What IRSA Inversiones Y Representaciones (IRS) Said on Its Q1 Earnings Call

Key Points

• IRSA posted a fiscal Q1 2027 net loss of ARS 6.3 billion, as inflation outpaced peso devaluation and weighed on the reported peso fair value of investment properties, which management said were stable in U.S. dollar terms.
• Rental adjusted EBITDA fell 2% year over year in pesos but rose 20% in dollars; trailing 12-month rental EBITDA reached a record $205 million. Mall occupancy increased to 97.6%, though tenant sales declined 6% in real terms.
• IRSA expects about $150 million in fiscal 2027 project and acquisition spending, with two shopping center projects nearing completion. Following a roughly $137 million dividend, net debt was expected to reach about $446 million and could rise to around $500 million during the year.

IRSA Inversiones Y Representaciones NYSE: IRS reported a net loss of ARS 6.3 billion for its fiscal first quarter of 2027, as changes in the fair value of its investment properties weighed on results, Chief Financial Officer Matías Gaivironsky said on the company’s earnings call.

Rental adjusted EBITDA declined 2% from a year earlier in peso terms but rose 20% when measured in U.S. dollars, Gaivironsky said. He attributed much of the difference to the effects of inflation and exchange-rate movements on the company’s reported figures.

Management also outlined a busy development pipeline, including two shopping center projects expected to be completed by the end of the fiscal year, and said it expects approximately $150 million in spending during fiscal 2027 on projects and remaining payments for existing acquisitions.

Property values and rental performance

Inflation in Argentina was 6% during the quarter, compared with a 2% devaluation of the peso, Gaivironsky said. In the corresponding quarter a year earlier, inflation was also 6%, but the official exchange rate devalued by 15%.

Gaivironsky said the company’s investment properties, which he described as broadly tracking dollar values, remained stable in dollar terms compared with the previous quarter. Their reported fair value in pesos nevertheless contributed to the quarterly loss because inflation exceeded the currency’s devaluation.

In peso terms, adjusted EBITDA fell 1% in shopping malls and 11.3% in offices from a year earlier, the CFO said. On a trailing 12-month basis, rental EBITDA from malls, offices and hotels reached a record $205 million, he added.

Shopping mall occupancy increased to 97.6% from 97% a year earlier, according to Investor Relations Officer Santiago Donato. Tenant sales fell 6% in real terms, a decline he attributed mainly to pricing rather than weaker activity. Mall visits rose 1.6% to 24 million, while the number of tickets increased 7%.

Donato said apparel accounts for about half of the tenant mix and that apparel prices had risen less than general inflation, which is used to adjust sales figures. He added that approximately 90% of the company’s mall rent has a fixed component and that mall revenue rose nearly 1% above inflation.

Office occupancy edged lower after one floor at the DOT Building became vacant. Premium office rents were stable at about $25 per square meter per month, Donato said. Across the company’s three hotels, occupancy reached 66%, and the segment was generating approximately $10 million in annualized EBITDA, he added.

Development projects advance

Chief Investment Officer Jorge Cruces said the Oeste Outlet redevelopment was 90% complete and on track to open the following month. The project’s total investment, including the acquisition and capital expenditures, is about $22 million. Its 71 commercial units were fully leased, he said.

Construction of the Distrito Diagonal shopping center in La Plata was 55% complete, with retail units scheduled to begin being delivered to tenants in January, Cruces said. The company expects the project to add 22,000 square meters of gross leasable area.

At the Zetta office building, an expansion is expected to add more than 15,000 square meters. The building currently serves as Mercado Libre’s headquarters, and Mercado Libre will occupy 72% of the expanded property, Cruces said.

For the Edificio del Plata residential project, IRSA had sold more than 100 units for nearly $17 million, according to Cruces. The development is planned to include 721 residential units and 18 retail spaces.

At Ramblas del Plata, the company’s waterfront mixed-use development, IRSA had completed 20 transactions valued at $130 million by the end of the quarter. A subsequent land swap valued at $8.7 million brought the total to 21 transactions worth approximately $138 million, Cruces said. The agreements will provide IRSA with nearly 36,000 square meters of sellable area, and five lots remain in the project’s expanded first stage.

Dividend and debt outlook

IRSA distributed ARS 211 billion, or about $137 million, in dividends, representing a yield of nearly 11%, Gaivironsky said. Payments had begun in Buenos Aires, with payment to New York-listed American depositary receipt holders expected soon, he said.

After the dividend, net debt would rise to approximately $445.8 million, or nearly 2.2 times EBITDA, Gaivironsky said. He added that net debt could increase to around $500 million during the year as the company funds what he described as one of its most aggressive capital expenditure programs in the past decade.

Asked about future dividends, Gaivironsky said this year’s payment was higher than average and suggested a historical average of around $70 million a year as a possible guide. He emphasized that IRSA has no fixed dividend policy and considers its cash, debt and spending needs when making distributions.

Gaivironsky also said share buybacks remain an option for the board, though the company had used part of its cash for the recent dividend. He said management believes the shares trade at a substantial discount.

About IRSA Inversiones Y Representaciones (NYSE:IRS)

IRSA Inversiones y Representaciones SA is an Argentine real estate company engaged in the acquisition, development, leasing and management of properties. Its portfolio includes shopping centers, office buildings, hotels and residential and mixed-use developments, with operations primarily focused on Argentina.

The company operates and invests in a range of well-known Argentine commercial properties, including shopping centers such as Alto Palermo, Abasto, Patio Bullrich, Alto Avellaneda and DOT Baires.

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