinate the transaction to the accomplishment of certain conditions or (iii) reject the authorization.
 
The Antitrust Law provides that economic concentrations in which the transaction amount and the value of the assets subject to acquisition or disposition do not exceed 20 million mobile units each do not require approval. When the amount of the transactions consummated in the preceding 12 months exceeds in aggregate 20 million mobile units or 60 million mobile units in the preceding 36 months, these transactions require CNDC approval.
 
As our consolidated annual sales volume and our parent’s consolidated annual sales volume exceed ARS 200.0 million, we must give notice to the CNDC of any concentration provided for under the Antitrust Law.
 
Money laundering
 
For more information about money laundering see, “Item 10. Additional Information—E. Money Laundering.”
 
Environmental Law
 
Our activities are subject to several national, provincial and municipal environmental provisions.
 
Article 41 of the Argentine Constitution, as amended in 1994, provides that all Argentine inhabitants have the right to a healthy and balanced environment fit for human development and have the duty to preserve it. Environmental damage shall bring about primarily the obligation to restore it as provided by applicable law. The authorities shall control the protection of this right, the rational use of natural resources, the preservation of the natural and cultural heritage and of biodiversity and shall also provide for environmental information and education. The National Government shall establish minimum standards for environmental protection whereas Provincial and Municipal Governments shall fix specific standards and regulatory provisions.
 
On November 6, 2009, the Argentine Congress passed Law No. 25,675. Such law regulates the minimum standards for the achievement of a sustainable environment and the preservation and protection of biodiversity and fixes environmental policy goals.
 
Law No. 25,675 establishes the activities that will be subject to an environmental impact assessment procedure and certain requirements applicable thereto. In addition, such Law sets forth the duties and obligations that will be triggered by any damage to the environment and mainly provides for restoration of the environment to its former condition or, if that is not technically feasible, for payment of compensation in lieu thereof. Such Law also fosters environmental education and provides for certain minimum reporting obligations to be fulfilled by natural and legal entities.
 
 
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In addition, the CNV Rules require the obligation to report to the CNV any events of any nature and fortuitous acts that seriously hinder or could potentially hinder performance of our activities, including any events that generate or may generate significant impacts on the environment, providing details on the consequences thereof.
 
The new Argentine Civil and Commercial Code has introduced as a novel feature the acknowledgement of collective rights, including the right to a healthy and balanced environment. Accordingly, the Argentine Civil and Commercial Code expressly sets forth that the law does not protect an abusive exercise of individual rights if such exercise could have an adverse impact on the environment and the rights with a collective impact in general.
 
Environmental matters
 
We consistently strive to act responsibly regarding protection of the environment in the management of our operating activities by preventing and minimizing the potential adverse environmental impacts of our activities. We have adopted an environmental impact policy, which is used as a reference for the realization of our investments. We are subject to environmental legislation under a series of laws, ordinances, norms, and national, provincial and municipal regulations of Argentina. Environmental obligations vary depending on the project site, the site’s environmental conditions, current and prior uses, and the activity proposed to be developed. Compliance with environmental laws may result in project delays or impose additional requirements that may result in substantial additional costs that may adversely affect our commercial activities. Before purchasing land or carrying out an investment on a plot of land, we carry out an environmental assessment of the parcel to identify possible environmental contingencies and analyze the possible environmental impact of the investment or the development to be carried out. Historically, our operations have not been negatively affected by the existence or potential existence of pollutants, nor by the failure to obtain environmental approvals or permits.
 
We intend to continue implementing plans that enhance our monitoring activities, in line with our commitment to and respect for the environment, our compliance obligations and with existing regulations, while seeking to optimize the use of resources.
 
Organizational Structure
 
The following table presents information relating to our ownership interest and the percentage of our consolidated total net revenues represented by our subsidiaries as of December 31, 2020:
 
 
 
 
 
% of ownership interest held by the Group
 
Name of the entity
Country
Main activity
 
As of December 30, 2020
 
IRSA’s direct interest:
 
 
 
 
 
IRSA CP(1) 
Argentina
Real estate
  80.65%
E-Commerce Latina S.A. 
Argentina
Investment
  100.00%
Efanur S.A. 
Uruguay
Investment
  100.00%
Hoteles Argentinos S.A.U. 
Argentina
Hotel
  100.00%
Inversora Bolívar S.A. 
Argentina
Investment
  100.00%
Llao Llao Resorts S.A.(2) 
Argentina
Hotel
  50.00%
Nuevas Fronteras S.A. 
Argentina
Hotel
  76.34%
Palermo Invest S.A. 
Argentina
Investment
  100.00%
Ritelco S.A. 
Uruguay
Investment
  100.00%
Tyrus S.A. 
Uruguay
Investment
  100.00%
U.T. IRSA y Galerías Pacifico(2)
Argentina
Investment
  50.00%
IRSA CP’s direct interest:
 
 
    
Arcos del Gourmet S.A. 
Argentina
Real estate
  90.00%
Emprendimiento Recoleta S.A. 
Argentina
Real estate
  53.68%
Fibesa S.A.(3) 
Argentina
Real estate
  100.00%
Panamerican Mall S.A. 
Argentina
Real estate
  80.00%
Shopping Neuquén S.A. 
Argentina
Real estate
  99.95%
Torodur S.A. 
Uruguay
Investment
  100.00%
EHSA 
Argentina
Investment
  70.00%
 
 
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Centro de Entretenimiento La Plata
Argentina
Real estate
  100.00%
Pareto S.A. 
Argentina
design and software development
  69.69%
Tyrus S.A.’s direct interest:
 
 
    
DFL and DN BV 
Bermuda’s / Netherlands
Investment
  97.04%
I Madison LLC 
USA
Investment
   
IRSA Development LP 
USA
Investment
   
IRSA International LLC 
USA
Investment
  100.00%
Jiwin S.A. 
Uruguay
Investment
  100.00%
Liveck S.A. 
Uruguay
Investment
  100.00%
Real Estate Investment Group V LP (REIG V)
Bermuda’s
Investment
   
Real Estate Strategies LLC 
USA
Investment
  100.00%
Efanur S.A.’s direct interest:
 
 
    
Real Estate Investment Group VII LP (REIG VII)
Bermuda’s
Investment
  100.00%
 
(1) 
Includes interest held through E-Commerce Latina S.A. and Tyrus S.A..
(2) 
The Company has consolidated the investment in Llao Llao Resorts S.A. and UT IRSA and Galerías Pacífico considering its equity interest and a shareholder agreement that confers it majority of votes in the decision making process.
(3) 
Includes interest held through Ritelco S.A. and Torodur S.A.
Except for the aforementioned items the percentage of votes does not differ from the stake.
 
The Company takes into account both quantitative and qualitative aspects in order to determine which non-controlling interests in subsidiaries are considered significant.
 
Property, Plant and Equipment
 
In the ordinary course of business, we lease property or spaces for administrative or commercial use both in Argentina under operating lease arrangements. The agreements include several clauses, including but not limited, to fixed, variable or adjustable payments.
 
 
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The following table sets forth certain information about our properties in Argentina as of December 31, 2020:
 
Property(6)
 
 
 
 
Leasable/ Sale sqm / Rooms
 
Location
 
Net Book Value ARS(2)
 
Use
 
Occupancy rate
 
República Building(3) 
 
Apr-08
 
  19,885 
City of Buenos Aires
  12,489 
Office Rental
  76.6%
BankBoston Tower(3)(13)
 
Aug-07
 
  - 
City of Buenos Aires
  190 
Office Rental
   
Bouchard 551 
 
Mar-07
 
   
City of Buenos Aires
  431 
Office Rental
   
Intercontinental Plaza Building(3)
 
Nov-97
 
  2,979 
City of Buenos Aires
  1,804 
Office Rental
  100%
Bouchard 710(3)(14) 
 
Jun-05
 
  - 
City of Buenos Aires
  - 
Office Rental
  - 
Dot Building(3) 
 
Nov-06
 
  11,242 
City of Buenos Aires
  5,884 
Office Rental
  77.1%
Zetta Building 
 
Jun-19
 
  32,173 
City of Buenos Aires
  17,175 
Office Rental
  84.7%
Suipacha 664 
 
Nov-91
 
  11,465 
City of Buenos Aires
  2,085 
Office Rental
  31.2%
Phillips Building 
 
Jun-17
 
  8,017 
City of Buenos Aires
  3,715 
Office Rental
  93.10%
Catalinas Building 
 
Jun-20
 
  28,714 
City of Buenos Aires
  18,852 
Office Rental
  76.60%
San Martín plot (ex Nobleza Picardo)
 
May-11
 
  109,610 
Province of Buenos Aires, Argentina
  7,659 
Other Rentals
  22.5%
Other Properties(5) 
  N/A 
  N/A 
City and Province of Buenos Aires / Detroit U.S
  6,333 
Other Rentals
  N/A 
 
  N/A 
    
 
    
 
    
Abasto Shopping(3) 
 
Nov-99
 
  36,794 
City of Buenos Aires, Argentina
  7,374 
Shopping Mall
  96.6%
Alto Palermo Shopping(3)
 
Dec-97
 
  18,655 
City of Buenos Aires, Argentina
  8,936 
Shopping Mall
  96.8%
Alto Avellaneda(3) 
 
Dec-97
 
  38,800 
Province of Buenos Aires, Argentina
  5,044 
Shopping Mall
  67.6%
Alcorta Shopping(3)(12) 
 
Jun-97
 
  15,812 
City of Buenos Aires, Argentina
  5,512 
Shopping Mall
  98.2%
Patio Bullrich(3) 
 
Oct-98
 
  11,396 
City of Buenos Aires, Argentina
  2,528 
Shopping Mall
  90.2%
Alto Noa(3) 
 
Nov-95
 
  19,313 
City of Salta, Argentina
  1,254 
Shopping Mall
  99.7%
Mendoza Plaza(3) 
 
Dec-94
 
  43,123 
Mendoza, Argentina
  2,099 
Shopping Mall
  96.9%
Alto Rosario(3) 
 
Dec-04
 
  33,682 
Santa Fe, Argentina
  4,443 
Shopping Mall
  94.9%
Córdoba Shopping –Villa Cabrera(3)(11)
 
Dec-06
 
  15,357 
City of Córdoba, Argentina
  1,373 
Shopping Mall
  95.5%
Dot Baires Shopping(3)
 
May-09
 
  48,805 
City of Buenos Aires, Argentina
  5,627 
Shopping Mall
  63.2%
Soleil Premium Outlet(3)
 
Jul-10
 
  15,357 
Province of Buenos Aires, Argentina
  2,012 
Shopping Mall
  97.8%
La Ribera Shopping(3) 
 
Aug-11
 
  10,530 
Santa Fe, Argentina
  650 
Shopping Mall
  96.5%
Distrito Arcos (3) 
 
Dec-14
 
  14,335 
City of Buenos Aires, Argentina
  2,106 
Shopping Mall
  100.0%
Alto Comahue(3) 
 
Mar-15
 
  11,702 
Neuquén, Argentina
  1,353 
Shopping Mall
  92.2%
Patio Olmos(3) 
 
Sep-97
 
   
City of Córdoba, Argentina
  1,251 
Shopping Mall
  N/A 
Caballito Plot of Land(3)
 
Nov-97
 
   
City of Buenos Aires
  4,391 
Land Reserve
  N/A 
Santa María del Plata 
 
Oct-97
 
  116,100 
City of Buenos Aires
  27,818 
Other Rentals
  17.3%
Catalinas Building 
 
May-10
 
   
City of Buenos Aires
  650 
Offices and Other Rentals
  N/A 
Luján plot of land(3) 
 
May-08
 
  1,160,000 
Province of Buenos Aires, Argentina
  1,337 
Mixed uses
  N/A 
Other Land Reserves(4)
  N/A 
  N/A 
City and Province of Buenos Aires
  9,277 
Land Reserve
  N/A 
Building annexed to Alto Palermo Shopping
  N/A 
  N/A 
City of Buenos Aires
  2,334 
Properties under development
  N/A 
Other Developments(15)
  N/A 
  N/A 
City of Buenos Aires
  307 
Properties under development
  N/A 
Intercontinental Hotel(7)(12)
 
Nov-97
 
  313 
City of Buenos Aires
  706 
Hotel
  7.6%
Libertador Hotel(8)(12) 
 
Mar-98
 
  200 
City of Buenos Aires
  327 
Hotel
  5.8%
Llao Llao Hotel(9)(10)(12)
 
Jun-97
 
  205 
City of Bariloche
  1,074 
Hotel
  11.0%
 
(1) 
Total leasable area for each property. Excludes common areas and parking spaces.
 
 
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(2) 
Cost of acquisition or development plus improvements, less accumulated depreciation, less allowances for our Hotels (considering inflation adjustment). The remaining properties are valued at fair value.
(3) 
Through IRSA CP.
(4) 
Includes the following land reserves: Pontevedra plot; Mariano Acosta Plot, San Luis Plot, Pilar plot and Merlo plot (through IRSA) and Intercontinental Plot, the building and plot annexed to Dot, Mendoza Plot, Mendoza 2.992 East Av. Plot and La Plata plot (through IRSA CP).
(5) 
Includes the following properties: Anchorena 665, Anchorena 545 (Chanta IV), Zelaya 3102, 3103 y 3105, Madero 1020, La Adela, Paseo del Sol, Libertador 498, Beruti Parking Space Santa María del Plata and Detroit properties.
(6) 
Percentage of occupation of each property. Land reserves are assets that the company keeps in the portfolio for future developments.
(7) 
Through Nuevas Fronteras S.A.
(8) 
Through Hoteles Argentinos S.A.U.
(9) 
Through Llao Llao Resorts S.A.
(10) 
Includes “Terreno Bariloche.”
(11) 
The cinema building located at Córdoba Shopping – Villa Cabrera is included in Investment Properties, which is encumbered by a right of antichresis as a result of loan due to Empalme by NAI INTERNACIONAL II Inc. Includes “Ocampo parking spaces”
(12) 
Express in number of rooms.
(13) 
On November 5, 2020, our subsidiary IRSA CP sold four floor and fifteen parking spaces and on November 12, 2020, it sold three floors and fifteen parking spaces. For more information, see “Recent Developments – Boston Tower Sale.”
(14) 
On July 30, 2020, IRSA CP sold the entire building.
(15) 
Includes the following developments: EH UT, PH Office Park, Phillips Building and Alto Avellaneda.
 
 
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OPERATING AND FINANCIAL REVIEW AND PROSPECTS
 
A. Operating Results
 
The following management’s discussion and analysis of our financial condition and results of operations should be read together with “Selected Consolidated Financial Data” and Our Audited Consolidated Financial Statements and related notes appearing elsewhere in this Form 6-K. This discussion and analysis of our financial condition and results of operations contains forward-looking statements that involve risks, uncertainties and assumptions. These forward-looking statements include such words as, “expects,” “anticipates,” “intends,” “believes” and similar language. Our actual results may differ materially and adversely from those anticipated in these forward-looking statements as a result of many factors, including without limitation those set forth elsewhere in this Form 6-K. See Item 3 “Key Information – D. Risk Factors” for a more complete discussion of the economic and industry-wide factors relevant to us.
 
General
 
We prepare our Audited Consolidated Financial Statements in pesos and in accordance with IFRS, as issued by the IASB, and with CNV Rules. Our Audited Consolidated Financial Statements included in our Form 6-K filed on January 5, 2021 have been recast to: (a) present the audited consolidated financial statements in the measuring unit current at the end of the reporting period as of September 30, 2020); and (b) reflect IRSA’s loss of control of IDBD and DIC on September 25, 2020 and, consequently, the deconsolidation of such investees since that date. As a result, income and expenses from our Operations Center in Israel have been presented within Discontinued Operations in the consolidated statements of income and other comprehensive income for the years ended June 30, 2020, 2019 and 2018. Accordingly, the following management’s discussion and analysis of our financial condition and results of operations will be focused primarily on our Operations Center in Argentina.
 
Our Audited Consolidated Financial Statements and the financial information included elsewhere in this Form 6-K have been prepared in accordance with IFRS. We have determined that, as of July 1, 2018, the Argentine economy qualifies as a hyperinflationary economy according to the guidelines of IAS 29 since the total cumulative inflation in Argentina in the 36 months prior to July 1, 2018 exceeded 100%. IAS 29 requires that the financial information recorded in a hyperinflationary currency be adjusted by applying a general price index and expressed in the measuring unit (the hyperinflationary currency) current at the end of the reporting period. Therefore, our Audited Consolidated Financial Statements included in this Form 6-K have been adjusted by applying a general price index. See “Risk Factors—Risks Relating to Argentina—A high level of uncertainty with regard to these economic variables, and a general lack of stability in terms of inflation, could have a negative impact on economic activity and adversely affect our financial condition
 
Overview
 
We are engaged, directly and indirectly through subsidiaries and joint ventures, in a range of diversified activities, primarily in real estate, including:
 
i. the acquisition, development and operation of shopping malls,
 
ii. the acquisition and development of office buildings and other non-shopping mall properties primarily for rental purposes,
 
iii. the development and sale of residential properties,
 
iv. the acquisition and operation of luxury hotels,
 
v. the acquisition of undeveloped land reserves for future development or sale, and
 
vi. selective investments outside Argentina.
 
 
57
 
 
 
Effects of the global macroeconomic factors
 
The table below shows Argentina’s GDP, inflation rates, dollar exchange rates, the appreciation (depreciation) of the Peso against the U.S. dollar, and the appreciation (depreciation) of the NIS against the U.S. dollar for the indicated periods (inter-annual information—which is the 12 month period preceding the dates presented—is presented to conform to our fiscal year periods).
 
 
 
As of December 31,
 
 
Fiscal year ended June 30,
 
 
 
2020
 
 
2020
 
 
2019
 
 
2018
 
 
 
(year-to-year data)
 
GDP (1) 
  (4.3)%
  (19.1)%
  (3.7)%
  2.0%
Inflation (IPIM)(2) 
  19.8%
  39.7%
  60.8%
  44.1%
Inflation (CPI) 
  27.3%
  42.8%
  55.8%
  29.5%
Depreciation of the Peso against the U.S. dollar 
  (19.5)%
  (66.1)%
  (47.1)%
  (73.7)%
Average exchange rate per USD1.00(3) 
 
ARS 84.0500
 
 
ARS 70.3600
 
 
ARS 42.3630
 
 
ARS 28.8000
 
 
(1) 
Represents inter-annual growth of the last twelve months GDP average at constant prices (2004).
(2) 
IPIM (Índice de Precios Internos al por Mayor) is the wholesale price index as measured by the Argentine Ministry of Treasury.
(3) 
Represents average of the selling and buying exchange rate quoted by Banco de la Nación Argentina as of June 30, 2020. As of March 2, 2021, the exchange rate was 90.1500 per U.S. Dollar.
Source: INDEC and Banco de la Nación Argentina.
 
Argentine GDP contracted 10.2% during the third quarter of 2020 fiscal year, compared to the third quarter of 2019. Nationally, shopping mall sales decreased 82.2% in fiscal 2020 compared to fiscal 2019. As of June 30, 2020, the unemployment rate was at 13.1% of the country’s economically active population compared to 10.6% as of June 30, 2019. The monthly estimate of economic activity (“EMAE”) as of December 31, 2020, contracted by 2.2% compared to the same month in 2019. In the third quarter of 2020, the activity rate was 42.3%, the employment rate was 37.4% and the unemployment rate was 11.7%.
 
In the context of the health emergency related to the COVID-19 pandemic, the main impact on the labor market was verified in the dynamics of the employment rate (TE), which measures the proportion of employed persons in relation to the total population. The second quarter of 2020 showed a drop of 8.8 percentage points (p.p.) compared to the first quarter of the year and of 9.2 p.p. compared to the second quarter of 2019, driven by the lower proportion of people who were able to report to work. Due to COVID-19 pandemic, total sales at current prices in the month of June 2020 relevant to the survey reached a total of ARS 2,841.6 million, which represents a decrease of 82.2% compared to the month of June 2019.
 
Changes in short- and long-term interest rates, unemployment and inflation rates may reduce the availability of consumer credit and the purchasing power of individuals who frequent shopping malls. These factors, combined with low GDP growth, may reduce general consumption rates at our shopping malls. Since most of the lease agreements at our shopping malls, our main source of revenue, require tenants to pay a percentage of their total sales as rent, a general reduction in consumption may reduce our revenue. A reduction in the number of shoppers at our shopping malls and, consequently, in the demand for parking, may also reduce our revenues from services rendered.
 
Effects of inflation
 
The following are annual inflation rates during the fiscal years indicated, based on information published by the INDEC, an entity dependent of the Argentine Ministry of Treasury.
 
 
58
 
 
 
 
 
Consumer price index
 
 
Wholesale price index
 
 
 
(year-to-year data)
 
Fiscal Year ended June 30,
 
 
 
 
 
 
2018 
  29.5%
  44.1%
2019 
  55.8%
  60.8%
2020 
  42.8%
  39.7%
As of December 31, 2020 
  27.3%
  19.8%
 
The current structure of IRSA CP’s leases contracts for shopping mall tenants generally include provisions that provide for payment of variable rent, which is a percentage of the IRSA CP’s shopping mall tenant’s sales. Therefore, the projected cash flows for these shopping malls generally are highly correlated with GDP growth and consumption power.
 
For the leases of spaces at our shopping malls we use for most tenants a standard lease agreement, the terms and conditions of which are described below. However, our largest tenants generally negotiate better terms for their respective leases. No assurance can be given that lease terms will be as set forth in the standard lease agreement.
 
The rent specified in our leases generally is the higher of (i) a monthly Base Rent and (ii) a specified percentage of the store’s monthly gross sales, which generally ranges between 2% and 10% of such sales. In addition, pursuant to the rent escalation clause in most of our leases, a tenant’s Base Rent generally increases between 10% and 15% on a semi-annual and cumulative basis from the seventh (7th) month following effectiveness of the lease. Although many of our lease agreements contain price adjustment provisions, these are not based on an official index nor do they reflect the inflation index. In the event of litigation regarding these adjustment provisions, there can be no assurance that we may be able to enforce such clauses contained in our lease agreements. See “Information of the Company—Business Overview—Our Shopping Malls—Principal Terms of our Leases.”
 
Continuing increases in the rate of inflation are likely to have an adverse effect on our operations. Although higher inflation rates in Argentina may increase minimum lease payments, given that tenants tend to pass on any increases in their expenses to consumers, higher inflation may lead to an increase in the prices our tenants charge consumers for their products and services, which may ultimately reduce their sales volumes and consequently the portion of rent we receive based on our tenants’ gross sales.
 
In addition, we measure the fair market value of our shopping malls based upon the estimated cash flows generated by such assets which, as discussed in previous paragraphs, is directly related to consumer spending since a significant component of the rent payment received from our tenants is tied to the sales realized by such tenants (i.e. is a percentage of the sales of our tenants). Therefore, macroeconomic conditions in Argentina have an impact in the fair market value of our shopping malls as measured in pesos. Specifically, since our tenants’ products have been adjusted (increased) to account for inflation of the peso, our expected cash flows from our shopping malls have similarly increased in nominal terms since rent is largely dependent on sales of our tenants in pesos.
 
Seasonality
 
Our business is directly affected by seasonality, influencing the level of our tenants’ sales. During Argentine summer holidays (January and February) our tenants’ sales typically reach their lowest level, whereas during winter holidays (July) and in Christmas (December) they reach their maximum level. Clothing retailers generally change their collections in spring and autumn, positively affecting our shopping malls’ sales. Discount sales at the end of each season are also one of the main seasonal factors affecting our business. See “Item 5.A. Operating Results – The Ongoing COVID-19 Pandemic.”
 
In Israel, the retail segment business’s results are subject to seasonal fluctuations as a result of the consumption behavior of the population proximate to the Passover holidays (March and/or April) and Rosh Hashanah and Sukkoth holidays (September and/or October). This also affects the balance sheet values of inventory, customers
 
 
 
59
 
 
 
and suppliers. Revenues from cellular services are usually affected by seasonality with the third quarter of the year characterized by higher roaming revenues due to increased incoming and outgoing tourism.
 
Effects of interest rate fluctuations
 
Most of our U.S. dollar-denominated debt accrues interest at a fixed rate. An increase in interest rates will result in a significant increase in our financing costs and may materially affect our financial condition or our results of operations.
 
In addition, a significant increase of interest rates could deteriorate the terms and conditions in which our tenants obtain financing from banks and financial institutions in the market. As a consequence of that, if they suffer liquidity problems the collection of our lease contracts could be affected by an increase in the level of delinquency.
 
Effects of foreign currency fluctuations 
 
A significant portion of our financial debt is denominated in U.S. dollars. Therefore, a devaluation or depreciation of the peso against the U.S. dollar would increase our indebtedness measured in pesos and materially affect our results of operations. Foreign currency exchange restrictions imposed by the Argentine government could prevent or restrict our access to U.S. dollars, affecting our ability to service our U.S. dollar denominated- liabilities.
 
In addition, contracts for the rental of office buildings are generally stated in U.S. dollars, so a devaluation or depreciation of the peso against the U.S. dollar would increase the risk of delinquency on our lease receivables. 
 
As discussed above, we calculate the fair market value of our office properties based on comparable sales transactions. Typically real estate transactions in Argentina are transacted in U.S. dollars. Therefore, a devaluation or depreciation of the peso against the U.S. dollar would increase the value of our real estate properties measured in pesos and an appreciation of the peso would have the opposite effect. In addition, foreign currency exchange restrictions imposed by Argentine government could prevent or restrict the access to U.S. dollars for the acquisition of real estate properties, which are denominated and transacted in U.S dollars in Argentina, that could affect our ability to sell or acquire real estate properties and could have an adverse impact in real estate prices.
 
For more information about the evolution of the U.S dollar / Peso exchange rate, see “Exchange Rate and Exchange Controls.”
 
Fluctuations in the market value of our investment properties as a result of revaluations
 
Currently, our interests in investment properties are revalued quarterly. Any increase or decrease in the fair value of our investment properties, based on appraisal reports prepared by appraisers, is recorded in our consolidated statement of comprehensive income for the fiscal year during which the revaluation occurs. The revaluation of our properties may therefore result in significant fluctuations in the results of our operations.
 
Property values are affected by, among other factors, a) shopping malls, which are mainly impacted by the discount rate used (WACC), the projected GDP growth and the projected inflation and devaluation for future periods and b) office buildings, which are mostly impacted by the supply and demand of comparable properties and the U.S. dollar / peso exchange rate at the reporting period, as office buildings fair value is generally established in U.S. dollars. For example:
 
during the six-month period ended December 31, 2020, there was a 19.5% depreciation of the peso from ARS 70.36 to USD 1.00 as of June 30, 2020 to ARS 84.05 to USD1.00 as of December 31, 2020.
The value of the Company investment properties is determined in U.S. dollar pursuant to the methodologies further described in “Critical Accounting Policies and estimates” and then determined in pesos (the Company functional and presentation currency).
 
 
 
60
 
 
 
In the past, purchases and sales of office buildings were usually settled in US dollars, However, as a consequence of the restrictions imposed by the BCRA on foreign exchange transactions, purchase and sales of office buildings are now usually settled in Argentine pesos, using an implicit exchange rate that is higher than the official one (as it was the case in the operations carried out by IRSA CP in the past few months). Therefore, IRSA CP has valued its office buildings and undeveloped parcels of land in Argentine pesos at the end of the year, considering the situation described above, which results in a gain with respect to the values previously recorded.
 
Factors Affecting Comparability of our Results
 
Comparability of information
 
Operations Center in Argentina
 
Office buildings
 
On June 30, 2019, IRSA CP’s Office portfolio consisted of 115,378 sqm of GLA after incorporating the recently inaugurated Zetta building. Additionally, we acquired the Maltería Hudson plot that has a surface area of 147,895 sqm and approximately 40,000 GLA at the intersection of Route 2 and Buenos Aires - La Plata highway.
 
On June 30, 2020, IRSA CP has acquired as an investment property the building “200 Della Paolera” located in Catalinas District in Buenos Aires. It consists of 35,208 sqm of gross leasable area over 30 office floors and includes 316 parking lots in 4 basements.
 
Shopping malls
 
During the fiscal years ended June 30, 2020 and 2019, we maintained the same portfolio of operating shopping malls. During the fiscal year ended June 30, 2019, the surface area of our Shopping Malls segment was reduced by 11,875 sqm due to the return of Buenos Aires Design, whose concession terminated in November 2018.
 
Operations Center in Israel
 
IDBD and DIC, our principal subsidiaries in the Operations Center in Israel, report their quarterly and annual results following Israeli regulations, whose filing deadlines fall after the filing deadlines in Argentina. In addition, IDBD and DIC fiscal year ends differ from our fiscal year end, consequently, we consolidate the results of operations from IDBD and DIC on a three-month lag basis adjusted for the effects of any significant transactions taking place within such period. As such, our consolidated statement of income and other comprehensive income for the year ended June 30, 2020 includes the results of IDBD and DIC for the 12-month period from April 1, 2019 to March 31, 2020, adjusted for the significant transactions that occurred between April 1, 2020 and June 30, 2020. As further described above, we lost control on IDBD and DIC on September 25, 2020 and thus, our Audited Consolidated Financial Statements included elsewhere in this Form 6-K present the results of operations of the Operations Center in Israel within Discontinued Operations.
 
Business Segment Reporting
 
IFRS 8 requires an entity to report financial and descriptive information about its reportable segments, which are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components of an entity about which separate financial information is available that is evaluated regularly by the CODM. According to IFRS 8, the CODM represents a function whereby strategic decisions are made and resources are assigned. The CODM function is carried out by the President of the Group, Mr. Eduardo S. Elsztain. Upon the acquisition of IDBD, two responsibility levels have been established for resource allocation and assessment of results of the two operations centers, through executive committees in Argentina and Israel.
 
 
61
 
 
 
Segment information is reported from two perspectives: geographic presence (Argentina and Israel) and products and services. In each operations center, the Group considers separately the various activities being developed, which represent reporting operating segments given the nature of its products, services, operations and risks. Management believes the operating segment clustering in each operations center reflects similar economic characteristics in each region, as well as similar products and services offered, types of clients and regulatory environments.
 
As described in “Presentation of Financial and Certain Other Information,” we lost control of IDBD and DIC on September 25, 2020 and, accordingly, we have presented the results of operations of the Operation Center in Israel within Discontinued Operations in our Audited Consolidated Financial Statements. Segment information for the years ended June 30, 2020, 2019 and 2018 and for the three and six-month periods ended September 30, 2019 and December 31, 2019, respectively, have been recast for purposes of comparability.
 
As from fiscal year 2018, the CODM reviews certain corporate expenses associated with each operations center in an aggregate manner and separately from each of the segments, such expenses have been disclosed in the “Corporate” segment of each operations center. Additionally, as from fiscal year 2018, the CODM reviews the offices business as a single segment and the entertainment business in an aggregate manner and separately from the offices segment. The entertainment business is presented within the “Others” segment.
 
Below is the segment information which was prepared as follows:
 
Operations Center in Argentina: Within this operations center, the Group operates in the following segments:
 
The “Shopping Malls” segment includes results principally comprised of lease and service revenues related to rental of commercial space and other spaces in the shopping malls of the Group.
 
The “Offices” segment includes the operating results from lease revenues of offices, other rental spaces and other service revenues related to the office activities.
 
The “Sales and Developments” segment includes the operating results of the development, maintenance and sales of undeveloped parcels of land and/or trading properties. Real estate sales results are also included.
 
The “Hotels” segment includes the operating results mainly comprised of room, catering and restaurant revenues.
 
The “International” segment includes assets and operating profit or loss from business related to associates Condor (hotels) and New Lipstick (offices).
 
The “Others” segment primarily includes the entertainment activities through ALG Golf Center S.A., La Rural S.A. and TGLT, and the financial activities carried out by BHSA.
 
The “Corporate” segment includes the expenses related to the corporate activities of the Operations Center in Argentina.
 
The CODM periodically reviews the results and certain asset categories and assesses performance of operating segments of this operations center based on a measure of profit or loss of the segment composed by the operating income plus the share of profit / (loss) of joint ventures and associates. The valuation criteria used in preparing this information are consistent with IFRS, the accounting standards used for the preparation of our Audited Consolidated Financial Statements, except for the following:
 
 
62
 
 
 
Operating results from joint ventures are evaluated by the CODM applying proportional consolidation method. Under this method, profit/loss and assets are reported in the Statement of Income and Other Comprehensive Income on a line-by-line basis, based on the percentage held in joint ventures rather than in a single item as required by IFRS. Management believes that the proportional consolidation method provides more useful information to understand the business return. On the other hand, the investment in the joint venture La Rural S.A. is accounted for under the equity method since this method is considered to provide more accurate information in this case.
 
Operating results from Shopping Malls and Offices segments do not include the amounts pertaining to building administration expenses and collective promotion funds (“FPC,” as per its Spanish acronym) as well as total recovered costs, whether by way of expenses or other concepts included under financial results (for example default interest and other concepts). The CODM examines the net amount from these items (total surplus or deficit between building administration expenses and FPC and recoverable expenses).
 
The assets’ categories examined by the CODM are: investment properties, property, plant and equipment, trading properties, inventories, right to receive future units under barter agreements, investment in associates and goodwill. The sum of these assets, classified by business segment, is reported under “assets by segment.” Assets are allocated to each segment based on the operations and/or their physical location.
 
Within the Operations Center in Argentina, most revenue from its operating segments is derived from, and their assets are located in, Argentina, except for the share of profit / (loss) of associates included in the “International” segment located in USA.
 
Revenues for each reporting segments derive from a large and diverse client base and, therefore, there is no revenue concentration in any particular segment.
 
Operations Center in Israel: Within this operations center, as of June 30, 2020, the Company operated in the following segments:
 
The “Real Estate” segment in which, through PBC, the Group operates rental properties and residential properties in Israel, USA and other parts of the world and carries out commercial projects in Las Vegas, USA. In this fiscal year, the Company lost control over Gav-Yam. Income was reclassified to discontinued operations and no longer forms part of this segment in this fiscal year. The comparative information has been adjusted accordingly. As of September 2019, Gav-Yam started to be accounted for as an associate.
 
The “Supermarkets” segment in which, through Shufersal, the Group operated a supermarket chain in Israel. Upon the loss of control in 2018 this segment was reclassified to discontinued operations and presented as an associate since 2019. Due to the loss of control, it was reclassified to discontinued operations and no longer represents a segment for fiscal year 2018.
 
The “Telecommunications” segment includes Cellcom whose main activities include the provision of mobile phone services, fixed line phone services, data, Internet and television, among others.
 
The “Insurance” segment includes the investment in Clal, insurance company which main activities includes pension and social security insurance, among others. As stated in Note 14, the Group does not have control over Clal; therefore, the business is reported in a single line as a financial asset held for sale and valued at fair value.
 
The “Others” segment includes other diverse business activities, such as technological developments, tourism, oil and gas assets, electronics, agricultural activities and others.
 
The “Corporate” segment includes the expenses related with the activities of the holding companies.
 
 
63
 
 
 
Goods and services exchanged between segments are calculated on the basis of established prices. Intercompany transactions between segments, if any, are eliminated.
 
 
64
 
 
 
Results of Operations for the periods ended December 31, 2020 compared to the periods ended December 31, 2019
 
Below is a summary of the operating segments by geography and a reconciliation between the total of the operating result according to the information by segments and the operating result according to the income statement for the periods ended December 31, 2020 and 2019.
  
 
 
Total Segment
 
 
Joint Ventures
 
 
Expenses and Collective Promotion Fund
 
 
Inter-segment eliminations and non-reportable assets / liabilities
 
 
Total income statement / statement of financial position
 
 
  12.31.20 
  12.31.19 
 
Var.
 
  12.31.20 
  12.31.19 
 
Var.
 
  12.31.20 
  12.31.19 
 
Var.
 
  12.31.20 
  12.31.19 
 
Var.
 
  12.31.20 
  12.31.19 
 
Var.
 
 
 
(in million ARS)
 
Revenues
  3,854 
  8,891 
  (5,037)
  (17)
  (54)
  37 
  1,127 
  2,095 
  (968)
  (13)
  (16)
  3 
  4,951 
  10,916 
  (5,965)
Costs
  (1,423)
  (1,852)
  429 
  31 
  31 
  - 
  (1,237)
  (2,189)
  952 
  - 
  4 
  (4)
  (2,629)
  (4,006)
  1,377 
Gross profit/(loss)
  2,431 
  7,039 
  (4,608)
  14 
  (23)
  37 
  (110)
  (94)
  (16)
  (13)
  (12)
  (1)
  2,322 
  6,910 
  (4,588)
Net gain/(loss) from fair value adjustment of investment properties
  9,774 
  5,637 
  4,137 
  (508)
  (344)
  (164)
  - 
  - 
  - 
  - 
  - 
  - 
  9,266 
  5,293 
  3,973 
General and administrative expenses
  (1,538)
  (1,617)
  79 
  3 
  7 
  (4)
  - 
  - 
  - 
  20 
  20 
  - 
  (1,515)
  (1,590)
  75 
Selling expenses
  (794)
  (730)
  (64)
  7 
  5 
  2 
  - 
  (33)
  33 
  - 
  - 
  - 
  (787)
  (758)
  (29)
Other operating results, net
  (104)
  (39)
  (65)
  1 
  19 
  (18)
  1 
  27 
  (26)
  (7)
  (8)
  1 
  (109)
  (1)
  (108)
Profit/(loss) from operations
  9,769 
  10,290 
  (521)
  (483)
  (336)
  (147)
  (109)
  (100)
  (9)
  - 
  - 
  - 
  9,177 
  9,854 
  (677)
Share of profit/(loss) of associates and joint ventures
  (807)
  (1,755)
  948 
  354 
  242 
  112 
  - 
  - 
  - 
  - 
  - 
  - 
  (453)
  (1,513)
  1,060 
Segment profit/(loss)
  8,962 
  8,535 
  427 
  (129)
  (94)
  (35)
  (109)
  (100)
  (9)
  - 
  - 
  - 
  8,724 
  8,341 
  383 
Reportable assets
  184,867 
  139,307 
  45,560 
  (958)
  (812)
  (146)
  - 
  - 
  - 
  16,220 
  34,758 
  (18,538)
  200,129 
  173,253 
  26,876 
Reportable liabilities
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (107,848)
  (122,649)
  14,801 
  (107,848)
  (122,649)
  14,801 
Net reportable assets
  184,867 
  139,307 
  45,560 
  (958)
  (812)
  (146)
  - 
  - 
  - 
  (91,628)
  (87,891)
  (3,737)
  92,281 
  50,604 
  41,677 
 
Operations Center in Argentina
 
Below is a summary analysis of the operating segments by products and services of the Operations Center in Argentina for the periods ended December 31, 2020 and 2019
 
 
 
Shopping Malls
 
 
Offices
 
 
Sales and Developments
 
 
Hotels
 
 
International
 
 
Corporate
 
 
Others
 
 
Total
 
 
  12.31.20 
  12.31.19 
 
Var.
 
  12.31.20 
  12.31.19 
 
Var.
 
  12.31.20 
  12.31.19 
 
Var.
 
  12.31.20 
  12.31.19 
 
Var.
 
  12.31.20 
  12.31.19 
 
Var.
 
  12.31.20 
  12.31.19 
 
Var.
 
  12.31.20 
  12.31.19 
 
Var.
 
  12.31.20 
  12.31.19 
 
Var.
 
 
 
(in million ARS)
 
Revenues
  1,943 
  4,961 
  (3,018)
  1,118 
  1,491 
  (373)
  358 
  626 
  (268)
  119 
  1,726 
  (1,607)
  297 
  7 
  290 
  - 
  - 
  - 
  19 
  80 
  (61)
  3,854 
  8,891 
  (5,037)
Costs
  (292)
  (394)
  102 
  (91)
  (81)
  (10)
  (371)
  (350)
  (21)
  (335)
  (961)
  626 
  (251)
  (7)
  (244)
  - 
  - 
  - 
  (83)
  (59)
  (24)
  (1,423)
  (1,852)
  429 
Gross profit/(loss)
  1,651 
  4,567 
  (2,916)
  1,027 
  1,410 
  (383)
  (13)
  276 
  (289)
  (216)
  765 
  (981)
  46 
  - 
  46 
  - 
  - 
  - 
  (64)
  21 
  (85)
  2,431 
  7,039 
  (4,608)
Net gain/(loss) from fair value adjustment of investment properties
  (4,762)
  (2,554)
  (2,208)
  7,796 
  4,528 
  3,268 
  6,167 
  3,463 
  2,704 
  - 
  - 
  - 
  3 
  - 
  3 
  - 
  - 
  - 
  570 
  200 
  370 
  9,774 
  5,637 
  4,137 
General and administrative expenses
  (674)
  (594)
  (80)
  (178)
  (158)
  (20)
  (146)
  (155)
  9 
  (157)
  (241)
  84 
  (31)
  (74)
  43 
  (325)
  (317)
  (8)
  (27)
  (78)
  51 
  (1,538)
  (1,617)
  79 
Selling expenses
  (116)
  (346)
  230 
  (79)
  (59)
  (20)
  (529)
  (133)
  (396)
  (47)
  (184)
  137 
  (20)
  - 
  (20)
  - 
  - 
  - 
  (3)
  (8)
  5 
  (794)
  (730)
  (64)
Other operating results, net
  (65)
  (89)
  24 
  (8)
  (42)
  34 
  (37)
  (4)
  (33)
  10 
  (12)
  22 
  (1)
  (1)
  - 
  - 
  - 
  - 
  (3)
  109 
  (112)
  (104)
  (39)
  (65)
Profit/(loss) from operations
  (3,966)
  984 
  (4,950)
  8,558 
  5,679 
  2,879 
  5,442 
  3,447 
  1,995 
  (410)
  328 
  (738)
  (3)
  (75)
  72 
  (325)
  (317)
  (8)
  473 
  244 
  229 
  9,769 
  10,290 
  (521)
Share of profit/(loss) of associates and joint ventures
  - 
  - 
  - 
  - 
  - 
  - 
  (15)
  - 
  (15)
  - 
  - 
  - 
  (542)
  (519)
  (23)
  - 
  - 
  - 
  (250)
  (1,236)
  986 
  (807)
  (1,755)
  948 
Segment profit/(loss)
  (3,966)
  984 
  (4,950)
  8,558 
  5,679 
  2,879 
  5,427 
  3,447 
  1,980 
  (410)
  328 
  (738)
  (545)
  (594)
  49 
  (325)
  (317)
  (8)
  223 
  (992)
  1,215 
  8,962 
  8,535 
  427 
Reportable assets
  54,593 
  58,703 
  (4,110)
  70,222 
  42,600 
  27,622 
  45,971 
  36,816 
  9,155 
  2,133 
  2,250 
  (117)
  1,969 
  (9,886)
  11,855 
  7 
  7 
  - 
  9,972 
  8,817 
  1,155 
  184,867 
  139,307 
  45,560 
Reportable liabilities
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
Net reportable assets
  54,593 
  58,703 
  (4,110)
  70,222 
  42,600 
  27,622 
  45,971 
  36,816 
  9,155 
  2,133 
  2,250 
  (117)
  1,969 
  (9,886)
  11,855 
  7 
  7 
  - 
  9,972 
  8,817 
  1,155 
  184,867 
  139,307 
  45,560 
 
 

65
 
 
 
Operations Center in Argentina
 
Below is a summary analysis of the operating segments by products and services of the Operations Center in Israel where only assets and liabilities are presented as of December 31,2019
 
 
 
Real Estate
 
 
Supermarkets
 
 
Telecommunications
 
 
Insurance
 
 
Corporate
 
 
Others
 
 
Total
 
 
  12.31.19 
  12.31.19 
  12.31.19 
  12.31.19 
  12.31.19 
  12.31.19 
  12.31.19 
 
(in Million ARS)
 
Reportable assets
  182,170 
  30,553 
  156,780 
  9,989 
  39,527 
  90,512 
  509,531 
Reportable liabilities
  (167,716)
  - 
  (122,483)
  - 
  (131,502)
  (27,623)
  (449,324)
Net reportable assets
  14,454 
  30,553 
  34,297 
  9,989 
  (91,975)
  62,889 
  60,207 
 
 

66
 
 
 
Revenues December 2020 vs December 2019
 
Revenues from sales, leases, and services, according to the income statement, decreased by ARS 5,965 million from ARS 10,916 million during the six-month period ended December 31, 2019 to ARS 4,951 million during the six-month period ended December 31, 2020. In index terms, revenues from sales, leases, and services decreased by 54.6%.
 
In turn, revenues from expenses and Collective Promotion Fund decreased by 46.2%, from ARS 2,095 million (out of which ARS 1,936 million are allocated to the Shopping Malls segment and ARS 159 million are allocated to the Offices segment) during the six-month period ended December 31, 2019, to ARS 1,127 million (out of which ARS 1,020 million are allocated to the Shopping Malls segment and ARS 107 million are allocated to the Offices segment) during the six-month period ended December 31, 2020.
 
Moreover, revenues from our joint ventures decreased by 68.5%, from ARS 54 million (out of which ARS 46 million are allocated to the Shopping Malls segment and ARS 8 million are allocated to the Offices segment) during the six-month period ended December 31, 2019 to ARS 17 million (out of which ARS 7 million are allocated to the Shopping Malls segment and ARS 10 million are allocated to the Offices segment) during the six-month period ended December 31, 2020.
 
Finally, revenues from inter-segment transactions decreased by ARS 3 million, from ARS 16 million during the six-month period ended December 31, 2019, to ARS 13 million during the six-month period ended December 31, 2020.
 
Therefore, according to information by segments, revenues decreased by ARS 5,037 million, from ARS 8,891 million during the six-month period ended December 31, 2019, to ARS 3,854 million during the six-month period ended December 31, 2020. Revenues, according to information by segments, decreased by 56.7%.
 
Shopping Malls. Revenues from the Shopping Malls segment decreased by 60.8% from ARS 4,961 million during the six-month period ended December 31, 2019, to ARS 1,943 million during the six-month period ended December 31, 2020. Such fall is mainly attributable to: (i) an ARS 1.655 million decrease in revenues from permanent leases (total sales from our lessees decrease 55.4% from ARS 61,515 million in period 2019 to ARS 27,497 million in period 2020). Compared to the comparative quarter, there is an 277.0% increase in real terms due to the reopening of 100% of shopping malls of the Group as of October 30, 2020; (ii) a decrease in contingent leases revenue of ARS 980 million; (iii) an ARS 292 million decrease in revenue from admission rights; (iv) an ARS 251 million decrease in revenue from parking; partially offset by (v) an ARS 168 million increase in the revenue from averaging of scheduled rent escalation.
 
Offices. Revenues from the Offices segment decreased by 25.0% from ARS 1,491 million during the six-month period ended December 31, 2019, to ARS 1,118 million during the six-month period ended December 31, 2020. This variation is mainly explained by a decrease of 27.7% in revenues from leases, from ARS 1,480 million during the six-month period ended December 31, 2019 to ARS 1,070 million during the six-month period ended December 31, 2020, mainly as a result of less income from leases due to the sale of Bouchard Building and sale of floors in Boston Tower during the period ended December 31, 2020.
 
Sales and Developments. Revenues from the Sales and Developments segment recorded a 42.8% decrease from ARS 626 million during the six-month period ended December 31, 2019, to ARS 358 million during the six-month period ended December 31, 2020. This segment often varies significantly from period to period due to the non-recurrence of different sales transactions carried out by the Group over time.
 
Hotels. Revenues from our Hotels segment decreased by 93.1% from ARS 1,726 million during the six-month period ended December 31, 2019, to ARS 119 million during the six-month period ended December 31, 2020, mainly due to a decrease in revenues as a result of the fall in the tourist industry during this period because of COVID 19.
 
International. Revenues from our International segment increased by ARS 290 million, from ARS 7 million during the six-month period ended December 31, 2019, to ARS 297 million during the six-month period ended December 31, 2020, due to the sale of Stowe House in USD 3.45 million, generating a profit of USD 0.3 million.
 
Corporate. Revenues associated with our Corporate segment showed no variations for the reported periods.
 
Others. Revenues from the Others segment decreased by 76.3% from ARS 80 million during the six-month period ended December 31, 2019, to ARS 19 million during the six-month period ended December 31, 2020, mainly due to the lack of incomes derived from LA RURAL S.A. – OFC S.R.L. – OGDEN S.A. – ENTRETENIMIENTO
 
 

67
 
 
 
UNIVERSAL S.A. – Joint venture – (Convention Center and Exhibitions of the City of Buenos Aires Administrator), attributable to the COVID-19 pandemic.
 
Costs December 2020 vs December 2019
 
Total consolidated costs, according to the income statement, decreased by ARS 1,377 million, from ARS 4,006 million during the six-month period ended December 31, 2019, to ARS 2,629 million during the six-month period ended December 31, 2020. In index terms, costs decreased by 34.4%. Furthermore, consolidated total costs measured as a percentage of consolidated total revenues increased from 36.7% during the six-month period ended December 31, 2019 to 53.1% during the six-month period ended December 31, 2020.
 
In turn, costs related to expenses and Collective Promotion Fund decreased by 43.5% from ARS 2,189 million (out of which ARS 2,024 million are allocated to the Shopping Malls segment and ARS 165 million are allocated to the Offices segment) during the six-month period ended December 31, 2019, to ARS 1,237 million (out of which ARS 1,126 million are allocated to the Shopping Malls segment and ARS 111 million are allocated to the Offices segment) during the six-month period ended December 31, 2020, mainly due to lower costs originated by our Shopping Malls, which decreased by 44.4% from ARS 2,024 million during the six-month period ended December 31, 2019, to ARS 1,126 million during the six-month period ended December 31, 2020.
 
Likewise, costs from our joint ventures showed no variations remaining stable at ARS 31 million during the six-month period ended December 31, 2019 (out of which ARS 4 million are allocated to the Shopping Malls segment; ARS 22 million to the Offices segment and 5 million to the Sales and Developments segment) and ARS 31 million during the six-month period ended December 31, 2020 (out of which ARS 4 million are allocated to the Shopping Malls segment; ARS 23 million to the Offices segment and 4 million to the Sales and Developments segment).
 
Finally, costs from inter-segment operations showed no variations for the reported periods.
 
Therefore, according to information by segments (taking into account the costs from our joint ventures and without considering the costs associated with expenses and collective promotion fund or the costs from inter-segment operations), costs evidenced a decrease of ARS 429 million, from ARS 1,852 million during the six-month period ended December 31, 2019 to ARS 1,423 million during the six-month period ended December 31, 2020. In index terms, costs decreased by 23.2%. Likewise, total costs, measured as a percentage of total revenues, according to information by segments, increased from 20.8% during the six-month period ended December 31, 2019 to 36.9% during the six-month period ended December 31, 2020.
 
Shopping Malls. Costs associated with the Shopping Malls segment decreased by 25.9%, from ARS 394 million during the six-month period ended December 31, 2019, to ARS 292 million during the six-month period ended December 31, 2020, mainly due to: (i) a decrease in maintenance expenses of ARS 82 million; (ii) an ARS 8 million decrease in fees and compensation services; (iii) a decrease in leases and expenses of ARS 4 million; partially offset by: (iv) an increase in salaries, social security and other personnel administrative expenses of ARS 9 million. Costs associated with the Shopping Malls segment, measured as a percentage of the revenues from this segment, increased from 7.9% during the six-month period ended December 31, 2019, to 15.0% during the six-month period ended December 31, 2020.
 
Offices. Costs associated with the Offices segment increased by 12.3%, from ARS 81 million during the six-month period ended December 31, 2019, to ARS 91 million during the six-month period ended December 31, 2020, mainly due to (i) an increase of ARS 7 million in salaries, social security charges and other personnel administrative expenses; (ii) an increase in taxes, rates and contributions of ARS 5 million; (iii) an increase in fees and compensation services of ARS 3 million; offset by: (iv) a decrease in leases and expenses of ARS 5 million. Costs associated with the Offices segment, measured as a percentage the revenues from this segment, increased from 5.4% during the six-month period ended December 31, 2019, to 8.1% during the six-month period ended December 31, 2020.
 
Sales and Developments. Costs associated with our Sales and Developments segment recorded a 6.0% increase from ARS 350 million during the six-month period ended December 31, 2019, to ARS 371 million during the six-month period ended December 31, 2020 mainly due to an increase in the cost of sale of goods and services generated by Catalinas in an amount of ARS 53 million. Costs in the Sales and Developments segment, measured as a percentage of revenues from this segment, increased from 55.9% during the six-month period ended December 31, 2019, to 103.6% during the six-month period ended December 31, 2020.
 
 
68
 
 
 
Hotels. Costs in the Hotels segment decreased by 65.1%, from ARS 961 million during the six-month period ended December 31, 2019, to ARS 335 million during the six-month period ended December 31, 2020, mainly as a result of (i) an ARS 268 million decrease in the costs of salaries, social security and other personnel expenses; (ii) an ARS 125 million decrease in food, beverages and other hotel expenses; (iii) an ARS 124 million decrease in maintenance, repair, and services; and (iv) an ARS 44 million decrease in fees and compensation services. Costs in the Hotels segment, measured as a percentage of revenues from this segment, increased from 55.7% during the six-month period ended December 31, 2019, to 281.5% during the six-month period ended December 31, 2020.
 
International. Costs in the International segment increased 3,485.7%, amounting to ARS 7 million during the six-month period ended December 31, 2019 and ARS 251 million during the six-month period ended December 31, 2020, mainly as a result of an increase in cost of selling properties of ARS 245 million due to the sale of Stowe House. Costs in the International segment, measured as a percentage of revenues from this segment, decreased from 100.0% during the six-month period ended December 31, 2019, to 84.5% during the six-month period ended December 31, 2020.
 
Corporate. Costs in the Corporate segment did not vary in the reported periods.
 
Others. Costs in the Others segment increased by 40.7%, from ARS 59 million during the six-month period ended December 31, 2019, to ARS 83 million during the six-month period ended December 31, 2020, mainly as a result of an increase of ARS 20 million in fees and compensation services from Pareto S.A. related to fees for application development.
 
Gross profit 2020 vs. 2019
 
The total consolidated gross profit, according to the income statement, decreased by ARS 4,588 million from ARS 6,910 million during the six-month period ended December 31, 2019 to ARS 2,322 million during the six-month period ended December 31, 2020. In index terms, the gross profit decreased by 66.4%. The total consolidated gross profit, measured as a percentage of revenues, decreased from 63.3% during the six-month period ended December 31, 2019 to 46.9% during the six-month period ended December 31, 2020.
 
In turn, total gross profit (loss) on account of expenses and collective promotion fund increased by ARS 16 million, from ARS 94 million during the six-month period ended December 31, 2019 (out of which a loss of ARS 88 million derives from Shopping Malls segment and a loss of ARS 6 million from the Offices segment), to ARS 110 million during the six-month period ended December 31, 2020 (out of which a loss of ARS 106 million derives from Shopping Malls segment and other loss of ARS 4 million from the Offices segment).
 
Additionally, the gross profit from our joint ventures decreased by 160.9%, from a profit of ARS 23 million during the six-month period ended December 31, 2019 to a loss of ARS 14 million during the six-month period ended December 31, 2020.
 
Therefore, according to information by segments, gross profit decreased by ARS 4,608 million, from ARS 7,039 million during the six-month period ended December 31, 2019 to ARS 2,431 million during the six-month period ended December 31, 2020. In index terms, the gross profit decreased by 65.5%. In addition, gross profit, measured as a percentage of revenues, according to information by segments, decreased from 79.2% during the six-month period ended December 31, 2019, to 63.1% during the six-month period ended December 31, 2020.
 
Shopping Malls. Gross profit from the Shopping Malls segment decreased by 63.8%, from ARS 4,567 million during the six-month period ended December 31, 2019, to ARS 1,651 million during the six-month period ended December 31, 2020, mainly as a result of a decrease in total sales of our lessees in real terms, thus resulting in lower percentage rentals under our lease agreements. Gross profit from the Shopping Malls segment as a percentage of the segment revenues, decreased from 92.1% during the six-month period ended December 31, 2019, to 85.0% during the six-month period ended December 31, 2020.
 
Offices. Gross profit from the Offices segment decreased by 27.2%, from ARS 1,410 million during the six-month period ended December 31, 2019, to ARS 1,027 million during the six-month period ended December 31, 2020. Gross profit from the Offices segment, measured as percentage of revenues from this segment, decreased from 94.6% during the six-month period ended December 31, 2019, to 91.9% during the six-month period ended December 31, 2020.
 
 
69
 
 
 
Sales and developments. Gross profit from the Sales and Developments segment decreased by 104.7%, from a profit of ARS 276 million during the six-month period ended December 31, 2019, to an ARS 13 million loss during the six-month period ended December 31, 2020. Gross profit from the Sales and Developments segment, measured as a percentage of revenues from this segment, decreased from 44.1% positive during the six-month period ended December 31, 2019, to 3.6% negative during the six-month period ended December 31, 2020.
 
Hotels. Gross profit from the Hotels segment decreased by 128.2%, from a profit of ARS 765 million during the six-month period ended December 31, 2019, to an ARS 216 million loss during the six-month period ended December 31, 2020. Gross profit from the Hotels segment, measured as a percentage of revenues from this segment, increased from 44.3% positive during the six-month period ended December 31, 2019, to 181.5% negative during the six-month period ended December 31, 2020.
 
International. Gross profit from the International segment increased by ARS 46 million, no charge was recorded during the six-month period ended December 31, 2019 and an ARS 46 million gross profit was recorded during the six-month period ended December 31, 2020. Gross profit from the International segment, measured as a percentage of revenues from this segment, increased from 0.0% during the six-month period ended December 31, 2019, to 15.5% positive during the six-month period ended December 31, 2020.
 
Corporate. Gross profit from the Corporate segment did not show any variations during the reported periods.
 
Others. Gross profit from the Others segment decreased by 404.8%, from a profit of ARS 21 million during the six-month period ended December 31, 2019, to an ARS 64 million loss during the six-month period ended December 31, 2020. Gross profit from the Others segment, measured as a percentage of revenues from this segment, increased from 26.3% positive during the six-month period ended December 31, 2019, to 336.8% negative during the six-month period ended December 31, 2020.
 
Net gain (loss) from fair value adjustment of investment properties December 2020 vs December 2019
 
Total consolidated net gain/(loss) from fair value adjustment of investment properties, according to the income statement, increased by ARS 3,973 million, from a net profit of ARS 5,293 million during the six-month period ended December 31, 2019, to a net profit of ARS 9,266 million during the six-month period ended December 31, 2020.
 
For the period ended December 31, 2020, the net gain/(loss) from fair value adjustment of investment properties was a gain of ARS 9,774 million (an ARS 4,762 million loss from our Shopping Malls segment; an ARS 7,796 million gain from our Offices segment; an ARS 6,167 million gain from our Sales and Developments segment; an ARS 3 million profit from our International segment and an ARS 570 million gain from our Others segment).
 
The net impact of prices in Pesos of our properties mainly resulted from a change in macroeconomic conditions: (i) the Argentine gross domestic product growth rate estimated for 2020 remained in order to -11.0%; and (ii) from June 2020 to December 2020, the Argentine Peso depreciated by 19.5% with respect to the US Dollar (from ARS 70.26 per USD 1.00 to ARS 83.95 per USD 1.00) which mainly resulted in a decrease in projected cash flows in US Dollars from the Shopping Malls.
 
The offices market in Argentina is a liquid market, in which a great number of counterparties participates carrying out sale-purchase transactions. This situation results in significant and representative sale-purchase prices. Furthermore, lease agreements are denominated in US dollars and are usually executed for three-year terms, hence this business produces stable cash flows in US dollars. In this sense, we use the Market Approach method to determine the fair value of our Offices and Others segment, the value per sqm, being the most representative measurement.
 
Since September 2019, the real estate market experienced certain operational changes due to the adoption of foreign exchange regulations. As a result, it is very likely that office buildings/lands reserved sales be settled in Pesos at an implied exchange rate higher than the official exchange rate, which can be observed in the transactions conducted by the Company before and after closing of these financial statements. Therefore, we have valued our offices and lands reserved in Pesos as of closing of these financial statements considering the aforementioned situation, thus resulting in a gain with respect to the previously recorded values.
 
 
70
 
 
 
General and administrative expenses December 2020 vs December 2019
 
Total general and administrative expenses, according to the income statement, recorded a decrease of ARS 75 million, from ARS 1,590 million during the six-month period ended December 31, 2019 to ARS 1,515 million during the six-month period ended December 31, 2020. In index terms, administrative expenses decreased by 4.7%. Total administrative expenses, measured as a percentage of revenues, increased from 14.6% during the six-month period ended December 31, 2019, to 30.6% during the six-month period ended December 31, 2020.
 
In turn, administrative expenses of our joint ventures decreased by ARS 4 million, from ARS 7 million during the six-month period ended December 31, 2019, to ARS 3 million during the six-month period ended December 31, 2020.
 
Finally, administrative expenses for inter-segment transactions showed no variations remaining stable at ARS 20 million during the six-month period ended December 31, 2019 and ARS 20 million during the six-month period ended December 31, 2020.
 
Therefore, according to information by segments, administrative expenses decreased by ARS 79 million, from ARS 1,617 million during the six-month period ended December 31, 2019, to ARS 1,538 million during the six-month period ended December 31, 2020. In index terms, administrative expenses, decreased by 4.9%. Administrative expenses, measured as a percentage of revenues, increased from 18.2% during the six-month period ended December 31, 2019, to 39.9% during the six-month period ended December 31, 2020.
 
Shopping Malls. Administrative expenses of Shopping Malls increased by 13.5%, from ARS 594 million during the six-month period ended December 31, 2019, to ARS 674 million during the six-month period ended December 31, 2020, mainly due to: (i) an increase of ARS 135 million in fees payable to directors; partially offset by: (ii) a decrease of ARS 30 million in amortization and depreciation; (iii) a decrease of ARS 22 million in fees and compensation for services; and (iv) a decrease of ARS 9 million in salaries, social security charges and other personnel administrative expenses. Administrative expenses of Shopping Malls, measured as a percentage of revenues from such segment, increased from 12.0% during the six-month period ended December 31, 2019, to 34.7% during the six-month period ended December 31, 2020.
 
Offices. The general and administrative expenses of our Offices segment increased by 12.7%, from ARS 158 million during the six-month period ended December 31, 2019, to ARS 178 million during the six-month period ended December 31, 2020, mainly as a result of: (i) an increase in fees payable to directors of ARS 37 million; partially offset by (ii) a decrease in amortization and depreciation of ARS 8 million and (iii) a decrease in fees and compensation for services of ARS 6 million. General and administrative expenses, measured as a percentage of revenues from the same segment, increased from 10.6% during the six-month period ended December 31, 2019, to 15.9% during the six-month period ended December 31, 2020.
 
Sales and Developments. General and administrative expenses associated with our Sales and Developments segment decreased by 5.8%, from ARS 155 million during the six-month period ended December 31, 2019, to ARS 146 million during the six-month period ended December 31, 2020. General and administrative expenses, measured as a percentage of revenues from the same segment, increased from 24.8% during the six-month period ended December 31, 2019, to 40.8% during the six-month period ended December 31, 2020.
 
Hotels. General and administrative expenses associated with our Hotels segment decreased by 34.9%, from ARS 241 million during the six-month period ended December 31, 2019, to ARS 157 million during the six-month period ended December 31, 2020, mainly as a result of: (i) an ARS 27 million decrease in salaries, social security and other personnel administrative expenses; (ii) an ARS 19 million decrease in maintenance, security, cleaning, repairs and related expenses; (iii) an ARS 12 million decrease in taxes, rates and contributions; and (iv) an ARS 3 million decrease in fees and compensation for services. General and administrative expenses associated with the Hotels segment, measured as a percentage of revenues from this segment, increased from 14.0% during the six-month period ended December 31, 2019, to 131.9% during the six-month period ended December 31, 2020.
 
International. General and administrative expenses associated with our International segment decreased by 58.1%, from ARS 74 million during the six-month period ended December 31, 2019, to ARS 31 million during the six-month period ended December 31, 2020, mainly as a result of an ARS 37 million decrease in salaries, social security and other personnel administrative expense.
 
 
71
 
 
 
Corporate. General and administrative expenses associated with our Corporate segment increased by 2.5%, from ARS 317 million during the six-month period ended December 31, 2019, to ARS 325 million during the six-month period ended December 31, 2020, mainly as a result of: (i) in ARS 45 million increase in fees and compensation for services; partially offset by: (ii) an ARS 35 million decrease in in fees payable to directors; and (ii) an ARS 13 million decrease in business expenses, mobility and library.
 
Others. General and administrative expenses associated with our Others segment decreased by 65.4%, from ARS 78 million during the six-month period ended December 31, 2019, to ARS 27 million during the six-month period ended December 31, 2020, mainly due to (i) a decrease of ARS 20 million in maintenance, repairs and services; (ii) a decrease of ARS 13 million in salaries, social security and other personnel administrative expenses and (iii) a decrease of ARS 12 million in fees and compensation for services.
 
Selling expenses December 2020 vs December 2019
 
Total consolidated selling expenses, according to the income statement, showed an increase of ARS 29 million, from ARS 758 million during the six-month period ended December 31, 2019 to ARS 787 million during the six-month period ended December 31, 2020. In index terms, selling expenses increased by 3.8%. Total consolidated selling expenses, measured as a percentage of revenues from sales, leases and services, increased from 6.9% during the six-month period ended December 31, 2019, to 15.9% during the six-month period ended December 31, 2020.
 
In turn, selling expenses of our joint ventures increased by ARS 2 million, from ARS 5 million during the six-month period ended December 31, 2019, to ARS 7 million during the six-month period ended December 31, 2020.
 
Therefore, according to information by segments, selling expenses increased by ARS 64 million, from ARS 730 million during the six-month period ended December 31, 2019 to ARS 794 million during the six-month period ended December 31, 2020. In index terms, selling expenses increased by 8.8%. Selling expenses, measured as a percentage of revenues, according to information by segments, increased from 8.2% during the six-month period ended December 31, 2019, to 20.6% during the six-month period ended December 31, 2020.
 
Shopping Malls. Selling expenses of the Shopping Malls segment decreased by 66.5%, from ARS 346 million during the six-month period ended December 31, 2019, to ARS 116 million during the six-month period ended December 31, 2020, mainly as a result of: (i) a decrease in the charge of taxes, rates and contributions of ARS 134 million; ii) a decrease in the charge of doubtful accounts of ARS 60 million; and iii) a decrease in the charge of publicity, advertising and other commercial expenses of ARS 21 million. Selling expenses, measured as a percentage of revenues from the Shopping Malls segment, decreased from 7.0% during the six-month period ended December 31, 2019, to 6.0% during the six-month period ended December 31, 2020.
 
Offices. Selling expenses associated with our Offices segment increased by 33.9%, from ARS 59 million during the six-month period ended December 31, 2019, to ARS 79 million during the six-month period ended December 31, 2020. Such variation was mainly generated as a result of: (i) an ARS 22 million increase in the charge of taxes, rates and contributions, partially offset by (ii) an ARS 4 million decrease in salaries, social security and other personnel administrative expenses. Selling expenses associated with our Offices segment, measured as a percentage of revenues from this segment, increased from 4.0% during the six-month period ended December 31, 2019, to 7.1% during the six-month period ended December 31, 2020.
 
Sales and Developments. Selling expenses associated with our Sales and Developments segment increased by 297.7%, from ARS 133 million during the six-month period ended December 31, 2019, to ARS 529 million during the six-month period ended December 31, 2020. Such variation was mainly generated by: (i) an ARS 219 million increase in taxes, rates and contributions; and (ii) an ARS 186 million increase in fees and compensation for services, both charges related to the sale of Bouchard Building and sale of floors in Boston Tower. Selling expenses associated with our Sales and Developments segment, measured as a percentage of revenues from this segment, increased from 21.2% during the six-month period ended December 31, 2019, to 147.8% during the six-month period ended December 31, 2020.
 
Hotels. Selling expenses associated with our Hotels segment decreased by 74.5%, from ARS 184 million during the six-month period ended December 31, 2019, to ARS 47 million during the six-month period ended December 31, 2020, mainly as a result of: (i) an ARS 65 million decrease in taxes, rates and contributions; (ii) an ARS 26 million decrease in salaries, social security and other personnel administrative expenses; (iii) an ARS 18 million decrease in fees and compensation for services; and (iv) an ARS 17 million decrease in publicity, advertising and other
 
 
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commercial expenses. Selling expenses associated with our Hotels segment, measured as a percentage of revenues from this segment, increased from 10.7% during the six-month period ended December 31, 2019, to 39.5% during the six-month period ended December 31, 2020.
 
International. Selling expenses associated with the International segment increased by 100,0%, no charge was recorded during the six-month period ended December 30, 2019 and ARS 20 million was recorded during the six-month period ended December 30, 2020, due to fees and compensation for services.
 
Corporate. Selling expenses associated with the Corporate segment were not recorded in both periods.
 
Others. Selling expenses associated with our Others segment decreased by 62.5%, from ARS 8 million during the six-month period ended December 31, 2019, to ARS 3 million during the six-month period ended December 31, 2020. Selling expenses associated with our Others segment, measured as a percentage of revenues from this segment, increased from 10.0% during the six-month period ended December 31, 2019, to 15.8% during the six-month period ended December 31, 2020.
 
Other operating results, net December 2020 vs December 2019
 
Other operating results, net, according to the income statement, recorded a variation of ARS 108 million, from a net loss of ARS 1 million during the six-month period ended December 31, 2019, to a net loss of ARS 109 million during the six-month period ended December 31, 2020.
 
Other operating results, net from our joint ventures decreased by ARS 18 million, from ARS 19 million during the six-month period ended December 31, 2019, to a net profit of ARS 1 million during the six-month period ended December 31, 2020.
 
In turn, other operating results on account of building administration expenses and collective promotion fund decreased by ARS 26 million, from ARS 27 million during the six-month period ended December 31, 2019 (out of which a profit of ARS 19 million are allocated to the Shopping Malls segment and a profit of ARS 8 million to the Offices segment), to ARS 1 million during the six-month period ended December 31, 2020 (out of which a profit of ARS 1 million are allocated to the Shopping Malls segment and a loss of ARS 0 million to the Offices segment).
 
Therefore, according to information by segments, the other operating results line, net, decreased by ARS 65 million, from a net profit of ARS 39 million during the six-month period ended December 31, 2019 to a net loss of ARS 104 million during the six-month period ended December 31, 2020.
 
Shopping Malls. Other operating results, net associated with our Shopping Malls segment increased by 27.0%, from a net loss of ARS 89 million during the six-month period ended December 31, 2019, to a net loss of ARS 65 million during the six-month period ended December 31, 2020, mainly as a result of: (i) an ARS 16 million decrease in the charge of tax on personal assets; and (ii) a lower charge of donations of ARS 9 million. Other operating results, net, from this segment, as a percentage of revenues from this segment, increased from 1.8% negative during the six-month period ended December 31, 2019, to 3.3% negative during the six-month period ended December 31, 2020.
 
Offices. Other operating results, net associated with our Offices segment increased by 81.0%, from a net loss of ARS 42 million during the six-month period ended December 31, 2019, to a net loss of ARS 8 million during the six-month period ended December 31, 2020, mainly as a consequence of an ARS 15 million decrease in others from the joint venture Quality S.A. and an ARS 6 million decrease in donations, among other items. Other operating results, net from this segment, as a percentage of the revenues from this segment, decreased from 2.8% negative during the six-month period ended December 31, 2019, to 0.7% negative during the six-month period ended December 31, 2020.
 
Sales and Developments. Other operating results, net associated with our Sales and Developments segment decreased by 825.0%, from a net loss of ARS 4 million during the six-month period ended December 31, 2019, to a net loss of ARS 37 million during the six-month period ended December 31, 2020, mainly due to a recovery of a balance with Euromayor S.A de Inversiones in the comparative period by ARS 23 million. Other operating results, net from this segment, as a percentage of the revenues of this segment, increased from 0.6% negative during the six-month period ended December 31, 2019, to 10.3% negative during the six-month period ended December 31, 2020.
 
Hotels Other operating results, net associated with the Hotels segment increased by 183.3%, from a net loss of ARS 12 million during the six-month period ended December 31, 2019, to a net profit of ARS 10 million during the six-month period ended December 31, 2020, mainly due to an ARS 14 million income by sell of property, plant and equipment. Other operating results, net from this segment, as a percentage of the revenues from this segment,
 
 
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increased from 0.7% negative during the six-month period ended December 31, 2019, to 8.4% positive during the six-month period ended December 31, 2020.
 
International. Other operating results, net associated with the International segment showed no variations amounting a net loss of ARS 1 million during the six-month period ended December 31, 2019, and a net loss of ARS 1 million during the six-month period ended December 31, 2020.
 
Corporate. Other operating results, net associated with the Corporate segment showed no variations between the reported periods.
 
Others. Other operating results, net associated with the Others segment decreased by 102.8%, from a net profit of ARS 109 million during the six-month period ended December 31, 2019, to a net loss of ARS 3 million during the six-month period ended December 31, 2020, mainly due to lack of income of fee charged to La Rural S.A. during the period ended December 31, 2020. Other operating results, net from this segment, as a percentage of the revenues from this segment, decreased from 136.3% positive during the six-month period ended December 31, 2019, to 15.8% negative during the six-month period ended December 31, 2020.
 
Profit / (loss) from operations December 2020 vs December 2019
 
Total consolidated profit/ (loss) from operations, according to the income statement, decreased from a net profit of ARS 9,854 million during the six-month period ended December 31, 2019 to a net profit of ARS 9,177 million during the six-month period ended December 31, 2020. In index terms, the profit/(loss) from operations varied by 6.9%. Total consolidated profit/(loss) from operations, measured as a percentage of revenues from sales, leases and services, increased from 90.3% positive during the six-month period ended December 31, 2019, to 185.4% positive during the six-month period ended December 31, 2020.
 
Profit/ (loss) from operations from our joint ventures decreased from a loss of ARS 336 million during the six-month period ended December 31, 2019 (out of which a net loss of ARS 25 million is allocated to the Shopping Malls segment; a net loss of ARS 321 million to the Offices segment and a profit of ARS 10 million to the Sales and Developments segment), to a net loss of ARS 483 million during the six-month period ended December 31, 2020 (out of which a net profit of ARS 32 million is allocated to the Shopping Malls segment; a net loss of ARS 519 million to the Offices segment and a profit of ARS 4 million to the Sales and Developments segment).
 
Therefore, according to information by segments, the net profit from operations decreased from a net profit of ARS 10,290 million during the six-month period ended December 31, 2019, to a net profit of ARS 9,769 million during the six-month period ended December 31, 2020. The profit/(loss) from operations, measured as a percentage of revenues, according to information by segments, increased from a 115.7% profit during the six-month period ended December 31, 2019, to a 253.5% profit during the six-month period ended December 31, 2020.
 
Shopping Malls. Profit/(loss) from operations associated with the Shopping Malls segment decreased from a profit of ARS 984 million during the six-month period ended December 31, 2019, to a loss of ARS 3,966 million during the six-month period ended December 31, 2020.
 
Offices. Profit/(loss) from operations associated with our Offices segment increased by 50.7%, from a net profit of ARS 5,679 million during the six-month period ended December 31, 2019, to a net profit of ARS 8,558 million during the six-month period ended December 31, 2020. Such variation was mainly due to an ARS 3,268 million increase in the gain / (loss) from fair value adjustments of investment properties. Profit / (loss) from operations associated with the Offices segment, as a percentage of revenues from such segment, increased from 380.9% during the six-month period ended December 31, 2019, to 765.5% during the six-month period ended December 31, 2020.
 
Sales and Developments. Profit/(loss) from operations associated with our Sales and Developments segment increased by 57.9%, from a net profit of ARS 3,447 million during the six-month period ended December 31, 2019, to a net profit of ARS 5,442 million during the six-month period ended December 31, 2020. Such increase is mainly due to the gain / (loss) from fair value adjustments of investment properties. Profit / (loss) from operations associated with the Sales and Developments segment, as a percentage of revenues from this segment, increased from 550.6% during the six-month period ended December 31, 2019, to 1,520.1% during the six-month period ended December 31, 2020.
 
Hotels. Profit/(loss) from operations associated with the Hotels segment decreased by 225.0%, from a net profit of ARS 328 million during the six-month period ended December 31, 2019, to a net loss of ARS 410 million during the six-month period ended December 31, 2020. Such decrease is mainly due to the fact that revenues were significantly
 
 
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affected by a decline in the activity in the present period, attributable to the COVID-19 pandemic. The profit / (loss) from operations associated with the Hotels segment, as a percentage of revenues from such segment, increased from 19.0% during the six-month period ended December 31, 2019, to 344.5% during the six-month period ended December 31, 2020.
 
International. Profit/(loss) from operations associated with our International segment varied by 96.0%, from a net loss of ARS 75 million during the six-month period ended December 31, 2019, to a net loss of ARS 3 million during the six-month period ended December 31, 2020. Such variation is due to the income generated by the sale of Stowe House.
 
Corporate. Profit/(loss) from operations associated with our Corporate segment decreased by 2.5%, from a loss of ARS 317 million during the six-month period ended December 31, 2019, to a loss of ARS 325 million during the six-month period ended December 31, 2020, mainly affected by general and administrative expenses.
 
Others. Profit/(loss) from operations associated with the Others segment increased from a net profit of ARS 244 million during the six-month period ended December 31, 2019, to a net profit of ARS 473 million during the six-month period ended December 31, 2020. The variation is mainly due to the gain / (loss) from fair value adjustments of investment properties.
 
Share of profit / (loss) of associates and joint ventures December 2020 vs December 2019
 
The share of profit / (loss) of associates and joint ventures, according to the income statement, increased by 70.1%, from a net loss of ARS 1,513 million during the six-month period ended December 31, 2019 to a net loss of ARS 453 million during the six-month period ended December 31, 2020, mainly due to less negative results from the Others segment.
 
Also, the net share of profit / (loss) of joint ventures, mainly from Nuevo Puerto Santa Fe S.A. (Shopping Malls segment), Quality Invest S.A. (Offices segment) and Cyrsa S.A. and Puerto Retiro S.A. (Sales and Developments segment), showed a 46.3% increase, from a profit of ARS 242 million during the six-month period ended December 31, 2019, to a profit of ARS 354 million during the six-month period ended December 31, 2020, mainly due to results from the share in Quality Invest S.A., mainly attributable to the gain / (loss) from fair value adjustments of investment properties.
 
Shopping Malls. In the information by segments, the share of profit / (loss) of the joint venture Nuevo Puerto Santa Fe S.A. is recorded on a consolidated basis, line by line in this segment.
 
Offices. In the information by segments, the share of profit / (loss) of the joint venture Quality S.A. is recorded on a consolidated basis, line by line in this segment.
 
Sales and Developments. The share of profit / (loss) of the joint ventures Cyrsa S.A. and Puerto Retiro S.A is recorded on a consolidated basis, line by line. The share of profit / (loss) of our associate Manibil S.A., which is recorded in this line, increased by ARS 15 million during the six-month period ended December 31, 2020.
 
Hotels. This segment does not show results from the share of profit / (loss) of associates and joint ventures.
 
International. The share of profit / (loss) of associates of this segment decreased by 4.4%, from a net loss of ARS 519 million during the six-month period ended December 31, 2019, to a net loss of ARS 542 million during the six-month period ended December 31, 2020, mainly generated by a negative result from our investment in New Lipstick LLC of ARS 378 million and a negative result from our investment in Condor Hospitality of ARS 165 million.
 
Other. The share of profit / (loss) of associates from the Others segment increased by 79.8%, from a net loss of ARS 1,236 million during the six-month period ended December 31, 2019, to a net loss of ARS 250 million during the six-month period ended December 31, 2020, mainly as a result of the variation from our investments in Banco Hipotecario S.A. in the amount of ARS 1,513 million positive.
 
Financial results, net
 
The financial results went from a loss of ARS 9,202 million during the six-month period ended December 31, 2019 to a profit of ARS 1,236 million during the six-month period ended December 31, 2020. Mainly due to lower results in terms of the exchange rate variation and the result from changes in fair value of financial assets.
 
Income Tax
 
 
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The Company applies the deferred tax method to calculate the income tax for the reported periods, thus recognizing temporary differences as tax assets and liabilities. The income tax charge went from a loss of ARS 2,720 million during the six-month period ended December 31, 2019, to a loss of ARS 4,004 million during the six-month period ended December 31, 2020, from the Operations Center in Argentina.
 
Profit for the period
 
As a result of the factors described above, the profit for the period went from a profit of ARS 6,611 million (that includes a profit of ARS 10,192 million for the effect of discontinued operations) during the six-month period ended December 31, 2019 to a loss of ARS 1,164 million (that includes a loss of ARS 7,120 million for the effect of discontinued operations) during the six-month period ended December 31, 2020.
 
 
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B. Liquidity and Capital Resources
 
Our principal sources of liquidity have historically been:
 
Cash generated by operations;
 
Cash generated by issuance of debt securities;
 
Cash from borrowing and financing arrangements; and
 
Cash proceeds from the sale of real estate assets.
 
Our principal cash requirements or uses (other than in connection with our operating activities) have historically been:
 
capital expenditures for acquisition or construction of investment properties and property, plant and equipment;
 
interest payments and repayments of debt;
 
acquisition of equity interests in companies;
 
payments of dividends; and
 
acquisition of real estate.
 
Our liquidity and capital resources include our cash and cash equivalents, proceeds from bank borrowings and long-term debt, capital financing and sales of real estate investments.
 
In the framework of the national and international context previously exposed, the Company’s Board of Directors will continue evaluating financial, economic and/or corporate tools that allow the Company to improve its position in the market in which it operates and to have the necessary liquidity to face its obligations. In the context of this analysis, the indicated tools may be linked to corporate reorganization processes (merger, spin-off or a combination of both), implementation of financial and/or corporate efficiencies in international companies directly or indirectly owned by the Company through reorganization processes, public and / or private disposal of assets that may include real estate as well as negotiable securities owned by the Company, incorporation of shareholders through capital increases through the public offering of shares to raise new capital, issuance of convertible negotiable obligations or subscription options or a combination of these three instruments, as were approved by the Shareholders’ Meeting on October 30, 2019, repurchase of shares and instruments similar to those described that are useful for the proposed objectives.
 
 
The following table shows our cash flow for the six-month periods ended December 31, 2020 and 2019:
 
 
 
Period ended December 31,
 
 
 
2020
 
 
2019
 
 
 
(in millions of ARS)
 
Net cash flow generated by operations
  4,403 
  22,844 
Net cash flow generated by investment activities
  51,381 
  18,815 
Net cash flow used in financing activities
  (39,357)
  (62,336)
Net increase/ (decrease) in cash and cash equivalents
  16,427 
  (20,677)
 
As of December 31, 2020 we had a negative working capital of ARS 10,172 million (calculated as current assets less current liabilities as of that date).
 
As of the same date, we had cash and cash equivalents for ARS 1,605 million, which represents the total of cash and cash equivalents at a consolidated level.
 
Cash Flow Information
 
Operating activities
 
Six-month period ended December 31, 2020
 
Our operating activities for the six-month period ended December 31, 2020 generated net cash inflows of ARS 4,403. million, of which ARS 2,473 are originated in discontinued operations and ARS 1,930 from continuing operations, mainly due to (i) an increase in trade and other payables of ARS 2,600 million; and (ii) a decrease in trading properties of ARS 749 million; partially offset by (iii) an operating loss of ARS 672 million; (iv) an increase in trade and other receivables of ARS 686 million; (v) an increase in salaries and social security contributions of ARS 7 million; and (vi) a decrease in provisions of ARS 44 million.
 
 
77
 
 
 
Six-month period ended December 31, 2019
 
Our operating activities for the six-month period ended December 31, 2019 generated net cash inflows of ARS 22,844 million, of which ARS 17,626 million are originated in discontinued operations and ARS 5,218 million in continuing operations, mainly due to: (i) an operating result of ARS 6,629 million; (ii) a decrease in trade and other receivables of ARS 1,190 million; partially offset by (iii) a decrease in provisions of ARS 188 million; (iv) a decrease in trade and other payables for ARS 1,530 million; (v) a decrease in salaries and social security contributions of ARS 133 million; and (vi) ARS 294 million related to income tax paid.
 
Investment activities
 
Six-month period ended December 31, 2020
 
Our investment activities generated a net cash inflow of ARS 51,381 million, corresponding to an inflow from discontinued operations of ARS 35,434 million and an inflow of ARS 15,947 million of from continued operations for the six-month period ended on December 31, 2020, mainly due to (i) ARS 14,158 inflow from the sale of investment properties; and (ii) ARS 15,351 million inflow dorm the sale of financial assets; partially offset by (iii) ARS 11,732 million used in the acquisition of investments in financial assets; and (iv) ARS 2,032 used in the acquisition and improvements of investment properties.
 
Six-month period ended December 31, 2019
 
Our investing activities generated a net cash flow inflow of ARS 18,815 million, corresponding to an inflow of funds from discontinued activities of ARS 17,278 million and an inflow of funds from continued operations of ARS 1,537 million for the six-month period ended on December 31, 2019, mainly due to: (i) ARS 19,238 million from the sale of investments in financial assets; partially offset by (ii) ARS 14,502 million used in the acquisition of investments in financial assets; (iii) ARS 1,695 million used in the acquisition and improvements of investment properties; and (iv) ARS 1,172 million used to grant loans.
 
Financing activities
 
Six-month period ended December 31, 2020
 
Our financing activities for the six-month period ended December 31, 2020 resulted in a net cash outflow of ARS 39,357 million, out of which ARS 14,492 million correspond to discontinued operations, and ARS 24,865 million correspond to continued operations , mainly due to (i) the cancellation of loans and capital of negotiable obligations of ARS 27,252 million; (ii) the payment of interest on short and long-term debt of ARS 3,754 million; and (iii) ARS 336 million due to the payment of derivative financial instruments; partially offset by (iv) ARS 2,377 million for obtaining short-term loans; (v) borrowing and issuance of negotiable obligations for ARS 3,303 million; and (vi) ARS 3,138 million from the sale of our own negotiable obligations in the portfolio.
 
Six-month period ended December 31, 2019
 
Our financing activities for the six-month period ended December 31, 2019 resulted in an outflow of ARS 62,336 million, out of which ARS 54,022 million correspond to discontinued operations and ARS 8,314 million to continued operations, mainly due to (i) the cancellation of loans and capital of debentures of ARS 12,940 million; (ii) the payment of interest on short and long-term loans of ARS 3,628 million; and (iii) ARS 2,676 million due to the repurchase of debentures; partially offset by (iv) borrowing and issuance of debentures for ARS 9,711 million; and (v) ARS 1,740 million for obtaining short-term loans.
 
Capital expenditures
 
Six-month period ended on December 31, 2020
 
During the period ended December 31, 2020, we made investments for ARS 1,745 million as follows: (a) acquisition and improvements of property, plant and equipment for ARS 1,204 million , mainly related to: i) ARS 55 million in buildings and facilities, ii) ARS 464 million in communication networks, iii) ARS 604 million in machinery, equipment and others, iv) improvements in Llao Llao and Intercontinental hotels (ARS 24 million and ARS 13 million, respectively), and v) ARS 44 million in agricultural establishments; (b) improvements in our rental properties for ARS 541 million, out of which ARS 497 million correspond to our Argentina Operations Center and ARS 44 million to the Israel Operations Center.
 
 
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Six-month period ended on December 31, 2019
 
During the period ended December 31, 2019, we made investments for ARS 6,612 million as follows: (a) acquisition and improvements of property, plant and equipment for ARS 3,706 million , mainly related to: i) ARS 158 million in buildings and facilities, ii) ARS 2,739 million in communication networks, iii) ARS 760 million in machinery, equipment and others, and iv) improvements in our hotels Sheraton Libertador, Llao Llao and Intercontinental (ARS 15 million, ARS 23 million and ARS 11 million, respectively); (b) improvements in our rental properties for ARS 787 million, out of which ARS 451 million correspond to our Argentina Operations Center and ARS 336 million to the Israel Operations Center; (c) properties under development for ARS 2,118 million.
 
Indebtedness
 
The breakdown of the Company’s borrowings as of December 31, 2020 was as follows:
 
 
 
Total as of december 31, 2020
 
 
 
(millions of ARS)
 
Non-convertible Notes
  45,860 
Bank loans
  3,970 
Bank overdrafts
  4,132 
Other borrowings (i)
  1,511 
Total borrowings
  55,473 
Non-current
  40,942 
Current
  14,531 
 
  55,473 
 
    
 
Type of debt
Currency
 
Annual Average Interest Rate
 
 
Nominal value
 
 
Book value (in million of ARS)
 
IRSA Commercial Properties’ 2023 Notes
USD
  8.75%
  360 
  30,932 
IRSA’s 2023 Notes – Series I (1)
USD
  10.00%
  3 
  298 
IRSA’s 2021 Notes – Series III (2)
ARS
 
Badlar + 600 bps
 
  353 
  258 
IRSA’s 2021 Notes – Series IV
USD
  7.00%
  51 
  4,380 
IRSA’s 2022 Notes – Series V
USD
  9.00%
  9 
  795 
IRSA’s 2021 Notes – Series VI
ARS
 
Badlar + 400 bps
 
  335 
  355 
IRSA’s 2022 Notes – Series VII
USD
  4.00%
  33 
  2,846 
IRSA’s 2023 Notes – Series VIII
USD
  10.00%
  31 
  2,324 
IRSA’s 2023 Notes – Series IX
USD
  10.00%
  80 
  3,672 
Related Party
ARS
 
Badlar
 
  5 
  32 
Related Party
USD
 
From 5.97% to 14.0%
 
  63 
  240 
Related Party
USD
  3.97%
  1 
  44 
Related Party
USD
 
Libor 1 m + 2.0%
 
  3 
  234 
Bank loans
USD
  5.95%
  17 
  1,395 
Bank loans
USD
 
Libor + 1.90%
 
  30 
  2,434 
Bank loans
ARS
 
35.3% to 36.3%
 
  92 
  94 
AABE Debt
ARS
 
Libor
 
  120 
  209 
Seller financing
USD
  N/A 
  2 
  197 
Others
USD
 
Libor 1 m + 2.0% / 3.5%
 
  7 
  602 
Bank overdrafts
ARS
 
from 20.50% to 80.00%
 
  - 
  4,132 
Total (3)
 
    
    
  55,473 
 
 
(1)
On October 22, 2020, we announced Notes to be issued by exchange for the Existing Notes, Series I Notes, or through the Cash Subscription, for more information see “Recent Developments – Exchange Offer- Issuance of Series VIII and IX Notes.”
(2)
On February 22, 2021, it was fully canceled.
(3)
The credit line between IRSA CP and IRSA for an amount of USD 62.6 million is not shown due because it is eliminated in consolidation.
 
 
79
 
 
 
(1)
The credit line between IRSA CP and IRSA for an amount of USD 62.6 million is not shown due because it is eliminated in consolidation.
 
 
Series II Notes (Issued by IRSA)
 
IRSA’s Notes Class II at 11.50% maturing in 2020 for a total amount of USD 71.4 million were fully repaid on July 20, 2020.
 
Series II Notes (Issued by IRSA CP)
 
On March 23, 2016, IRSA CP issued Notes in an aggregate principal amount of USD360 million under its Global Notes Program. Series II Notes accrue interest semi-annually, at an annual fixed rate of 8.75% and mature on March 23, 2023.
 
IRSA CP’s Notes due 2023 are subject to certain covenants, events of default and limitations, such as the limitation on incurrence of additional indebtedness, limitation on restricted payments, limitation on transactions with affiliates, and limitation on merger, consolidation and sale of all or substantially all assets.
 
To incur additional indebtedness, IRSA CP is required to meet a minimum 2.00 to 1.00 Consolidated Interest Coverage Ratio. The Consolidated Interest Coverage Ratio is defined as Consolidated EBITDA divided by consolidated net interest expense. Consolidated EBITDA is defined as operating income plus depreciation and amortization and other consolidated non-cash charges.
 
The Series II Notes contain financial covenants limiting IRSA CP’s ability to declare or pay dividends in cash or in kind, unless the following conditions are met at the time of payment:
 
a) no Event of Default shall have occurred and be continuing;
 
b) IRSA CP may incur at least USD1.00 worth of additional debt pursuant to the “Restriction on Additional Indebtedness”;
 
c) and the aggregate amount of such dividend exceeds the sum of:
 
i. 100% of cumulative EBITDA for the period (treated as one accounting period) from July 1, 2015 through the last day of the last fiscal quarter ended prior to the date of such Restricted Payment minus an amount equal to 150% of consolidated interest expense for such period; and
 
ii. any reductions of Indebtedness of IRSA on a consolidated basis after the Issue Date any reductions of Indebtedness of after the Issue Date exchanged for to Capital Stock of the IRSA or its Subsidiaries.
 
For more informarion see. “Item 10. Additional Information—D. Exchange Controls,” if Communication “A” 7,106 is extended after March 31, 2021, the maturity of this Note would be affected by such measure.
 
 
 
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Series I and II Notes
 
On May 15, 2019, IRSA issued the Note Series I under Argentine law for an amount of USD 96.3 million due on November 15, 2020, at a fixed rate of 10%. The proceeds were mainly used to repay preexisting debt.
 
On August 6, 2019, IRSA reopened the Note Series I under Argentine law for an amount of USD 85.2 million, at a price of 103.77%, which resulted in an internal annual rate of return of 8.75% nominal. Also, on the same date, the Notes Series II denominated in Chilean pesos, under writable and payable in dollars, for an amount of CLP 31,502.6 million (equivalent to USD 45 million) at a fixed rate of 10.5% per within 12 months.
 
On August 6, 2020, Class II denominated in Chilean pesos was fully repaid.
 
On September 15, 2020, Communication “A” 7,106 established that companies must refinance maturities of financial debt capital in the period from October 15, 2020 to March 31, 2021. In this sense, the Central Bank will give access to companies for up to 40% of maturities and companies must refinance the rest within at least two years. For more information see. “Item 10. Additional Information—D. Exchange Controls,” if Communication “A” 7,106 is extended after March 31, 2021, the capital outstanding maturity of this Note would be affected by such measure.
 
As a consequence of the new restrictions on access to the Foreign Exchange Market, on October 22, 2020, IRSA launched an exchange offer on its Series I Notes due on November 15, 2020.
 
The exchange offer consisted on two options for the bondholders: i) a cash consideration of USD 0.69622593 for each USD 1 of existing notes presented to the Exchange and the remaining amount until completing USD 1 for each USD 1 of existing notes presented to the Exchange, in notes Series VIII, and ii) a par for par exchange of notes Series IX for each Existing Notes presented to the Exchange.
 
The Exchange Offer expired on November 10, 2020 and the Nominal Value of Existing Notes presented and accepted for the Exchange (for both Series) was USD 178,458,188, which represents 98.31% acceptance. Considering that consent has been obtained for an amount greater than 90% of the capital of the existing notes, the Company made the Non-Essential Proposed Modifications and / or the Essential Proposed Modifications, by means of which the terms and conditions of the existing notes will be modified and replaced.
 
In relation to the Exchange Offer ended on November 10, 2020, on November 12, 2020, IRSA made a partial repayment of Series I Notes for a Nominal Value of USD 178,458,188, after the partial repayment the Nominal Value under circulation was USD 3,060,519.
 
For more information see: “Recent Developments - Exchange Offer- Issuance of Series VIII and IX Notes.” For more information see: “Recent Developments - Exchange Offer- Issuance of Series VIII and IX Notes.”
 
Series III, IV and V (issued by IRSA)
 
On May 21, 2020, we issued in the local market a total amount of USD 65.8 million through the following Notes:
 
Series III: denominated and payable in pesos for ARS 354 million (equivalent at the time of issuance to USD 5.2 million) at a variable rate (private BADLAR + 6.0%) with quarterly payments. The principal will be paid in two installments: the first for an amount equivalent to 30% of the nominal value payable 6 (six) months from the Issue and Settlement Date, and the second for an amount equivalent to 70% of the nominal value payable on the due date, February 21, 2021. Price of issuance was 100.0% of the nominal value. On February 22, 2021, Series III was fully repaid.
 
 
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Series IV: denominated in USD and payable in ARS at the applicable exchange rate for USD 51.4 million at a fixed rate of 7.0%, with quarterly payments and principal expiring on May 21, 2021. Price of issuance was 102.0% of the nominal value (IRR 5.03%).
 
Series V: denominated in USD and payable in ARS at the applicable exchange rate for USD 9.2 million at a fixed rate of 9.0%, with quarterly payments and principal expiring on May 21, 2022. Price of issuance was 103.0% of the nominal value (IRR 7.56%).
 
Series VI and VII (issued by IRSA)
 
On July 21, 2020, we issued in the local market a total amount of USD 38.4 million through the following Notes:
 
Series VI: denominated and payable in pesos for ARS 335.2 million (equivalent at the time of issuance to USD 4.7 million) at a variable rate (private BADLAR + 4.0%) with quarterly payments. The principal will be paid in two installments: the first for an amount equivalent to 30% of the nominal value payable 9 (nine) months from the Issue and Settlement Date, and the second for an amount equivalent to 70% of the nominal value payable on the due date, July 21, 2021. Price of issuance was 100.0% of the nominal value.
 
Series VII: denominated in dollars and payable in pesos at the applicable exchange rate for USD 33.7 million at a fixed rate of 4.0%, with quarterly payments and principal expiring on January 21, 2022. Price of issuance was 100.0% of the nominal value.
 
The funds have been used to refinance short-term liabilities.
 
Communication “A” 7,106
 
On September 15, 2020, Communication “A” 7,106 established that companies must refinance maturities of financial debt capital in the period from October 15, 2020 to March 31, 2021. In this sense, the Central Bank will give access to companies for up to 40% of maturities and companies must refinance the rest within at least two years. For more information see. “Item 10. Additional Information—D. Exchange Controls.”
 
Series VIII and IX (issued by IRSA)
 
On November 12, 2020, the company issued in the local market a total ammount of USD 111 million. The Series VIII denominated and payable in USD for USD 31,679,760 at a fixed rate of 10.0% with quarterly interest. The maturity of the capital will be in three installments: the first for an amount of 33% of the nominal value payable within 12 (twelve) months from the Issue and Settlement Date, the second for an amount of 33% of the nominal value payable to 24 (twenty-four) months from the Issue and Settlement Date and the third for an amount of 34% of the nominal value payable at 36 (thirty-six) months from the Issue and Settlement Date. The issue price was 100.0% of the nominal value. The Series IX denominated and payable in USD for USD 80,676,505 at a fixed rate of 10.0% with quarterly interest. The capital will mature on March 1, 2023. The issue price was 100.0% of the nominal value.
 
C. Research and Development, Patents and Licenses, Etc.
 
We have several trademarks registered with the Instituto Nacional de la Propiedad Industrial, the Argentine institute for industrial property. We do not own any patents nor benefit from licenses from third parties.
 
 
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D. Trend Information
 
International Macroeconomic Outlook
 
As reported in the IMF’s “World Economic Outlook,” world GDP is expected to be reduced (4.9)% in 2020 and recover 5.4% in 2021. As with the April 2020 WEO projections, there is a higher-than-usual degree of uncertainty around this forecast. The baseline projection rests on key assumptions about the fallout from the pandemic. In economies with declining infection rates, the slower recovery path in the updated forecast reflects persistent social distancing into the second half of 2020; greater scarring (damage to supply potential) from the larger-than-anticipated hit to activity during the lockdown in the first and second quarters of 2020; and a hit to productivity as surviving businesses ramp up necessary workplace safety and hygiene practices. For economies struggling to control infection rates, a lengthier lockdown will inflict an additional toll on activity. Moreover, the forecast assumes that financial conditions—which have eased following the release of the April 2020 WEO — will remain broadly at current levels. Alternative outcomes to those in the baseline are clearly possible, and not just because of how the pandemic is evolving.
 
All countries including those that have seemingly passed peaks in infections—should ensure that their health care systems are adequately resourced. The international community must vastly step up its support of national initiatives, including through financial assistance to countries with limited health care capacity and channeling of funding for vaccine production as trials advance, so that adequate, affordable doses are quickly available to all countries. Where lockdowns are required, economic policy should continue to cushion household income losses with sizable, well-targeted measures as well as provide support to firms suffering the consequences of mandated restrictions on activity. Where economies are reopening, targeted support should be gradually unwound as the recovery gets underway, and policies should provide stimulus to lift demand and ease and incentivize the reallocation of resources away from sectors likely to emerge persistently smaller after the pandemic.
 
Strong multilateral cooperation remains essential on multiple fronts. Liquidity assistance is urgently needed for countries confronting health crises and external funding shortfalls, including through debt relief and financing through the global financial safety net. Beyond the pandemic, policymakers must cooperate to resolve trade and technology tensions that endanger an eventual recovery from the COVID-19 crisis. Furthermore, building on the record drop in greenhouse gas emissions during the pandemic, policymakers should both implement their climate change mitigation commitments and work together to scale up equitably designed carbon taxation or equivalent schemes. The global community must act now to avoid a repeat of this catastrophe by building global stockpiles of essential supplies and protective equipment, funding research and supporting public health systems, and putting in place effective modalities for delivering relief to the neediest.
 
Argentine macroeconomic context
 
At the end of 2019, the economy faced a severe balance of payments crisis and public debt. Faced with this scenario, the National Government adopted a set of measures designed to face the most immediate manifestations of the crisis and to stabilize the economy. Regarding monetary policy, the Central Bank of Argentina defined a series of guidelines, highlighting the referring to interest rates and exchange rate management. Foreign exchange regulations and the moderation in prices linked to the limited volatility of the exchange rate allowed a marked reduction of the LELIQ rate from 68% to 38% nominal annually. The progress made the financial system better prepared to face the emergency caused by COVID-19.
 
Shopping malls sales reached a total ARS 3,758.5 million in September 2020, which represents a 71.4% decrease as compared to fiscal 2019.
 
The INDEC reported that, for the ten months ended October 31, 2020, industrial activity in Argentina contracted by 9.9% compared to the same period in 2019. The textile industry accumulated a 32.2% contraction during the first ten months of 2020 as compared to the same period last year. Moreover, the monthly estimation of economic activity (“EMAE”) as of September 30, 2020, contracted by 6.9% compared to the same month in 2019.
 
 
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Regarding the balance of payments, in the second quarter of 2020 the current account surplus reached USD 2,824 million, with USD 4,971 million allocated to the goods and services trade balance, and USD 2,484 million to the net primary deficit, and a surplus of USD 337 million to net secondary income.
 
During the second quarter of 2020, the financial account showed net outflow of USD 2,514 million, explained by the net acquisition of financial assets for USD 893 million, and net cancellation of liabilities of USD 1,621 million. The sectors that have explained these outflows have been Other sectors for USD 2,433 million and the Government for USD 1,324 million, partially offsetting by the net income of the Central Bank for USD 1,293 million. The international reserves decreased by USD 793 million during the second quarter of 2020.
 
As of December 18, 2020, the Private Badlar rate in Pesos peaked at 34.31%. As of December 22, 2020, the seller exchange rate quoted by Banco de la Nación Argentina was of ARS 83.25 pesos per USD1.00. As of December 18, 2020, Argentina’s country risk reduced by 466 basis points in year-on-year terms. The debt premium paid by Argentina was at 1,363 basis points as of December 22, 2020, compared to 263 basis points paid by Brazil and 205 basis points paid by Mexico as of that same date.
 
Likewise, in the national and international framework described above, the Company periodically analyzes alternatives to appreciate its shares value. In that sense, the Board of Directors of the Company will continue in the evaluation of financial, economic and / or corporate tools that allow the Company to improve its position in the market in which it operates and have the necessary liquidity to meet its obligations. Within the framework of this analysis, the indicated tools may be linked to corporate reorganization processes (merger, spin-off or a combination of both), disposal of assets in public and / or private form that may include real estate as well as negotiable securities owned by the Company, incorporation of shareholders through capital increases through the public offering of shares to attract new capital, repurchase of shares and instruments similar to those described that are useful to the proposed objectives.
 
Evolution of Shopping Malls in Argentina
 
In December 2020, the Consumer Confidence Index (CCI) showed a 3.8% decline compared to November 2020, and a 7.2% decrease compared to December 2019. Shopping mall sales decreased 82.2% in the fiscal 2020 compared to fiscal 2019.
 
Evolution of Office Properties in Argentina
 
According to Colliers International, as of December 31, 2020, the A+ and A office inventory increased compared to 2019 to 1,848,808 sqm. The vacancy rate was steady at approximately 15.9% during the fourth quarter of 2020. These values indicate that the market is healthy in terms of its operations, allowing an optimum level of supply with robust values.
 
Compared to the previous quarter, lease prices for Premium Offices decreased to USD 25.2 per square meter (1.2% as compared to the previous quarter), and showed similar values to those of the same period last year, which was USD 25.1 per square meter. The prices for A+ properties were USD 27.1 per square meter for the fourth quarter of 2020. Likewise, the industry reported a 5.0% decrease in rental prices for A properties compared to the third quarter of 2020, reaching an average of USD 22.6 per square meter.
 
Evolution of the Hotel industry in Argentina
 
According to the Hotel Vacancy Survey (EOH) prepared by INDEC, at December 2020, overnight stays at hotel and parahotel establishments were estimated at 2.6 million, 42.1% shorter than the same month the previous year. Overnight stays by resident and nonresident travelers decreased by 66.3% and 97.4%, respectively. The Room Occupancy Rate in june was 15.0%. Moreover, the Bed Occupancy Rate for the same period was 18.6%.
 
Where the interest payable is not fixed, the amount disclosed has been determined by reference to the existing conditions at the reporting date.
 
 
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G. Safe Harbor
 
See the discussion at the beginning of this Item 5 and “Forward Looking Statements” in the introduction of this Form 6-K for the forward looking safe harbor provisions.
 
 
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DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
 
Directors
 
The table below shows information about our regular directors and alternate directors as from October 26, 2020:
 
Name
Date of Birth
Position in IRSA
Date appointed
Term expiration
Current position held since
Eduardo S. Elsztain 
01/26/1960
Chairman
2018
2021
1991
Saúl Zang 
12/30/1945
First Vice-Chairman
2018
2021
1994
Alejandro G. Elsztain 
03/31/1966
Second Vice-Chairman
2019
2022
2001
Fernando A. Elsztain 
01/04/1961
Regular Director
2020
2023
1999
Cedric D. Bridger 
11/09/1935
Regular Director
2018
2021
2003
Marcos Fischman 
04/09/1960
Regular Director
2018
2021
2003
Mauricio E. Wior 
10/23/1956
Regular Director
2018
2021
2006
Daniel Ricardo Elsztain
12/22/1972
Regular Director
2020
2023
2007
Oscar Pedro Bergotto 
19/07/1946
Regular Director
2019
2022
2019
Demian Brener 
20/06/1990
Regular Director
2019
2022
2019
Maria Julia Bearzi 
11/15/1975
Regular Director
2019
2022
2019
Liliana L. De Nadai 
01/11/1975
Regular Director
2019
2022
2019
Gastón Armando Lernoud
06/04/1968
Alternate Director
2020
2023
2014
Enrique Antonini 
03/16/1950
Alternate Director
2019
2022
2007
Gabriel A. G. Reznik 
11/18/1958
Alternate Director
2019
2022
2008
David Williams 
12/07/1955
Alternate Director
2019
2022
2008
Ben Iosef Elsztain 
01/16/1997
Alternate Director
2020
2023
2020
Iair Elsztain 
03/05/1995
Alternate Director
2020
2023
2020
 
Oscar Pedro Bergotto, Demian Brener, David Williams, María Julia Bearzi and Liliana De Nadai are independent directors, pursuant to CNV Rules.
 
Employees
 
As of December 31, 2020, we had 1413 employees. Our employees of the segments non relating to our Shopping Mall and Offices had 9 employees. Our Shopping Malls segment had 669 employees, including 293 under collective labor agreements. Our Hotels segment had 735 employees, with 600 represented by the Tourism, Hotel and Gastronomic Workers Union (Unión de Trabajadores del Turismo, Hoteleros y Gastronómicos de la República Argentina, UTHGRA).
 
 
 
As of December 31,
 
 
Year ended on June 30,
 
 
 
2020
 
 
2020
 
 
2019
 
 
2018
 
Development and Sale of Properties and Other Non-Shopping Mall Businesses(1)
  9 
  11 
  12 
  31 
Shopping Malls and Offices(2) 
  669 
  784 
  865 
  928 
Hotels(1) 
  735  
  701  
  832  
  812  
Total 
  1,413  
  1,496  
  1,709  
  1,771  
 
(1) 
As of March 2019, we were no longer administrators of Consorcio Libertador S.A. and Consorcio Maipu 1300 S.A.
(2) 
On December 2018, the concession of the Buenos Aires Design shopping mall ended.
(3) 
Includes Hotel Intercontinental, Sheraton Libertador and Llao Llao.
 
 
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Share Ownership
 
The following table sets forth the amount and percentage of our common shares beneficially owned by our directors, senior managers, and members of the supervisory committee as of December 31, 2020.
 
 
 
 
Share ownership
 
Name
Position
 
Number of Shares
 
 
Percentage
 
Directors
 
 
 
 
 
 
 
Eduardo S. Elsztain (1)
Chairman
  365,050,302 
  63.1%
Saúl Zang
Vice-Chairman I
  471,516 
  0.0%
Alejandro G. Elsztain
Vice- Chairman II
  2,279,357 
  0.4%
Fernando A. Elsztain
Regular Director
  - 
  - 
Cedric D. Bridger
Regular Director
  - 
  - 
Marcos M. Fischman
Regular Director
  - 
  - 
Mauricio E. Wior
Regular Director
  - 
  - 
Daniel R. Elsztain
Regular Director
  99,890 
  0.0%
María Julia Bearzi
Regular Director
  - 
  - 
Oscar Pedro Bergotto
Regular Director
  - 
  - 
Liliana De Nadai
Regular Director
  - 
  - 
Damian Brener
Regular Director
  - 
  - 
Gaston A. Lernoud
Alternate Director
  4,782 
  0.0%
Enrique Antonini
Alternate Director
  - 
  - 
Gabriel A. G. Reznik
Alternate Director
  - 
  - 
David Williams
Alternate Director
  - 
  - 
Ben Elsztain
Alternate Director
  - 
  - 
Iair Elsztain
Alternate Director
  900 
  0.0%
Senior Management
 
    
    
Matías I. Gaivironsky
Chief Financial and Administrative Officer
  43,150 
  0.0%
Jorge Cruces
Chief investment Officer
  18,930 
  0.0%
Supervisory Committee
 
    
    
José D. Abelovich
Member
  - 
  - 
Marcelo H. Fuxman
Member
  - 
  - 
Noemí I. Cohn
Member
  - 
  - 
Roberto D. Murmis
Alternate member
  - 
  - 
Paula Sotelo
Alternate member
  - 
  - 
Ariela Levy
Alternate member
  - 
  - 
 
(1) 
Includes (i) 356,913,421 common shares beneficially owned by Cresud, ii) 2,188,790 common shares owned by Helmir, (iii) 3,152,153 common shares owned by Consultores Venture Capital Uruguay S.A., iv) 430,229 common shares owned by Consultores Asset Management S.A. and v) 2,365,709 common shares directly owned by Eduardo Sergio Elsztain.
Option Ownership
 
No options to purchase common shares have been granted to our Directors, Senior Managers, members of the Supervisory Committee, or Audit Committee.
 
Employee Participation in our share Capital
 
There are no arrangements for involving our employees in our capital stock or related to the issuance of options, common shares or securities, other than those described under the following sections: (i) Item 6 – B. Compensation – Capitalization Plan and (ii) Item 6 – B. Compensation – Mid and Long Term Incentive Program.
 
 
 
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MAJOR SHAREHOLDERS
 
Major Shareholders
 
Information about Major Shareholders
 
Share Ownership
 
The following table sets forth information regarding ownership of our capital stock by each person known to us to own beneficially at least 5% of our common shares, ANSES and all our directors and officers as a group.
 
 
 
Share Ownership as of December 31, 2020
 
Shareholder
 
Number of Shares
 
 
Percentage (2)
 
Cresud (1) 
  359,102,211 
  62.1%
Directors and officers (excluding Eduardo Elsztain) 
  2,918,525 
  0.5%
ANSES 
  25,914,834  
  4.5%
Total 
  387,935,570 
  67.1%
 
(1) 
Eduardo S. Elsztain is the beneficial owner of 182,111,933 common shares of Cresud, representing 36.3% of its total share capital, which include (i) 51,623,611 common shares beneficially owned by IFISA, (ii) 940 common shares owned by Consultores Venture Capital Uruguay S.A. for which Mr. Eduardo S. Elsztain is deemed to be the beneficial owner, (iii) 88,350,550 common shares owned by Agroinvestment S.A. for which Mr. Eduardo S. Elsztain is deemed beneficial owner and (iv) 42,136,832 common shares directly owned by Mr. Eduardo S. Elsztain. Furthermore, IFISA retains voting power and right of first refusal over an equivalent of 7,454,600 common shares (1.49% of the outstanding) until 02/18/2021). Although Mr. Elsztain does not own a majority of the common shares of Cresud, he is its largest shareholder and exercises substantial influence over it. If Mr. Elsztain is considered to be the beneficial owner of Cresud due to his substantial influence over it, he would be the beneficial owner of 63.08% of our common shares by virtue of his investment in Cresud of 359,102,211 common shares, in Consultores Venture Capital Uruguay S.A. of 3,152,153 common shares, in Consultores Asset Management S.A. of 430,229 common shares and in directly owned 2,365,709 common shares. Cresud is a leading Argentine producer of basic agricultural products. Cresud’s common shares began trading in the BYMA on December 12, 1960, under the trading symbol “CRES” and on March 1997 its GDSs began trading in the Nasdaq under the trading symbol “CRESY.”
(2) 
As of December 31, 2020, the number of outstanding common shares was 578,676,460.
 
Changes in Share Ownership
 
Shareholder (3)
 
December 31, 2020 (%)
 
 
June 30, 2020 (%)
 
 
June 30, 2019 (%)
 
 
June 30, 2018 (%)
 
 
June 30, 2017 (%)
 
 
June 30, 2016(%)
 
Cresud (1) 
  62.1 
  62.1 
  62.1 
  63.4 
  63.4 
  63.4 
Directors and officers (2) 
  0.5 
  0.4 
  0.5 
  0.2 
  0.2 
  0.2 
ANSES 
  4.5  
  4.5  
  4.5  
  4.5  
  4.5  
  4.5  
Total 
  67.1 
  67.0 
  67.1 
  68.1 
  68.1 
  68.1 
 
(1) 
Eduardo S. Elsztain is the beneficial owner of 182,111,933 common shares of Cresud, representing 36.3% of its total share capital, which include (i) 51,623,611 common shares beneficially owned by IFISA, (ii) 940 common shares owned by Consultores Venture Capital Uruguay S.A. for which Mr. Eduardo S. Elsztain is deemed to be the beneficial owner, (iii) 88,350,550 common shares owned by Agroinvestment S.A. for which Mr. Eduardo S. Elsztain is deemed beneficial owner and (iv) 42,136,832 common shares directly owned by Mr. Eduardo S. Elsztain. Furthermore, IFISA retains voting power and right of first refusal over an equivalent of 7,454,600 common shares (1.49% of the outstanding) until 02/18/2021). Although Mr. Elsztain does not own a majority of the common shares of Cresud, he is its largest shareholder and exercises substantial influence over it. If Mr. Elsztain is considered to be the beneficial owner of Cresud due to his substantial influence over it, he would be the beneficial owner of 63.08% of our common shares by virtue of his investment in Cresud of 359,102,211 common shares, in Consultores Venture Capital Uruguay S.A. of 3,152,153 common shares, in Consultores Asset Management S.A. of 430,229 common shares and in directly owned 2,365,709 common shares.
(2) 
Includes only direct ownership of our directors and senior management.
(3) 
As of December 31, 2020, the number of outstanding common shares was 578,676,460.
 
 
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Differences in Voting Rights
 
Our major shareholders do not have different voting rights.
 
Arrangements for change in control
 
We are not aware of any arrangements that may, when in force, result in a change in control.
 
Securities held in the host country
 
As of December 31, 2020, our total issued capital stock outstanding consisted of 578,676,460 common shares. As of December 31, 2020, there were approximately 20,364,471 Global Depositary Shares (representing 203,644,710 of our common shares, or 35.2% of all or our outstanding common shares) held in the United States by approximately 19 registered holders.
 
 
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INDEX OF EXHIBITS
 
 
 
 
 
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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
IRSA Inversiones y Representaciones Sociedad Anónima
 
 
 
 
Date April 9, 2021
By:                                                              /s/ Matías I. Gaivironsky 
Name: Matías I. Gaivironsky
Title: Chief Financial and Administrative Officer
 
 
 
 
 
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