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01/11 07:59
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents mixed signals: strong dividend distribution and positive net income contrast with hotel segment weakness and economic volatility. The Q&A reveals management's confidence in cash generation and strategic flexibility, despite some unclear responses. Given these factors, the stock price reaction is likely to remain stable, leading to a neutral rating.
Net Income ARS 163.4 million gain compared to a loss of ARS 143.6 million last year. This improvement was mainly driven by the gain in the fair value of investment properties and good results from the rental segment.
Shopping Mall Segment Revenue and EBITDA Increased by 6% and 4%, respectively, despite a 7% decrease in tenant sales. The increase is attributed to revenues being linked to a fixed structure.
Office Segment Occupancy and Rent 100% occupancy maintained, with rents stable at $25 per square meter per month. This stability has been consistent for the last 4 quarters.
Hotel Segment Revenue and Occupancy Decline in revenues and occupancy, with occupancy dropping from 67% last year to 52%. This was due to a weak winter period with no snow and lower visits to Llao Llao Hotel and Bariloche. The average rate per room is $230, with slightly lower margins.
Adjusted EBITDA Declined by 7.5% overall. The rental segment increased by 3.5%, with shopping malls up 4% and offices up 16%, attributed to higher occupancy and favorable currency conversion. Hotels declined by 22%.
Net Financial Results Declined due to real devaluation, which impacted dollar-denominated debt conversion into pesos. This resulted in a loss compared to a gain last year.
Net Debt Increased slightly to $308 million due to dividend distribution. Debt metrics remain conservative with 1.6x EBITDA, less than 9% LTV, and more than 11x coverage ratio.
New shopping mall acquisition: Acquired Al Oeste Shopping mall in Haedo for $9 million. Plans to reposition it as an outlet center with a $7 million investment in the first phase of redevelopment.
Upcoming shopping mall development: Distrito Diagonal in La Plata is under development, adding 22,000 square meters of GLA. Expected opening in May 2027.
Mixed-use property acquisition: Acquired the former Israelita Hospital property in Buenos Aires for $6.8 million to convert into a mixed-use development.
International brand interest: Increased interest from international brands to enter Argentine malls, with some already under construction.
Consumer confidence outlook: Expecting improved consumer confidence and economic activity post-elections.
Occupancy rates: Shopping malls reached nearly 98% occupancy, and office spaces achieved 100% occupancy.
Rental segment performance: Revenues and EBITDA in the shopping mall segment increased by 6% and 4%, respectively, despite a 7% decline in tenant sales.
Hotel segment performance: Decline in revenues and occupancy due to FX appreciation and weak winter season, with occupancy dropping from 67% to 52%.
Portfolio expansion: Shopping mall portfolio expanded to 390,000 square meters of GLA, with plans to grow to over 458,000 square meters in the coming years.
Dividend distribution: Initiated a dividend distribution with a 10% yield, amounting to $116 million.
Tenant Sales Decline: There was a 7% decline in tenant sales during the first quarter of 2026 compared to the same period in 2025, attributed to election-related volatility, higher interest rates, and tighter monetary conditions.
Hotel Segment Weakness: The hotel segment experienced a decline in revenues and occupancy, with occupancy dropping from 67% to 52% due to a weak winter season and unfavorable exchange rate dynamics. This trend has persisted from the previous year.
Economic and Monetary Volatility: The electoral process caused economic instability, including higher interest rates and tighter monetary conditions, which negatively impacted consumer confidence and sales.
Currency Devaluation Impact: The real devaluation of the peso against the dollar led to financial losses when converting dollar-denominated debt into pesos, impacting net financial results.
Deferred Tax Adjustments: Increased deferred tax liabilities were recognized due to the appreciation in the fair value of investment properties, which negatively impacted income tax results.
Underperforming Acquisition: The newly acquired Al Oeste Shopping mall is operating below its full potential, requiring a $7 million investment for repositioning and redevelopment.
Hotel Segment Margins: The average rate per room in the hotel segment is $230, but margins remain slightly lower, reflecting ongoing challenges in profitability.
Shopping Malls: The company expects consumer confidence to gradually improve and anticipates a recovery in economic activity and consumption in Argentina in the upcoming quarters. International brands are showing increased interest in entering the Argentine market, with some already under construction in the company's malls.
Shopping Mall Expansion: The company plans to reposition and relaunch the newly acquired Al Oeste Shopping mall as an outlet center next year, with an investment of approximately $7 million in the first phase. Additionally, the Distrito Diagonal shopping center in La Plata is expected to open in May 2027, adding 22,000 square meters of GLA to the portfolio.
Real Estate Development: The company intends to convert the recently acquired Israelita Hospital property into a mixed-use concept. In Uruguay, the Distrito Calcagno project is progressing, with a new land-swap agreement signed for $9.3 million. The Ramblas del Plata project is advancing, with Phase A construction progress at 15% and public hearings for the second phase expected by the end of the year.
Hotels: The company notes that it is too early to anticipate a sustained recovery in the hotel segment, despite some real depreciation of the FX in the last quarter.
Dividend Distribution: The company started the distribution of a new dividend approved in October. The payment represents a dividend yield of approximately 10%. The total distribution amounts to ARS 173.8 million, equivalent to roughly $116 million at the current blue chip swap rate. The payment began on November 4 for the local market, with GDS holders expected to receive their payments within 5 to 7 days.
The earnings call presents mixed signals: strong dividend distribution and positive net income contrast with hotel segment weakness and economic volatility. The Q&A reveals management's confidence in cash generation and strategic flexibility, despite some unclear responses. Given these factors, the stock price reaction is likely to remain stable, leading to a neutral rating.
The earnings call summary and Q&A reveal strong financial performance, with record-high EBITDA, stable office rents, and increased shopping mall valuations. The company has a healthy debt structure and plans for future dividends. Despite challenges in the hotel segment, the overall outlook is optimistic, with fast sales in Ramblas and potential new office projects. The Q&A section shows analysts' confidence, despite some uncertainties. The positive momentum, combined with strategic initiatives, suggests a likely stock price increase of 2% to 8% over the next two weeks.
The earnings call reveals strong financial performance with a record high EBITDA, significant net income recovery, and high occupancy rates in malls. Despite challenges in the hotel segment and economic risks in Argentina, the company's conservative debt structure and strategic bond issuance are positive. The Q&A section shows management's optimism for growth and strategic partnerships, although some uncertainty remains regarding CapEx and dividend policies. Overall, the positive financial metrics and strategic outlook outweigh the risks, suggesting a positive stock price movement.
The earnings call presents mixed signals. Positive aspects include the acquisition of a new mall, full office occupancy, and a strong dividend yield. However, the net loss, weaker hotel performance, and vague financing plans raise concerns. The Q&A session highlighted uncertainties in financing and future maturities, which could affect investor sentiment. Overall, the company's performance is heavily tied to economic recovery in Argentina, making the outlook uncertain. The lack of clear guidance on financing and the net loss contribute to a neutral sentiment, expecting minimal stock price movement.
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