IRSA Inversiones y Representaciones Sociedad Anónima : Earnings Release | IVQ 2021

Earnings Release

Fiscal Year 2021

IRSA invites you to participate in its conference call for the Fiscal Year 2021

Thursday, September 9, 2021, 11:00 AM BA (10:00 AM US EST)

The call will be hosted by:

Alejandro Elsztain, IIVP

Matias Gaivironsky, CFO

To participate, please access through the following link:

https://irsacorp.zoom.us/j/89161656291?pwd=Ky8wNjMyU2ZiakowcFJiNnc5cHdIdz09

Webinar ID: 891 6165 6291

Password: 087884

In addition, you can participate communicating to this numbers:

Argentina: [phone] or [phone] or [phone] or [phone]

Israel: [phone] or [phone]

Brasil : [phone] or [phone] or [phone] or [phone]

US: [phone] or [phone] or [phone] or [phone] or [phone] Chile: [phone] or [phone] or [phone] or [phone] or [phone]

Preferably, 10 minutes before the call is due to begin. The conference will be held in English.

Main Highlights of the Period

• The results for fiscal year 2021 have been affected by the restrictions due to the COVID19 pandemic. The company's shopping malls and hotels were closed for most of the year while the offices remained operational, even though most of the tenants adopted the remote work modality.
• Malls' tenant sales and revenues fell 27.8% and 40.3%, respectively, in real terms, office revenues fell 22.0% and hotel revenues 69.7%. Adjusted EBITDA of the rental segments reached ARS 4,223 million, 55.1% lower than the previous year, while total Adjusted EBITDA, which includes investment property sales, reached ARS 13,284 million, growing by 54.6% in the year.
• The net result for fiscal year 2021 showed a loss of ARS 37,591 million mainly explained by the operating result, the impact of the change in the rate, from 25% to 35%, in the deferred income tax and the loss recorded by discontinued operations.
• During fiscal year 2021, we sold approximately 29,700 m2 of premium offices for a total amount of USD 170.6 million and inaugurated the building located at Della Paolera 261, the company's new headquarters.
• In financial matters, during the year we issued debt in the local market for USD 216 million, we successfully completed the exchange of the Series I Notes for USD 181.5 million within the framework of the BCRA Resolution, we increased the capital by approximately USD 29 million and we distributed a dividend in kind with shares of IRSA Propiedades Comerciales for the sum of ARS 484 million.

Letter to Shareholders

Dear shareholders,

A year full of challenges and learning concludes. The COVID-19 pandemic had a great impact on the company and our people but strengthened us more than any previous crisis. It made us realize what we are capable of, the degree of commitment, agility, innovation, and work of our team, showing solidarity and empathy with those around us, defending what is ours.

During the months of strict lockdown, we arranged the modality of remote work to take care of the health of our employees and as the restrictions became more flexible, we implemented a mixed work scheme, complying with current protocols, with very good results in terms of productivity. Over the months, we were able to verify that the office is a safe place that connects us with our people, encourages creativity and teamwork and allows us to continue building our organizational culture.

The shopping mall business of our subsidiary IRSA CP faced closures and reopens during the year and this forced us to be creative in designing the strategy and business policies for each shopping center according to the restrictions of each district. From the beginning, we put in place all the necessary protocols to ensure that our shopping centers could open when the authorities and the health context allowed. Given the situation and to preserve occupancy, we decided to accompany our tenants, prioritizing the long-term relationship, largely waiving the basic rent and the collective promotion fund during the closing period of operations. Likewise, we worked hard on managing collections and reducing operating costs.

We are seeing a good recovery in the sales of our tenants and the traffic, and we hope that it will continue to evolve favorably as the vaccination plan advances and the protocols become more flexible. The premium location of our assets, the wide variety of offers and proposals that we are promoting in our shopping malls, and the need for recreation in a population burdened by the lockdown, will drive commercial activity for the next fiscal year.

Premium offices showed great resilience during this crisis. The rental income was collected normally even though most of our tenants used the home office modality to work during the pandemic and although vacancies increased, the rental and sale prices of the assets remained firm.

As part of our flight to quality strategy of the commercial portfolio, we sold during the year the Bouchard 710 building and our floors in the Boston Tower for the sum of USD 170.6 million and we inaugurated the Della Paolera 261 building in Catalinas, new company headquarters. Commercial real estate once again demonstrated its liquidity and strength as an investment alternative and safeguard of value in times of crisis.

To achieve future synergies and firmly believing in the need to boost mortgage credit in Argentina, we maintain our 29.91% stake in Banco Hipotecario S.A. (BHSA), which will continue to promote the PROCREAR housing construction and remodeling lines next year, together with the national government.

The hotel industry was one of the most affected by the pandemic. The company's hotels were closed for a large part of the year and since their reopening, with the proper protocols, activity resumed with low occupancy in Buenos Aires and a better recovery in Llao Llao in Bariloche, motivated by the rise in domestic tourism. We expect better results in 2022 both in our Argentine hotels and in our hotel investment in the United States, through the REIT Condor Hospitality Trust (NYSE: CDOR).

On the international front, we faced several challenges during the fiscal year. On one hand, the low profitability of the Lipstick building in New York due to the expensive rental of the land (Ground Lease) led to the decision to stop facing it, and hand over the administration of the property. On the other hand, in relation to our investment in Israel, after negotiations with the bondholders that led to justice, the Tel Aviv Court rejected our request. Currently, the group has no interest in IDBD or investment-related liabilities.

At the operational level, considering the effects of the restrictions imposed by the pandemic in 2020 and 2021, that distort the comparability of results, tenant sales and revenues from our Shopping Centers fell during the fiscal year 27.8% and 40,3%, respectively, in real terms, office revenues fell 22.0% and hotel revenues 69.7%. Adjusted EBITDA of the rental segments reached ARS 4,223 million, 55.1% lower than the previous year. In consolidated terms, revenues reached ARS 12,978 million, and adjusted EBITDA was ARS 13,284 million, 54.6% higher than in 2020, due to office sales made during the year. The net result was negative in ARS 37,591 million mainly explained by the operating result, the impact of the change in the rate, from 25% to 35%, in the deferred income tax and the loss from discontinued operations.

Our strategic approach encourages us to continue innovating in the development of unique real estate projects, betting on the integration of commercial and residential spaces, offering our clients a mix of attractive products and services, meeting places and a memorable experience, focusing on the sustainability through relationships with our nearby communities, caring for the environment and people, promoting inclusion in our work teams.

We are proud of the solidity of IRSA Inversiones y Representaciones businesses, the management's ability to optimize the control of an irreplicable portfolio and the prudence of its financial management. This allowed us to count, once again, with the support of the market in the greatest economic and health crisis that Argentina and the world went through.

We issued debt in the local market for USD 216 million, we successfully completed the exchange of the Series I Notes for USD 181.5 million within the framework of the BCRA resolution, we increased the capital by approximately USD 29 million, we canceled all our Notes that expired in the year and distributed a dividend in kind with shares of IRSA Propiedades Comerciales for the sum of ARS 484 million.

Looking forward, when the context allows, we will launch the mixed-use projects that the company has in its extensive land reserve portfolio. After more than 20 years since we acquired the property known as Solares de Santa María in the south of Puerto Madero, the City of Buenos Aires Congress approved in first reading the development of the "Costa Urbana" project that will require a large investment, will generate many jobs, directly and indirectly, and will house approximately 6,000 families. Although it requires additional instances for its final approval, this first vote brings us closer to fulfilling our greatest dream. We are convinced of the potential of the real estate industry and its role in the economic reactivation of the country.

In 30 years investing in Argentina, we have gone through numerous crises, and we were able to move forward. The one that was presented this 2021 is unprecedented because for the first time our shopping centers and hotels closed their doors for such a long period. We are convinced that we will be able to overcome current difficulties with the usual support of our collaborators, tenants, consumers, suppliers, shareholders, and investors.

To all of you, my most sincere thanks.

Eduardo S. Elsztain

Chairman