IRSA Inversiones y Representaciones SA (IRS) 2020 Q4 法說會逐字稿

Good morning, everyone. I'm Santiago Donato, Investor Relations Officer of IRSA, and I welcome you to the fiscal year 2020 results conference call. First of all, I would like to remind you that both audio and a slide show may be accessed through company's Investor Relations website at www.irsa.com.ar by clicking on the banner webcast link. The following presentation and the earnings release are also available for download on the company website.

After management remarks, there will be a question-and-answer session for analysts and investors. If you want to make a question, please click the bottom labeled Raise Hand.

Before we begin, I would like to remind you that this call is being recorded, and the information discussed today may include forward-looking statements regarding the company's financial and operating performance. All projections are subject to risk and uncertainties, and actual results may differ materially. Please refer to the detailed note in the company's earnings release regarding forward-looking statements.

I will now turn the call over to Mr. Alejandro Elsztain, Second Vice President. Please go ahead, sir.

Thank you very much. Welcome, everybody, to our fiscal year 2020 results. We are closing our year. And in these difficult times for everyone, I hope that everyone is well and safe at their office or at their home. As you probably know, in Argentina, from March 20, there was a lockdown of the economy because of the coronavirus 19, and this made mainly to the shopping centers closed throughout the country. And we began to reopen the recent months some of them, but not all of them. We are going to see in details later. The only part that stayed open were the essentials as pharmacies, supermarkets and banks.

In the case of IRSA, hotels were locked down and shutdown too. The impact will reflect mainly after the fourth quarter. Up to the third quarter, the results were almost normal. But from the fourth quarter, we saw that the impact affecting these lines of business of IRSA.

The net income for this year recorded a gain of ARS 23.7 billion. And we compare this to a loss of last year of ARS 38.4 billion, and we are going to see later that this is mainly explained from the changes in the fair value of investment properties that we are going to dig later in more details.

Adjusted EBITDA reached ARS 26.7 billion in the whole year, increasing 26% to last year numbers. And in Argentina, we see ARS 5.7 billion, 23% below last year numbers -- 23%, sorry.

In Israel, as a subsequent event, negotiation with IDBD bondholders reached the Tel Aviv District Court, which ordered the opening of a liquidation procedure against IDBD. We are analyzing the resolution and evaluating the course of action we are going to explain in more details in a little later.

So now I will introduce Mr. Daniel Elsztain to explain about what are happening in the operation in Argentina at the beginning.

Thank you, Alejandro, and good morning, everyone. We'll start on Page #3, analyzing the Argentina real estate business, starting with shopping malls.

As Alejandro mentioned, on March 20th, all operations were closed since then and Buenos Aires remained close. The company at that time decided to defer building and collection of base rent and all commercial funds from April to September 30th, basically supporting our tenants and prioritizing the long-term relationship. The company only charged the common expenses that you can see on the right side of the chart, and we can see that it only represents 20% of all the collection that were basically what we're collecting from our tenants.

As you imagine, with shopping centers closed, our tenants were suffering and are still suffering a lot since there was some opening, and we decided to build on the long-term relationship with them to try to make them survive as many as possible and to have a -- as we can, a healthy business when we start opening on the shopping centers. And we are working with them, so we can open the shopping center in good conditions, hope soon, hopefully. And some of them were open in the provinces outside Buenos Aires, we had some openings with a lot of restrictions. We'll talk about this a little bit later.

On the office segment, normal revenues collection during the lockdown period. We have seen some decrease in occupancy, but basically has been a normal situation for this segment. On the hotels, the shutdown since March 20th, and they're still closed, preparing for opening sometime during the end of October or November. We don't have a precise date today. And the only one that has been working under contingency and emergency plan is the Intercontinental Hotel.

In the line of expenses, we have done big cuts on everything that is nonessential expenses and services, trying to reduce our cost and also the cost that we send for common charges on the shopping centers. And we did also some cuts on social tax -- social security taxes and other taxes.

CapEx, we have the construction of Catalinas, the 200 Della Paolera tower and the expansion of Alto Palermo. Both were suspended during the lockdown. And after the end of the fiscal year, construction was back reestablished, but with some restrictions. As of today, we have basically non-restrictions on the Catalinas project, and we are allowing and the city is allowing the tenants to start construction on the premises. And in the case of Alto Palermo, we're still doing with more restrictions.

On Page #3, we can see that our -- on the left side -- sorry, Page #4, the stock on the shopping centers remained stable at 332,000 square meters of GLA. Occupancies at the end of the fiscal year was very similar to the previous one. And sales went down dramatically. This is basically because of the last quarter, sales were basically inexistent because of the lockdown. And then we can see that full impact on that quarter.

In the interior of the country, we had some openings, as we mentioned, basically in the provinces, not in the city of Buenos Aires and in the Greater Buenos Aires, and we are expecting that opening soon. The only exception to that is Distrito Arcos, which is our premium outlet shopping center in the city of Buenos Aires. That is -- it's an outdoor shopping. And because of that, we were allowed to open.

In the segment of offices, the stocks remain -- the stock remained similar at 115,000 square meters of GLA. We had some sales that we're going to talk later. Occupancy went down a little, reaching 93% of occupancy levels. And the average rent remained stable at $26.7 per month per square meter. We had normal operations and rent collections since then with only a very few exceptions. And we are seeing some slight increase in vacancy. But if we compare with the average of the city, we are doing a little bit better than the average of the city of Buenos Aires at the premium market. And basically, the problem is on Class B office buildings and one of those buildings, it's in the for-sale list.

As I was mentioned, the construction in the Paolera was suspended, but now it's back. We have full permits to work, and we estimate the opening really -- opening and the building working with tenants and people working in the office by the end of December or the beginning of January this year.

In the case of hotels, the stock remained the same, the amount of rooms at 718 rooms. Occupancy went down as you can imagine because of the lockdown, it went down to 0.6% occupancy at the end of the quarter, but -- and the fiscal year because this basically are completely closed. And the average rate is $156 all over the year. That is also a reduction compared to last year. The full impact was for the last quarter of 2020 and also for the first quarter of 2021 as all the hotels remain closed basically with the exception of the Intercontinental. Nevertheless, even the Intercontinental is open, it is not producing cash. In the case of hotels, we took all the measures that the government did as subsidies to pay salaries, subsidies not to pay taxes, and we took all of those programs that the government established, so we can take it.

On page number -- sorry, on Page #5, we see some of the sales that happened after the fiscal year closed. Starting first with -- on the left side, we saw the entire building of Bouchard 710. This was a building of approximately 15,000 square meters and it was sold for $87.2 million, representing a value of about $5,800 per square meter. And it was an IRR of 16%. This was a very good sale and allowed the company, the IRSA Commercial Properties to pay down its debt that was expiring at the -- a few weeks ago.

Also, there was a partial sale on the 200 Della Paolera building, the one we are still about to finish, 2 floors of approximately 2,400 square meters for a price of $16.9 million. That represents a price per square meter of $6,940. And we still have at this tower 28,000 square meters that we are basically -- we have -- I forgot to tell, we have a very good prospect, we have about 61% of this tower already leased and signed. And we have very good prospects as leases that are out and ready to be signed in the near future -- very, very near future.

And also, we sold in July and August of 2020 at the Boston Tower, 6 floors, representing 7,482 square meters of GLA for a total value of $41.4 million. It's an average of $5,500 per square meters, and we still have that tower 7,380 square meters of GLA. The average cap rate that we are selling today is 6.6%. So this has been very good and keep also. We are renewing our portfolio. If you can compare the portfolio after the sales, we have a similar number that we have before construction, but now the portfolio is younger and better. So we are very happy with these sales, and maybe there are some more coming.

On the -- in Page #6, we can see some of our investments in the U.S. On August 2020, the company decided to stop facing the ground lease cost and the land -- of the land at the Lipstick Building. This is in New York City. So we handed over the administration of the property to the owners of the ground lease. There was no -- it made no sense to keep paying higher rent than the collection of the rent it was producing. So at the time, Metropolitan ceased to recognize the liabilities associated with the ground lease as well as ceased to recognize all the assets and liabilities associating with the building for the operation of the administration. And that generated an accounting profit at the IRSA level of almost ARS 6.8 billion, I say again, ARS 6.786 billion at the level of IRSA. This was basically was -- we were accounting all the future rents in the future and by giving back this -- the building to the owner, we got rid of all those liabilities in our balance sheet and represented again.

In the case of Condor -- sorry, there are no new liabilities. We signed an agreement with the owner and now administrator of the building, there will be no complaints in between one to each other. In the case of Condor, there was a sale agreement and merger that was signed in 2019 that has been canceled recently. This is the news of last week. And the company will continue to review the options and reserve all the rights and resources under the original merger agreement. This means that they are going to do a claim for the termination of this agreement. And as of June 30, 2020, the company owned IRSA 2.2 million common shares, that represents 18.9% of the capital of the company, and 325,752 preferred E shares. The company has been doing a little bit better than expected in terms of occupancy of the hotels since the COVID started in the U.S. and also is looking for other alternatives of what to do with the company and the portfolio since the agreement for the merger was canceled.

So now we're going to go to Matias Gaivironsky, our CFO, to review some -- the Israel Business Center.

Thank you, Ale. Good morning, everybody. So if we move to Page 7, we can see our situation in the Israel Business Center. As Alejandro mentioned, recently on Friday, we received a negative order from the court in Israel to open a liquidation procedure about IDB. I will try to summarize our situation and how we got to this point.

So if we see in Page 7, we can see what was the evolution of our net debt in the 2 holding companies in IDB and in DIC. So when we enter into the company, IDB, debt was around $1.3 billion. And today, the debt is around $560 million. In the middle, we have been selling shares of Clal that I will review in the following pages and also is all our injections. So IRSA and Dolphin injected an important amount of money that went to cancel basically the debt in IDBD.

If we see the debt situation in DIC level, also we can see a significant reduction in the net debt from $1.3 billion, $1.4 billion, up to $840 million at the end of June. After that, DIC sold their shares of Shufersal. So net debt as of today is around $477 million. If we see the debt amortization schedule on IDBD, we can see that in this year, we have an amortization of $78 million between now until December and the cash position was not enough to cancel the total debt, it was $25.4 million. In the previous year and in September last year, and due to the IDB financial situation, we committed to inject 3 installments, 3 contribution of ILS 70 million each year. Last year, we did the first injection of ILS 70 million, that is around $20 million into IDB in order to improve the financial situation. And at that moment, the second -- or our commitment following 2 installments were subject to basically certain conditions that are basically that the company doesn't decrease its financial position and doesn't start any of -- the bondholders doesn't start any kind of procedure against the company.

During this year, and I will reveal the following situation on the shares of the company, but given all the doubts regarding the fulfillment of those agreed conditions, Dolphin decided not to make the capital contribution of this year, the ILS 70 million, because we thought that the conditions are not fulfilled. In this regard, IDB has started the legal actions against us and against -- basically against Dolphin because of the lack of the contribution. And we will reserve our rights for the (technical difficulty) times and procedures.

If we move to the next page, we can see that the negotiation was -- we started a negotiation with the 3 series of bondholders. The NAV of the company and because of the decrease in the price of the underlying assets that are basically, if you remember, on the IDB side, we have CLAL, the [Israel,] that airline company and 25% of shopping in Las Vegas and also the pledged shares of DIC towards IDB and one of the series of bondholders that during the year decreased the value, and that generated a negative NAV of the company. So for that reason, we try to negotiate our restructuring with the bondholders. And there's 3 series. The total debt of IDB amounts to ILS 2 billion. Series 9 is ILS 900 million without any guarantee. Series 14 is ILS 880 million with a collateral of 70% of the DIC shares. Series 15 is ILS 240 million with a collateral of 5% of the CLAL shares. So the remaining assets that are not pledged to the series are the shopping is -- the 25% of the shopping in Las Vegas, 12% of the shares of DIC, plus the airline that are not in collateral of any series.

So after several rounds of negotiation where Dolphin tried to reach an agreement that benefit all the parties, the creditors rejected the offers and asked the Tel Aviv District Court to order the opening of a bankruptcy procedure against IDB. And last Friday, the court resolved that IDB is insolvent and has therefore resolved to grant all the 3 orders requested and accordingly issued an order for the initiation of proceedings and liquidation of IDB and has appointed a liquidator to IDB and interim receivers over the pledged DIC shares and the pledged CLAL shares. We are now analyzing together with our local and international advisers the judicial decision and the alternatives and course of action.

It's important to mention that since the beginning of -- when we took control of the company, we started to consolidate IDBD and DIC. And during these years, we have been recognizing losses of IDB that, finally, at the end of this fiscal year, as of June 30, all the investment in IDBD and in DIC is valued at 0 in our financial statement. The impairment that we did during the last quarter is not significant one, is -- compared with our results during the year, the company finished with a net income this year of around ARS 23 billion. And the loss that was recognized because of this situation is around ARS 1.4 billion. So compared with the results, it was not important. The losses were recognized before during the previous fiscal years.

Part of the history and on the challenging history of our investment in Israel, I think one of the main highlights is in Page 9, that is regarding our investment in CLAL. You'll remember that since we acquired IDBD, the regulator haven't granted us the control permit. That means that all our shares were held in a trust, and the company and IDBD hasn't any intervention or any influence in the operations of the company, no directors, no management, nothing, and even we can't vote our shares. And that situation was very unfair, and we tried to find a solution on our investment that was impossible. So since -- after the regulator doesn't allow us to control the company, they force us to sell. So we, at the beginning, tried to sell the company. And in fact, we presented 2 different offers at prices close to book value and the regulator haven't approved. And after that, they force us to put a time frame to sell the shares. And finally, they force to sell 5% of the shares every quarter.

So that situation was very unfair for us. We lost a lot of equity value in -- with this resolution. If you see on the bottom right of the graph, the evolution of the equity value of the company and the market cap, there was a significant difference between the 2. The book value of the company today is around ILS 5.4 billion, and the market value is around ILS 2 billion. So every time that we sold the share, we'll lost a lot of money.

This situation trigger our financial deterioration of the company. And this is one of the main reasons of the decrease in the net worth and the financial situation of the company. Also if you see the related performance between CLAL and its peers, the company has been losing market position, market share and also performance was completely different than its peers where the peers, again, have much better results than CLAL and was basically managed by directly the government and the regulator that directly report to the Minister of Finance there.

In Page 10, we can see also the evolution of the rest of the shares. The first one is DIC. That is the other holding. We can see a decrease in value during this year. And also since we took control, when we see the -- or the main reason was related to Cellcom. Cellcom, since we acquired, the competitive environment there was huge. And basically, the company has to be -- has to reduce prices that impact on the performance of the company.

You can see during this year a rebound on the shares. This year, the price of the shares increased by 74%. The company reached an agreement with one of the competitors in order to merge the 2 companies. We believe that this consolidation will help in the future. But unfortunately, when we see the evolution, we haven't a lock value, significant value from Cellcom since our acquisition.

When you will see PBC, the shares of PBC increased up to March, that this drop is basically related, we believe, to the COVID situation in Israel.

Regarding Shufersal, the investment was very good. In fact, we sold all the shares. And you can see that the evolution in terms of prices was positive. Those are the main assets of IDB, and altogether, generated the deterioration in the financial situation of the company. We believe that sometimes there is a discount implicit in the shares, that there is value in the shares that are not reflected in the value of the company.

So if we move to Page 12, related to our consolidated financial statements. You know that we consolidate IDB since we took control of the company. So probably, and it's very likely that we will deconsolidate our investment in IDBD since the next quarter. I mean it's very likely because we haven't yet the confirmation because this happened in the last days, but our initial analysis is that we will need to deconsolidate. We may deconsolidate the company -- the IDB holding in the next quarter.

So focusing in the explanation of the Argentina Business segment, we can see a net income generated by Argentina of ARS 27 million. Here are basically 2 main drivers of the appreciation. The first one is the change in the fair value of our investment properties that are related to the peso valuation of our offices and land bank that are reflecting the real value in pesos and are supported by the recent transactions that we did in IRSA Commercial Properties.

The following impact is in the line 9, the results from associates and joint ventures. That is basically what Danny mentioned about the Lipstick Building. And in line 10, that is the net financial results that I will explain in the following page.

Regarding the adjusted EBITDA wise segment of the Argentina Business Center, shopping malls have a drop of 37.4% during the year. This is all related to the COVID situation in the last quarter of the fiscal year. The first quarter of the next fiscal year of the 2021 also will be with bad results because we have our -- most of our malls closed or all the malls in the -- almost all the malls in the city of Buenos Aires and the province of Buenos Aires closed. The offices generated a positive result of 7.5%. The hotels also negative and sales and development, we have -- during the quarter, we haven't had any significant transactions is always basically the cost allocated to this segment.

If we move to Page 14, we can see what happened on the net financial results line in -- during the year, we can see the evolution of the effects in the bottom left of the page. Last year, we have an appreciation of the pesos in real time -- in real terms, sorry. And this year was the valuation from 42.46 to 17.46. That has an impact on the line 2, the net foreign exchanges that this year -- net foreign exchange that we have a negative result of ARS 6.5 billion against again last year of ARS 1 billion.

The other part, the Israel Business segment was all related to CLAL and the valuation of the CLAL shares that keep generating losses to the company.

If we move to the following page, Page 15, we have here the -- there -- the description of our net asset value. We can see that the current situation using the fair value of our investment properties at IRSA Commercial Properties and also the land bank and others that is at the segment of directly at IRSA level or land bank at the IRSA Commercial Properties, that is all reflected in our books. This is the same information that is reflected in our books. The gross asset value of the company reached $1.5 billion, with a net debt of $410 million. So with that, we -- our net asset value totaled $1.1 billion. That represents a 26.7% LTV in terms of the leverage. Here, we are -- as we did in the last years, we are valuing this deposition of IDB in 0.

And if we move to Page 16, we can see the breakdown of our debt. The 2 main events during the last months were the cancellation of debt. We canceled 2 series of bonds, one in July for $71.4 million. The other in August for almost $40 million. So we remain with a payment for this year of $141 million that expired in November.

1-8-1.

Sorry, 181 that expired in November. So in the middle, there was a new regulation from the Central Bank that companies must refinance maturities operating between October 15 and March 31. So our bond expired during this period of time. So we need to fulfill the regulation. The Central Bank will only give access to the official exchange rate for up to 40% of the total amount that expired during that period. And the companies must refinance the remaining balance to an average term of at least 2 years. That is a regulation that we are forced to fulfill in order to have access to buy dollars to cancel the debt.

So today, there was an expiration of a term that we should submit a plan to the Central Bank, so we will need to submit today the plan. And we will work together with our creditors in order to implement a plan according to the rule.

If you see in the debt amortization scale, that this is basically the remaining payment that we need to do during the year in the middle. In order to pay the July and August amortizations, we issued 2 new series of debt dollar-linked that were at a cost much lower than the debt that we canceled. So we were successful on that.

And finally, before opening for questions, we have here an evolution of the net debt of the 2 companies together, IRSA and IRSA Commercial Properties since we started our investment in Israel. And we can see that the net debt is stable. We haven't increased the debt because of the -- of our investment in Israel. We have financed all the investment selling assets or with profits, but not with the increase on our debt. And as I showed in the previous page, the LTV of the company remain in levels that are conservative according to any metric of real estate companies.

So with this, we open the line to receive your questions.

Yes, it opens the Q&A session. If you have a question, please click the bottom label, Raise Hand. We have here the first question comes from Mariel Abreu from T. Rowe Price. Go ahead, Mariel, please.

Can you hear me well?

Yes.

Yes, we can.

So I want to understand, well first of all, are there any other related party transactions that either IRSA parent or IRSA Commercial Property has the IDB? And then if -- what are the implications if -- I know you're working with bondholders at the IRSA level to hopefully refinance the debt that you have maturing. But in an event of default, what are the implications for IRSA CP or the IBD event in you to pay down debt, even the 40% that basically you don't have to refinance if you don't want to?

Thank you, Mariel. Well, regarding the first question, no. The only commitment that we had towards Israel was related to the injection of the ILS 70 million during this year and next year that was subject to certain conditions. So that was the only commitment so that all the debt of Israel is -- hasn't any recourse to IRSA or IRSA Commercial Property. IRSA Commercial Property is not related at all with IRCP. So IRSA is the -- at the end of the day, the main investor or the only investor in Dolphin, that is the controlling entity of IDB. So it not -- hasn't any recourse or any related party transaction.

Regarding the second part of the question, well, we -- the rule, we will need to implement or fulfill the rule that we will try. The rule doesn't say anything about what happened with the people that doesn't accept the proposal. The Central Bank is saying basically you have to refinance, but we can't oblige our investors to refinance. So we will offer them, and we will try to do refinancing primarily to our investors, but we don't have any certainty about what they will decide.

So what they have to understand is that the company is not allowed to buy dollars to their pay debt. So in the case that they don't accept the proposal, the company hasn't any possibility to buy dollars. That means that we can pay pesos but not dollars. So that is related to the rule. The implications of potential event of default in this regard doesn't affect at all the position in IRSA Commercial Properties. There is any clause of cross-default between the company, so it doesn't has any impact on that.

And regarding IRSA itself, this is our main debt. The rest of the debts are the dollar link that we issued during the year. In the prospectus, we have an event of default divided around $50 million of default. So we hope we don't have any situation of cross-default between the series. But to say, I am speaking about a hypothetical case of the investor that doesn't accept. We don't have yet all the understanding of the regulation of the Central Bank. In that case, we'll do something different and allow the companies to pay. So that is according to what we know today and under the current regulation, this is the impact. But we hope that we can offer something attractive to our investors to accept.

Do you have any indications so far of how many investors would accept or have you already put on the table the offer that you will be giving investors to do the refinance?

Mariel, it's too soon to say because the rule was written 2 weeks ago. We first need to submit a plan to the Central Bank that expired today. Then we need to ask for approval to the CNV, the Comisión Nacional de Valores. And after that, we will be in a position to launch the exchange offer. So it's too soon to say if they will -- what they will be the behavior of our investors. It's important to mention that during the last 3 months, IRSA and IRSA Commercial Properties canceled around $250 million of debt without any problem. And our behavior, as always, was to do all possible to pay. And the company is in a financial situation that can afford the payment. So we need to deal with this regulation that unfortunately is not dictated by us, no.

So okay, understood. On the -- for the 40%, they will require that potentially you would not refinance. How is IRSA CP and IRSA Commercial Properties helping those liquidities for IRSA parent either via dividends or additional use of the credit line that you have -- that you still have around $130 million available. Can you give us color on that? I mean what are the plans?

Yes. If you see today, IRSA Commercial Properties, we already canceled $140 million that expired in September. So the next payment of debt is in 2023. The company has a good financial position and cash position that we can either distribute dividends. In fact, there is a proposal to our shareholders meeting to pay dividends in October. So that should be approved by our shareholders. And also, we have the credit line between IRSA and IRSA Commercial Properties that's open and that is up to $180 million. So those are the 2 ways that IRSA Commercial Properties can use its money and lend the money to IRSA or distribute dividends or use the credit line.

Okay.

Gordon Lee from BTG wants to do the next question.

Can you hear me?

Yes, Gordon. We hear you.

Great. I had 2 -- I guess, 2 or 3 questions, which are really follow-ups of Mariel's. The first, I was wondering if you could just remind us what the dividend proposal is. As far as how much cash, if that proposal is accepted, could be streamed up from propriox co maxialis to imbersionis representarsionis. That was one question. The second one is if you could let us know what IRSA's -- IRSA Commercial Properties' gross cash position is today in September once you account for the proceeds of the asset sales, and obviously, the amortizations that you've completed in September? And then just a final question is, last week on the propriox co maxialis call, you spoke about having a couple of additional office assets for sale. I was wondering if you could provide an update in terms of how those potential sales are going and when you think we might see those close.

Gordon. So regarding the dividend proposal, first it's subject to the approval of our shareholders' meeting. So the proposal was to pay a dividend for up to ARS 9.7 billion, that is roughly $120 million at the official exchange rate. Remember that IRSA already granted some lending to IRSA, so the dividend could be the cancellation of that credit line and not necessarily the use of cash of IRSA paying a cash position or cash dividend to IRSA. So that could be a way to cancel that credit line. So if you remember our history, IRSA Commercial Properties used to pay regular dividend every year.

During the last 2, 3 years, IRSA have -- IRSA Commercial Properties haven't distributed a significant dividend. So at the end of the day, it could be to go back to the average stream of dividends that the company used to pay. So that is regarding the proposal of the dividend. The cash position of the company as of today is around $155 million. So if you see the cash -- we released the financials and the -- if you saw the presentation of IRSA Commercial Properties, basically, it's almost the same cash position. Remember that after June, we sold assets for around $140 million and canceled debt for $140 million. So the cash position remain the same or almost the same than as of June.

And Gordon, regarding the selling -- the assets that are in the lease for sale. As you saw on the SA Commercial Properties call, there is one building that we have a lot of vacancy that is the building at Suipacha Street that is running at very low occupancy, and that building specifically is in the for-sale list. We have been talking with the candidates. We have some showings. And I don't want to say anything because we always depend on the buyer. It's not upon us. But I would say that we have good prospects on that one. And as we mentioned also, having these low cap rates for Argentina, I mean, you see the gap in between cap rates between Argentina and New York, and it's in existing basically. And if you see the cost of capital in between Argentina and the States, it's huge.

So we will take that advantage of -- there is some arbitration we will leave. And also, there's also good use if we produce pesos because we can make -- we can build new assets if needed for a good use of pesos at having a newer square meters at cheaper base price. So that -- I think it's the main picture of what we are trying to achieve on the real estate side of IRSA Commercial Properties.

Perfect.

Thank you. Any other additional question, please raise your hand.

Okay. If there are no more questions, this -- sorry, one more coming from Matias Castagnino from BCP Securities. Matias, go ahead.

Yes. The question is, if you eventually can buy dollars through the Contado con Liqui to pay for the debt, is that an option?

So Matias, no, it's not an option because the rule said that if you have access to buy official dollars, I mean, not official dollars, dollars at the official exchange rate, you have -- it's forbidden to buy at the Contado con Liqui even 90 days before and 90 days after. So no, the answer is that no, we have access to -- we already bought dollars at the official exchange rate, so we can't do Contado con Liqui transactions.

Next question comes from Ignacio of Frávega. Go ahead, please.

Yes. My understanding is that at IRSA Commercial Property level, the company owns about $50 million of corporate bonds of the group. I was wondering if you can clarify if that part of that corporate portfolio is this bond of IRSA that matures in 2 months and for what amount?

As of June, the company holds part of those bonds that are the ones that will expire in November. So yes, the company holds part of that. And also others that are expired at Cresud level.

Okay. Is it possible to know the amount of the one that expires on November?

That is around $50 million as of June.

Sorry, this concludes the question-and-answer session. At this time, I would like to turn back to Mr. Alejandro Elsztain for any closing remarks.

So we are finalizing a special year finishing with the COVID-19. Now we have a great challenge for the next. In Argentina, mainly the reopening of the business lines, we are expecting that we opening soon the shoppings and the hotels. We expect on the spring this to happen. And the good is that the company was able to maintain its cash flow through these times, in this so tough environment. We would -- we were supporting our tenants. We thought our mission is to keep our business well alive and to reopen with a locked up occupation. And that is the mission, and you are going to see that event soon.

In the reopening, we are bringing brands and new quality tenants and new proposals to the shoppings to keep the importance and the location that we have keeps that important. So we are soon very expecting that opening.

In the real estate, you are going to keep seeing us this swapping of assets and to do new buildings in our land banks. And so we have a big challenge in Israel too. We -- after the court resolution, we need to arrive to some arrangement with bondholders trying to save our investment and we are seeing the next steps what to do or not to do. So we expect a more a normal year like next year.

So to thank you, everyone, on the participation on this call. And I hope everyone will be safe and very good. Thank you very much, and have a very good day.