Executive Summary / Key Takeaways

• IRSA Inversiones y Representaciones Sociedad Anónima ($IRS) concluded fiscal year 2025 with a significant net gain of ARS 196 billion, marking a strong turnaround from the previous year's loss, driven by robust performance in its shopping mall segment and strategic real estate developments.
• The company's shopping mall portfolio achieved a record $169 million in EBITDA for FY 2025, demonstrating a 10% year-over-year growth in adjusted EBITDA and a solid recovery in tenant sales, underpinned by operational efficiencies and a diversified asset base.
• IRSA is aggressively advancing its flagship Ramblas del Plata project, having completed 13 transactions totaling approximately 111,000 sellable square meters through a strategic mix of cash sales and developer swaps, minimizing direct capital outlay while maximizing future value capture.
• With a highly conservative debt structure, including only $184 million in net debt and a 1x EBITDA ratio, IRSA is exceptionally well-positioned to capitalize on Argentina's re-emerging real estate market, particularly with the reintroduction of mortgage loans and anticipated economic normalization.
• The company's strategic focus on operational enhancements, digital customer engagement, and a disciplined approach to capital allocation, coupled with its deep local market expertise, provides a resilient framework for sustained growth and shareholder returns amidst Argentina's dynamic economic landscape.

The Resilient Foundation: A Century of Argentine Real Estate Leadership

IRSA Inversiones y Representaciones Sociedad Anónima, established in 1943, stands as a cornerstone of Argentina's real estate sector. For over eight decades, IRSA has cultivated a diversified portfolio encompassing shopping malls, office buildings, luxury hotels, and extensive land reserves for residential and mixed-use developments. This long history, including navigating the profound economic shifts of the 2001 crisis which reshaped Argentina's residential market, has forged a business model characterized by adaptability and resilience. The company's strategic responses to market dynamics, such as its patient holding of the Ramblas del Plata asset for over 28 years, underscore a deep understanding of long-term value creation in a volatile environment.

IRSA operates within a competitive landscape that includes both regional and global real estate players. While direct quantitative market share figures for all niche competitors are not publicly detailed, IRSA's strong presence across multiple segments positions it as a leading player in Argentina. Competitors like Fibra Uno (FIBRAUNO.MX), Simon Property Group , and Brookfield Property Partners , with their broader geographic reach and larger scale, often exhibit superior financial flexibility and access to capital. However, IRSA's distinct advantage lies in its unparalleled local market expertise, its integrated approach to mixed-use developments, and its strategic ties to Cresud S.A.C.I.F. y A. (CRESY), which provides synergistic benefits in land acquisition and development. This localized strength allows IRSA to navigate Argentina's unique regulatory environment with greater efficiency and tailor its offerings to specific consumer preferences, potentially leading to stronger customer loyalty and better occupancy rates in its core segments.

Operational Excellence and Digital Engagement: IRSA's Differentiated Approach

While IRSA's core business is rooted in physical real estate, the company strategically leverages operational enhancements and digital tools to drive efficiency, sustainability, and customer engagement. These initiatives, while not "deep tech" in the traditional sense, represent IRSA's form of technological differentiation within the real estate services industry.

A significant focus has been on sustainability and operational efficiency. Over 90% of IRSA's shopping malls have transitioned to LED lighting, a move that directly translates into tangible cost savings through reduced energy consumption. Furthermore, solar panels have been installed in three additional malls (Alto Palermo, Dot, and Distrito Arcos), building on the existing installation at Mendoza Plaza. This commitment to renewable energy, though currently incipient, aims to increase exposure to sustainable power sources, mitigating operational costs and enhancing the company's environmental footprint. For investors, these efforts contribute to a more resilient cost structure and align with growing ESG mandates, potentially attracting a broader investor base and improving long-term asset value.

In terms of customer engagement and digital services, IRSA operates ¡appa!, a digital customer loyalty system platform. This platform facilitates consumption in shopping malls, streamlines the use of parking spaces, and enables the redemption of corporate benefits. Complementing this, a dedicated contact center serves over 400,000 customers. These digital initiatives enhance the customer experience, fostering loyalty and driving repeat business across IRSA's retail properties. The "so what" for investors is clear: improved customer satisfaction and convenience can lead to higher foot traffic, increased tenant sales, and ultimately, stronger rental income and property valuations. These digital tools provide a competitive edge by offering a seamless and integrated experience that rivals may not fully replicate in the local market.

IRSA's R&D efforts, while not focused on developing proprietary hardware, are geared towards optimizing its existing portfolio and future developments. The continuous evaluation of market needs for projects like City Block 35 in Caballito, and the strategic planning for new office buildings in the Dot section, reflect an ongoing commitment to innovation in design, functionality, and market relevance. These initiatives aim to ensure that IRSA's properties remain attractive and competitive, contributing to sustained rental income and capital appreciation.

Financial Resilience and Strategic Growth Drivers

IRSA concluded fiscal year 2025 with a robust financial performance, reporting a net gain of ARS 196 billion, a significant reversal from the ARS 32 billion loss in the prior year. This turnaround underscores the company's operational effectiveness and strategic positioning.

The Shopping Malls segment was a primary driver of this success, demonstrating a solid recovery with adjusted EBITDA growing by 10% year-over-year in FY 2025. Revenues in this segment also increased by 8%. Tenant sales, while initially lagging inflation earlier in the fiscal year, showed strong momentum in the fourth quarter, growing by 3.2% compared to Q4 2024. This segment achieved a record $169 million in EBITDA for FY 2025, the highest in a decade, reflecting the resilience of its inflation-linked revenues and high occupancy rates, which remained close to 98% (excluding the recently acquired Terrazas de Mayo). The acquisition of Terrazas de Mayo, adding nearly 34,000 square meters of GLA, and the development of a new shopping center in La Plata are set to further boost this segment's growth, with Terrazas de Mayo's occupancy already improving from 81% to 89% post-acquisition. The company values its mall portfolio at $1.2 billion, approximately 7.5x EBITDA, with management noting that this valuation is conservative given market cap rates.

The Office segment maintained stability, with rents holding at approximately $25 per square meter per month and premium portfolio occupancy reaching almost 100%. Despite a smaller portfolio of 58,000 square meters due to strategic sales, the segment's dollar-denominated revenues remained consistent. Management is considering new office developments in the Dot section, potentially adding 15,000 square meters of GLA, indicating confidence in the market's recovery and demand for premium office space.

Conversely, the Hotels segment faced challenges in FY 2025, with lower revenues and occupancy (decreasing from 66% to 60-61%) attributed to the appreciation of the Argentine peso against the U.S. dollar and reduced international tourism. Despite this, the segment provides valuable diversification, and IRSA is not pursuing further growth in this area, open to divesting assets if favorable opportunities arise.

Real Estate Development is a key growth engine, with the flagship Ramblas del Plata project making significant strides. This ambitious $1.8 billion development, projected to yield 693,000 sellable square meters and 10,000 new homes, saw 13 transactions completed in FY 2025, including cash sales and swaps totaling approximately 111,000 sellable square meters with a combined value of $81 million. The strategy of swapping land for finished units with developers minimizes IRSA's direct capital investment while allowing it to capture future value appreciation, with initial swap percentages at 25-26% and expected to rise to nearly 30%. Infrastructure work for Stage 1 commenced in January 2025, with completion anticipated by July 2026, and the first buildings expected to break ground within 10 months to a year. Other residential projects like Edificio del Plata and Nuevo Quilmes II are also progressing, capitalizing on the re-emerging mortgage market in Argentina.

IRSA's financial health is exceptionally strong. The company boasts a very healthy debt position with only $184 million in net debt, representing a conservative 1x EBITDA ratio, 8% of assets, and a 12% coverage ratio. The successful issuance of $300 million in 10-year Series XXIV notes in March 2025 significantly extended its debt tenure, providing long-term financial stability.

This conservative leverage, coupled with robust cash generation, allows IRSA to self-finance its organic growth projects without immediate reliance on external markets. The company also maintains a strong commitment to shareholder returns, distributing an 8% dividend and treasury shares equivalent to 3.6% of its capital stock in FY 2025, following an "extraordinary period" of approximately $250 million in dividends paid over the last three years.

Outlook and Strategic Positioning for a New Cycle

IRSA's management expresses significant optimism for the future, anticipating a "new cycle" for the Argentine real estate industry driven by economic normalization, declining inflation, and the re-emergence of the mortgage market. Banco Hipotecario (BHIP.BA), in which IRSA holds a 29% stake, has been a pioneer in restoring mortgage loans, contributing ARS 13.6 billion to IRSA in FY 2025 and paying ARS 18 billion in dividends. This trend is expected to fuel demand for residential projects, directly benefiting IRSA's extensive land bank monetization strategy.

The company projects continued positive momentum for its shopping mall segment in the coming quarters, expecting improved tenant sales as real wages recover and consumer spending normalizes. The opening of the La Plata shopping mall is estimated for May 2027, and the launch of one of the Manzana 35 towers is planned for March-May 2026. IRSA is also exploring entry into the logistics business, viewing it as a "great match" given its expertise in commercial property development and the sector's rapid growth.

Despite the positive outlook, IRSA acknowledges inherent risks, particularly the uncertainty and volatility associated with Argentina's electoral climate. Inflation and devaluation remain key drivers of volatility, and sustained high interest rates could impact consumption. However, IRSA's business model, with dollar-denominated assets and inflation-hedged revenues, has proven resilient across various economic contexts. Management emphasizes that while a stable economy is crucial for growth, the company is well-equipped to manage its existing portfolio through periods of volatility.

In the competitive arena, IRSA's local market dominance, diversified portfolio, and strategic development pipeline provide a strong foundation. While global players like Simon Property Group (SPG) and Brookfield Property Partners (BPYU) offer scale and broader market access, IRSA's agility, deep local insights, and strategic use of capital-light development models (like Ramblas del Plata swaps) allow it to effectively compete and capture value in the Argentine context. Its operational efficiencies, such as LED lighting and solar panel integration, also contribute to a competitive cost structure.

Conclusion

IRSA Inversiones y Representaciones Sociedad Anónima stands at the precipice of a promising new growth cycle in Argentina's real estate market. The company's exceptional performance in fiscal year 2025, marked by a significant return to profitability and record-breaking results in its core shopping mall segment, underscores the effectiveness of its diversified strategy and operational resilience. With flagship developments like Ramblas del Plata gaining substantial traction and a highly conservative financial structure providing ample flexibility, IRSA is uniquely positioned to capitalize on the re-emerging mortgage market and broader economic normalization.

The company's strategic focus on enhancing operational efficiencies through initiatives like LED lighting and solar panel integration, coupled with its commitment to digital customer engagement via the ¡appa! platform, reinforces its competitive standing. While the inherent macroeconomic volatility of Argentina presents ongoing risks, IRSA's proven ability to navigate challenging environments, its dollar-denominated asset base, and inflation-hedged revenues provide a robust framework for sustained value creation. For discerning investors, IRSA represents a compelling opportunity to participate in the resurgence of the Argentine real estate sector, driven by a seasoned management team, a strong asset base, and a clear strategic roadmap for growth.