IRSA Propiedades Comerciales S A : Institutional Presentation | IVQ 2020

Institutional Presentation

FY 2020

1

IRCP AT A GLANCE

AN ARGE N T IN E P LAY TO CON SUM PT ION AN D REAL ESTAT E

LEADING COMMERCIAL REAL ESTATE COMPANY

Managing 15 shopping malls and 8 office buildings in Argentina

~ 450,000 sqm of GLA

UNIQUE PORTFOLIO AND STRONG MARKET POSITION

Best quality of assets in Argentine premium locations

~70% market share in BA city shopping sales

More than 10% market share in BA city A+ office buildings

LISTED BOTH IN BUENOS AIRES AND NEW YORK

Since 1994 in BYMA (IRCP)

Since 2000 in NASDAQ (IRCP)

80.7%

ADMINISTRATION

HIGH BRAND RECOGNITION AND CUSTOMER LOYALTY

Top of mind shopping malls

More than 100 mm annual visitors in malls

Awards received for design, development and real estate company

INTEGRAL BUSINESS MODEL

			HISTORY & CAPITAL MARKETS TRACK RECORD
					2 5 Y EARS D OIN G COM M E RCIAL REAL ESTAT E
	17	USD BN						CAGR '95 - '19: 17.5%
	ISSUED
								CAGR '09 - '19: 5.0%
	200		TRANSACTIONS				429	429	447
										5 shopping malls
	13		GROUP LISTED							3 office building
			COMPANIES						186	42%
						288				developed
	NON-DEFAULT HISTORY
	Even in the worst Argentinean crisis (2001)	224
										10 shopping malls
				143						6 office buildings
									261	58%
			81							acquired
	11
GLA	1995	1997	2001	2007	2009	2015	2018	2020
(Th. sqm)

APSA

Office portfolio acquisition

from IRSA

APSA renamed IRCP

SHOPPING MALLS'	ATOMIZED AND DIVERSE TENANT MIX
UNIQUE PORTFOLIO	With low incidence of department stores
TOP FIVE ON SALES		SALES BY TYPE
	6.7%	17.3%	Others
		19,5%
			Department Store
				5,4%
	93.3%	82.7%		10,8%	56,2%
		Restaurants
				8,1%
	BY BASE RENT	BY SQM		Electro	Apparel
				BA CITY	~70%
					Market
					Share
15 MALLS
332,000 sqm GLA
				High income Area	4
				Mid Income Area
				Low Income Area

Dot Building

Philips

Zetta

OFFICES BUILDINGS

Boston Tower	200 Della
Paolera
	(IQ FY21)
	Bouchard 710
Suipacha	República
	Intercontinental
Expanding Corporate North Area
Business Center
AAA Location
Back Office Center

8 BUILDINGS 121,000 sqm GLA

PREMIUM PORTFOLIO

Surface by class

A+ & A 84%

16% B

PREMIUM TENANTS

Others	Technology
46%	31%	75%

International

14%Tenants

9%

Oil & Energy

Banks & Insurance

5

1.5mm sqm Landbank	San Martín		CEC
LANDBANK &
1)	Polo Dot (BA City ) - Offices
2)	Caballito (BA City) - Mixed uses	OTHER
3)	Intercontinental II (BA City) - Offices
4)	La Plata (Greater BA) - Mixed uses
INVESTMENTS
5)	San Martin (Greater BA) - Mixed uses
6)	UOM Lujan (Greater BA) - Mixed uses
(ENTERTAINMENT)
7)	Adjoining Córdoba Shopping - Mixed uses
8)	Adjoining Alto Comahue (Neuquén) - Residential
	Caballito	Intercontinental II
			70.0%
			Entertainment Holdings
		50.0%	60.0%	77.5%
	Adjoining Córdoba Shopping	La Plata

RESILIENT REVENUE MODEL

FOR BOT H S HOP P IN G M A L L S A N D OF F ICE S EGM E N TS

SHOPPING MALLS

OFFICES

ARS

USD

Variable

Base

Rent

Per sqm

Per sqm

Per sqm

Base Rent

Base

Rent

Fixed

Key money

Brokerage fee

In advance

YEAR 1

YEAR 2

YEAR 3

YEAR 1

YEAR 2

YEAR 3

VARIABLE & FIXED RENT

50% Fixed

OTHER REVENUES

OFFICE AGREEMENTS

The company collects the

74%

26% of total revenues comes from

•

3-year average term

75%

highest between a % of tenant

key money, brokerage fee, stands,

•

US Dollar based

of total

International

monthly sales and a minimum

parking and non-traditional

revenues

• Rental rates for renewed terms

Tenants

fixed rent (base rent)

advertising

are negotiated at market

24% Variable	conditions

SHOPPING MALLS

OFFICE BUILDINGS

ENTERTAINMENT & CONVENTION CENTERS

EXPENSES

CAPEX

COVID-19 IN ARGENTINA

IM PACT IN OUR BUSIN ESS

Operations closed since March 20th. The company decided to defer billing and collection of base rent and commercial fund from April to September 30, 2020, supporting tenants and prioritizing long-term relationship. We just charged common expenses.

Normal revenues collection during lockdown period.

Operations closed since March 20th. Convention Centers, Fairs and Events cancelled or postponed. There is no certainty about the reactivation of the sector.

Cut of nonessential expenses and services.

Cut of social security taxes and other taxes.

Construction works in Catalinas ("200 Della Paolera") and Alto Palermo expansion suspended during lockdown. After the end of the Fiscal Year, construction activity has been reestablished but with some restrictions.

		Common Expenses;
		20%
		Commercial fund; 8%
		Parking y Otros; 9%
		Key money ; 9%
		Variable rent; 21%
GUARANTEED BY
	Base rent; 33%
CONTRACT
	Situation pre Covid-19
		(6M FY20)

Working together with our tenants giving them all our support and help in this unprecedented

situation

8

SHOPPING MALLS

OP E RAT IN G FIGURES

GLA & OCCUPANCY

(GLA: sqm)	Pre COVID-19
	95.0%

SAME SHOPPING MALLS SALES

(% Var i.a.)

Pre COVID-19

COVID-19

98.5%

94.7%93.2%

IIIQ20 Includes 10

days and IVQ the

full impact from

closure of

operations

344,025	332,150	333,062
		end of
		concession
	FY18			FY19		FY20

SHOPPING MALLS - DELINQUENCY

(ARS MILLION)

	9M 20	IVQ 20	FY 20	FY 19	∆
Delinquency	118	187	305	109	180%
Revenues	5,632	303	5,935	8,541	-30.5%
Delinquency/	2.1%	61.7%	5.1%	1.3%	+3.8bps
Revenues

	22,3%	22,7%	27,3%	28,7%	24,4%	24,7%	29,6%
18,3%
-2,1%	2,8%	-0,1%	1,6%	1,2%
				-8,1%
					-15,5%
							-14,7%

IVQ 17 IQ 18 IIQ 18 IIIQ 18 IVQ 18 IQ 19 IIQ 19 IIIQ 19

	60,5%
	46,2%
35,1%	32,5%
	5,6%
	-5,1%
-13,5%	-11,9%

Nominal terms

Real terms

-90,4%-92,9%

IVQ 19 IQ 20 IIQ 20 IIIQ 20 IVQ 20

9

COVID-19 MALLS´ REOPENING

ACCORD IN G TO IRSA COM M E RCIAL P ROP E RT IES' P ROTOCOL

May		June
% OF TOTAL PORTFOLIO*
BY GLA	BY SALES	Average
	(FY 20)	Occupancy
44%	37%
56%	63%	97.0%

*Includes Alto Rosario recently closed on 9/5 for two weeks and Alto Noa closed on 9/9 for one week (~16% of GLA)

July

August

September

REOPENING PROTOCOL

STRICT SAFETY AND HYGIENE	REDUCED HOURS AND
MEASURES	TRAFFIC

SOCIAL DISTANCE	COMMUNICATION, TRAINING
	AND INCENTIVES

10

OFFICE BUILDINGS

STOCK

(GLA: sqm)

				200 Della
				Paolera
			+4.8%
				121,144
				28,000
	Zetta
	Building			Bouchard
	115,378	115,640	710
83,213				93,144
				Boston
				Tower
FY18	FY19	FY20
		IH21E

OP E RAT IN G FIGURES

OCCUPANCY BY CLASS		Pre COVID-19		COVID-19
A+ & A	97,2%		96,6%		97,1%
			93,9%
				93,0%

B
						53,2%		52,4%
				47,5%
		46,2%
45,0%
	IVQ 19		IQ 20		IIQ 20		IIIQ 20		IVQ 20

LEASES	Pre COVID-19	COVID-19
(USD/sqm/month)

26,4

26,6

26,9

26,6

26,6

IVQ 19

IQ20

IIQ 20

IIIQ20

IVQ 20

11

July 2020

BOUCHARD 710

Entire building - 12 floors

15,0145,800

GLA sqm	USD/sqm
USD 87.2 mm	16%

FY 2020 AND SUBSEQUENT SALES

OFFICE BUILDINGS

PARTIAL SALES

		June 2020		July and August 2020
		200 DELLA		BOSTON
		PAOLERA		TOWER
		2 floors		6 floors
		2,430		7,482
		GLA sqm		GLA sqm
		USD 16.9 mm		USD 41.4 mm
		Price		Price
		6,940		5,500
		USD/sqm		USD/sqm
		~28,000		~7,380
		Remaining GLA sqm		Remaining GLA sqm

AVERAGE CAP RATE 6.0%

Price	USD IRR	12

OFFICE BUILDINGS

HOME OFFICE IN ARGENTINA BEFORE	HOME OFFICE NEW MODALITY	MIXED MODALITY
COVID-19	DURING LOCKDOWN	AFTER LOCKDOWN
Total Teleworkers

7.6%

Private companies working with home office

3.0%

Source: Survey conducted by the National Ministry of Labor

A+&A BA CITY MARKET BEHAVIOUR	A+ & A BA MARKET LOW PENETRATION	NEW DISTANCING
						Stock (sqm) / 1,000 inhabitants	SHORT TERM
						REQUIREMENTS
				234
						167	162	152
	IVQ 19	IVQ 20
										96
Vacancy	7.6%	9.9%
Average rent	27.6	26.3
(USD/sqm/month)
					Santiago Bogotá		Lima San Pablo Buenos Aires

Source: Cushman & Wakefield 2018

13

PROJECTS

UNDER

DEVELOPMENT

200

DELLA

PAOLERA

ALTO PALERMO

	EXPANSION	3,900
	GLA sqm
		64%
		Works Progress
		FY21
		Est. Opening date
		USD 28.5mm
		Est. Investment
		~USD 6.2mm
		CAPEX deployment pending
200 DELLA PAOLERA
35,000	95%	61%
Total GLA	Works Progress	Commercialization Progress
28,000	IH21	~USD 5.8mm
IRCP GLA	Est. Opening date	CAPEX deployment pending

~USD 90mm	Construction works suspended during COVID-19
lockdown. After the end of the Fiscal Year,
Est. Investment
~USD 10mm	construction activity has been reestablished but
working with protocol restrictions.
Est. Stabilized Revenues
Both openings are delayed.

14

TECHNOLOGICAL TRANSFORMATION

APPA!

100% digital loyalty plan

During FY20 reached

840k users and

500k transactions.

CLOVER

Technological replacement of contactless payment terminals. We are in the process but we have more than 100 updated stores to date.

P ROGRESS D URIN G FY 2 0 2 0

MOL Marketplace

Working to launch an exclusive

Marketplace for IRSA CP

CONTACT CENTER

Work team provided with digital tolos focused on the unification of contact channels and reduction of HR costs.

WIZI

New exclusive payment method for shopping malls. Launch is expected for October 2020.

FOOD HALL

Web App that allows the user to access the entire gastronomic offers in the shopping malls

15

Financial Performance

IRCP - ASSETS VALUATION

FAIR VALUE ACCORD IN G TO FIN AN CIAL STAT E M ENTS AT T HE E N D OF EACH P E RIOD

EVOLUTION BY TYPE OF ASSET

(USD M ILLION - OFFICIAL FX)

2,155	2,170
91	106	1,878			1,669
296	337	158	1,424
			334	174
					158
1,769	1,728			459	827
1,387
					807	669
FY16		FY17		FY18		FY19	FY 20
		Shopping Malls		Offices		Land Reserves & Others

EVOLUTION BY TYPE OF ASSET

(ARS M ILLION)					117,492
							12,259
							Gain
							recognition:
32,234	35,917	54,055	60,326	58,262 ARS 25,126
4,547	6,705
1,363	1,757	9,629	19,495
4,446	5,599	39,878			46,971
26,425	28,561	34,126
FY16		FY17		FY18		FY19	FY 20
		Shopping Malls		Offices		Land Reserves & Others

EVOLUTION BY SQM

(USD )

Valuation method:

Shopping Malls: DCF

Offices: Comparables

Official

5,757

5,290

5,081

FX

4,032 4,011

Blue-chip

3,740

4,003

3,979

4,035

swap FX

2,431

2,007

FY16

FY17

FY18

FY19

FY 20

Shopping Malls

Offices

FX GAP BETWEEN OFFICIAL AND BLUE-CHIP SWAP

			Recent Office sales
			Blue-chip Swap	100,5	43%
				70,5
			Official FX
30/6/2016	30/6/2017	30/6/2018	30/6/2019	30/6/2020

17

				FINANCIAL METRICS
				JUN E 3 0 , 2 0 2 0 - USD M ILLION
90.4	Adjusted EBITDA	107.9 Net Operating Income	52.5	Adjusted FFO
			FY204				FY204		FY204
NAV1							-22%
			15	75
		160		339			VALUATION RATIOS	June 2020
	780							CAP RATE (NOI/EV)	18%
				1.672			1.718
						1.333		EV/EBITDA	6.5x
642								P/FFO	3.8x
Shopping Malls	Offices5	Land reserves	Others 2	JV & Investees 3 Gross Asset	Net Debt	Net Asset	Net Asset	P/NAV	0.2x
		& Prop. Under		Value		Value	Value IVQ FY
		development					2020
1- Assets and liabilities adjusted by IRCP ownership
2- Includes trading properties and barters registered under intangible assets. These two items are recorded at historical cost in the financial statements
3- Includes Quality and Nuevo Puerto Santa Fe as JV and La Rural, Convention Center & TGLT as Investees.
4- FY as of June 30, 2020 Adjusted Avg. FX: $68.07
5- Includes 200 Della Paolera								18

DEBT PROFILE

JUN E 3 0 , 2 0 2 0 - USD M ILLION

344.6	Consolidated Net
Debt2
Description		Amount	Maturity
Short-term debt	23.0	<360 days
2020 Series IV (local)	140.0	Sep 2020
PAMSA loan		29.7	Feb 2023
2023 Series II		360.0	Mar 2023
(international)
GROSS DEBT		552.7
Cash & Equivalents1	154.7
Intercompany Credit	53.4
NET DEBT2		344.6

128.6	SalesSubsequent Office	3.8x	Net Debt/EBITDA
140.0	Series IV Cancellation	20.6%	Loan to Value3

AMORTIZATION SCHEDULE

A F T E R S E R I E S I V C A N C E L L AT I ON

368.1

33.8	10.8
	FY 2021		FY 2022		FY 2023

1. Cash & Cash Equivalents + Investments in Financial Currents Assets + Intercompany Notes Holdings
2. Gross Financial Debt less cash & equivalents, short-term financial current investments & Intercompany Credit with parent IRSA
3. Net Financial Debt over Gross Assets Value

19

Largest commercial real estate company in Argentina with a proven track record acquiring

1 and developing assets

2 Pure, simple and focused commercial real estate player

3 Unique prime portfolio of assets located in profitable areas

4 Strong cash flow generation with conservative financial discipline

5 Significant growth potential

6 Experienced management team with longstanding industry expertise