20-F

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: June 30, 2007

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 128 0-30982

Alto Palermo S.A. (APSA)

(Exact name of Registrant as specified in its charter)

Republic of Argentina

(Jurisdiction of incorporation or organization)

Moreno 877, Piso 22

Buenos Aires, Argentina

(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act: None

Securities registered or to be registered pursuant to Section 12(g) of the Act:

Title of each class	Name of each exchange on which registered
ADS, each representing forty shares of Common Stock	Nasdaq National Market of the Nasdaq Stock Market
Common Stock, face value ten cents of Peso per share	Nasdaq National Market of the Nasdaq Stock Market*

* Not for trading, but only in connection with the registration of American Depositary Shares pursuant to the requirements of the Securities and Exchange Commission.

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

The number of outstanding shares of the issuer’s common stock as of June 30, 2007 was 782,064,214

Indicate by check mark if the registrant is a well known seasoned issuer, as defined in Rule 405 of the Securities Act:     ¨  Yes    x  No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934.    x  Yes    ¨  No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x   Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (check one):

Large accelerated filer  ¨     Accelerated filer  x    Non-accelerated filer  ¨

Indicate by check mark which financial statement item the registrant has elected to follow.    ¨  Item 17    x  Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ¨  Yes    x  No

Table of Contents

ALTO PALERMO S.A. (“APSA”)

		Page No.
Disclosure Regarding Forward-Looking Information		6
Certain Measurements and Terms		6
Presentation of Financial and Certain Other Information		7
Market Data		8
	Part I
Item 1	Identity of Directors, Senior Management and Advisers	9
Item 2	Offer Statistics and Expected Timetable	9
Item 3	Key Information	9
	(a) Selected Financial Data	9
	(b) Capitalization and Indebtedness	15
	(c) Reasons for the Offer and Use of Proceeds	15
	(d) Risk Factors	15
Item 4	Information on the Company	30
	(a) History and Development of the Company	30
	(b) Business Overview	33
	(c) Organizational Structure	81
	(d) Property, Plants and Equipment	82
Item 4A	Unresolved staff comments	83
Item 5	Operating and Financial Review and Prospects	84
	(a) Operating Results	84

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	(b) Liquidity and Capital Resources	116
	(c) Research and Development, Patents and Licenses, etc.	122
	(d) Trend Information	122
	(e) Off-Balance Sheet Arrangements	124
	(f) Tabular Disclosure of Contractual Obligations	124
	(g) Safe Harbor	124
Item 6	Directors, Senior Management and Employees	125
	(a) Directors and Senior Management	125
	(b) Compensation	130
	(c) Board Practices	132
	(d) Employees	132
	(e) Share Ownership	133
Item 7	Major Shareholders and Related Party Transactions	134
	(a) Major Shareholders	134
	(b) Related Party Transactions	136
	(c) Interests of Experts and Counsel	139
Item 8	Financial Information	139
	(a) Consolidated Statements and Other Financial Information	139
	(b) Significant Changes	142
Item 9	The Offer and Listing	143
	(a) The Offer and Listing Details	143
	(b) Plan of Distribution	145
	(c) Markets	145

3

	(d) Selling Shareholders	147
	(e) Dilution	147
	(f) Expenses of the Issue	147
Item 10	Additional Information	147
	(a) Share Capital	147
	(b) Memorandum and Articles of Association	148
	(c) Material Contracts	157
	(d) Exchange Controls	157
	(e) Taxation	161
	(f) Dividends and Paying Agents	169
	(g) Statement by Experts	169
	(h) Documents on Display	169
	(i) Subsidiary Information	169
Item 11	Quantitative and Qualitative Disclosures About Market Risk	169
Item 12	Description of Securities Other than Equity Securities	174
	Part II
Item 13	Defaults, Dividend Arrearages and Delinquencies	174
Item 14	Material Modifications to the Rights of Security Holders and Use of Proceeds	174
Item 15	(a) Controls and Procedures	174
	(b) Management´s Annual Report on Internal Control Over Financial Reporting	174
	(c) Attestation Report of the Registered Public Accounting Firm	174

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	(d) Item 16.D Changes in Internal Control Over Financial Reporting	175
Item 16	Reserved	175
	Item 16.A. Audit Committee Financial Expert	175
	Item 16.B. Code of Ethics	175
	Item 16.C. Principal Accountant Fees and Services	175
	Item 16.D. Exemptions from the Listing Standards for Audit Committees	177
	Item 16.E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers	177
	Part III
Item 17	Financial Statements	177
Item 18	Financial Statements	177
Item 19	Exhibits	177
	Signatures	179

5

DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward looking statements.

This annual report includes forward-looking statements, principally under the captions “Summary” “Risk Factors,” “Operating and Financial Review and Prospects” and “Business Overview.” We have based these forward-looking statements largely on our current beliefs, expectations and projections about future events and financial trends affecting our business. Many important factors, in addition to those discussed elsewhere in this annual report, could cause our actual results to differ substantially from those anticipated in our forward-looking statements, including, among other things:

Factors that could cause actual results to differ materially and adversely include, but are not limited to:

• changes in general economic, business, political or other conditions in Argentina or changes in general economic or business conditions in Latin America;

• changes in capital markets in general that may affect policies or attitudes toward lending to Argentina or Argentine companies;

• changes in exchange rates or regulations applicable to currency exchanges or transfers;

• unexpected developments in certain existing litigation;

• increased costs;

• unanticipated increases in financing and other costs or the inability to obtain additional debt or equity financing on attractive terms; and

• the factors discussed under “Risk Factors”.

You should not place undue reliance on such statements, which speak only as of the date that they were made. Our independent public accountants have not examined or compiled the forward-looking statements and, accordingly, do not provide any assurance with respect to such statements. These cautionary statements should be considered in connection with any written or oral forward-looking statements that we might issue in the future. We do not undertake any obligation to release publicly any revisions to such forward-looking statements after filing of this Form to reflect later events or circumstances or to reflect the occurrence of unanticipated events.

CERTAIN MEASUREMENTS AND TERMS

As used throughout this annual report, the terms “APSA”, the “Company”, “we”, “us”, and “our” refer to Alto Palermo S.A. (APSA), together with our consolidated subsidiaries, except where we make clear that such terms refer only to the parent company.

In Argentina the standard measure of area in the real estate market is the square meter (m²), while in the United States and certain other jurisdictions, the standard measure of area is the square foot (sq. ft.). All units of area shown in this annual report (e.g., gross leasable area of buildings and size of undeveloped land) are expressed in terms of square meters. One square meter is equal to approximately 10.764 square feet.

As used herein: “GLA or gross leasable area”, in the case of shopping centers, refers to the total leasable area of the property, regardless of our ownership interest in such property (excluding common areas and parking and space occupied by supermarkets, hypermarkets, gas stations and co-owners, except where specifically stated).

6

PRESENTATION OF FINANCIAL AND CERTAIN OTHER INFORMATION

This annual report contains our audited consolidated financial statements as of June 30, 2007 and 2006 and for the years ended June 30, 2007, 2006 and 2005 (“consolidated financial statements”). Our consolidated financial statements have been audited by Price Waterhouse & Co. S.R.L., Buenos Aires, Argentina member firm of PricewaterhouseCoopers, an independent registered public accounting firm whose report is included herein.

We prepare our consolidated financial statements in thousands of Pesos and in conformity with generally accepted accounting principles in Argentina, as set forth by the Federación Argentina de Consejos Profesionales de Ciencias Económicas (“FACPCE”) and as implemented, adapted, amended, revised and/or supplemented by the Consejo Profesional de Ciencias Económicas de la Ciudad Autónoma de Buenos Aires (“CPCECABA”) (collectively, “Argentine GAAP”) and the regulations of the Comisión Nacional de Valores which differ in certain significant respects from generally accepted accounting principles in the United States of America (“U.S. GAAP”). Such differences involve methods of measuring the amounts shown in our consolidated financial statements, as well as additional disclosures required by U.S. GAAP and Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”). See Note 19 to our consolidated financial statements contained elsewhere in this annual report for a description of the principal differences between Argentine GAAP and U.S. GAAP, as they relate to us, and reconciliation to U.S. GAAP of net income and shareholders’ equity.

In order to comply with Comisión Nacional de Valores regulations, we recognized deferred income tax assets and liabilities on an undiscounted basis. This accounting practice represented a departure from Argentine GAAP for the years ended June 30, 2005 and 2006. However, such departure has not had a material effect on our consolidated financial statements. As further discussed below, the CPCECABA issued revised accounting standards. One of these standards required companies to account for deferred income taxes on an undiscounted basis, thus aligning the accounting to that of the Comisión Nacional de Valores. Since the Comisión Nacional de Valores adopted the CPCECABA standards effective for our fiscal year beginning July 1, 2006, there is no longer a difference on this subject between Argentine GAAP and the Comisión Nacional de Valores regulations.

Additionally, after considerable inflation levels for the second half of 2002 and the first months of 2003, on March 25, 2003, the Argentine government instructed the Comisión Nacional de Valores to issue the necessary regulations to preclude companies under its supervision from presenting price-level restated financial statements. Therefore, on April 8, 2003, the Comisión Nacional de Valores issued a resolution providing for the discontinuance of inflation accounting as of March 1, 2003. We complied with the Comisión Nacional de Valores resolution and accordingly recorded the effects of inflation until February 28, 2003. Comparative figures were restated until that date, using a conversion factor of 1.1232. Since Argentine GAAP required companies to discontinue inflation adjustments only as of October 1, 2003, the application of the Comisión Nacional de Valores resolution represented a departure from Argentine GAAP. However, due to low inflation rates during the period from March to September 2003, such a departure did not have a material effect on our consolidated financial statements.

Adoption by Comisión Nacional de Valores of accounting standards

The Comisión Nacional de Valores issued General Resolutions 485 and 487 on December 29, 2005 and January 26, 2006, respectively, adopting, with certain modifications, new accounting standards previously issued by the CPCECABA through its Resolution CD 93/2005. These standards were effective for our fiscal year ended June 30, 2007. The most significant changes included in the accounting standards adopted by the Comisión Nacional de Valores related to (i) changes in the impairment test of long-lived assets and (ii) changes to deferred income tax accounting. Under the new standards, the carrying value of a long-lived asset is considered impaired when the expected cash flows from such asset are separately identifiable and less than its carrying value. Expected cash flows are determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. The new standards also provide for the accounting treatment of

7

differences between the tax basis and book basis of non-monetary items for deferred income tax calculation purposes when companies prepare price-level restated financial statements. The new accounting standard mandates companies to treat these differences as temporary but allows a one-time accommodation to continue treating those differences as permanent at the time of adoption of the standard. As a result, we elected to continue treating differences as permanent. In addition, the new standards provide for the recognition of deferred income taxes on a non-discounted basis.

Certain amounts which appear in this annual report (including percentage amounts) may not sum due to rounding. You should not construe the translations as a representation that the amounts shown could have been, or could be, converted into U.S. Dollars at that or any other rate.

References to fiscal years 2003, 2004, 2005, 2006 and 2007 are to the fiscal years ended June 30, 2003, 2004, 2005, 2006 and 2007, respectively.

MARKET DATA

Market data used throughout this annual report were derived from reports prepared by unaffiliated third-party sources. Such reports generally state that the information contained therein has been obtained from sources believed by such sources to be reliable. Certain market data which appear herein (including percentage amounts) may not sum due to rounding.

8

PART I

ITEM 1. Identity of Directors, Senior Management and Advisers

This item is not applicable.

ITEM 2. Offer Statistics and Expected Timetable

This item is not applicable.

ITEM 3. Key Information

A. Selected financial data

In this annual report, references to “US$” and “U.S. dollar” are to United States Dollars and references to “Ps.”, “Peso” or “Pesos” are to Argentine Pesos. The following selected consolidated financial data has been derived from our audited consolidated financial statements as of the dates and for each of the periods indicated below. This information should be read in conjunction with and is qualified in its entirety by reference to our consolidated financial statements and the discussion in Operating and Financial Review and Prospects included elsewhere in this annual report. The selected consolidated statement of income data for the years ended June 30, 2007, 2006 and 2005 and the selected consolidated balance sheet data as of June 30, 2007 and 2006 have been derived from our consolidated financial statements included in this annual report which have been audited by Price Waterhouse & Co. S.R.L., Buenos Aires, Argentina, member firm of PricewaterhouseCoopers, an independent registered public accounting firm.

The selected consolidated statements of income data for the years ended June 30, 2004 and 2003 and the selected consolidated balance sheet data as of June 30, 2005 and 2004 have been derived from our audited consolidated financial statements as of June 30, 2005 and 2004 and for each of the three years in the period ended June 30, 2005 which are not included herein. Certain reclassifications have been made to these figures to conform to current fiscal year presentation.

The selected consolidated balance sheet data as of June 30, 2003 has been derived from our audited consolidated financial statements as of June 30, 2004 and 2003 and for each of the three years in the period ended June 30, 2004 which are not included herein. Certain reclassifications have been made to these figures to conform to current fiscal year presentation.

We prepare our consolidated financial statements in thousands of Pesos and in conformity with generally accepted accounting principles in Argentina, as set forth by the Federación Argentina de Consejos Profesionales de Ciencias Económicas (“FACPCE”) and as implemented, adapted, amended, revised and/or supplemented by the Consejo Profesional de Ciencias Económicas de la Ciudad Autónoma de Buenos Aires (“CPCECABA”) (collectively, “Argentine GAAP”) and the regulations of the Comisión Nacional de Valores which differ in certain significant respects from generally accepted accounting principles in the United States of America (“U.S. GAAP”). Such differences involve methods of measuring the amounts shown in our consolidated financial statements, as well as additional disclosures required by U.S. GAAP and Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”). See Note 19 to our consolidated financial statements contained elsewhere in this annual report for a description of the principal differences between Argentine GAAP and U.S. GAAP, as they relate to us, and reconciliation to U.S. GAAP of net income and shareholders’ equity.

In order to comply with regulations of the Comisión Nacional de Valores, we recognized deferred income tax assets and liabilities on an undiscounted basis. This accounting practice represented a departure from Argentine GAAP for the years ended June 30, 2005 and 2006. However, such a departure did not have a material effect on our consolidated financial statements as of those dates. As further discussed below, the

9

CPCECABA issued revised accounting standards, one of which required companies to account for deferred income taxes on an undiscounted basis, thus aligning its accounting practices with that of the Comisión Nacional de Valores. Since the Comisión Nacional de Valores adopted the CPCECABA standards effective for our fiscal year beginning July 1, 2006, there is no longer a difference on this subject between Argentine GAAP and the Comisión Nacional de Valores regulations.

Additionally, after high inflation levels during the second half of 2002 and the first months of 2003, on March 25, 2003, the Argentine government instructed the Comisión Nacional de Valores to issue regulations to preclude companies under its supervision from presenting price-level restated financial statements. Therefore, on April 8, 2003, the Comisión Nacional de Valores issued a resolution providing for the discontinuance of inflation accounting as of March 1, 2003. We complied with this Comisión Nacional de Valores resolution and accordingly recorded the effects of inflation only through February 28, 2003. Comparative figures were restated until that date, using a conversion factor of 1.1232. Since Argentine GAAP required companies to discontinue inflation adjustments only as of October 1, 2003, our application of the Comisión Nacional de Valores resolution as of March 1, 2003 represented a departure from Argentine GAAP. However, due to low inflation rates during the period from March to September 2003, such a departure did not have a material effect on our consolidated financial statements.

Certain amounts which appear in this annual report (including percentage amounts) may not sum due to rounding. You should not construe the translations as a representation that the amounts shown could have been, or could be, converted into U.S. Dollars at that or any other rate.

References to fiscal years 2003, 2004, 2005, 2006 and 2007 are to the fiscal years ended June 30, 2003, 2004, 2005, 2006 and 2007, respectively.

	As of and for the year ended June 30,(1)
	2007		2007		2006		2005		2004		2003
	(US$)(2)		(Ps.)(1)		(Ps.)(1)		(Ps.)(1)		(Ps.)(1)		(Ps.)(1)
INCOME STATEMENT DATA
Argentine GAAP
Revenues:
Leases and services	87,336.6		270,132.0		215,003.0		165,477.9		113,151.5		88,625.6
Credit cards	68,854.0		212,965.3		122,968.6		64,558.0		30,034.4		24,934.6
Other	43.3		133.8		23,384.3		121.4		64.2		655.1
Total revenues	156,233.8		483,231.2		361,355.9		230,157.3		143,250.0		114,215.4
Costs	(54,415.3	)	(168,306.6	)	(139,065.4	)	(92,510.4	)	(73,400.4	)	(69,723.1	)
Gross Profit:
Leases and services	58,006.2		179,413.3		138,368.8		96,274.0		51,744.6		28,234.2
Credit cards	44,201.2		136,714.4		79,035.4		41,456.1		18,069.3		16,604.4
Other	(389.0	)	(1,203.1	)	4,886.4		(83.2	)	35.7		(346.3	)
Total gross profit	101,818.5		314,924.6		222,290.5		137,647.0		69,849.7		44,492.3
Selling expenses	(27,259.0	)	(84,312.0	)	(46,905.3	)	(24,774.4	)	(9,826.8	)	(17,593.5	)
Administrative expenses	(25,823.8	)	(79,872.9	)	(52,773.1	)	(31,875.3	)	(20,720.9	)	(18,227.5	)
Net income (loss) from retained interest in securitization	1,052.0		3,253.8		2,625.0		423.5		260.9		(4,077.1	)
Gain from recognition of inventories at Net RealizableValue	176.3		545.4		3,497.6		—		—		—
Torres de Abasto unit contracts’ rescissions	—		—		—		—		—		9.7
Operating income:
Leases and services	41,077.5		127,052.6		96,657.2		68,298.3		34,053.7		8,661.4
Credit cards	9,918.4		30,677.7		24,411.3		13,492.9		5,630.3		(3,605.8	)
Other	(1,031.8	)	(3,191.4	)	7,666.3		(370.4	)	(121.1	)	(451.7	)
Total operating income	49,964.1		154,538.9		128,734.8		81,420.8		39,562.8		4,603.9
Equity loss from related companies	(219.4	)	(678.6	)	(678.9	)	(706.6	)	(1,126.5	)	(12,072.2	)
Amortization of goodwill	(1,411.7	)	(4,366.4	)	(4,739.7	)	(4,826.8	)	(4,826.5	)	(4,827.1	)
Financial results, net(3)	(6,293.7	)	(19,466.4	)	(15,633.9	)	2,411.2		7,324.8		118,641.1
Other income (expenses), net	(1,082.3	)	(3,347.5	)	(9,761.8	)	(7,382.0	)	(5,227.6	)	15,420.1
Income (loss) before taxes and minority interest	40,957.0		126,680.1		97,920.6		70,916.6		35,707.0		121,765.9
Income tax (expense) benefit	(18,187.2	)	(56,252.9	)	(48,457.1	)	(33,615.9	)	(16,311.4	)	(46,755.1	)
Minority interest	(2,059.7	)	(6,370.6	)	(4,784.4	)	(4,045.4	)	(558.1	)	2,339.8

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	As of and for the year ended June 30,(1)
	2007		2007		2006		2005		2004		2003
	(US$)(2)		(Ps.)(1)		(Ps.)(1)		(Ps.)(1)		(Ps.)(1)		(Ps.)(1)
Total net income	20,710.2		64,056.6		44,679.0		33,255.4		18,837.5		77,350.6
Basic net income (loss) per common share	0.08		0.08		0.06		0.04		0.01		0.09
Basic net income (loss) per ADS	3.28		3.28		2.29		1.71		0.40		3.60
Diluted net income (loss) per common share	0.03		0.03		0.03		0.02		0.01		0.02
Diluted net income (loss) per ADS	1.32		1.32		1.12		0.73		0.40		0.80
Number of shares outstanding	782,064.2		782,064.2		781,962.6		780,423.6		727,682.3		704,829.7
U.S. GAAP
Revenues(4)	194,064.6		600,241.7		451,696.4		294,964.9		199,789.2		158,410.2
Costs(4)	(88,994.1	)	(275,258.6	)	(223,541.9	)	(152,520.2	)	(128,135.3	)	(116,879.0	)
Gross Profit	105,070.5		324,983.0		228,154.5		142,444.7		71,653.9		41,531.2
Selling expenses	(26,782.2	)	(82,837.4	)	(54,436.0	)	(24,774.4	)	(11,959.7	)	(17,593.5	)
Administrative expenses	(25,823.8	)	(79,872.9	)	(52,773.1	)	(31,875.3	)	(20,720.9	)	(18,227.5	)
Net income (loss) from retained securitized receivables	(483.2	)	(1,494.5	)	(13,933.1	)	2,578.3		(2,313.3	)	1,167.6
Torres de Abasto unit contracts’ rescissions	—		—		—		—		—		9.7
Operating income (loss)	51,981.3		160,778.3		107,012.3		88,373.3		36,659.9		6,887.5
Equity loss from related companies	(219.4	)	(678.6	)	(678.9	)	(689.1	)	626.4		(11,895.1	)
Financials results, net	(8,321.2	)	(25,737.6	)	(25,230.6	)	(18,376.0	)	(19,608.5	)	109,681.7
Other (expenses) income, net	(2,024.4	)	(6,261.6	)	(3,212.0	)	(6,025.2	)	(2,322.5	)	15,420.1
Income (loss) before taxes and minority interest	41,416.3		128,100.5		77,890.9		63,283.0		15,355.3		120,094.2
Income tax (expense) benefit	(15,150.0	)	(46,858.8	)	(28,235.4	)	(22,494.5	)	(7,398.2	)	(57,748.2	)
Minority interest	(1,778.1	)	(5,499.6	)	(2,647.7	)	(4,619.6	)	(706.0	)	1,511.1
Net income (loss)	24,488.2		75,742.1		47,007.8		36,169.0		7,251.1		63,857.2
BALANCE SHEET DATA
Argentine GAAP
Current Assets:
Cash, banks and other investments, net	167,228.7		517,238.5		70,472.5		66,673.8		75,273.7		35,987.7
Accounts receivable, net	48,851.8		151,098.7		104,312.7		56,195.4		26,978.7		28,961.4
Other receivables and prepaid expenses	16,881.9		52,215.7		30,929.1		32,075.8		23,842.5		4,851.5
Inventory, net	2,357.6		7,292.2		7,989.3		888.2		780.3		759.1
Total current assets	235,320.1		727,845.1		213,703.6		155,833.2		126,875.2		70,559.7
Non-current assets:
Accounts receivable, net	13,568.7		41,967.9		32,539.7		7,698.8		2,749.4		2,340.8
Other receivables and prepaid expenses, net	10,388.3		32,130.9		13,254.5		11,402.4		38,914.8		47,681.6
Inventory, net	—		—		—		18,048.4		17,545.0		15,950.0
Fixed assets, net	377,635.7		1,168,027.2		912,795.1		949,137.1		864,449.1		891,742.8
Investments	—		—		129.5		808.4		7,198.1		8,527.3
Other investments, net	40,576.9		125,504.4		167,842.9		83,704.6		70,140.7		38,602.2
Intangible assets, net	554.1		1,713.9		3,222.3		4,385.2		1,735.9		2,402.6
Goodwill, net	(1,124.8	)	(3,478.9	)	11,557.9		16,876.7		21,703.6		26,530.0
Total non-current assets	441,598.9		1,365,865.4		1,141,341.9		1,092,061.6		1,024,436.6		1,033,777.3
Total assets	676,919.0		2,093,710.6		1,355,045.5		1,247,894.8		1,151,311.8		1,104,337.0
Current liabilities:
Trade accounts payable	58,030.8		179,489.4		101,949.6		49,992.1		31,824.4		19,478.7
Short-term debt	24,962.8		77,210.1		90,816.6		56,417.5		95,587.7		24,699.3
Salaries and social security payable	6,336.5		19,598.8		10,885.4		8,443.9		5,743.8		3,783.0
Taxes payable	14,456.8		44,714.9		23,762.0		10,994.9		7,179.2		5,812.2
Customer advances	18,929.2		58,548.0		48,052.8		36,306.6		19,332.3		11,212.1
Related parties	2,152.5		6,657.6		6,383.7		3,760.5		8,432.7		7,445.0
Dividends payable	299.5		926.4		—		39.0		337.7		337.7
Other liabilities	4,999.4		15,463.2		11,200.2		10,575.1		5,638.7		5,649.9
Total (debts)	130,167.6		402,608.3		293,050.1		176,529.6		174,076.5		78,417.9
Provisions	237.1		733.4		506.7		2,032.5		—		—
Total current liabilities	130,404.7		403,341.7		293,556.8		178,562.1		174,076.5		78,417.9
Non-current liabilities:
Trade accounts payable	6.7		20.8		1,010.2		1,870.6		2,865.0		3,609.6
Long-term debt	219,447.7		678,751.9		145,853.8		175,139.9		145,064.9		218,138.8
Taxes payable	8,943.1		27,660.9		13,707.0		8,463.7		9,300.0		—
Customer advances	21,249.7		65,725.4		41,535.3		39,264.3		27,546.3		25,318.1
Related parties	—		—		925.8		1,732.2		—		—
Other liabilities	3,373.3		10,433.5		10,959.0		13,829.8		701.6		914.0
Total (debts)	253,020.5		782,592.5		213,991.1		240,300.5		185,477.8		247,980.5
Provisions	4,022.4		12,441.3		10,667.3		10,606.1		5,995.7		3,927.2

11

	As of and for the year ended June 30,(1)
	2007		2007		2006		2005		2004		2003
	(US$)(2)		(Ps.)(1)		(Ps.)(1)		(Ps.)(1)		(Ps.)(1)		(Ps.)(1)
Total non-current liabilities	257,042.9		795,033.8		224,658.4		250,906.6		191,473.5		251,907.7
Total liabilities	387,447.6		1,198,375.5		518,215.3		429,468.7		365,550.0		330,325.6
Minority interest	23,093.4		71,427.9		29,989.7		27,418.5		15,388.1		14,760.5
Retained earnings (accumulated deficit)	20,710.2		64,056.6		106,610.5		92,594.2		78,176.4		72,988.2
Shareholders’ equity	266,378.0		823,907.2		806,840.5		791,007.6		770,373.7		759,250.9
U.S. GAAP
Current Assets:
Cash, banks and other investments, net	168,080.7		519,873.7		70,526.3		69,628.2		73,886.2		35,174.5
Accounts receivable, net	44,471.2		137,549.4		96,093.4		56,195.4		26,978.7		28,961.4
Other receivables and prepaid expenses	22,054.6		68,214.7		42,124.0		36,518.2		24,341.9		14,104.4
Inventory, net	1,546.0		4,781.7		4,491.6		888.1		780.3		759.2
Total current assets	236,152.4		730,419.5		213,235.4		163,230.0		125,987.2		78,999.5
Non-current assets:
Accounts receivable, net	13,568.7		41,967.9		32,539.7		7,698.8		2,749.4		2,340.8
Other receivables and prepaid expenses, net	6,919.0		21,400.5		7,336.8		3,649.9		36,871.5		47,681.6
Inventory, net	—		—		—		18,048.4		17,545.0		15,950.0
Fixed assets, net	366,522.5		1,133,654.0		871,762.8		909,093.4		820,622.7		859,847.4
Investments	—		—		129.5		808.4		4,712.8		4,289.1
Other investments, net	40,576.9		125,504.4		167,842.9		83,704.6		70,140.7		38,602.0
Intangible assets, net	39.7		122.7		176.5		226.8		74.5		875.8
Goodwill, net	4,495.1		13,903.2		28,940.1		34,258.9		39,085.6		39,178.5
Total non-current assets	432,121.8		1,336,552.8		1,108,728.2		1,057,489.3		991,802.3		1,008,765.0
Total assets	668,274.3		2,066,972.3		1,321,963.6		1,220,719.2		1,117,789.5		1,087,764.5
Current liabilities:
Trade accounts payable	60,352.2		186,669.4		102,153.0		50,186.1		31,824.4		19,478.7
Short-term debt	24,962.8		77,210.1		90,816.6		56,417.5		95,587.7		24,699.3
Salaries and social security payable	6,336.5		19,598.8		10,885.4		8,443.9		5,743.8		3,783.0
Taxes payable	14,456.8		44,714.9		23,762.0		10,994.9		7,179.2		5,812.2
Customer advances	18,929.2		58,548.0		48,052.8		36,306.6		19,332.2		11,212.1
Related parties	2,152.5		6,657.6		6,383.7		3,760.5		8,432.7		7,445.0
Dividends payable	299.5		926.4		—		39.0		337.7		337.7
Other liabilities	4,999.4		15,463.2		11,200.2		10,575.0		5,638.8		5,649.9
Total (debts)	132,488.9		409,788.3		293,253.6		176,723.5		174,076.5		78,417.9
Provisions	237.1		733.4		506.7		2,032.5		—		—
Total current liabilities	132,726.1		410,521.7		293,760.3		178,756.0		174,076.5		78,417.9
Non-current liabilities:
Trade accounts payable	6.7		20.8		1,010.2		1,870.6		2,865.0		3,609.6
Long-term debt	218,646.4		676,273.3		143,020.5		175,139.9		145,466.5		219,137.6
Taxes payable	50,860.5		157,311.6		151,025.3		155,502.0		153,106.8		149,917.0
Customer advances	21,249.7		65,725.4		41,535.3		39,264.3		27,546.3		25,318.1
Related parties	—		—		925.8		1,732.2		—		—
Other liabilities	3,373.3		10,433.5		10,959.0		13,829.8		701.7		913.9
Total (debts)	294,136.6		909,764.7		348,476.1		387,338.9		329,686.3		398,896.3
Provisions	4,022.4		12,441.3		10,667.3		10,606.1		5,995.7		3,927.1
Total non-current liabilities	298,159.0		922,205.9		359,143.4		397,945.0		335,682.0		402,823.5
Total liabilities	430,885.1		1,332,727.6		652,903.7		576,701.0		509,758.5		481,241.4
Minority interest	21,393.5		66,170.2		25,212.8		24,042.4		12,800.3		11,786.5
Shareholders’ equity	215,995.6		668,074.5		643,847.0		619,975.8		595,230.7		594,736.7
CASH FLOW DATA
Argentine GAAP:
Net cash provided by operating activities	58,102.7		179,711.5		170,666.1		95,100.6		78,510.9		42,896.9
Net cash used in investing activities	(59,548.2	)	(184,182.6	)	(124,023.5	)	(61,476.9	)	(17,898.7	)	(3,331.3	)
Net cash provided by (used in) financing activities	140,175.5		433,562.8		(39,952.4	)	(52,205.7	)	(20,603.1	)	(27,737.4	)
U.S. GAAP: (7)
Net cash provided by operating activities	57,866.7		178,981.8		169,521.9		95,239.5		76,533.6		44,607.7
Net cash used in investing activities	(201,192.8	)	(622,289.2	)	(124,023.5	)	(61,390.2	)	(17,898.7	)	(3,331.3	)
Net cash used in financing activities	140,175.5		433,562.8		(39,952.4	)	(52,205.7	)	(20,603.1	)	(27,737.4	)
Effect of exchange rate changes on cash and cash equivalents	235.9		729.7		1,144.1		(225.7	)	1,977.3		1,699.7
Effect of inflation accounting	—		—		—		—		—		(3,410.5	)

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	As of and for the year ended June 30,(1)
	2007	2007	2006	2005	2004	2003
	(US$)(2)	(Ps.)(1)	(Ps.)(1)	(Ps.)(1)	(Ps.)(1)	(Ps.)(1)
OTHER FINANCIAL DATA
Argentine GAAP:
Capital expenditures(5)	31,146.0	96,334.4	100,183.7	51,288.9	20,579.7	2,448.0
Depreciation and Amortization	24,121.5	74,607.6	68,573.9	63,433.5	58,404.5	61,383.2
Ratio of current assets to current liabilities	1.80	1.80	0.73	0.87	0.73	0.90
Ratio of non-current assets to total assets	0.65	0.65	0.84	0.88	0.89	0.94
Profiability(6)	0.08	0.08	0.06	0.04	0.02	0.11
Dividends per share	0.060	0.060	0.037	0.023	0.025	0.014
Dividends per ADS	2.404	2.404	1.486	0.921	0.984	0.568

(1) In thousands of Pesos, except per share amounts and ratios. Totals may not sum due to rounding.

(2) Solely for the convenience of the reader we have translated Peso amounts into U.S. Dollars at the exchange rate quoted by Banco de la Nación Argentina as of June 30, 2007, which was Ps. 3.093 per US$ 1.0 as of June 30, 2007. We make no representation that the Argentine Peso or U.S. Dollar amounts actually represent, could have been or could be converted into U.S. Dollars at the rates indicated, at any particular rate or at all. See “Exchange Rates”. Totals may not sum due to rounding.

(3) Includes interest income, interest expense, gains from derivative financial instruments, exchange differences, gain of redemption of debt, results on exposure to inflation, impairment losses and reversals, and loss on repurchase of debt.

(4) As part of the lease agreements, tenants are required to pay their proportionate share of common area maintenance expenses. We do not charge any mark up on reimbursable costs. These expenses are incurred and paid by us and then passed through to tenants as reimbursable costs. Under Argentine GAAP, pass-through expenses, such as these reimbursable costs, are accounted for on a net basis and, as such, excluded from revenues and expenses in the financial statements. Under U.S. GAAP, the Company accounts for pass-through revenue and expenses in accordance with Emerging Issues Task Force, or EITF, Issue 01-14, “Income Statement Characterization of Reimbursements Received for Out of Pocket Expenses Incurred,” and include these costs incurred as a component of revenue and as a component of operating expenses in the statement of income. As these expenses are fully reimbursed, without mark-up, by the tenants, there is no impact on operating income, net income, EPS, cash flows or the balance sheet. Prior year amounts have been modified to reflect this disclosure difference.

(5) Capital expenditures include the purchase of fixed assets and undeveloped plots of land. Capital expenditures also include escrow deposits held in favor of third parties related to the acquisition of certain fixed assets.

(6) Profitability is net income (loss) / average shareholders’ equity (average shareholders’ equity represents the summation of shareholder’s at the beginning of year / period plus the shareholders’ equity at the end of the year / period divided by two).

(7) This table is intended to present cash flows from operating, investing and financing activities under Argentine GAAP but following the classification guidelines of SFAS No. 95 under U.S. GAAP. See Note 28 to our audited consolidated financial statements included elsewhere in this prospectus for details of the differences in classifications affecting the categories of cash flows.

13

Exchange Rates

In April 1991, Argentine law established a fixed exchange rate according to which the Central Bank was statutorily obliged to sell U.S. dollars to any individual at a fixed exchange rate of Ps.1.00 per US$1.00. On January 7, 2002, the Argentine congress enacted the Public Emergency Law, abandoning over ten years of fixed Peso-U.S. dollar parity at Ps.1.00 per US$1.00. After devaluing the Peso and setting the official exchange rate at Ps.1.40 per US$1.00, on February 11, 2002, the government allowed the Peso to float. The shortage of U.S. dollars and their heightened demand caused the Peso to further devalue significantly in the first half of 2002. Since June 30, 2002, the Peso has appreciated versus the U.S. dollar from an exchange rate of Ps.3.80 =US$1.00 to an exchange rate of Ps.3.1400=US$1.00 at December 17, 2007 as quoted by Banco de la Nación Argentina at the U.S. dollar selling rate. The Central Bank may indirectly affect this market through its active participation.

The following table presents the high, low, average and period closing exchange rate for the purchase of U.S. dollars stated in nominal Pesos per U.S. dollar.

	Exchange Rate
	High(1)	Low(2)	Average(3)	Period Closing
Fiscal year ended June 30, 2003	3.7400	2.7120	3.2565	2.8000
Fiscal year ended June 30, 2004	2.9510	2.7100	2.8649	2.9580
Fiscal year ended June 30, 2005	3.0400	2.8460	2.9230	2.8670
Fiscal year ended June 30, 2006	3.0880	2.8590	3.0006	3.0860
Fiscal year ended June 30, 2007	3.1080	3.0480	3.0862	3.0930
June 2007	3.0930	3.0720	3.0793	3.0930
July 2007	3.1800	3.0910	3.1131	3.1210
August 2007	3.1780	3.1330	3.1530	3.1560
September 2007	3.1650	3.1310	3.1477	3.1500
October 2007	3.1790	3.1420	3.1597	3.1420
November 2007	3.1500	3.1240	3.1357	3.1450
December 2007 (through December 17, 2007)	3.1420	3.1320	3.1381	3.1400

Source: Banco de la Nación Argentina

(1) The high exchange rate stated was the highest closing exchange rate of the month during the fiscal year or any shorter period, as indicated.

(2) The low exchange rate stated was the lowest closing exchange rate of the month during the fiscal year or any shorter period, as indicated.

(3) Average month-end closing exchange rates.

Fluctuations in the Peso-dollar exchange rate may affect the equivalent in dollars of the price in Pesos of our shares on the Buenos Aires Stock Exchange . Increases in Argentine inflation or devaluation of the Argentine currency could have a material adverse effect on our operating results.

14

B. Capitalization and Indebtedness

This section is not applicable.

C. Reasons for the Offer and Use of Proceeds

This section is not applicable.

D. Risk Factors

You should consider the following risks associated with our business, taking into account the instability of the country in which we operate.

We may also face additional risks and uncertainties that are not presently affecting us, or that we currently deem immaterial, which may materially impair our business. In general, investing in companies which operate in emerging markets such as Argentina is more risky than investing in companies which operate in more stable markets such as the United States.

Risks Related to Argentina

Argentina’s current growth and stabilization may not be sustainable.

During 2001 and 2002, Argentina experienced a period of severe political, economic and social crisis. Although the economy has recovered significantly over the past three years, uncertainty remains as to whether the current growth and relative stability are sustainable. Sustainable economic growth is dependant on a variety of factors, including international demand for Argentine exports, the stability and competitiveness of the Peso against foreign currencies, confidence among consumers as well as foreign and domestic investors and stable and relatively low inflation.

The Argentine economy remains fragile for the following reasons:

• unemployment remains high;

• the availability of long-term fixed rate credit is limited;

• investment as a percentage of GDP remains low;

• the current fiscal surplus could become a fiscal deficit;

• inflation has risen recently and threatens to accelerate;

• the country’s public debt remains high and international financing is limited; and

• the recovery has depended to some extent on high commodity prices, which are volatile and outside the control of the country, and excess capacity, which has reduced considerably.

A substantial part of our operations, properties and customers are located in Argentina. As a result, our business is to a very large extent dependent upon the economic conditions prevailing in Argentina.

The continuing rise of inflation may have an adverse effect on the economy.

After several years of price stability, the devaluation of the Peso in January 2002 imposed pressures on the domestic price system that generated high inflation throughout 2002. In 2003, inflation substantially

15

stabilized. However, inflationary pressures have since reemerged with consumer prices increasing by 6.1% during 2004 and increasing by 12.3% in 2005. As a result of the execution of fixed price agreements and restrictions on, and in certain cases, suspension of exports, consumer prices only increased by 9.8% in 2006. As of November 30, 2007 consumer prices increased by 8.5% on an annualized basis.

In the past, inflation has materially undermined the Argentine economy and the government’s ability to create conditions conducive to growth. A return to a high inflation environment could slow the rebound in the long term credit market and real estate market and may also undermine Argentina’s foreign competitiveness by diluting the effects of the Peso devaluation and negatively impacting the level of economic activity and employment.

If inflation remains high or continues to rise, Argentina’s economy may be negatively impacted which could have an adverse effect on our business.

Argentina’s ability to obtain financing from international markets is limited which may affect its ability to implement reforms and foster economic growth.

In the first half of 2005, Argentina restructured part of its sovereign debt that had been in default since the end of 2001. As of March 31, 2007, the Argentine government announced that as a result of the restructuring, it had approximately US$136.3 billion in total outstanding debt remaining. Of this amount, approximately US$26.5 billion are defaulted bonds owned by creditors who did not participate in the restructuring of the external financial debt.

Some bondholders in the United States, Italy and Germany have filed legal actions against Argentina, and holdout creditors may initiate new suits in the future. Additionally, foreign shareholders of certain Argentine companies have filed claims in excess of US$17 billion before the International Center for the Settlement of Investment Disputes, or ICSID, alleging that certain government measures are inconsistent with the fair and equitable treatment standards set forth in various bilateral treaties to which Argentina is a party.

Argentina’s past default and its failure to restructure completely its remaining sovereign debt and fully negotiate with the holdout creditors may prevent Argentina from reentering the international capital markets. Litigation initiated by holdout creditors as well as ICSID claims may result in material judgments against the Argentine government and could result in attachments of, or injunctions relating to, assets of Argentina that the government intended for other uses. As a result, the government may not have the financial resources necessary to implement reforms and foster growth which could have a material adverse effect on the country’s economy and, consequently, our business.

Significant devaluation of the Peso against the U.S. dollar may adversely affect the Argentine economy as well as our financial performance.

Despite the positive effects of the real depreciation of the Peso in 2002 on the competitiveness of certain sectors of the Argentine economy, it has also had a far-reaching negative impact on the Argentine economy and on businesses and individuals’ financial condition. The devaluation of the Peso has had a negative impact on the ability of Argentine businesses to honor their foreign currency-denominated debt, initially led to very high inflation, significantly reduced real wages, had a negative impact on businesses whose success is dependent on domestic market demand, such as utilities and the financial industry, and adversely affected the government’s ability to honor its foreign debt obligations.

If the Peso devalues significantly, all of the negative effects on the Argentine economy related to such devaluation could recur, with adverse consequences to our business. Moreover, it would likely result in a decline in the value of our common shares and the ADSs as measured in U.S. dollars.

16

Significant appreciation of the Peso against the U.S. dollar may adversely affect the Argentine economy.

A substantial increase in the value of the Peso against the U.S. dollar also presents risks for the Argentine economy. The appreciation of the Peso against the U.S. dollar negatively impacts the financial condition of entities whose foreign currency-denominated assets exceed their foreign currency-denominated liabilities, such as us. In addition, in the short term, a significant real appreciation of the Peso would adversely affect exports. This could have a negative effect on GDP growth and employment as well as reduce the Argentine public sector’s revenues by reducing tax collection in real terms, given its current heavy reliance on taxes on exports. The appreciation of the Peso against the U.S. dollar could have an adverse effect on the Argentine economy and our business.

Government measures to preempt or respond to social unrest may adversely affect the Argentine economy.

During its crisis in 2001 and 2002, Argentina experienced social and political turmoil, including civil unrest, riots, looting, nationwide protests, strikes and street demonstrations. Despite Argentina’s ongoing economic recovery and relative stabilization, social and political tension and high levels of poverty and unemployment continue. Future government policies to preempt, or in response to, social unrest may include expropriation, nationalization, forced renegotiation or modification of existing contracts, suspension of the enforcement of creditors’ rights, new taxation policies, including royalty and tax increases and retroactive tax claims, and changes in laws and policies affecting foreign trade and investment. Such policies could destabilize the country and adversely and materially affect the economy, and thereby our business.

Exchange controls and restrictions on transfers abroad and capital inflow restrictions have limited and can be expected to continue to limit the availability of international credit.

In 2001 and 2002, Argentina imposed exchange controls and transfer restrictions substantially limiting the ability of companies to retain foreign currency or make payments abroad. These restrictions have been substantially eased, including those requiring the Central Bank’s prior authorization for the transfer of funds abroad in order to pay principal and interest on debt obligations. However, Argentina may re-impose exchange control or transfer restrictions in the future, among other things, in response to capital flight or a significant depreciation of the Peso. In addition, the government issued Decree No. 616/2005 in June 2005 that established new controls on capital inflows that could result in less availability of international credit. Pursuant to such Decree, the Ministry of Economy’s Resolution No. 292/2005 was repealed and it was established that any indebtedness in favor of foreign creditors by individuals and legal entities residing in Argentina and conducting business in the private sector must be settled in Argentina and must mature no earlier than 365 days irrespective of the manner of settlement, except in the following cases: transactions related to foreign trade financing, and original issuances of debt instruments admitted to public offering and listed in self-regulated stock exchanges.

Therefore, (a) any cash inflows in the domestic foreign exchange market arising from debts incurred with foreign creditors by individuals or legal entities in the private sector and (b) transfer by non-residents to acquire financial assets or liabilities of any kind in the financial and non-financial private sector, excluding direct foreign investment and original issuances of debt instruments admitted to public offering and listed on self-regulated stock exchanges must meet the following requirements: (i) they may be remitted abroad only after expiration of a term of at least 365 days counted after the date on which such funds officially entered the Argentine foreign exchange market; (ii) the amounts resulting from the exchange rate settlement transaction are to be deposited in an account opened at an Argentine banking system institution, (iii) a non-transferable, non-interest bearing deposit of 30% of the amount being settled is to be made in the name of the depositor for a term of 365 days and (iv) such deposit is to be held in U.S. dollars at one of the Argentine banking system institutions and may not be used as guarantee or collateral of any loan. Non-compliance with the requirements laid down in Decree 616/2005 shall be punished in accordance with the Criminal Foreign Exchange Regime.

17

Additional controls could have a negative effect on the economy and our business if imposed in an economic environment where access to local capital is substantially constrained. Moreover, in such event, restrictions on the transfers of funds abroad may impede your ability to receive dividend payments as a holder of ADSs.

Payment of dividends to non-residents has been limited in the past and may be limited again.

Beginning on February 2002, any payment of dividends, irrespective of amount, outside Argentina needed prior authorization from the Central Bank. In December 2002 the rule was amended through Communication “A” 3845 which required Argentine companies to obtain prior authorization from the Central Bank to purchase currency in excess of US$150,000 (in the aggregate) per calendar month. This rule applied, among others, to the payment of dividends.

On January 7, 2003, the Central Bank issued communication “A” 3859 which is still enforceable and pursuant to which Argentine companies have no limitation on their ability to purchase foreign currency and transfer it outside Argentina to pay dividends, to the extent such dividend payments result from an approved and audited financial statement. In the future, similar restrictions may be enacted by the Argentine government or the Central Bank again and, if this were to occur, it could have an adverse effect on the value of our common shares and the ADSs.

The stability of the Argentine banking system is uncertain.

During 2001 and the first half of 2002, a very significant amount of deposits were withdrawn from financial institutions. This massive withdrawal of deposits was largely due to the loss of confidence of depositors in the Argentine government’s ability to repay its debts, including its debts within the financial system, and to maintain peso-dollar parity in the context of its solvency crisis.

To prevent a run on the U.S. dollar reserves of local banks, the government restricted the amount of money that account holders could withdraw from banks and introduced exchange controls restricting capital outflows. The government subsequently imposed new restrictions and released a schedule stating how and when deposits would become available.

These measures taken by the government to protect the solvency of the banking system, in particular the emergency laws that converted certain U.S. dollar-denominated debts into Pesos, generated significant opposition directly against banks from depositors frustrated by the loss of their savings. Many depositors instituted court challenges, eventually at the Supreme Court level, on constitutional grounds seeking restitution of their deposits in their original currency. Under Argentine law, Supreme Court rulings are limited to the particular facts and defendants in the case, although lower courts tend to follow precedent set by the Supreme Court. Initial Supreme Court rulings struck down on constitutional grounds pesification pursuant to Law No. 25,561 (the “Public Emergency Law”). However, the Supreme Court has found in subsequent holdings that emergency laws enacted by the Argentine Congress were necessary to mitigate the crisis, the regulations were not disproportionate to the emergency, and the measures did not violate the constitutional property rights of those affected. For instance, the Supreme Court held on December 27, 2006 in Massa, Juan Agustin vs. Poder Ejecutivo Nacional y Otro that banks should repay deposits originally denominated in U.S. dollars in Pesos at an exchange rate of Ps.1.40 per US$1.00, subject to CER or Coeficiente de Estabilización de Referencia indexation, plus interest, at a 4% annual rate. Notwithstanding the foregoing, however, numerous other cases challenging the constitutionality of the pesification pursuant to the Public Emergency Law are still pending. We cannot assure you that the Supreme Court will consistently uphold the views expressed in its latest rulings, or that future rulings will not negatively affect the banking system as a whole. If the Argentine government is called upon to provide additional financial assistance to the banks through the issuance of additional government debt, this could add to Argentina’s outstanding debt and would increase the burdens of the public sector.

While the condition of Argentina’s financial system has improved and depositors affected by the restrictions imposed in 2001 and 2002 have regained access to their deposits, albeit mainly in Pesos and subject

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to certain restrictions, you should not underestimate the long-term implications of the most recent crisis for Argentina’s economy and the credibility of its financial system. Adverse economic developments, even if not related to or attributable to the financial system, could easily result in deposits flowing out of the banks and into the foreign exchange market, as depositors seek to shield their financial assets from a new crisis. Any run on deposits could create liquidity or even solvency problems for financial institutions and bring about similar measures or other government interventions.

The Argentine economy could be adversely affected by economic developments in other global markets.

Financial and securities markets in Argentina are influenced, to varying degrees, by economic and market conditions in other global markets. Although economic conditions vary from country to country, investors’ perception of the events occurring in one country may substantially affect capital flows into and securities from issuers in other countries, including Argentina. The Argentine economy was adversely impacted by the political and economic events that occurred in several emerging economies in the 1990s, including Mexico in 1994, the collapse of several Asian economies between 1997 and 1998, the economic crisis in Russia in 1998 and the Brazilian devaluation in January 1999. In addition, Argentina continues to be affected by events in the economies of its major regional partners. Furthermore, the Argentine economy may be adversely affected by events in developed economies which are trading partners or that impact the global economy.

In the future, political and economic crises in the international markets can be expected to adversely affect the Argentine economy and its financial system and therefore our business.

Recent Presidential and Congressional elections may adversely affect the Argentine economy.

On October 28, 2007, presidential and congressional elections took place in Argentina. Cristina Fernández-Kirchner was elected as President, the ruling party maintained the majority in Congress and as a resultthere exists uncertainty regarding the economic policy to be carried out by the new government. There are no assurances that future uncertainties preceding and resulting from the Congressional and the Presidential elections will not negatively impact the Argentine economy and/or local bonds and stock markets.

Risks Related to Our Business

We are subject to risks inherent to the operation of shopping centers that may affect our profitability.

Shopping centers are subject to various factors that affect their development, administration and profitability. These factors include:

• the accessibility and the attractiveness of the area where the shopping center is located;

• the intrinsic attractiveness of the shopping center;

• the flow of people and the level of sales of each shopping center rental unit;

• increasing competition from internet sales;

• the amount of rent collected from each shopping center rental unit; and

• the fluctuations in occupancy levels in the shopping centers.

An increase in operating costs, caused by inflation or other factors, could have a material adverse effect on us if our tenants are unable to pay higher rent due to the increase in expenses. Moreover, the shopping center business is closely related to consumer spending and to the economy in which customers are

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located. All of our shopping centers are in Argentina, and, as a consequence, their business could be seriously affected by potential recession in Argentina. For example, during the economic crisis in Argentina, spending decreased significantly, unemployment, political instability and inflation significantly reduced consumer spending in Argentina, lowering tenants’ sales and forcing some tenants to leave our shopping centers. If this were to occur again, it could have a material adverse effect on the revenues from the shopping center activity.

Our performance is subject to risks associated with our properties and with the real estate industry.

Our economic performance and the value of our real estate assets, and consequently the value of the securities issued by us, are subject to the risk that if our properties do not generate sufficient revenues to meet its operating expenses, including debt service and capital expenditures, our cash flow and ability to pay distributions to our shareholders will be adversely affected. Events or conditions beyond our control that may adversely affect our operations or the value of our properties include:

• downturns in the national, regional and local economic climate;

• volatility and decline in discretionary spending;

• competition from other real estate operators which might down our prices and profits;

• oversupply of retail space or a reduction in demand for retail space, which could result in lower rent prices and lower revenues for us;

• changes in interest rates and availability of financing;

• the exercise by our tenants of their legal right to early termination of their leases;

• vacancies, changes in market rental rates and the need to periodically repair, renovate and re-lease space;

• increased operating costs, including insurance expense, utilities, real estate taxes, state and local taxes and heightened security costs;

• civil disturbances, earthquakes and other natural disasters, or terrorist acts or acts of war which may result in uninsured or underinsured losses;

• significant expenditures associated with each investment, such as debt service payments, real estate taxes, insurance and maintenance costs which are generally not reduced when circumstances cause a reduction in revenues from a property;

• declines in the financial condition of our tenants and our ability to collect rents from them;

• changes in our ability or our tenants’ ability to provide for adequate maintenance and insurance, possibly decreasing the useful life of and revenue from property; and

• law reforms and governmental regulations (such as those governing usage, zoning and real property taxes).

If any one or more of the foregoing conditions were to affect our business, it could have a material adverse effect on our financial condition and results of operations.

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The loss of significant tenants could adversely affect the operating revenues and value of our shopping center.

If certain of our most important tenants were to experience financial difficulties, including bankruptcy, insolvency or a general downturn of business, or if we simply failed to retain their patronage, our business could be adversely affected. Our shopping centers are typically anchored by significant tenants, such as well known department stores who generate shopping traffic at the mall. A decision by such significant tenants to cease operations at our shopping centers could have a material adverse effect on the revenues and profitability of the affected segment and, by extension, on our financial condition and results of operations. The closing of one or more significant tenants may induce other tenants at an affected property to terminate their leases, to seek rent relief and/or cease operating their stores or otherwise adversely affect occupancy at the property. If we are not able to successfully lease the affected space again, the bankruptcy and/or closure of significant tenants, could have an adverse effect on both the operating revenues and underlying value of the properties involved.

Our future acquisitions may be unprofitable.

We intend to acquire additional shopping center properties to the extent that they will be acquired on advantageous terms and meet our investment criteria. Acquisitions of commercial properties entail general investment risks associated with any real estate investment, including:

• our estimates of the cost of improvements needed to bring the property up to established standards for the market may prove to be inaccurate;

• properties we acquire may fail to achieve within the time frames we project the occupancy or rental rates we project at the time we make the decision to acquire, which may result in the properties’ failure to achieve the returns we projected;

• our pre-acquisition evaluation of the physical condition of each new investment may not detect certain defects or identify necessary repairs, which could significantly increase our total acquisition costs; and

• our investigation of a property or building prior to our acquisition, and any representations we may receive from the seller of such building or property, may fail to reveal various liabilities, which could reduce the cash flow from the property or increase our acquisition cost.

If we acquire a business, we will be required to integrate the operations, personnel and accounting and information systems of the acquired business. In addition, acquisitions of or investments in companies may cause disruptions in our operations and divert management’s attention away from day-to-day operations, which could impair our relationships with our current tenants and employees.

Some of the land we have purchased is not zoned for development purposes, and we may be unable to obtain, or may face delays in obtaining the necessary zoning permits and other authorizations.

We own some plots of land which are not zoned for development purposes or for the type of developments we intend to propose. In addition, we do not yet have the required land-use, building, occupancy and other required governmental permits and authorizations. We cannot assure you that we will continue to be successful in our attempts to rezone land and to obtain all necessary permits and authorizations, or that rezoning efforts and permit requests will not be unreasonably delayed. Moreover, we may be affected by building moratoria and anti-growth legislation. If we are unable to obtain all of the governmental permits and authorizations we need to develop our present and future projects as planned, we may be forced to make unwanted modifications to such projects or abandon them altogether.

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Our ability to grow will be limited if we cannot obtain additional capital.

Our growth strategy is focused on the redevelopment of properties we already own and the acquisition and development of additional properties. As a result, we are likely to depend to an important degree on the availability of debt or equity capital, which may or may not be available on favorable terms or at all. We cannot guarantee that additional financing, refinancing or other capital will be available in the amounts we desire or on favorable terms. Our access to debt or equity capital markets depends on a number of factors, including the market’s perception of our growth potential, our ability to pay dividends, our financial condition, our credit rating and our current and potential future earnings. Depending on the outcome of these factors, we could experience delay or difficulty in implementing our growth strategy on satisfactory terms, or be unable to implement this strategy.

Our business is subject to extensive regulation and additional regulations may be imposed in the future.

Our activities are subject to federal, state and municipal laws, and to regulations, authorizations and licenses required with respect to construction, zoning, use of the soil, environmental protection and historical patrimony, consumer protection and other requirements, all of which affect our ability to acquire land, develop and build projects and negotiate with customers. In addition, companies in this industry are subject to increasing tax rates, the creation of new taxes and changes in the taxation regime. We are required to obtain licenses and authorizations with different governmental authorities in order to carry out our projects. Maintaining our licenses and authorizations can be a costly provision. In the case of non-compliance with such laws, regulations, licenses and authorizations, we may face fines, project shutdowns, cancellation of licenses and revocation of authorizations.

In addition, public authorities may issue new and stricter standards, or enforce or interpret existing laws and regulations in a more restrictive manner, which may force us to make expenditures to comply with such new rules. Development activities are also subject to risks relating to potential delays or an inability to obtain all necessary zoning, environmental, land-use, development, building, occupancy and other required governmental permits and authorizations. Any such delays or failures to obtain such government approvals may have an adverse effect on our business.

In the past, the Argentine government imposed strict and burdensome regulations regarding leases in response to housing shortages, high rates of inflation and difficulties in accessing credit. Such regulations limited or prohibited increases on rental prices and prohibited eviction of tenants, even for failure to pay rent. Most of our leases provide that the tenants pay all costs and taxes related to their respective leased areas. In the event of a significant increase in the amount of such costs and taxes, the Argentine government may respond to political pressure to intervene by regulating this practice, thereby negatively affecting our rental income. We cannot assure you that the Argentine government will not impose similar or other regulations in the future. Changes in existing laws or the enactment of new laws governing the ownership, operation or leasing of properties in Argentina could negatively affect the Argentine real estate market and the rental market and materially and adversely affect our operations and profitability.

Lease Law No. 23,091 imposes restrictions that limit our flexibility.

Argentine laws governing leases impose certain restrictions, including the following:

• lease agreements may not contain inflation adjustment clauses based on consumer price indexes or wholesale price indexes. Although many of our lease agreements contain readjustment clauses, these are not based on an official index nor do they reflect the inflation index. In the event of litigation it may be impossible for us to adjust the amounts owed to us under our lease agreements;

• residential leases must comply with a mandatory minimum term of two years and retail leases must comply with a mandatory minimum term of three years except in the case of stands and/or spaces for special exhibitions;

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• lease terms may not exceed ten years, except for leases regulated by Law No. 25,248 (which provides that leases containing a purchase option are not subject to term limitations); and

• tenants may rescind commercial lease agreements after the initial six-month period.

As a result of the foregoing, we are exposed to the risk of increases of inflation under our leases and the exercise of rescission rights by our tenants could materially and adversely affect our business and we cannot assure you that our tenants will not exercise such right, especially if rent values stabilize or decline in the future.

Eviction proceedings in Argentina are difficult and time consuming.

Although Argentine law permits a summary proceeding to collect unpaid rent and a special proceeding to evict tenants, eviction proceedings in Argentina are difficult and time-consuming. Historically, the heavy workloads of the courts and the numerous procedural steps required have generally delayed landlords’ efforts to evict tenants. Eviction proceedings generally take between six months and two years from the date of filing of the suit to the time of actual eviction.

Historically, delinquency regarding our office rental space has been very low, approximately 2%, and we have usually attempted to negotiate the termination of lease agreements with defaulting tenants after the first few months of non-payment in order to avoid legal proceedings. Delinquency may increase significantly in the future, and such negotiations with tenants may not be as successful as they have been in the past. Moreover, new Argentine laws and regulations may forbid or restrict eviction proceedings, and in such case, they would likely have a material and adverse effect on our financial condition and results of operation.

Our investment in property development or redevelopment may be less profitable than we anticipate.

We are engaged in the development and construction of shopping centers and residential apartment complexes, frequently through third-party contractors. Risks associated with our development, re-development and construction activities include the following, among others:

• abandonment of development opportunities and renovation proposals;

• construction costs of a project may exceed its original estimates for reasons including raises in interest rates or increases in the costs of materials and labor, making a project unprofitable;

• occupancy rates and rents at newly completed properties may fluctuate depending on a number of factors, including market and economic conditions, resulting in lower than projected rental rates and a corresponding lower return on our investment;

• pre-construction buyers may default on their purchase contracts or units in new buildings may remain unsold upon completion of construction;

• the unavailability of favorable financing alternatives in the private and public debt markets;

• sale prices for residential units may be insufficient to cover development costs;

• construction and lease-up may not be completed on schedule, resulting in increased debt service expense and construction costs; and

• we may be unable to obtain, or may face delays in obtaining, necessary zoning, land-use, building, occupancy and other required governmental permits and authorizations, or we may be affected by building moratoria and anti-growth legislation.

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We are subject to great competitive pressure.

All of our properties are located in Argentina. There are other shopping centers and numerous smaller retail stores and residential properties within the market area of each of our properties. The number of competing properties in a particular area could have a material adverse effect on our ability to lease retail space in our shopping centers or sell units in our residential complexes and on the amount of rent or the sale price that we are able to charge. To date, there have been relatively few companies competing with us for shopping center properties. However, if additional companies become active in the Argentine shopping center market in the future, such competition could have a material adverse effect on our results of operations.

Our assets are highly concentrated in certain geographic areas and an economic downturn in such areas could have a material adverse effect on our financial condition.

For the fiscal year ended June 30, 2007, 83.5% of our sales from leases and services were derived from properties in the City of Buenos Aires and the greater Buenos Aires metropolitan area. Although we own properties and may acquire or develop additional properties outside of the City of Buenos Aires and the greater Buenos Aires metropolitan area, we expect to continue to depend to a very large extent on economic conditions affecting those areas and therefore, an economic downturn in those areas could have a material adverse effect on our financial condition.

Our dependence on rental income may adversely affect our ability to meet our debt obligations.

The substantial majority of our income is derived from rental income from real property. As a result, our performance depends on our ability to collect rent from tenants. Our income and funds for distribution would be negatively affected if a significant number of our tenants, or any of our major tenants (as discussed in more detail below):

• Delay lease commencements;

• Decline to extend or renew leases upon expiration;

• Fail to make rental payments when due; or

• Close stores or declare bankruptcy.

Any of these actions could result in the termination of the tenant’s leases and the loss of rental income attributable to the terminated leases. In addition, we cannot be sure that any tenant whose lease expires will renew that lease or that we will be able to re-lease space on economically advantageous terms. The loss of rental revenues from a number of our tenants and our inability to replace such tenants may adversely affect our profitability and our ability to meet debt and other financial obligations.

Some potential losses are not covered by insurance, and certain kinds of insurance coverage may become prohibitively expensive.

We currently carry liability, fire, business interruption, flood, extended coverage and rental loss insurance on all of our properties. Although we believe the policy specifications and insured limits of these policies are generally customary, there are certain types of losses, such as lease and other contract claims and terrorism and acts of war that generally are not insured. Should an uninsured loss or a loss in excess of insured limits occur, we could lose all or a portion of the capital we have invested in a property, as well as the anticipated future revenue from the property. In such an event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the property. We cannot assure you that material losses in excess of insurance proceeds will not occur in the future. If any of our properties were to experience a catastrophic loss, it could seriously disrupt our operations, delay revenue and result in large expenses to repair or rebuild the property.

In addition, we cannot assure you that we will be able to renew our insurance coverage in an adequate amount or at reasonable prices. Insurance companies may no longer offer coverage against certain types of losses, such as losses due to terrorist acts and mold, or, if offered, these types of insurance may be prohibitively

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expensive. Moreover, we do not purchase life or disability insurance for any of our key employees. If any of our key employees were to die or become incapacitated, we could experience losses caused by a disruption in our operations which will not be covered by insurance, and this could have a material adverse effect on our financial condition and results of operations.

Our level of debt may adversely affect our operations and our ability to pay our debt as it becomes due.

We had, and expect to continue to have, substantial liquidity and capital resource requirements to finance our business. As of June 30, 2007, our consolidated financial debt amounted to Ps.756.0 million (including accrued and unpaid interests and deferred financing costs). Although we are generating sufficient funds from operating cash flows to satisfy our debt service requirements and our capacity to obtain new financing is adequate, we cannot assure you that we will maintain such cash flow and adequate financial structure in the future.

The fact that we are leveraged may affect our ability to refinance existing debt or borrow additional funds to finance working capital, acquisitions and capital expenditures. This would require us to allocate a substantial portion of cash flow to repay principal and interest, thereby reducing the amount of money available to invest in operations, including acquisitions and capital expenditures. Our leverage could also affect our competitiveness and limit our ability to react to market conditions, the real estate industry and economic downturns.

We may not be able to generate sufficient cash flows from operations to satisfy our debt service requirements or to obtain future financing. If we cannot satisfy our debt service requirements or if we default on any financial or other covenants in our debt arrangements, the holders of our debt will be able to accelerate the maturity of such debt or cause defaults under the other debt arrangements. Our ability to service debt obligations or to refinance them will depend upon our future financial and operating performance, which will, in part, be subject to factors beyond our control such as macroeconomic conditions and regulatory changes in Argentina. If we cannot obtain future financing, we may have to delay or abandon some or all of our planned capital expenditures, which could adversely affect our ability to generate cash flows and repay our obligations.

The shift of consumers to purchasing goods over the Internet may negatively affect sales in our shopping centers.

During the last years, retail sales by means of the Internet have grown significantly in Argentina, even though the market share of Internet sales related to retail sales is still not significant. The Internet enables manufacturers and retailers to sell directly to consumers, diminishing the importance of traditional distribution channels such as retail stores and shopping centers. We believe that our target consumers are increasingly using the Internet, from home, work or elsewhere, to shop electronically for retail goods, and this trend is likely to continue. If e-commerce and retail sales through the Internet continue to grow, consumers’ reliance on traditional distribution channels such as our shopping centers could be materially diminished, having a material adverse effect on our financial condition, results of operations and business prospects.

We are subject to payment default risks due to our investments in credit card businesses

We own an 80% interest in Tarshop S.A., or Tarshop, a credit card company that originates credit card accounts to promote sales from our tenants and other selected retailers. During the fiscal year ended June 30, 2007, Tarshop had net revenues of Ps.213.0 million, representing 44.1% of our revenues. Credit card businesses such as Tarshop are adversely affected by defaults or late payments by card holders on credit card accounts, difficulties enforcing collection of payments, fraudulent accounts and the writing off of past due receivables. The present rates of delinquency, collection proceedings and loss of receivables may vary and be affected by numerous factors beyond our control, which, among others, include:

• adverse changes in the Argentine economy;

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• adverse changes in the regional economies;

• political instability;

• increases in unemployment; and

• erosion of real and/or nominal salaries.

These and other factors may have an adverse effect on rates of delinquency, collections and receivables, any one or more of which could have a material adverse effect on the results of operations of Tarshop’s credit card business. In addition, if our credit card business is adversely affected by one or more of the above factors, the quality of our securitized receivables is also likely to be adversely affected. Therefore, we could be adversely affected to the extent that we hold an interest in any such securitized receivables.

Our subordinated interest in Tarshop’s securitized assets may have no value.

Tarshop S.A. is a credit card company that originates credit card accounts to promote sales from our tenants and other selected retailers. Tarshop’s accounts receivables, which consist of cash flows from consumer financing and personal loans, are placed into a number of trust accounts that securitize those receivables. Tarshop sells beneficial interests in these trust accounts through the sale of debt certificates, but remains a beneficiary of these trust accounts by holding Ps.77.8 million in equity certificates as of June 30, 2007.

We cannot assure you that collection of payments from credit card accounts will be sufficient to distribute earnings to holders of participation certificates, which would reduce Tarshop’s earnings. In addition, local authorities might increase credit card or trust account regulations, negatively affecting Tarshop’s revenues and results of operation.

An uninsured loss or a loss that exceeds the policies on our properties could subject us to lost capital or revenue on those properties.

Under the terms and conditions of the leases currently in force on our properties, tenants are required to indemnify and hold us harmless from liabilities resulting from injury to persons, or property, on or off the premises, due to activities conducted on the properties, except for claims arising from our negligence or intentional misconduct or that of our agents. Tenants are generally required, at the tenant’s expense, to obtain and keep in full force during the term of the lease, liability and property damage insurance policies. We have obtained comprehensive liability, casualty, property, flood and coverage for loss of profits due to the ocurrence of a disaster on our properties. All of these policies may involve substantial deductibles and certain exclusions. In addition, we cannot assure the holders that the tenants will properly maintain their insurance policies or have the ability to pay the deductibles. Should a loss occur that is uninsured or in an amount exceeding the combined aggregate limits for the policies noted above, or in the event of a loss that is subject to a substantial deductible under an insurance policy, we could lose all or part of our capital invested in, and anticipated revenue from, one or more of the properties, which could have a material adverse effect on our operating results and financial condition.

We may not be able to recover the mortgage loans we have provided to purchasers of units in our residential development properties.

In recent years, we have provided mortgage financing to purchasers of units in our residential development properties. Before January 2002, our mortgage loans were U.S. dollar-denominated and accrued interest at a fixed interest rate generally ranging from 10% to 15% per year and for terms generally ranging from one to fifteen years. However, on March 13, 2002, the Central Bank converted all U.S. dollar denominated debts into Peso denominated debts at the exchange rate of Ps.1.00 = US$1.00. In addition, the Central Bank imposed maximum interest rates of 3% for residential mortgage loans to individuals and 6% for mortgage loans to businesses. These regulations adversely affected the U.S. dollar value of our outstanding mortgages.

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Beside risks normally associated with providing mortgage financing, including the risk of default on principal and interest, other regulatory risks such as suspension of foreclosure enforcement proceedings could adversely affect our cash flow. Argentine law imposes significant restrictions on our ability to foreclose and auction properties. Thus, when there is a default under a mortgage, we do not have the right to foreclose on the unit. Instead, in accordance with Law No. 24,441, in order to reacquire a property we are required to purchase it at a court ordered public auction, or at an out-of-court auction. However, the Public Emergency Law temporarily suspended all judicial and non-judicial mortgage and pledge enforcement actions. Several laws and decrees extended this mortgage foreclosure suspension period. On June 14, 2006, a new suspension period was approved, which established a 180-day suspension period for mortgage foreclosure proceedings affecting debtors’ only dwellings and where the original loan was no higher than Ps.100,000.

Law No. 25,798 enacted November 5, 2003, and implemented by Decrees No. 1284/2003 and No. 352/2004, among others, sets forth a system to restructure delinquent mortgage payments to prevent foreclosures on a debtor’s only dwelling (the “Mortgage Refinancing System”). The Mortgage Refinancing System establishes a trust over assets contributed by the Argentine government and income from restructured mortgage loans. Banco de la Nación Argentina, in its capacity as trustee of said trust, enters into debt restructuring agreements with delinquent mortgage debtors establishing the following terms: (i) a grace period on the mortgage loan of one year and (ii) monthly installment payments on the mortgage loan not to exceed 30% of the aggregate income of the family living in the mortgaged property. Banco de la Nación Argentina then subrogates the mortgagee’s rights against the debtor, by issuing notes delivered to the mortgagee to settle the amounts outstanding on the mortgage loan. The sum restructured under the Mortgage Refinancing System may not exceed the appraisal value of the property securing the mortgage after deducting any debts for taxes and maintenance. The Mortgage Refinancing System was established for a limited period of time, during which parties to a mortgage loan agreement could opt to participate in it. However, it was extended by a number of decrees and laws.

Law No. 26,167, enacted in November, 2006 established a special proceeding to replace ordinary trials regarding the enforcement of mortgage loans. Such special proceedings give creditors ten days to inform the debtor of the amounts owed to them and later agree with the debtor on the amount and terms of payment. If the parties fail to reach an agreement, payment conditions are to be determined by the judge.

We cannot assure you that laws and regulations relating to foreclosure on real estate will not continue to change in the future or that any changes will not adversely affect our business, financial condition or result of operations.

We are controlled by two principal shareholders.

As of November 30, 2007, IRSA and Parque Arauco, our major shareholders, owned in the aggregate 92% of our capital stock. These principal shareholders control us and have significant influence on the election of our directors and the outcome of any action requiring shareholder approval.

We are dependent on our chairman Eduardo S. Elsztain.

Our success depends on the continued employment of Eduardo S. Elsztain, chairman of the board of directors, who has significant expertise and knowledge of our business and industry. The loss of or interruption in his services for any reason could have a material adverse effect on our business. Our future success also depends in part upon our ability to attract and retain other highly qualified personnel. We cannot assure you that we will be successful in hiring or retaining qualified personnel. A failure to hire or retain qualified personnel may have a material adverse effect on our financial condition and results of operations.

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Due to the currency mismatches between our assets and liabilities, we have significant currency exposure.

As of June 30, 2007, the majority of our liabilities, such as our Series I Notes and our convertible notes are denominated in U.S. dollars while our revenues and most of our assets as of June 30, 2007 are denominated in Pesos. This currency gap exposes us to a risk of exchange rate volatility, which would negatively affect our financial results if the dollar were to appreciate against the Peso. Any further depreciation of the Peso against the U.S. dollar will correspondingly increase the amount of our debt in Pesos, with further adverse effects on our results of operation and financial condition and may increase the collection risk of our leases and other receivables from our tenants and mortgage debtors, most of whom have Peso-denominated revenues.

Risks Related to the American Shares and the Shares

Shares eligible for sale could adversely affect the price of our shares and American Depositary Shares (“ADS”)

The market prices of our common shares and ADS could decline as a result of sales by our existing shareholders of common shares or ADS in the market, or the perception that these sales could occur. These sales also might make it difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

The ADS are freely transferable under U.S. securities laws, including shares sold to our affiliates. IRSA and Parque Arauco, which as of November 30, 2007 own approximately 92.0% of our common shares (or approximately 719,743,632 common shares which may be exchanged for an aggregate of 17,993,591 ADS), are free to dispose of any or all of their common shares or ADS at any time in their discretion. Sales of a large number of our common shares and/or ADS would likely have an adverse effect on the market price of our common shares and the ADS. Different Corporate Disclosure and Accounting Standards.

We are subject to certain different corporate disclosure requirements and accounting standards than domestic issuers of listed securities in the United States

There may be less publicly available information about the issuers of securities listed on the Buenos Aires Stock Market (Bolsa de Comercio de Buenos Aires) than is regularly published by or about domestic issuers of listed securities in the United States and certain other countries. In addition, all listed Argentine companies must prepare their financial statements in accordance with generally accepted accounting principles in Argentina which differ in certain significant respects from U.S. GAAP. Consequently, the presentation of Argentine financial statements and reported earnings may differ from that of companies in other countries in this and other respects.

We are exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.

Investors may not be able to effect service of process within the U.S., limiting their recovery of any foreign judgment

We are a publicly held stock corporation (sociedad anónima) organized under the laws of Argentina. Most of our directors and senior managers, and most of our assets are located in Argentina. As a result, it may not be possible for investors to effect service of process within the United States upon us or such persons or to enforce against them in United States courts judgments obtained in such courts predicated upon the civil liability provisions of the United States federal securities laws. We have been advised by our Argentine counsel, Zang, Bergel & Viñes, that there is doubt whether the Argentine courts will enforce in all respects, to the same extent and in as timely a manner as a U.S. or foreign court, an action predicated solely upon the civil liability provisions of the United States federal securities laws or other foreign regulations brought against such persons or against us.

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If we are considered to be a Passive Foreign Investment Company for United States federal income tax purposes, United States holders of our securities would suffer negative consequences

Based on the current and projected composition of our income and valuation of our assets we do not believe we were a Passive Foreign Investment Company (“PFIC”), for United States federal income tax purposes for the tax year ending June 30, 2007, and we do not currently expect to become a PFIC, although there can be no assurance in this regard. The determination of whether we are a PFIC is made annually. Accordingly, it is possible that we may be a PFIC in the current or any future taxable year due to changes in our asset or income composition or if our projections are not accurate. The volatility and instability of Argentina’s economic and financial system may substantially affect the composition of our income and assets and the accuracy of our projections. If we become a PFIC, United States Holders of our shares or ADS will be subject to certain United States federal income tax rules that have negative consequences for United States Holders such as additional tax and an interest charge upon certain distributions by us or upon a sale or other disposition of our shares or ADS at a gain, as well as reporting requirements. Please see “Taxation-United States Taxation” for a more detailed discussion of the consequences if we are deemed a PFIC. You should consult your own tax advisors regarding the application of the PFIC rules to your particular circumstances.

Under Argentine law, shareholder rights may be fewer or less well defined than in other jurisdictions.

Our corporate affairs are governed by our by-laws and by Argentine corporate law, which differ from the legal principles that would apply if we were incorporated in a jurisdiction in the United States, such as the States of Delaware or New York, or in other jurisdictions outside Argentina. In addition, your rights or the rights of holders of our common shares to protect your or their interests in connection with actions by our board of directors may be fewer and less well defined under Argentine corporate law than under the laws of those other jurisdictions. Although insider trading and price manipulation are illegal under Argentine law, the Argentine securities markets are not as highly regulated or supervised as the US securities markets or markets in some other jurisdictions. In addition, rules and policies against self-dealing and regarding the preservation of shareholder interests may be less well defined and enforced in Argentina than in the United States, putting holders of our common shares and ADSs at a potential disadvantage.

The protections afforded to minority shareholders in Argentina are different from and more limited than those in the United States and may be more difficult to enforce.

Under Argentine law, the protections afforded to minority shareholders are different from, and much more limited than, those in the United States and some other Latin American countries. For example, the legal framework with respect to shareholder disputes, such as derivative lawsuits and class actions, is less developed under Argentine law than under U.S. law as a result of Argentina’s short history with these types of claims and few successful cases. In addition, there are different procedural requirements for bringing these types of shareholder lawsuits. As a result, it may be more difficult for our minority shareholders to enforce their rights against us or our directors or controlling shareholder than it would be for shareholders of a US company.

Holders of common shares may determine not to pay any dividends.

In accordance with Argentine corporate law we may pay dividends to shareholders out of net and realized profits, if any, as set forth in our audited financial statements prepared in accordance with Argentine GAAP. The approval, amount and payment of dividends are subject to the approval by our shareholders at our annual ordinary shareholders meeting. The approval of dividends requires the affirmative vote of a majority of the shareholders entitled to vote at the meeting. As a result, we cannot assure you that we will be able to generate enough net and realized profits so as to pay dividends or that our shareholders will decide that dividends will be paid.

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ITEM 4. Information on the Company

A. History and Development of the Company

General Information

Our legal name is “Alto Palermo S.A. (APSA)”. We were organized and incorporated on August 29,1889 under Argentine law as a stock corporation (Sociedad Anónima or S.A.). Our bylaws were registered in the Superintendence of Corporations (Inspección General de Justicia or “IGJ”) on February 27, 1976 under number 323, on page 6, book 85 of the stock corporations volume. Pursuant to our bylaws, our term of duration expires on August 28, 2087. Our shares are listed and traded on the Buenos Aires Stock Market (Bolsa de Comercio de Buenos Aires) and our ADS on the NASDAQ. Our headquarters and principal executive offices are located at Moreno 877, 22^nd Floor, (C1091AAQ), Buenos Aires, Argentina. Our telephone is +54-(11)-4344-4600. Our Depositary Agent for the ADS in the United States is Bank of New York whose address is 1258 Church Street Station, New York, New York 10286, and whose telephone is +1-(610)-312-5315. Our website is www.apsacc.com.ar. Information contained in or accesible through our website is not a part of this annual report. All references in this annual report to this or other internet sites are inactive textual references to these URLs, or “uniform resources locator” and are for your information reference only. We assume no responsibility for the information contained on this site.

History

Limited Operating History

We were formed in 1889 under the name “Sociedad Anónima Mercado de Abasto Proveedor (SAMAP)”, and, until 1984, we led the main fresh produce market in the City of Buenos Aires. Our most important asset during that period was the historic Mercado de Abasto building which served as the location of the market from 1889 to 1984, when we largely ceased operations. In July 1994, IRSA acquired a controlling interest in our company and, subsequently, we resumed real estate operations. Since then, we have continued to grow through a series of acquisitions and development of businesses. In April 1997, we merged with fourteen of our wholly owned subsidiaries, including Alto Palermo S.A., and subsequently changed our name from “Sociedad Anónima Mercado de Abasto Proveedor (SAMAP)” to “Alto Palermo S.A. (APSA)”. As of November 30, 2007, the largest beneficial owners of our capital stock are IRSA 62.5 % and Parque Arauco with an aggregate shareholding of 29.6 % of our common shares. Our remaining shares are owned by the public.

Significant acquisitions, dispositions and development of businesses

Fiscal Year ended June 30, 2007

Panamerican Mall project. In June 2006, the Company acquired from an unrelated party, Philips Argentina S.A., a 28,741 square meter plot of land (the “Philips land”) located in Saavedra, a neighbourhood in the northern area of Buenos Aires, for an aggregate purchase price of US$ 17.9 million. The Company developed a project for the construction of a mall including a hypermarket, a movie theatre complex and office and/or residential buildings. For that purpose, in December 2006, the Company entered into a Construction, Management and Commercialization Agreement with an unrelated party, Centro Comercial Panamericano S.A. (“CCP”) to partner in the project. The Company incorporated PAMSA for this purpose. The Company contributed cash and the Philips land to PAMSA amounting to Ps.158.3 million. The Company acquired from CCP an adjacent property amounting to Ps. 36.9 million through cash and 20% of the stock of PAMSA. In addition, the Company and CCP committed to make capital contributions amounting to US$37.8 million and US$ 9.4 million, respectively, to complete the project.

Córdoba Shopping. On December 27, 2006, we acquired Cordoba Shopping Villa Cabrera located in the Province of Córdoba, Argentina for an aggregate purchase price of US$ 13.3 million. We paid US$ 7.3 million of the purchase price in cash at closing, and the balance was financed in three equal semiannual

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installments of US$ 2.0 million each, starting in December 2007. This financing accrues interest at a fixed rate of 6% per annum. The property, which is located in the neighborhood of Villa Cabrera in the city of Córdoba, is a 35,000 square meter shopping center comprising 106 stores, a 12 movie theatre complex and a 1,500-vehicle parking lot. As of June 30, 2007 the property’s occupancy rate was 97%.

Patio Olmos Building. In November 2006, we submitted a bid for the acquisition of a property known as “Edificio Ex Escuela Gobernador Vicente de Olmos” located in the City of Córdoba, Argentina for an aggregate purchase price of Ps.32.5 million. On September 25, 2007, the transfer deed was signed with the Government of the Province of Córdoba for the building in which “Centro Comercial Patio Olmos” is currently operating. The transference of the respective concession contract was also entered into, and as of September 25, 2007, the agreed purchase price was fully paid. The property is a 5,147 square meter four-story building consisting of commercial space, parking lots and movie theatres. The property is subjected to a 40-year concession contract granted to an unrelated party for the commercial use of the building. Pursuant to the concession granted in 1990 from the Provincial Government of Córdoba, the concessionaire is required to pay the owner of the building a monthly concession fee actually of Ps. 10,052 which increases by an additional Ps. 2,513 every 47 months.

Fiscal Year ended June 30, 2006

Panamerican Mall Project. On June 29, 2006, we acquired from Philips Argentina S.A. a plot of land located in Saavedra district, in the Northern Area of the city of Buenos Aires covering a surface area of 28,741 square meters. The transaction price was US$ 17.9 million, which has been completely paid at the time the deed of title was subscribed.

Sale of the Alcorta Plaza plot of land. On December 22, 2005, the Company subscribed a preliminary purchase contract with possession, by which the Company sold to RAGHSA S.A. the plot of land denominated Alcorta Plaza for a total price of US$ 7.7 million. On March 13, 2006 the deed title of the building was registered and a first privilege degree mortgage guarantee was established on certain functional units to be used as offices and garages of the building property of RAGHSA S.A., located in Buenos Aires. The mortgage amounted to US$ 4.4 million. The agreed terms and conditions of payment were determined in four installments of US$ 1.9 million and 7.5% annual interest on the balance. The first three installments have been collected at the date of these financial statements.

Fiscal Year ended June 30, 2005

On September 29, 2004, we entered into a purchase agreement pursuant to which we acquired an additional 49.9% ownership interest in Mendoza Plaza Shopping for US$ 5.3 million, of which US$ 1.77 million were paid on December 2, 2004. The remaining balance was paid in two installments of US$ 1.77 million each on September 29, 2005 and 2006. As a result of this acquisition, we became holders of 68.8% of the capital stock of Mendoza Plaza Shopping, which runs the Mendoza Plaza Shopping center in the city of Mendoza. In addition, in May 2005 our ownership interest in Mendoza Plaza Shopping increased to 85.4% as a result of a capital increase made by Mendoza Plaza Shopping through the conversion of debt owed to us. For details see Note 2.h) to our consolidated financial statements.

Capital Expenditures

During the first five months of fiscal year 2008 we had capital expenditures of Ps. 95.6 million of which (i) Ps. 8.0 million were related to the construction of garages, to be located in a building next to our Paseo Alcorta Shopping Center, (ii) Ps. 31.5 million were related to the improvements of our shopping center properties, (iii) Ps. 23.1 million related to our acquisition of the building known as Ex Escuela Gobernador Vicente de Olmos, located in the City of Córdoba, (iv) Ps. 32.2 million related to the construction of Panamerican Mall, and (v) Ps. 0.8 million related to the acquisition of an option exercised for acquiring 75% of the capital stock and votes of a company the purpose of which is the development of a cultural and recreational complex in the Palermo district of the City of Buenos Aires.

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During fiscal year 2007 we had capital expenditures of Ps. 96.3 million of which (i) Ps. 25 million in respect of the construction of garages, to be located in a building next to our Paseo Alcorta Shopping Center, (ii) Ps. 22.9 million were related to the improvements of our shopping center properties, (iii) a down payment of Ps. 9.7 million related to our acquisition of Patio Olmos building, located in the City of Córdoba, (iv) Ps. 19.6 million related to furniture and computer equipment, (v) Ps. 18.5 million related to the construction of Panamerican Mall, and (vi) Ps. 0.6 million related to the acquisition of undeveloped plots of land.

During fiscal year 2006 we invested approximately Ps. 100.2 million in capital expenditures of which Ps.61.3 million were related to the acquisition of the plot of land of the Panamerican Mall Project, and other undeveloped plots of land, Ps. 30.3 million correspond to improvements made to our shopping center properties and Ps. 8.6 million were kept in escrow in the Deustche Bank in favor of Argentimo S.A. pursuant to an agreement entered into between Alto Palermo S.A., Argentimo S.A. and Constructora San José Argentina S.A. which sets forth the guidelines for negotiating the acquisition of land in which we are developing a commercial center and where we also plan to develop a dwelling and / or office building.

During fiscal year 2005 we invested approximately Ps. 51.3 million in capital expenditures, Ps. 50.6 million were related to the development of Alto Rosario and improvements of our shopping center properties, Ps. 4.2 million (US$ 1.77 million corresponding to the first installment, net of cash acquired) related to the acquisition of 49.9% of the capital stock of Mendoza Plaza Shopping S.A. We acquired Mendoza Plaza Shopping S.A. for a total amount of US$ 5.3 million and Ps. 0.6 million related to the acquisition of undeveloped plots of land.

Recent Developments

Patio Olmos Building. On September 25, 2007 we signed the transfer deed to purchase the real estate in which the Patio Olmos commercial center is currently operating from the Government of the Province of Córdoba. We also signed the transfer deed to purchase the related concession contract relating to the use of the property. The balance of Ps. 22.7 million for the property and the concession was also paid on this date.

Neuquén Project. On September 20, 2007 the Municipality of Neuquén decreed the feasibility of the urban project and environmental impact study. As from such date Shopping Neuquén S.A. has a 150 days term to submit the work plans.

Torres Rosario, City of Rosario. We own a plot of land spanning a surface of approximately 50,000 square meters in the City of Rosario in the same place where our local Shopping Center, Alto Rosario, is located.

On October 11, 2007, we entered into a barter agreement with Condominios del Alto S.A. whereby Condominios del Alto S.A. proposed to acquire plot G, located in the City of Rosario, Province of Santa Fe, Argentina, which belongs to us, for the construction at its own expense and under its own responsibility of a housing building. As consideration for the barter over the plot, Condominios de Alto S.A. agreed to deliver: (i) fifteen housing units, with a total constructed surface of 1,504.45 square meters, which will represent upon completion in aggregate 14.85% of the area of housing units to be build in plot G (ii) fifteen garages, which will represent upon completion in aggregate 15% of the area of garage units to be build in the same building.

As additional consideration in our favor, Condominios del Alto S.A. will pay us U.S.$ 15,300 and guarantee its obligations: (i) Condominios del Alto S.A. granted a first degree mortgage in our favor on plot G in the amount of U.S.$ 1,100,000; (ii) established a security insurance of which we will be assigner of the insured amount of U.S.$ 1,600,000, and (iii) the shareholders of Condominios del Alto S.A. are the guarantors of the obligations of the latter up to the amount of U.S.$ 800,000.

Finally, we granted to Condominios del Alto S.A. an option to enter a barter agreement in relation to on plot 2h, close to the transferred plot G.

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B. Business Overview

Operations and principal activities

We are primarily engaged in the ownership, acquisition, development, leasing, management and operation of shopping centers and are one of the largest owners and managers of shopping centers in Argentina in terms of gross leasable area and number of shopping centers. As of June 30, 2007, we own and/or operate ten shopping centers in Argentina, six of which are located in the Buenos Aires metropolitan area and four of which are in the provinces of Córdoba, Mendoza, Salta and Santa Fé. We also own certain properties for future development in Buenos Aires and several important provincial cities.

As of June 30, 2007, we had total assets of Ps.2,093.7 million and shareholders’ equity of Ps. 823.9 million. During our fiscal years ended June 30, 2005, 2006, and 2007, we had revenues of Ps.230.2 million, Ps. 361.4 million, and Ps.483.2 million, respectively, generating net income of Ps.33.3 million, Ps.44.7 million, and Ps. 64.1 million for such respective fiscal years. We operate our business through three reportable segments: Leases and Services, Credit Card Operations and Other, as described below.

Leases and Services. We derive a majority of our revenues from leases with retail tenants in our ten shopping centers. We generally charge our tenants rent based on the higher of (i) a monthly base rent and (ii) a specified percentage of the tenant’s monthly gross retail sales. We also charge our tenants a monthly management fee, prorated among all tenants according to their leases, which differs from shopping center to shopping center, for our administration and maintenance of common areas and administration of contributions made by tenants to finance promotional efforts for our shopping centers. We also generate revenues from admission rights (a non-refundable admission fee tenants may be required to pay upon entering into or renewing a lease), leasing agent fees and parking lot fees charged to visitors. As of June 30, 2007, the average occupancy rate of our shopping centers was 97.0%. Our Leases and Services segment generated operating income of Ps. 97.5 million and Ps. 127.1 million during our fiscal years ended June 30, 2006 and 2007, respectively, representing 75.8% and 82.2% of our consolidated operating income for such fiscal years, respectively.

Credit Card Operations. We operate a credit card consumer finance business through our majority-owned subsidiary, Tarshop S.A. (“Tarshop”). Our Credit Card operations consist primarily of lending and servicing activities relating to the credit card products we offer to consumers at shopping centers, hypermarkets and street stores. We finance a substantial majority of our credit card activities through securitization of the receivables underlying the accounts we originate. Our revenues from credit card transactions are derived from interest income generated by financing and lending activities, merchants’ fees, insurance charges for life and disability insurance, and fees for processing and printing cardholders’ account statements. Our Credit Card operations segment generated operating income of Ps. 22.8 million and Ps. 30.6 million during our fiscal years ended June 30, 2006 and 2007, respectively, representing 17.7% and 19.8% of our consolidated operating income for such fiscal years, respectively.

Other. Our Other segment includes the development and sale of residential properties, acquisitions of undeveloped parcels of land for future development, sales from time to time of such undeveloped parcels and gains or losses from our investment in E-Commerce Latina S.A. which offered on-line shopping until March 2007 when it restructured its business activities away from internet-based operations. For the fiscal years ended June 30, 2005, 2006 and 2007, revenues from our Other segment were not significant, except for Ps. 23.0 million of revenues from our sale of the Alcorta Plaza parcel of land in December 2005. Our Other segment generated operating income of Ps. 7.7 million, and operating loss of Ps. 3.2 million during our fiscal years ended June 30, 2006 and 2007, respectively, representing 6.0% and (2.1)% of our consolidated operating income for such fiscal years, respectively.

Our major shareholders are IRSA Inversiones y Representaciones Sociedad Anónima (“IRSA”) and Parque Arauco S.A. (“Parque Arauco”) which together owned 91.9% of our outstanding shares as of June 30, 2007. IRSA is an Argentine company engaged in a range of diversified real estate activities and whose shares are listed on the Buenos Aires Stock Exchange and the New York Stock Exchange. Parque Arauco is a Chilean company primarily engaged in the acquisition, development and operation of shopping centers and whose shares are listed on the Santiago Stock Exchange.

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Business Strategy

We believe the Argentine shopping center sector offers attractive prospects for long-term growth due to, among other factors, a continuing evolution of consumer preferences in favor of shopping centers (away from small neighborhood shops) and a level of shopping center penetration that we consider low compared to many developed countries. In recent years, the Argentine shopping center industry has benefited from improved macroeconomic conditions and a significant expansion in consumer credit.

Our principal objectives are to maintain our leadership position in the Argentine shopping center industry while generating sustainable cash flow growth and increasing the long-term value of our real estate assets.

Operating Strategy. Our core operating strategy is to maximize growth and profitability of our shopping centers, and we seek to achieve this objective by:

• Optimizing tenant base and lease terms. We seek to take advantage of increasing occupancy rates by leasing and re-leasing these properties to a diverse group of creditworthy tenants, resulting in higher base rents per square meter.

• Enhancing brand awareness and consumer loyalty. Our goal is to enhance brand name recognition and consumer and tenant loyalty to our shopping centers. To achieve consumer loyalty we intend to organize promotional events, issue loyalty cards and implement similar initiatives to attract local consumers and tourists away from traditional street-level stores and differentiate our shopping centers from those of our competitors. We also seek to enhance our relationships with consumers by improving entertainment and restaurant facilities to encourage increased frequency and duration of visits, particularly by families and tourists.

• Improving operating margins. We seek to take advantage of our consolidated administrative capabilities to achieve economies of scale and cost reductions at each of our shopping centers in order to improve our consolidated operating margins;

• Continuously upgrading our shopping centers. We expect to continue to upgrade and renovate our shopping center properties to maintain their modern and attractive physical appearance while at the same time maintaining competitive tenant occupancy costs;

• Enhancing our merchant relationship. We seek to enhance our relationship with our shopping center tenants by providing them with administrative advice and recommendations with respect to their promotional and marketing initiatives. In addition, our goal is to establish our credit cards as the most convenient card not only for consumers but also for our tenants through promotions which are tailored to suit their commercial needs.

Credit cards. We believe that our credit card operations complement our shopping center business and offer attractive prospects for long-term growth due to improved macroeconomic conditions and an expansion in consumer credit. We seek to grow our credit card business and intend to maintain low levels of credit exposure through continuing securitization of our credit card loans. From time to time we consider strategic alternatives with respect to our investment in Tarshop which, due to its recent growth in size and profitability, competes increasingly with domestic and international banks and credit card companies that are substantially larger than Tarshop. As a result, we are considering alternatives to maximize the value of our investment in Tarshop including its possible merger with, or sale to, another financial institution actively engaged in the Argentine credit card industry. Although we are actively considering a range of such strategic alternatives, we cannot give you any assurance if or when any of them will be in fact be implemented.

Investment Strategy. We seek to improve our position as a leader in the shopping center industry in Argentina by developing new shopping centers in urban areas with attractive prospects for growth, including in the Buenos Aires metropolitan area, Argentine provincial cities and possibly elsewhere in Latin America. Our investment strategy is to deploy capital in projects that are expected to generate returns that exceed our cost of capital. Our investment strategy consists primarily of the following:

• selectively acquiring shopping centers which we believe will benefit from our active, centralized management and leasing strategies;

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• selectively developing new shopping centers in high density locations with attractive prospects for growth;

• renovating, redeveloping, expanding, reconfiguring our existing properties to make them more attractive for leasing or re-leasing to tenants or to take advantage of underutilized land or leasable space; and

• disposing of non-shopping center assets and lines of business from time to time as opportunities arise to realize attractive returns on such assets and lines of businesses. See “Business—Credit Card Operations” and “—E-Commerce Activities.”

Our principal executive office is located at Moreno 877, 22^nd Floor, Buenos Aires (C1091AAQ), Argentina. Our telephone is +54 (11) 4344-4600, our fax is +54 (11) 4814-7875, and our webpage is www.apsacc.com.ar. Information on our website is not included or incorporated by reference into this offering memorandum.

Description of our business portfolio

Our shopping centers comprise a total of 224,138 square meters of gross leasable area (excluding certain space occupied by hypermarkets which are not our tenants and the surface area of our subsidiary Panamerican Mall that includes several projects one of which is the construction of a shopping center). Total tenants’ sales in nominal value in our shopping centers, as reported by retailers, were approximately Ps. 2,825.8 million for the fiscal year ended June 30, 2007 and Ps. 2,275.1 million for the fiscal year ended June 30, 2006. Tenant sales at our shopping centers are relevant to our revenues and profitability because they are one of the factors that determine the amount of rent that we charge our tenants. They also affect the tenants’ overall occupancy costs as a percentage of the tenant’s sales.

As of June 30, 2007, we owned and/or operated the following ten shopping centers in Argentina:

Shopping Center	Interest owned (4)		Location
Paseo Alcorta	100	%	City of Buenos Aires, Argentina
Patio Bullrich	100	%	City of Buenos Aires, Argentina
Abasto	100	%	City of Buenos Aires, Argentina
Alto Palermo (1)	100	%	City of Buenos Aires, Argentina
Buenos Aires Design (2)	54	%	City of Buenos Aires, Argentina
Alto Avellaneda	100	%	Buenos Aires, Argentina
Alto Noa	100	%	Salta, Argentina
Alto Rosario	100	%	Santa Fe, Argentina
Mendoza Plaza (3)	85	%	Mendoza, Argentina
Córdoba Shopping Villa Cabrera (5)	100	%	Córdoba, Argentina

(1) We have a 99.99% interest in Alto Palermo through a 99.99% interest in our subsidiary Shopping Alto Palermo S.A. (“SAPSA”).

(2) We have a 54% equity interest of Emprendimiento Recoleta S.A. (“ERSA”), which holds the concession to operate the Buenos Aires Design Shopping Center.

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(3) We have a 85% equity interest in Mendoza Plaza Shopping Center, through a 85% interest in our subsidiary Mendoza Plaza Shopping S.A.

(4) Percentage of equity interest owned has been rounded.

(5) We have a 100% interest in Córdoba Shopping Villa Cabrera through a 100% interest in our subsidiary Empalme S.A.

Tenant Retail Sales

The following table sets forth the total approximate tenant retail sales in Pesos at the shopping centers in which we had an interest for the fiscal years ended June 30, 2007, 2006 and 2005.

	Fiscal year ended June 30, (1)
	2005	2006	2007
	Ps	Ps	Ps
Abasto	333,216,597	453,871,445	573,814,588
Alto Palermo	362,089,242	436,244,953	502,220,444
Alto Avellaneda	259,630,930	308,900,404	418,349,117
Paseo Alcorta	212,617,732	264,060,375	321,948,304
Patio Bullrich	170,679,604	195,877,528	226,200,714
Alto Noa	75,648,232	104,529,187	130,318,508
Buenos Aires Design	73,906,709	91,921,046	110,722,931
Mendoza Plaza	159,206,234	275,864,008	337,757,597
Alto Rosario	50,895,239	143,806,266	204,430,069
Total sales (2)	1,697,890,519	2,275,075,212	2,825,762,272

(1) Retail sales based upon information provided to us by retailers and prior owners. The amounts shown reflect 100% of the retail sales of each shopping center, although in certain cases we own less than 100% of such shopping centers.

(2) Excludes sales from stands and spaces used for special exhibitions.

The following table shows certain information on shopping centers in which we held an interest as of June 30, 2007:

	Acquisition date	Gross leaseable area (1)	Number of stores	Occupation percentage (2)	Interest percentage	Book value as of June 30, 2007 (3)
		(m2)		(%)	(%)	(thousands of Ps)
Abasto (4)	7/94	39,683	171	97.0	100	180,925.7
Alto Palermo (5)	11/97	18,210	150	99.6	100	175,517.2
Alto Avellaneda (6)	11/97	27,336	145	95.0	100	85,184.8
Paseo Alcorta	6/97	14,403	113	99.0	100	58,855.0
PatioBullrich	10/98	10,978	83	100.0	100	102,478.6
Alto Noa (7)	3/95	18,831	84	100.0	100	27,040.3
Buenos Aires Design (8)	11/97	13,988	61	100.0	54	16,033.2
Mendoza Plaza (9)	12/94	39,392	148	95.9	85	89,004.3
Alto Rosario (10)	11/04	30,261	146	93.4	100	85,685.4
Córdoba Shopping –Villa Cabrera- (11)(12)	12/06	11,056	106	97.0	100	75,496.7
Total		224,138	1,207			896,221.2

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(1) Excludes the gross leaseable area occupied by hypermarkets that are not our tenants.

(2) Calculated by dividing square meters leased under leases in effect by gross leasable area as of June 30, 207.

(3) Book value equals cost of acquisition of fixed assets or development plus improvements, (adjusted for inflation until February 28, 2003), less accumulated depreciation and impairment charges / recovery.

(4) Excludes approximately 3,800 square meters of space occupied by Museo de los Niños, Abasto. Opened on November 10, 1998.

(5) On November 18, 1997, we acquired a 75% interest in the property and on December 23, 1997, we acquired the remaining 25%.

(6) On November 18, 1997, we acquired a 50% interest in the property and on December 23, 1997, we acquired the remaining 50%.

(7) In March 1995, September 1996 and January 2000, we acquired a 50%, 30% and 20% interest in the property, respectively.

(8) We own a 54% interest in the company which holds the concession to operate this property. We consolidate sales of this shopping center. The amounts shown reflect 100% of the gross leasable area, the total number of stores and of the percentage leased. During May 2006, we acquired an additional 3% interest, increasing our interest from 51% to 54%.

(9) During the fiscal year ended June 30, 2005, we increased our interest in Mendoza Plaza Shopping S.A. by 66%, from 19% to 85%.

(10) Excludes approximately 1,260 square meters of space occupied by Museo de los Niños, Rosario.

(11) Excludes 12,371 square meters of space occupied by movie theaters and a supermarket.

(12) On December 27, 2006, we acquired a 100% interest in the property (see note 15 to our basic financial statements).

Occupancy Rate

The following table sets forth the occupancy rate expressed as a percentage of the gross leasable area for the fiscal years ended June 30, 2005, 2006 and 2007:

	As of June 30
	2005	2006	2007
	%
Abasto	100.0	99.9	97.0
Alto Palermo	100.0	100.0	99.6
Alto Avellaneda	99.1	96.6	95.0
Paseo Alcorta	99.7	99.2	99.0
Patio Bullrich	98.6	100.0	100.0
Alto Noa	99.5	100.0	100.0
Buenos Aires Design	96.8	100.0	100.0
Mendoza Plaza	95.5	97.8	95.9
Alto Rosario	98.0	100.0	93.4
Córdoba Shopping Villa Cabrera	N/A	N/A	99.0
Overall Average	98.4	99.1	97.0

Rental Price

The following table shows the annual average rental price per square meter for the fiscal years ended June 30, 2005, 2006 and 2007:

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	Fiscal year ended June 30, (1)
	2005	2006	2007
	(Ps )	(Ps )	(Ps )
Abasto	779.7	1,021.5	1,273.2
Alto Palermo	1,926.2	2,432.2	2,925.0
Alto Avellaneda	678.0	899.7	1,099.8
Buenos Aires Design	399.9	501.4	633.7
Paseo Alcorta	1,295.5	1,628.7	2,074.2
Patio Bullrich	1,455.0	1,791.6	2,051.1
Alto Noa	193.1	280.0	343.9
Alto Rosario	274.1	376.0	484.2
Mendoza Plaza	203.2	353.8	455.6

(1) Annual rental price per gross leasable square meter reflects the sum of base rent, percentage rent, stands and revenues from admission rights (excluding any applicable tax on sales) divided by gross leasable square meters.

Lease Expirations

The following table sets forth the schedule of estimated lease expirations for our shopping centers for leases in effect as of June 30, 2007, assuming that none of the tenants exercise renewal options or terminate their leases early:

Lease Expiration as of June 30,	Number of Leases Expiring (2)	Square Meters Subject to Expiring Leases	Percentage of Total Square Meters Subject to Expiration	Annual Base Rent Under Expiring Leases (1)	Percentage of Total Base Rent Under Expiring Leases
		(m2)	(%)	(Ps. )	(%)
2008	703	134,815	63	49,763,778	28
2009	277	35,413	17	66,336,108	38
2010	96	17,564	8	41,939,740	24
2011 and subsequent years	25	25,290	12	17,961,963	10
Total(3)(2)	1,101	213,082	100	176,001,589	100

(1) Including the vacant stores as of June 30, 2007. A lease may be associated to one or more stores.

(2) Including the base rent and does not reflect our ownership interest in each property.

(3) Does not include information from Córdoba Shopping – Villa Cabrera.

Depreciation

The net book value of the properties has been determined using the straight-line method of depreciation calculated over the useful life of the property. For more information, see our consolidated financial statements.

Detailed Information About Each of our Shopping Centers

Set forth below is information regarding our shopping center portfolio, including tables with the names of the five largest tenants of each shopping center and certain lease provisions agreed with such tenants.

Abasto, City of Buenos Aires.

Abasto is a 171-store shopping center property located in the center of the City of Buenos Aires with direct access from the Carlos Gardel subway station, six blocks from the Once railway terminal and near the highway to Ezeiza International Airport. Abasto opened on November 10, 1998. We invested approximately

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US$111.6 million in Abasto. The main building is a landmark building that, between 1889 and 1984 was the primary fresh produce market for Buenos Aires. We converted the property into an 115,905 square meter shopping center with approximately 39,683 square meters of gross leasable area. Abasto is the fourth largest shopping center in Argentina in terms of gross leasable area. This shopping center is close to Torres de Abasto, our developed residential apartment complex, and to Coto supermarket.

Abasto includes a food court with 24 restaurants, a multiplex cinema with 12 movie theaters and seating for approximately 2,800 people covering an area of 9,890 square meters, entertainment facilities and a 3,800 square meter children’s museum that is not included in the gross leasable area. The shopping center is spread out over five levels and has a 1,200-car parking lot consisting of 40,169 square meters (excluding the supermarket).

Abasto’s target clientele consists of middle-income individuals between the ages of 25 and 45 which we believe represent a significant portion of the population in this area of Buenos Aires.

On July 15, 1997, we entered into a lending facility agreement with Cinemas Hoyts de Argentina S.A. (“Hoyts”) which provides for the terms of the construction and of the space leased to operate a cinema complex in the Abasto. Pursuant to this agreement, Hoyts agreed to finance up to US$ 7.8 million for the construction cost of the portion of the building where the cinema complex is located. Construction was completed in November 1998, at which time Hoyts started leasing the space for a period of ten years, renewable at the option of Hoyts for two additional consecutive ten-year periods. As of November 1998, the amount initially extended by Hoyts under the facility was US$7.3 million, the same amount of the total construction cost. The loan accrues interest at six-month LIBOR plus 2%. Under the agreement, the loan is being repaid by offsetting it against the rent owed by Hoyts. The amount outstanding under this loan as of June 30, 2007 was Ps.1.0 million. Pursuant to Decree No. 214/02, the loan and the lease agreements, which were originally denominated in U.S. Dollars, were mandatorily converted into Pesos.

During the fiscal year ended June 30, 2007, visitors to the shopping center generated total retail sales in nominal value of approximately Ps. 573.8 million that represents sales per square meter of approximately Ps. 14,460. Revenues from leases increased from approximately Ps. 44.7 million for the fiscal year 2006 to Ps. 56.4 million for the fiscal year 2007 which represent monthly revenues per gross leasable square meter of Ps. 94.5 in 2006 and Ps. 118.4 in 2007. As of June 30, 2007, the occupancy rate in Abasto was 97.0%.

Abasto’s five largest tenants

Abasto’s five largest tenants (in terms of sales in this shopping center) accounted for approximately 35.1% of Abasto’s gross leasable area as of June 30, 2007 and approximately 11.3% of the annual base rent for the fiscal year ended on such date.

The following table provides certain information about Abasto’s five largest tenants:

Tenant	Type of Business	Gross Leaseable Area	% of Gross Leaseable Area
		(m2)	(%)
Garbarino	Houseware	656.74	1.7
Frávega	Houseware	885.24	2.2
Zara	Clothes and footwear	1,908.67	4.8
Rodo	Houseware	606.49	1.5
Hoyts	Entertainment	9,890.05	24.9
Total		13,947.19	35.1

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Tenant mix of Abasto

The following table sets forth the tenant mix of the types of business in Abasto:

Type of Business	Gross Leaseable Area	% of Gross Leaseable Area
	(m2)	(%)
Entertainment	17,929.38	41.3
Clothes and footwear	12,032.31	27.7
Miscellaneous	4,573.27	10.5
Anchor store (1)	2,769.54	6.4
Housewares	2,349.67	5.4
Restaurant	2,336.50	5.4
Services	757.89	1.7
Home	666.57	1.6
Total	43,415.13	100.0

(1) The term “anchor store” refers to strategically located leasable spaces in the shopping centers with more than 1,000 square meters which aim to increase traffic of visitors and sales of the stores around them. Areas occupied by entertainment areas are not included in the definition.

Revenues from Abasto

The following table sets forth certain information relating to the revenues of Abasto for the period indicated:

	Fiscal year ended June 30, (1)
	2005	2006	2007
	(in thousands of Ps.)
Revenues:
Base rent	20,286.5	25,544.4	31,516.5
Percentage rent (1)	6,225.8	9,243.9	11,955.3
Total rent	26,512.3	34,788.3	43,471.8
Revenues from admission rights(2)	4,149.8	5,531.1	7,053.5
Management fees	600.0	600.0	960.0
Parking	2,714.7	3,176.5	3,945.2
Other	606.3	643.4	949.2
Total	34,583.1	44,739.3	56,379.7

(1) Percentage rent is the revenue proportional to sales of our tenants. See Principal Terms of our Leases on page 62

(2) Admission rights are the revenues required to tenants for entering into a lease agreement or a lease agreement renewal.

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Lease expiration for Abasto

The following table includes the lease expiration for Abasto during the related periods for leases effective June 30, 2007, assuming that none of these tenants will exercise their option to extend or terminate in advance their lease agreements:

Lease Agreements Expiration	Number of Lease Agreements Expiration (1)	Square Meters of Leases to Expire	Square Meter Percentage of Leases to Expire	Amount of Lease Agreements to Expire	Percentage of Lease Agreements to Expire
		(m2)	(%)	(Ps. )	(%)
2008	110	29,845	75	12,456,934	30
2009	42	6,250	16	17,776,475	43
2010	14	2,695	7	7,509,537	18
2011 and subsequent years	5	893	2	3,544,000	9
Total	171	39,683	100	41,286,946	100

(1) Includes the vacant stores as of June 30, 2007. A lease may be associated to one or more stores.

Alto Palermo, City of Buenos Aires

Alto Palermo is a 150-store shopping center which opened in 1990 in a well-known middle class and densely populated neighborhood named Palermo in the City of Buenos Aires. Alto Palermo is located at the intersection of Santa Fe and Coronel Díaz avenues, only a few minutes from downtown Buenos Aires with nearby access from the Bulnes subway station. Alto Palermo has a total constructed area of 64,574 square meters that consists of 18,210 square meters of gross leasable area. The shopping center has an entertainment center and a food court with 21 restaurants. Alto Palermo is spread out over four levels and has a 647-car pay parking lot of 32,405 square meters. In 1992 Alto Palermo was awarded a prize from the International Council of Shopping Centers for its overall design and appearance. Alto Palermo’s targeted clientele consists of middle-income individuals between the ages of 28 and 40. Since January 2007 we started a substantial renovation of this shopping center. As of June 30, 2007, we have invested about Ps.6.0 million in connection with this ongoing renovation and we have a Ps.20.3 million budget to be completed.

During fiscal year ended June 30, 2007, visitors to the shopping center generated total retail sales in nominal value of approximately Ps. 502.2 million which represents sales per square meter of approximately Ps. 27,579. Revenues from leases increased from approximately Ps.47.7 million for the fiscal year 2006 to Ps.57.7 million for the fiscal year 2007, which represent monthly revenues per gross leasable square meter of Ps. 220.0 in 2006 and Ps.264.2 in 2007. As of June 30, 2007, the occupancy rate in Alto Palermo was 99.6%.

Alto Palermo’s five largest tenants

Alto Palermo’s five largest tenants (in terms of sales in this shopping center) accounted for approximately 15.4% of its gross leasable area at June 30, 2007 and approximately 9.6% of its annual base rent for the fiscal year ended on such date.

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The following table describes Alto Palermo’s five largest tenants as of June 30, 2007:

Tenant	Type of Business	Gross Leaseable Area	% of Gross Leaseable Area
		(m2)	(%)
Zara	Anchor stores	1,384.00	7.6
Garbarino	Houseware	185.73	1.0
Fravega	Houseware	155.84	0.9
Just For Sport	Clothes and footwear	724.28	4.0
Musimundo	Miscellaneous	346.68	1.9
Total		2,796.53	15.4

Tenant Mix of Alto Palermo

The following table sets forth the tenant mix of the types of businesses in Alto Palermo:

Type of Business	Gross Leasable Area	% of Gross leasable Area
	(m2)	(%)
Clothes and footwear	7,667.47	42.1
Miscellaneous	2,778.07	15.3
Restaurant	2,441.36	13.4
Services	1,730.58	9.5
Anchor stores	1,384.00	7.6
Entertainment	1,308.45	7.2
Houseware	456.31	2.5
Home	443.96	2.4
Total	18,210.20	100.0

Revenues from Alto Palermo

The following table sets forth certain information relating to the revenues derived from Alto Palermo during the following periods:

	Fiscal year ended June 30, (1)
	2005	2006	2007
	(in thousands of Argentine pesos)
Revenues:
Base rent	23,462.7	29,046.0	35,427.1
Percentage rent (1)	6,062.6	7,843.9	8,491.8
Total rent	29,525.3	36,889.9	43,919.0
Revenues from admission rights (2)	5,250.8	7,081.0	9,346.0
Management fees	664.8	664.8	965.0
Parking	2,224.8	2,826.4	3,215.7
Other	222.7	267.5	292.3
Total	37,888.4	47,729.6	57,738.0

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(1) Percentage rent is the revenue proportional to sales of our tenants. See Principal Terms of our Leases on page 62.

(2) Admission rights are the revenues required to tenants for entering into a lease agreement or a lease agreement renewal.

Lease expirations for Alto Palermo

The following table shows a schedule of lease expirations for Alto Palermo during the periods indicated for existing leases as of June 30, 2007, assuming that no one of the tenants exercise their renewal options nor terminates their leases early:

Lease Agreements Expiry	Number of Lease Agreements to Expire (1)	Square Meters of Leases to Expire	Square Meter Percentage of Leases to Expire	Amount of Lease Agreements to Expire	Percentage of Lease Agreements to Expire
		(m2)	(%)	(Ps )	(%)
2008	91	11,986	66	9,596,419	28
2009	42	4,254	23	14,393,910	41
2010	14	1,071	6	7,331,686	21
2011 and subsequent years	3	899	5	3,507,500	10
Total	150	18,210	100	34,829,515	100

(1) Includes the vacant stores as of June 30, 2007. A lease may be associated to one or more stores.

Alto Avellaneda, greater Buenos Aires area

Alto Avellaneda is a 145-store suburban shopping center that opened in October 1995 and is located in the City of Avellaneda, which is on the southern border of the City of Buenos Aires. This shopping center is next to a railway terminal and is close to downtown Buenos Aires. Alto Avellaneda has a total constructed area of 97,655 square meters which consists of 27,336 square meters of gross leasable area and common areas covering 19,918 square meters. The shopping center has a multiplex cinema with six movie theatres, the first Wal-Mart superstore in Argentina, a bowling center, an entertainment center and a food court with 16 restaurants. Wal-Mart (not included in gross leasable area) purchased the space it occupies, but it pays for its pro rata share of the common expenses of Alto Avellaneda. The shopping center is contained mostly on one floor, with the cinema located on the second floor, and has a 2,700-car free parking lot consisting of 47,856 square meters. Alto Avellaneda Shopping’s targeted clientele consists of middle-income individuals between the ages of 16 and 30.

During the fiscal year ended June 30, 2007, visitors to the shopping center generated total retail sales in nominal value of approximately Ps.418.3 million which represents sales per square meter of approximately Ps.15,304. Revenues from leases increased from approximately Ps.25.1 million for the fiscal year 2006 to Ps.31.2 million for the fiscal year 2007 which represent monthly revenues per gross leasable square meter of Ps.76.9 in 2006 and Ps.95.3 in 2007. As of June 30, 2007, the occupancy rate in Alto Avellaneda was 95.0%.

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Alto Avellaneda’s five largest tenants

Alto Avellaneda’s five largest tenants (in terms of sales in this shopping center) accounted for approximately 14.4% of its gross leasable area at June 30, 2007 and approximately 12.4% of its annual base rent for the fiscal year ended on such date.

The following table sets forth certain information about Alto Avellaneda’s five largest tenants as of June 30, 2007:

Tenant	Type of Business	Gross Leasable Area	% of Gross Leasable Area
		(m2)	(%)
Garbarino	Houseware	611.76	2.2
Fravega	Houseware	340.00	1.2
Compumundo	Miscellaneous	190.57	0.7
Rodo	Houseware	358.00	1.3
Bingo	Entertainment	2,469.53	9.0
Total		3,969.86	14.4

Tenant mix of Alto Avellaneda

The following table sets forth the tenant mix of the types of business in Alto Avellaneda:

Type of Business	Gross Leasable Area	% of Gross leasable Area
	(m2)	(%)
Entertainment	9,672.63	33.6
Clothes and footwear	9,278.84	32.2
Houseware	2,546.00	8.8
Miscellaneous	1,974.58	6.9
Restaurants	1,847.01	6.4
Services	1,621.61	5.6
Anchor stores	1,487.00	5.2
Total	28,427.67	98.7

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Revenues from Alto Avellaneda

The following table sets forth certain information relating to the revenues derived from Alto Avellaneda during the following periods:

	Fiscal year ended June 30, (1)
	2005	2006	2007
	(in thousands of Argentine pesos)
Revenues:
Base rent	12,979.2	16,691.6	18,269.5
Percentage rent (1)	3,518.7	5,413.6	8,079.1
Total rent	16,497.9	22,105.2	26,348.6
Revenues from admission rights (2)	2,021.4	2,411.3	3,716.2
Management fees	360.0	360.0	600.0
Other	270.2	274.7	584.1
Total	19,149.5	25,151.2	31,248.8

(1) Percentage rent is the revenue proportional to sales of our tenants. See Principal Terms of our Leases on page 62.

(2) Admission rights are the revenues required to tenants for entering into a lease agreement or a lease agreement renewal.

Lease expirations for Alto Avellaneda

The following table sets forth a schedule of estimated lease expirations for Alto Avellaneda during the periods indicated for existing leases as of June 30, 2007, assuming that none of the tenants exercise renewal options nor terminate their leases early:

Lease Agreements Expiry:	Number of Lease Agreements to Expire (1)	Square Meters of Leases to Expire	Square Meter Percentage of Leases to Expire	Amount of Lease Agreements to Expire	Percentage of Lease Agreements to Expire
		(m2)	(%)	(Ps.)	(%)
2008	82	19,118	70	4,272,528	19
2009	39	4,795	18	6,020,518	27
2010	20	2,567	9	10,070,820	45
2011 and subsequent years	4	856	3	2,264,938	9
Total	145	27,336	100	22,628,804	100

(1) Includes the vacant stores as of June 30, 2007. A lease may be associated to one or more stores.

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Buenos Aires Design, City of Buenos Aires

Buenos Aires Design is a shopping center with 61 stores specialized in interior and home decoration stores which opened in 1993. We own a 54% interest in Emprendimiento Recoleta S.A. (“ERSA”), the company which has the concession to operate Buenos Aires Design. The other shareholders of ERSA is owned by Grupo Bapro S.A.with a 44% interest.

As a result of a public auction, in February 1991, the City of Buenos Aires granted to ERSA a 20-year concession to use a plot of land in the Centro Cultural Recoleta. There can be no assurance that the City of Buenos Aires will extend the term of this concession upon its expiration. The concession agreement provides for ERSA to pay the City of Buenos Aires a monthly amount of Ps. 20,168. It establishes that the concession may be terminated for any of the following reasons, among others:

• severe breach of the obligations of the parties, which with regard to ERSA include: (i) breach of applicable law, (ii) change of the purpose of the Area under concession; (iii) non payment of the monthly fee for two consecutive periods;

• destruction or abandonment of the area under concession;

• bankruptcy or liquidation;

• restitution of the plot of land under concession, which shall only take place for public interest reasons.

In June 1991, we entered into an agreement with the shareholders of ERSA providing our administration of Buenos Aires Design for a monthly administration fee of approximately Ps. 12,000 plus VAT.

Buenos Aires Design is in a high-income neighborhood named Recoleta in the City of Buenos Aires, near Libertador Avenue and downtown Buenos Aires. Buenos Aires Design is located in one of Buenos Aires’ most popular tourist attraction areas. Many exclusive hotels and restaurants are located in this area, and the shopping center is close to the National Museum of Fine Arts, the Museum of Modern Art and other popular cultural institutions.

Buenos Aires Design has a total constructed area of 31,645 square meters that consists of 13,988 gross meters of leasable area. The shopping center has six restaurants anchored by the Hard Rock Café and a terrace that covers 3,700 square meters. The shopping center is divided into two floors and has a 174-car pay parking lot. Buenos Aires Design’s targeted clientele consists of upper-middle income individuals between the ages of 25 and 45.

During the fiscal year ended June 30, 2007, visitors to the shopping center generated total retail sales in nominal value of approximately Ps. 110.7 million which represents sales per square meter of approximately Ps. 7,916. Revenues from leases increased from approximately Ps. 8.6 million for the fiscal year 2006 to Ps. 10.4 million for the fiscal year 2007 which represent monthly revenues per gross leasable square meter of Ps. 49.2 in 2006 and Ps. 61.7 in 2007. As of June 30, 2007, the occupancy rate in Buenos Aires Design was 100%.

Buenos Aires Design’s five largest tenants

Buenos Aires Design’s five largest tenants (in terms of sales in this shopping center) accounted for approximately 29.5% of Buenos Aires Design’s gross leasable area on June 30, 2007 and approximately 17.6% of its annual base rent for the fiscal year ended on such date.

The following table contains certain information about Buenos Aires Design’s five largest tenants as of June 30, 2007:

Tenant	Type of Business	Gross Leasable Area	% of Gross Leasable Area
		(m2)	(%)
Garbarino	Houseware	193.82	1.4
Morph	Anchor stores	1,032.32	7.4
Barugel Azulay	Home	311.80	2.2
Hard Rock Café	Restaurants	1,687.23	12.1
Primafila	Restaurants	904.39	6.4
Total		4,129.56	29.5

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Tenant mix of Buenos Aires Design

The following table sets forth the tenant mix of the types of businesses in Buenos Aires Design:

Type of Business	Gross Leasable Area	% of Gross Leasable Area
	(m2)	(%)
Home	6,504.55	46.5
Restaurants	3,538.68	25.3
Anchor stores	3,073.39	22.0
Miscellaneous	452.88	3.2
Houseware	381.79	2.7
Services	36.50	0.3
Total	13,987.79	100.0

Revenues from Buenos Aires Design

The following table sets forth certain information relating to the revenues of Buenos Aires Design during the following periods:

	Fiscal year ended June 30,
	2005(1)	2006(1)	2007(1)
	(in thousands of Argentine pesos)
Revenues:
Base rent	4,130.4	5,130.7	6,495.6
Percentage rent (2)	996.5	1,060.1	1,003.5
Total rent	5,126.9	6,190.8	7,499.1
Revenues from admission rights (3)	710.5	1,129.1	1,365.3
Management fees	153.0	183.8	459.8
Parking	930.2	930.7	989.2
Other	161.7	184.5	45.3
Total	7,082.3	8,618.9	10,358.7

(1) It does not reflect our interest in the property.

(2) Percentage rent is the revenue proportional to sales of our tenants. See Principal Terms of our Leases on page 63

(3) Admission rights are the revenues required to tenants for entering into a lease agreement or a lease agreement renewal.

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Lease expirations for Buenos Aires Design

The following table shows a schedule of estimated lease expirations for Buenos Aires Design during the periods indicated for existing leases as of June 30, 2007, assuming that none of the tenants exercise renewal options nor terminates its lease early:

Lease Agreements Expiry:	Number of Lease Agreements to Expire(2)	Square Meters of Leases to Expire	Square Meter Percentage of Leases to Expire	Amount of Lease Agreements to Expire (1)	Percentage of Lease Agreements to Expire
		(m2)	(%)	(Ps.)	(%)
2008	36	6,557	47	1,508,777	17
2009	16	3,047	22	3,583,888	41
2010	7	1,973	14	1,666,213	19
2011 and subsequent years	2	2,410	17	1,925,000	23
Total	61	13,987	100	8,683,878	100

(1) It does not reflect our holding in the property.

(2) Includes the vacant stores as of June 30, 2007. A lease may be associated to one or more stores.

Paseo Alcorta, City of Buenos Aires

Paseo Alcorta is a 113-store shopping center which opened in 1992, located in the residential area of Palermo Chico, one of the most exclusive areas in the City of Buenos Aires, and a short drive from downtown Buenos Aires, has a total constructed area of approximately 54,728 square meters that consists of 14,403 square meters of gross leasable area. Paseo Alcorta has a multiplex cinema with four screens, a food court with 17 restaurants and a Carrefour hypermarket on the ground floor. Carrefour purchased the space it occupies but pays for its pro rata share of the common expenses of the shopping center. Paseo Alcorta is spread out over three shopping center levels and has a free parking lot for approximately 1,300 cars. Paseo Alcorta’s targeted clientele consists of high-income individuals between the ages of 34 and 54.

During the fiscal year ended June 30, 2007, visitors to the shopping center generated total retail sales in nominal value of approximately Ps.321.9 million which represents sales per square meter of approximately Ps.22,352. Revenues from leases increased from approximately Ps 24.6 million for the fiscal year 2006 to Ps.31.2 million for the fiscal year 2007, which represent monthly revenues per gross leasable square meter of Ps.139.2 in 2006 and Ps.180.8 in 2007 As of June 30, 2007, the occupancy rate in Paseo Alcorta was 99.0%.

Paseo Alcorta’s five largest tenants

Paseo Alcorta’s five largest tenants (in terms of sales in this shopping center) accounted for approximately 19.3% of Paseo Alcorta’s gross leasable area at June 30, 2007 and approximately 9.3% of its annual base rent for the fiscal year ended on such date.

The following table provides certain information about Paseo Alcorta’s five largest tenants as of June 30, 2007:

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Tenant	Type of Business	Gross Leasable Area	% of Gross Leasable Area
		(m2)	(%)
Zara	Clothes and footwear	1,100.40	7.6
Fravega	Houseware	210.79	1.5
Kartun	Miscellaneous	230.00	1.6
Etiqueta Negra	Clothes and footwear	248.89	1.7
Musimundo	Miscellaneous	987.33	6.9
Total		2,777.41	19.3

Tenant mix of Paseo Alcorta

The following table sets forth the tenant mix of the types of businesses in Paseo Alcorta:

Type of Business	Gross Leasable Area	% of Gross Leasable Area
	(m2)	(%)
Clothes and footwear	7,565.52	52.5
Miscellaneous	2,081.01	14.4
Services	1,777.72	12.3
Entertainment	1,183.00	8.2
Restaurants	1,139.36	7.9
Home	445.93	3.1
Houseware	210.79	1.6
Total	14,403.33	100.0

Revenues from Paseo Alcorta

The following table sets forth certain information relating to the revenues of Paseo Alcorta during the following periods:

	Fiscal year ended June 30,
	2005	2006	2007
	(in thousands of Argentine pesos)
Revenues:
Base rent	11,585.0	14,193.5	18,184.1
Percentage rent (1)	4,826.9	5,813.5	6,684.2
Total rent	16,411.9	20,007.0	24,868.3
Revenues from admission rights (2)	2,788.1	3,941.3	5,007.2
Management fees	212.5	212.5	360.0
Other	321.4	400.7	1,005.4
Total	19,733.9	24,561.5	31,240.9

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(1) Percentage rent is the revenue proportional to sales of our tenants. See Principal Terms of our Leases on page 63

(2) Admission rights are the revenues required to tenants for entering into a lease agreement or a lease agreement renewal.

Lease expirations for Paseo Alcorta

The following table shows a schedule of estimated lease expirations for Paseo Alcorta during the periods indicated for existing leases as of June 30, 2007, assuming that no one of the tenants exercises renewal options nor terminates its lease early:

Lease Agreements Expiration:	Number of Lease Agreements to Expire (1)	Square Meters of Leases to Expire	Square Meter Percentage of Leases to Expire	Amount of Lease Agreements to Expire	Percentage of Lease Agreements to Expire
		(m2)	(%)	(Ps )	(%)
2008	62	8,421	58	5,381,307	20
2009	33	2,960	21	9,078,868	34
2010	14	1,388	10	7,622,942	29
2011 and subsequent years	4	1,635	11	4,265,000	17
Total	113	14,404	100	26,348,117	100

(1) Includes the vacant stores as of June 30, 2007. A lease may be associated to one or more stores.

Patio Bullrich, City of Buenos Aires

Patio Bullrich is a 83-store shopping center which opened in 1988 and the first shopping center to start operations in the City of Buenos Aires. We acquired Patio Bullrich on October 1, 1998 for US$ 72.3 million.

Patio Bullrich is in the neighborhood of Recoleta, one of the most prosperous areas of the City of Buenos Aires. This district is a residential, cultural and tourist center that includes distinguished private homes, historical sites, museums, theatres and embassies. The shopping center is located within walking distance of prestigious hotels and the City’s subway, bus and train systems. Furthermore, the shopping center is only 10 minutes by car from the downtown area of the City of Buenos Aires.

Patio Bullrich has a total constructed area of 28,211 square meters that consist of 10,978 square meters of gross leasable area and common areas covering 12,125 square meters. The shopping center has a multiplex cinema with six- movie theatres complex with 1,381 seats, an entertainment area of 1,444 square meters and a food court of 15 restaurants. The center is spread out over four levels and has a pay parking lot for 212 cars in an area consisting of 4,825 square meters.

Patio Bullrich is one of the most successful shopping centers in Argentina in terms of sales per square meter. Its targeted clientele consists of high-income individuals aged of 45 and above.

During the fiscal year ended June 30, 2007, visitors to the shopping center generated total retail sales in

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nominal value of approximately Ps. 226.2 million that represents sales per square meter of approximately Ps. 20,606. Revenues from leases increased from approximately Ps. 21.4 million for the fiscal year 2006 to Ps. 25.4 million for the fiscal year 2007, which represent monthly revenues per gross leasable square meter of Ps. 166.1 in 2006 and Ps. 192.6 in 2007. As of June 30, 2007, the occupancy rate in Patio Bullrich was 100%.

Patio Bullrich’s five largest tenants

Patio Bullrich’s five largest tenants (in terms of sales in the shopping center) accounted for approximately 14.8% of Patio Bullrich’s gross leasable area at June 30, 2007 and approximately 9.4% of its annual base rent for the fiscal year ended on such date.

The following table sets forth certain information about Patio Bullrich’s five largest tenants as of June 30, 2007:

Tenant	Type of Business	Gross Leasable Area	% of Gross Leasable Area
		(m2)	(%)
Etiqueta Negra	Clothes and footwear	576.10	5.7
Rouge internacional	Miscellaneous	469.96	4.7
Christian Dior	Clothes and footwear	86.53	0.9
Rhapsodia	Clothes and footwear	279.50	2.8
Casa López	Clothes and footwear	83.54	0.8
Total		1,495.63	14.9

Tenant mix of Patio Bullrich

The following table sets forth the tenant mix of the types of business in Patio Bullrich:

Type of Business	Gross Leasable Area	% of Gross Leasable Area
	(m2)	(%)
Clothes and footwear	4,295.70	39.1
Entertainment	3,240.53	29.5
Miscellaneous	1,644.87	15.0
Restaurants	1,215.77	11.1
Home	238.02	2.2
Services	200.04	1.8
Anchor store	142.66	1.3
Total	10,977.59	100.0

Revenues from Patio Bullrich

The following table sets forth certain information relating to the revenues of Patio Bullrich during the following periods:

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	Fiscal year ended June 30,
	2005	2006	2007
	(in thousands of Argentine pesos)
Revenues:
Base rent	8,885.5	11,276.2	13,774.6
Percentage rent (1)	4,024.6	4,153.1	4,335.9
Total rent	12,910.1	15,429.3	18,110.5
Revenues from admission rights (2)	2,780.7	3,829.0	4,405.8
Management fees	480.0	480.0	690.0
Parking	1,479.9	1,589.6	1,722.3
Other	168.3	96.6	439.4
Total	17,819.0	21,424.5	25,368.0

(1) Percentage rent is the revenue proportional to sales of our tenant. See Principal Terms of our leases on page 63

(2) Admission rights are the revenues required to tenants for entering into a lease agreement or a lease agreement renewal.

Lease expirations for Patio Bullrich

The following table shows a schedule of lease expirations for Patio Bullrich during the periods indicated for existing leases as of June 30, 2007, assuming that none of the tenants exercise renewal options nor terminate their leases early:

Lease Agreements Expiration	Number of Lease Agreements to Expire (1)	Square Meters of Leases to Expire	Square Meter Percentage of Leases to Expire	Amount of Lease Agreements to Expire	Percentage of Lease Agreements to Expire
		(m2)	(%)	(Ps )	(%)
2008	60	9,360	85	4,907,484	36
2009	14	947	9	4,970,187	36
2010	9	671	6	3,754,560	28
2011 and subsequent years	—	—	—	—	—
Total	83	10,978	100	13,632,231	100

(1) Includes the vacant stores as of June 30, 2007. A lease may be associated to one or more stores.

Alto Noa, City of Salta

Alto Noa is an 84-store shopping center that opened in 1994. Alto Noa is located in the City of Salta, the

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capital of the Province of Salta, in the northwestern region of Argentina. The province of Salta has a population of approximately 1.1 million inhabitants with approximately 0.5 million inhabitants in the City of Salta. The shopping center has a total constructed area of approximately 41,700 square meters which consists of 18,831 square meters of gross leasable area. Alto Noa has a food court with 13 restaurants, a large entertainment center, a supermarket and a multiplex cinema with eight movie theatres. The shopping center is contained on one floor and has a free parking lot for 551 cars. Alto Noa’s targeted clientele consists of middle-income individuals between the ages of 28 and 40.

On May 29, 1998, we entered into a lending facility agreement with Hoyts which established the terms of the construction and for the lease of space to operate a cinema complex in Alto Noa. Pursuant to this agreement, Hoyts agreed to finance up to US$ 4.0 million of the cost of the construction of the part of the building where the cinema complex would be located. Construction was completed in August 2000, at which time Hoyts started leasing the space for a period of ten years with options for Hoyts to renew the lease for two additional consecutive ten-year periods. As of October 2000, borrowings under the facility totaled US$ 4.0 million. These borrowings accrue interest at the six-month LIBOR plus 2.25%. Under the agreement, borrowings are being repaid by offsetting against the rent payable by Hoyts Cinema. The amount outstanding under this loan as of June 30, 2007 was Ps 3.8 million. If after 30 years of lease, the loan has not been repaid in its entirety, the remaining balance shall become due. Pursuant to Decree No. 214/02, the loan and the lease agreements, which were originally denominated in U.S. Dollars, were mandatorily converted into Pesos.

During the fiscal year ended June 30, 2007, visitors to the shopping center generated total retail sales in nominal value of approximately Ps. 130.3 million, which represents sales per square meter of approximately Ps. 6,920. Revenues from leases increased from approximately Ps. 5.2 million for the fiscal year 2006 to Ps. 6.6 million for the fiscal year 2007 which represent monthly revenues per gross leasable square meter of Ps. 23.3 in 2006 and Ps. 29.4 in 2007. As of June 30, 2007, the occupancy rate in Alto Noa was 100%.

Five largest tenants of Alto Noa

Alto Noa’s five largest tenants (in terms of sales in this shopping center) accounted for approximately 32.8% of Alto Noa’s gross leasable area at June 30, 2007 and approximately 8.0% of its annual base rent for the fiscal year ended on such date.

The following table sets forth certain information about Alto Noa’s five largest tenants as of June 30, 2007:

Tenant	Type of Business	Gross Leasable Area	% of Gross Leasable Area
		(m2)	(%)
Supermercado Norte	Supermarket	3,080.54	16.4
Garbarino	Houseware	408.34	2.2
Fravega	Houseware	403.00	2.1
Slots	Entertainment	468.70	2.5
Y.P.F	Services	1,812.50	9.6
Total		6,173.08	32.8

Tenant mix of Alto Noa

The following table sets forth the types of businesses in Alto Noa:

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Type of Business	Gross Leasable Area	% of Gross Leasable Area
	(m2)	(%)
Entertainment	6,119.16	32.5
Clothes and footwear	3,184.85	16.9
Anchor stores	3,080.54	16.4
Services	2,345.71	12.5
Miscellaneous	1,652.17	8.8
Restaurants	1,240.25	6.6
Houseware	811.34	4.3
Home	397.45	2.0
Total	18,831.47	100.0

Revenues from Alto Noa

The following table sets forth certain information relating to the revenues of Alto Noa during the following periods:

	Fiscal year ended June 30,
	2005	2006		2007
	(in thousands of pesos)
Revenues:
Base rent	2,677.6	3,711.4		4,454.1
Percentage rent (1)	871.3	1,367.7		1,659.7
Total rent	3,548.9	5,079.1		6,113.7
Revenues from admission rights (2)	96.5	178.8		362.4
Other	184.0	(14.7	)	159.2
Total	3,829.4	5,243.2		6,635.3

(1) Percentage rent is the revenue proportional to sales of our tenants. See Principal Terms of our Leases on page 62.

(2) Admission rights are the revenues required to tenants for entering into a lease agreement or a lease agreement renewal.

Lease expirations for Alto Noa

The following table shows a schedule of estimated lease expirations for Alto Noa during the periods indicated for existing leases as of June 30, 2007, assuming that none of the tenants exercises renewal options nor terminate their leases early:

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Lease Agreements Expiration:	Number of Lease Agreements to Expire (1)	Square Meters of Leases to Expire	Square Meter Percentage of Leases to Expire	Amount of Lease Agreements to Expire	Percentage of Lease Agreements to Expire
		(m2)	(%)	(Ps. )	(%)
2008	50	8,826	47	871,996	20
2009	26	2,447	13	2,087,749	48
2010	6	4,071	22	1,320,500	30
2011 and subsequent years	2	3,488	18	112,500	2
Total	84	18,832	100	4,392,745	100

(1) Includes the vacant stores as of June 30, 2007. A lease may be associated to one or more stores.

Mendoza Plaza, City of Mendoza

Mendoza Plaza is a 148-store shopping center which opened in 1992 and is in the City of Mendoza, the capital of the Province of Mendoza. As of June 30, 2007 we own a 85.4% interest in Mendoza Plaza Shopping S.A. The other shareholder of Mendoza Plaza Shopping S.A. is Inversiones Falabella S.A. with a 14.6% interest. The city of Mendoza has a population of approximately 1.0 million inhabitants, making it the fourth largest city in Argentina. Mendoza Plaza consists of 39,392 square meters of gross leasable area. Mendoza Plaza has a multiplex cinema covering an area of approximately 3,659 square meters with ten movie theatres, the Chilean department store Falabella, a food court with 21 restaurants, an entertainment center and a supermarket which is also a tenant. The shopping center has two levels and has a free parking lot for 2,600 cars. Mendoza Plaza’s targeted clientele consists of middle-income individuals between the ages of 28 and 40.

During the fiscal year ended June 30, 2007, shopping center visitors generated total retail sales in nominal value of approximately Ps.337.8 million, which represents sales per square meter of approximately Ps.8,574. Revenues from leases increased from approximately Ps. 14.6 million for the fiscal year 2006 to Ps.18.8 million for the fiscal year 2007 which represent monthly revenues per gross leasable square meter of Ps.31.2 in 2006 and Ps.39.7 in 2007. As of June 30, 2007, the occupancy rate in Mendoza Plaza Shopping was approximately 95.9%.

Five largest tenants of Mendoza Plaza

Mendoza Plaza’s five largest tenants (in terms of sales in this shopping center) accounted for approximately 33.7% of Mendoza Plaza’s gross leasable area at June 30, 2007 and approximately 22.3% of its annual base rent for the fiscal year ended on such date.

The following table sets forth certain information about Mendoza Plaza’s five largest tenants as of June 30, 2007:

Tenant	Type of Business	Gross Leaseable Area	% of Gross Leaseable Area
		(m2)	(%)
Falabella	Anchor stores	6,970.01	17.7
Super Vea Plaza	Anchor stores	4,419.08	11.2
Garbarino	Houseware	813.90	2.1
Fravega	Houseware	469.37	1.2
Red Megatone	Houseware	588.70	1.5
Total		13,261.06	33.7

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Tenant mix of Mendoza Plaza

The following table sets forth the types of businesses of the tenants in Mendoza Plaza:

Type of Business	Gross Leasable Area	% of Gross Leasable Area
	(m2)	(%)
Anchor stores	11,389.09	28.9
Clothes and footwear	9,820.92	24.9
Entertainment	9,506.71	24.1
Restaurants	3,249.32	8.2
Miscellaneous	2,608.53	6.6
Houseware	1,871.97	4.8
Services	655.48	1.7
Home	290.45	0.8
Total	39,392.47	100.0

Revenues from Mendoza Plaza

The following table sets forth certain information relating to the revenues of Mendoza Plaza during the following periods:

	Fiscal year ended June 30,
	2005	2006	2007
	(in thousands of Ps.)
Revenues:
Base rent	5,301.8	8,843.5	11,041.2
Percentage rent (1)	2,257.3	3,552.8	4,906.5
Total rent	7,559.1	12,396.3	15,947.7
Revenues from admission rights (2)	594.8	1,425.4	2,000.9
Management fees	169.7	292.7	367.1
Other	888.5	521.2	463.6
Total	9,212.1	14,635.6	18,779.3

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(1) Percentage rent is the revenue proportional to sales of our tenants. See Principal Terms of our Leases on page 62.

(2) Admission rights are the revenues required to tenants for entering into a lease agreement or a lease agreement renewal.

Lease expirations for Mendoza Plaza

The following table shows a schedule of estimated lease expirations for Mendoza Plaza during the periods indicated for existing leases as of June 30, 2007, assuming that none of the tenants exercises renewal options nor terminate their leases early:

Lease Agreements Expiration:	Number of Lease Agreements to Expire (1)	Square Meters of Leases to Expire	Square Meter Percentage of Leases to Expire	Amount of Lease Agreements to Expire	Percentage of Lease Agreements to Expire
		(m2)	(%)	(Ps )	(%)
2008	105	26,893	68	3,162,044	28
2009	34	5,734	15	4,799,710	43
2010	7	951	2	1,427,153	13
2011 and subsequent years	2	5,815	15	1,848,000	16
Total	148	39,393	100	11,236,907	100

(1) Includes the vacant stores as of June 30, 2007. A lease may be associated to one or more stores.

Alto Rosario, City of Rosario

Alto Rosario is a 146-store shopping center located in the city of Rosario, the third largest city in Argentina in terms of population. It has a total constructed area of approximately 105,809 square meters, which consists of 30,261 square meters of gross leasable area. Alto Rosario has a food court with 17 restaurants, a large entertainment center, a supermarket and a Showcase cinema with 14 state-of-the-art movie theatres. The shopping center occupies on one floor and has a free parking lot for 1,736 cars. Alto Rosarios’s targeted clientele consists of middle-income individuals between the ages of 28 and 40.

During the fiscal year ended June 30, 2007, visitors to the shopping center generated total retail sales in nominal value of approximately Ps. 204.4 million, which represents sales per square meter of approximately Ps. 6,756. Revenues from leases increased from approximately Ps. 11.8 million for the fiscal year 2006 to Ps. 15.5 million for the fiscal year 2007, which represent monthly revenues per gross leasable square meter of Ps. 32.8 in 2006 and Ps. 42.6 in 2007. As of June 30, 2007, the occupancy rate in Alto Rosario was 93.4%.

Five largest tenants of Alto Rosario

Alto Rosario’s five largest tenants (in terms of sales in this shopping center) accounted for approximately 6.5% of Alto Rosario’s gross leasable area at June 30, 2007 and approximately 6.9% of its annual base rent for the fiscal year ended on such date.

The following table sets forth certain information about Alto Rosario’s five largest tenants as of June 30, 2007:

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Tenant	Type of Business	Gross Leasable Area	% of Gross Leasable Area
		(m2)	(%)
Fravega	Houseware	454.40	1.5
Sport 78	Clothes and footwear	612.50	2.0
Compumundo	Miscellaneous	232.50	0.8
Red Megatone	Houseware	406.50	1.3
Mc Donald´s	Food	254.80	0.8
Total		1,960.70	6.4

Tenant mix of Alto Rosario

The following table sets forth the types of businesses in Alto Rosario:

Type of Business	Gross Leasable Area	% of Gross Leasable Area
	(m2)	(%)
Entertainment	11,657.30	37.0
Clothes and footwear	9,665.62	30.7
Services	3,167.29	10.0
Miscellaneous	2,314.30	7.3
Restaurants	2,236.80	7.1
Anchor stores	1,295.00	4.1
Houseware	860.90	2.7
Home	324.35	1.1
Total	31,521.56	100.0

Revenues from Alto Rosario

The following table sets forth certain information relating to the revenues of Alto Rosario during the following period:

	Fiscal year ended June 30,
	2005	2006	2007
	(in thousands of Ps.)
Revenues:
Base rent	4,132.6	8,335.2	9,318.9
Percentage rent (1)	637.3	2,447.7	4,756.3
Total rent	4,769.9	10,782.9	14,075.2
Revenues from admission rights (2)	362.4	502.6	596.6
Management fees	240.0	360.0	420.0
Other	124.7	177.9	372.3
Total	5,497.0	11,823.4	15,464.5

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(1) Percentage rent is the revenue proportional to sales of our tenants. See Principal Terms of our Leases on page 63.

(2) Admission rights are the revenues required to tenants for entering into a lease agreement or a lease agreement renewal.

Lease expirations for Alto Rosario

The following table shows a schedule of estimated lease expirations for Alto Rosario during the periods indicated for existing leases as of June 30, 2007, assuming that none of the tenants exercise renewal options nor terminate their leases early:

Lease Agreements Expiration	Number of Lease Agreements to Expire (1)	Square Meters of Leases to Expire	Square Meter Percentage of Leases to Expire	Amount of Lease Agreements to Expire	Percentage of Lease Agreements to Expire
		(m2)	(%)	(Ps )	(%)
2007	107	13,810	46	7,606,288	59
2008	31	4,980	16	3,624,803	28
2009	5	2,177	7	1,236,328	10
2010 and subsequent years	3	9,295	31	495,025	3
Total	146	30,262	100	12,962,444	100

(1) Includes the vacant stores as of June 30, 2007. A lease may be associated to one or more stores.

Córdoba Shopping Villa Cabrera

On July 7, 2006, we executed a share purchase agreement jointly with our subsidiary Shopping Alto Palermo S.A. for the acquisition of all the shares held by Empalme S.A.I.C.F.A. y G., owner of Córdoba Shopping Villa Cabrera. The price agreed upon for such transaction was set at a gross amount of US$12.0 million plus a variable amount (originally established in the contract), that was determined at Ps.4 million. The Company’s incorporation was effective on December 31, 2006. To date, our company and our subsidiary Shopping Alto Palermo S.A. paid over US$6.0 million and the amount related to the “year-end adjustment”. As of June 30, 2007, three US$2.0 million installments are pending payment; such installments will become due and payable semi-annually as from December 2007, accruing interest at 6.0% p.a. To secure the unpaid payment price, we have pledged in favor of the sellers 100% of our equity interests in Empalme. Upon repaying each of the remaining installments, the encumbrance will be partially lifted.

Córdoba Shopping Villa Cabrera is a shopping center covering 35,000 square meters of surface area, including 106 commercial stores, 12 cinemas and parking lot for 1,500 vehicles, located in Villa Cabrera, City of Córdoba. This investment represents for us a growing opportunity in the commercial centers segment in line with the expansion strategy and presence in the principal markets inside the country.

We have not included any comparative tables (as the ones for the rest of our shopping centers) since we concluded this acquisition and started the administration and operations in December 2006.

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Residential Complexes

Torres de Abasto

In May 1999, we completed the construction of “Torres de Abasto”, a 545-apartment high-rise residential complex located one block away from Abasto in the center of the City of Buenos Aires. The complex had a construction cost of US$ 34.3 million and consists of three 28-story buildings and one 10-story building, all of which target the middle-income market. The complex has a swimming pool, a terrace, 24-hour security, approximately 310 underground parking spaces and four retail stores on the ground floor of one of the buildings.

We began to pre-sell units in this project in March 1997 and offered to contact financial institutions on behalf of purchasers or, in certain cases, offered financing directly to purchasers. As of June 30, 2003, we had financed through mortgage loans the acquisition of 69 units for a total amount of US$3.4 million, representing approximately 61% of the selling price of those units. On January 6, 2002, Decree No. 214/02 established the conversion to Pesos of all loans and agreements in effect that had been agreed in U.S. Dollars at the exchange rate of Ps. 1.00 = 1.00 U.S. dollar. As a result, the U.S. dollar-denominated mortgage loans offered by our Company, were converted into Pesos. As of June 30, 2007 our outstanding mortgage loans aggregated Ps. 880,765. The loans’ average interest rate at such date is 14.0%. Up to this date all the units were sold.

Expansion Opportunities

Panamerican Mall Project

During December 2006 we entered into a series of agreements for the construction, marketing and administration of a new commercial center to be developed in neighborhood of Saavedra in the City of Buenos Aires by our subsidiary Panamerican Mall S.A., in which we hold an 80% equity interest. Beside from the construction of a commercial center, the project also includes the construction of an hypermarket, a cinema complex and an office and/or residential building. This is one of our most significant projects. During March 2007 we started building the commercial center and we estimate that the opening will take place in November 2008 and April 2009.

Caballito Project

Caballito Project. We own a plot of land of approximately 25,539 square meters in the City of Buenos Aires, in the Caballito neighborhood, one of the most densely populated areas in the City. This plot could be used to build a shopping center of about 30,000 square meters, including a hypermarket. We have not been granted the required authorization by the City of Buenos Aires to develop the center in this plot and, to date, we may not guarantee that such authorization will be obtained.

Patio Olmos Building

On September 25, 2007 we signed the transfer deed with the Government of the Province of Córdoba for the real estate in which the Patio Olmos commercial center is currently operating for a total price of Ps.32.5 million. The transfer of the related concession contract was also signed. The balance of the price agreed amounting to Ps.22.7 million was cancelled on the same date.

Torres Rosario, City of Rosario

We own a plot of land spanning a surface of approximately 50,000 square meters in the City of Rosario in the same place where our local Shopping Center, Alto Rosario, is located.

On October 11, 2007, we entered into a barter agreement with Condominios del Alto S.A. whereby Condominios del Alto S.A. proposed to acquire plot G, located in the City of Rosario, Province of Santa Fe, Argentina, which belongs to us, for the construction at its own expense and under its own

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responsibility of a housing building. As consideration for the barter over the plot, Condominios de Alto S.A. agreed to deliver: (i) fifteen housing units, with a total constructed surface of 1,504.45 square meters, which will represent upon completion in aggregate 14.85% of the area of housing units to be build in plot G (ii) fifteen garages, which will represent upon completion in aggregate 15% of the area of garage units to be build in the same building.

As additional consideration in our favor, Condominios del Alto S.A. will pay us US$ 15,300 and guarantee for its obligations: (i) Condominios del Alto S.A. granted a first degree mortgage in our favor on plot G in the amount of US$ 1,100,000; (ii) established a security insurance of which we will be assigner of the insured amount of US$ 1,600,000, and (iii) the shareholders of Condominios del Alto S.A. are the guarantors of the obligations of the latter up to the amount of US$800,000.

Finally, we granted to Condominios del Alto S.A. an option to enter into a barter agreement in relation to on plot 2h, close to the transferred plot G.

Coto Residential Project

We own an air space of about 24,000 square meters on the top area of Coto hypermarket, close to our Abasto shopping center, in downtown Buenos Aires. This plot could be used to build 15,500 square meters of residential properties.

Neuquén Project

On March 28, 2007, we submitted to the Municipality of Neuquén a new draft project and the extension to the environmental impact study. On May 10, 2007, the Municipality of Neuquén, before issuing an opinion on the feasibility of the draft project submitted, required certain explanations and made certain comments and recommendations so that we respond to such matter within a reasonable time. On July 17, 2007, Shopping Neuquén responded the requirements for information and on September 20, 2007 the Municipality of Neuquén decreed the feasibility of the urban project and environmental impact study. As from such date Shopping Neuquén S.A. has a 150 days term to submit the work plans.

Likewise, on December 13, 2006, Shopping Neuquén S.A. entered into a pre-purchase agreement with P.Y.E. Sociedad Anónima for the plot E-UNO which was partially modified according to a legal instrument of September 20, 2007. The sale was subject to certain conditions that have been complied with. Also, it was conditioned upon the acquiring company earmarking the plot exclusively for the construction of a hotel, which does not exclude that as an accessory the acquiring company may construct one or two office buildings. The plot has a total area of 4,332.04 square meters and the sale price was established in US$119,131. The title deed and the conveyance of possession shall take place 60 days after the date on which the agreed-upon conditions have been complied with.

Shopping Centers’ Administration and Management

Administration and Management of Shopping Centers

Prior to our acquisition, each of our shopping centers had its own management and administrative structure, the cost of which had to be paid for by each individual shopping center operator. After acquiring several shopping centers and undergoing a corporate reorganization process, we reduced expenses by centralizing management and eliminating overlapping managerial positions.

Additional expenses related to the operation of the shopping centers (such as security, maintenance, housekeeping, electricity, etc.) are treated as pass-through expenses and are paid by tenants. Nonetheless, we try to manage pass-through expenses as efficiently as possible, since from the tenants’ perspective, rent is equal to total cost of occupancy, which includes base rent or percentage of sales, expenses and other contributions. Therefore, lower pass-through expenses allow tenants to reduce their costs. Our pass-through expenses have also been diminished as a consequence of the consolidation of the management of most of the acquired and developed shopping centers.

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We manage and operate each of the shopping centers in which we have more than 50% ownership. We charge tenants a monthly management fee, which varies from shopping center to shopping center, depending on the cost of administration and maintenance of the common areas and the administration of contributions made by tenants to fund promotional efforts for the shopping center. We charge a monthly management fee, paid prorated by the tenants, according to their particular lease rates. This management fee is a fixed amount in Alto Palermo, Alto Avellaneda, Abasto, Paseo Alcorta, Alto Rosario and Patio Bullrich and a percentage of the common area maintenance expenses in Buenos Aires Design and Mendoza Plaza. The total amount paid monthly to us during the fiscal year ended June 30, 2007, was approximately:

• Ps. 80,000 in Alto Palermo,

• Ps. 50,000 in Alto Avellaneda,

• Ps. 80,000 in Abasto,

• Ps. 65,000 in Patio Bullrich,

• Ps. 35,000 in Alto Rosario,

• Ps. 30,000 in Paseo Alcorta,

• 10% of the total amount of the common area maintenance expenses in Buenos Aires Design and

• 5% of the total amount of the common area maintenance expenses in Mendoza Plaza.

The total revenues from management fees charged by us during the fiscal year ended June 30, 2007, were Ps. 4.9 million, which accounts for 1.8% of our total revenues.

Principal Terms of our Leases

Under Argentine Law, terms of commercial leases must be between three to ten years, with most leases in the shopping center business having terms of no more than five years. Our lease agreements are generally denominated in Pesos.

Decree No. 214/2002 and Decree No. 762/2002, which modify Public Emergency Law No. 25,561, determine that duties to turn over sums of money which are denominated in U.S. dollars and which are not related to the financial system as of January 7, 2002 are subject to the following:

• obligations will have to be paid in Pesos at a rate of Ps.1.00 = US$1.00. Additionally, these obligations are subject to inflation adjustment through the CER index;

• if, as a consequence of this adjustment, the agreement is unfair to any of the parties, as long as the party that has the obligation to pay is not overdue and the adjustment is applicable, either may ask the other for a fairness adjustment. If they do not reach an agreement, a court will make the decision in order to preserve the continuity of the contract relation in a fair way; and

• new lease agreements may be freely entered into between parties, even U.S. dollar denominated lease agreements.

Leasable space in our shopping centers is marketed through an exclusive arrangement with our real estate brokers Fibesa S.A. and Comercializadora Los Altos S.A. We have a standard lease agreement, the terms and conditions of which are described below, which we use for most tenants. However, our largest tenants generally negotiate better terms for their respective leases. No assurance can be given that lease terms will be as set forth in the standard lease agreement.

We charge our tenants a rent which consists of the higher of (i) a monthly base rent (the “Base Rent”) and (ii) a specified percentage of the tenant’s monthly gross sales in the store (the “Percentage Rent”) (which generally ranges between 4% and 8% of tenant’s gross sales). Furthermore, pursuant to the rent escalation clause in most leases, a tenant’s Base Rent generally increases between 4% and 7% each year during the term of the lease. Although many of our lease agreements contain readjustment clauses, these are not based on an official index nor do they reflect the inflation index. In the event of litigation, there can be no assurance that we may be able to enforce such clauses contained in our lease agreements. See “Risk Factors—Risks Related to Our Business” for a more detailed discussion.

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In addition to rent, we charge most of our tenants an admission right, which is required to be paid upon entering into a lease agreement and upon a lease agreement renewal. The admission right is normally paid in one lump sum or in a small number of monthly installments. If the tenant pays this fee in installments, it is the tenant’s responsibility to pay for the balance of any such amount unpaid in the event the tenant terminates its lease prior to its expiration. In the event of unilateral termination and/or resolution for breach of duties by the tenant, a tenant will not be refunded its admission right without our consent.

We are responsible for supplying each shopping center with the electrical power connection and provision, a main telephone switchboard, central air conditioning connection and a connection to a general fire detection system. Each rental unit is connected to these systems. We also provide the food court tenants with sanitation and with gas systems connections. Each tenant is responsible for completing all the necessary installations within its own rental unit, in addition to the direct expenses generated by these items within each rental unit. These direct expenses generally include: electricity, water, gas, telephone and air conditioning. Tenants must also pay for a percentage of total charges and general taxes related to the maintenance of the common areas. We determine this percentage based on the tenant’s gross leasable area and the location of its store. The common area expenses include, among others, administration, security, operations, maintenance, cleaning and taxes.

We carry out promotional and marketing activities to increase attendance to our shopping centers. These activities are paid for with the tenants´ contributions to the Common Promotional Fund (“CPF”), which is administered by us. Every month tenants contribute to the CPF an amount equal to approximately 15% of their rent (Base Rent plus Percentage Rent), in addition to rent and expense payments. We may increase the percentage that tenants must contribute to the CPF, but the increase cannot exceed 25% of the original amount set forth in the corresponding lease agreement for the contributions to the CPF. We may also require tenants to make extraordinary contributions to the CPF to fund special promotional and marketing campaigns or to cover the costs of special promotional events that benefit all tenants. We may require tenants to make these extraordinary contributions up to four times a year provided that each such extraordinary contribution may not exceed 25% of the preceding monthly rental payment of the tenant.

Each tenant leases its rental unit as a shell without any fixtures. Each tenant is responsible for the interior design of its rental unit. Any modifications and additions to the rental units must be pre-approved by us. We have the option to decide tenants’ responsibility for all costs incurred in remodeling the rental units and for removing any additions made to the rental unit when the lease expires. Furthermore, tenants are responsible for obtaining adequate insurance for their rental units, which must include, among other things, coverage for fire, glass breakage, theft, flood, civil liability and workers’ compensation.

Control Systems

We have computer systems to monitor tenants’ sales in all of our shopping centers. We also conduct regular manual audits of our tenants accounting sales records in all of our shopping centers. Almost every store in those shopping centers has a computerized cash register that is linked to a main computer server in the administration office of such shopping center. We use the information generated from the computer monitoring system for auditing the Percentage Rent to be charged to each tenant and use the statistics regarding total sales, average sales, peak sale hours, etc., for marketing purposes. The lease contracts for tenants in Alto Avellaneda, Alto Palermo, Paseo Alcorta, Patio Bullrich, Buenos Aires Design (only with respect to agreements signed after its acquisition), Abasto, Alto Rosario Shopping, Alto Noa and Mendoza Plaza Shopping contain a clause requiring tenants to be linked to the computer monitoring system.

Insurance

We carry liability and fire insurance for all of our properties other than undeveloped land. The insurance policies have specifications, limits and deductibles customary for the community where the specific shopping center is located. We believe that the insurance coverage for our properties is adequate.

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Related Business

Credit Card Operations

Through our 80% owned subsidiary Tarshop, we are engaged in the credit card business through the issuance of our Tarjeta Shopping and Tarjeta Shopping Metroshop credit cards which have a strong presence in our shopping centers and nearby hypermarkets and street stores. In addition to increasing sales and traffic in our shopping centers, we also seek to achieve a financial return by facilitating access to credit for an underbanked segment of the Argentine population.

We target all customers of our shopping centers as well as customers in nearby hypermarkets and street stores. We attract customers by offering a credit card which is easy to obtain and use and by promotions suited to the commercial needs of our tenants and that are also regarded by customers as more convenient than other means of payment. One of the most important benefits granted to customers is the welcome discount which provides a 10% discount on all purchases made on the customer’s first day. One of the most aggressive promotions includes offering up to a 20% discount at stores designated at random, and as a result, affording accessible prices to a wide range of customers. Many of Tarjeta Shopping’s customers also have access to the Banelco and Link ATM networks, allowing them to make cash withdrawals from any ATM in Argentina.

We are currently considering strategic alternatives with respect to our investment in Tarshop which, due to its recent growth in size and profitability, competes increasingly with credit card companies that are substantially larger. As a result, we are currently considering alternatives to maximize the value of our investment in Tarshop, including its possible merger with, or sale to, another entity engaged in the credit card industry.

History of our Credit Card Business

The credit card business in Argentina started in the 1960s, but its development was limited until companies such as Visa and Mastercard entered the Argentine market in the early 1980s. During this first stage, and as a consequence of an inflationary economy, the surcharges imposed by merchants for credit card sales were high, burdensome and curtailed the growth of the credit card business in Argentina. With the implementation of the Convertibility Plan in April 1991 the inflation was curbed, and the consumer financing market, in pesos as well as in dollars, rapidly developed.

Our Tarjeta Shopping card was introduced in 1996 mainly to develop a private credit card that would be offered to customers of the Alto Avellaneda shopping center and accepted at all its stores, including the Wal-Mart Avellaneda superstore located next to Alto Avellaneda. In light of the initial success of the Tarjeta Shopping card in Alto Avellaneda, we determined to use it as our platform for expanding our credit card business to our other shopping centers.

In late 2004, we introduced our Tarjeta Shopping Metroshop credit card through a 50.0% owned joint venture with Metronec S.A., a company which issues the Tarjeta Subtecard credit card. The Tarjeta Shopping Metroshop credit card has the same characteristics and benefits as our Tarjeta Shopping card as well as the Tarjeta Subtecard. The Tarjeta Shopping Metroshop credit card allows us access to the users of the subway of the City of Buenos Aires and the General Urquiza Railway. Holders of the Tarjeta Shopping Metroshop credit card can pay credit card bills at Metroshop’s branches, subway stations ticket counters and through other collection agents, and are entitled to participate in exclusive promotions and specially designed financing plans. This alliance allows us to develop a consumer credit business using the captive customer base, experience and know how in the marketing of financial products in high-transit areas and its use in the more than 37,000 participating stores, the best chains and the Banelco and Link ATM networks.

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Metroshop currently has 11 branches distributed in the main stations of the A, B, C, and D and E subway lines in the City of Buenos Aires, one in the City of Mar del Plata and more than twenty outsourced participating points of sale located in the subway network of the City of Buenos Aires.

Since 2003, our credit card business has expanded its customer base and its area of influence, particularly in the south area of Buenos Aires and in other provinces. For the fiscal years ended June 30, 2005, 2006 and 2007 the evolution of Tarshop’s customers base was as follows:

Fiscal year ended June 30,	Shopping Centers		Street Stores and Other Non-Shopping Center Stores
2005	28.1	%	116.1	%
2006	16.0	%	84.0	%
2007	13.9	%	73.7	%

Our Tarjeta Shopping card has become one of the main credit cards in Alto Avellaneda shopping center with more than 29% of the credit card sales made, and in Abasto de Buenos Aires with a share exceeding 14%. In addition, we have increased our Tarjeta Shopping customer base to almost 700,000 accounts as of June 30, 2007, with an activation of more than 70%, sales of almost Ps.1.2 billion in the year and more than 37,000 participating stores.

The table below sets forth information with respect to the growth of our credit card business during the periods indicated:

	For the fiscal year ended June 30,
	2005	2006
	(in million of Ps.)
Revenues:
Interest income	14.8	29.9
Merchants’ commissions	14.7	22.7
Other fees and commissions	0.0	0.1
Compensatory, punitive and other interest	3.1	5.9
Account maintenance charges	12.7	22.2
Charges for life and disability insurance	19.4	41.6
Income from Metroshop	0.1	0.4
Other services	0.0	0.1
Credit cards reissued	0.0	0.1
Total	64.8	123.0
Credit card receivables(1)	209.2	384.6
Credit cards issued	0.4	0.5
Branches(2)	19	20
Participating stores(2)	21,500	25,900

(1) Including the securitized portion.

(2) In constant Ps.

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The table below sets forth information with respect to the growth of our credit card business during fiscal year 2007, considering the last classification of revenues in Tarshop’s financial statements:

	For the fiscal year ended June 30,
	2007
	(in million of Ps.)
Revenues
Merchants’ commissions	38.2
Income for services	74.2
Interest income	70.2
Other fees and commissions	2.6
Credit card reissued	1.5
Account maintenance charges	32.0
Income from Metroshop	0.7
Total	219.5

Distribution Network

Today, Tarjeta Shopping has 23 branches, including in our Alto Avellaneda, Alto Palermo, Abasto and Paseo Alcorta shopping centers, as well as street offices such as the one located in the Avellaneda District in the downtown area of Buenos Aires, and in the cities of Lomas de Zamora, Morón and Quilmes, among others. This growth has been accompanied by the significant expansion throughout the rest of the country by the opening of branches in the provinces of Córdoba, Tucumán, Salta and San Salvador de Jujuy. In addition, we have stands for promotion, opening of accounts and distribution of cards at the Wal-Mart Avellaneda superstore and the Coto supermarkets located in the cities of Lanús, Sarandí and Temperley. We have also entered into strategic alliances at the point of sale of certain important household appliance and motorcycle stores where it is possible to obtain instant credit through the so-called “First Transaction” scheme where no card is needed for the first purchase.

Each branch is organized as an autonomous and independent business unit that handles the resources necessary to achieve its business goals, such as invoicing and number of accounts opened. In addition, Tarjeta Shopping has its own ATM structure for payment of bills and extension of automatic cash loans to customers in its branches, applying facilities and procedures for the management and movement of cash comparable to those used by bank branches.

Credit Risk Management

Credit Approval Process

Applications for issue of credit cards submitted are subjected to an evaluation process that undergoes various controls. First, the applicant’s identity is verified and its credit information is collected from credit bureau agencies. Based on the information filed by the applicant and the credit bureau data obtained, in the absence of any negative background, the applicant is given a card with a provisional limit set according to its

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score level. Simultaneously, the data provided by the applicant himself are verified directly and by cross-checking by means of inquiries to credit databases and governmental agencies, and if necessary, telephone verifications and validations are made at the relevant domicile.

Credit Limits

The credit limit assigned to each card applicant is determined on the basis of the family income and other requirements established by Tarshop based on its experience up to a maximum of Ps. 30,000. The credit limit is the maximum amount of unmatured installment payments available to the client and its additional cardholders to make purchases, services and cash advances, after having analyzed the client’s indebtedness to other financial institutions.

Applications to increase credit limits are evaluated on the basis of the applicant’s seniority and payment behavior and financial condition vis-à-vis other financial institutions. In addition, Tarshop from time to time reviews the card’s limit based on the card holder’s payment behavior.

Payment Plans

Tarshop handles a single billing cycle that matures on the 20^th day of each month. The bill contemplates a grace period for non-interest accruing payments that expires from the 7^th to the 11^th day of the following month, and a second due date subject to delayed payment charges on the 20^th day of the following month. Bills are payable at any Tarshop office and in our major collection facilities.

Accounts with unpaid bills as of the 20th day of each month fall in arrears, and are blocked until payment is effected. During the first 30 days of arrears, the client receives automatic and manual calls and letters of reminder. As from the 23^rd day of arrears, telephone collection officers arrange an interview with the delinquent client at the branches, so as to continue collection activities in person.

Credit Monitoring and Collection Procedures

Delinquent collection management proceedings start with a reminder call sent to clients who have failed to pay on the first due date, by using an automatic call system. Approximately 40 to 120 days after the due date, the actions involve a combination of telephone calls, interviews with collection officers at the Tarshop’s branches and home visits, aimed at obtaining a discharge of the debt or a payment rescheduling, accompanied by the execution of a debt acknowledgment instrument by the client. Finally, accounts with arrears of more than 120 days are transferred to the attorneys for the filing of legal actions, unless there is evidence of the debtor’s insolvency.

Tarshop’s collection procedures are similar to those established in the trust, see “Funding and Securitization Activities” below.

As concerns loan loss provisions, the policies we apply are similar to those established by the Argentine Central Bank. We make provisions in relation to the credit portfolio category based on the following:

Performing	Provision
Past due:
0-31 days	1.0	%
32-90 days	5.0	%
91-180 days	25.0	%
181-365 days	50.0	%

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The table below sets forth information with respect to the credit card receivables (including the securitized portion)

	As of June 30,
	2005		2006		2007
	Ps. (1)	%	Ps. (1)	%	Ps. (1)	%
Portfolio Status
Performing(2)	264.1	90.5	338.6	88.2	627.4	86.7
Past due:
31-89 days	8.1	2.8	13.3	3.5	26.2	3.6
90-180 days	10.2	3.5	16.8	4.4	37.8	5.2
181-365 days	9.4	3.2	15.0	3.9	32.2	4.5
Total	291.8	100.0	383.7	100.0	723.6	100.0
Over 365 days and legal proceedings(3)	30.9	—	35.5	—	55.0	—
Loan loss allowance as % of past due loans	—	37.8	—	29.5	—	20.3
Loan loss allowance as % of all loans	—	3.5	—	3.5	—	2.7

(1) In million of Ps.

(2) Performing loans not past due more than 30 days.

(3) These claims are subject to a 100% loan loss allowance.

Funding and Securitization Activities

Tarshop’s main liquidity needs and capital resources include: payment of sales made by retail stores, working capital needs, investment in new technology, the opening and improvement of branches and holding of cash to take advantage of opportunities that may arise. Tarshop has significantly expanded its business by securitizing its credit card receivables pursuant to the Tarjeta Shopping Trust Program. By resorting to this innovative financial engineering mechanism, Tarjeta Shopping has led one of the largest issues in the market and successfully placed 33 series for more than Ps. 1.5 billion, and was assigned the highest rating by Standard & Poor’s.

Throughout its history, Tarshop has incurred liabilities mainly in local currency and to a lesser extent in foreign currency, and leveraged twice the coverage for its commitments incurred in foreign currency.

Receivables Portfolio Securitization

Tarshop has its own Ps.900 million Trust Security Program. To date, 33 series have been issued aggregating Ps.1,533 million in bonds and certificates of participation. In 2007, 4 series were issued for Ps.261 million, and in 2006 3 series were issued for Ps.99 million. Total terms under each issue range from 20 to 30 months. The applicable nominal interest rates for Class A and B Bonds are approximately 11% and 14%, respectively. The interest accrued on both Bonds is subject to a floor and ceiling rates. Class A Bonds in both the revolving and non-revolving structures have an AAA rating granted by S&P.

Liquidity Policies

Tarshop’s policy is to maintain cash and bank account balances for an average of approximately Ps.2.0 million, and to invest any excess in interest-accruing accounts and in mutual investment funds redeemable upon request within 48 or 24 hours. All balances and reserves are denominated in local currency.

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Technology

Information systems are an essential element for credit card companies, as the processing of a large number of transactions in constant expansion is required. This has prompted Tarjeta Shopping to procure state-of-the art technology, and for this reason the current data and transaction processing systems maintain all branches linked through its local intranet, allowing expediency and confidentiality in the handling and transmission of data. In addition, its administrative headquarters are capable of being connected via PosNetworks to the participating stores, ensuring the possibility of adding stores and carrying out transactions around the clock.

The expansion of the call center and our credit department required a significant investment in technology and communications, resulting in an aggressive growth in the number of transactions and inquiries attended and increase in processing speed. The Area has four sectors: Systems Development, Technology, New Projects and Server Management and IT Security. Tarjeta Shopping operates with proprietary information systems, developed and suited to the company’s business. Its main systems are developed in 4GL language with Informix DS Data Base Engine, currently, migrating to a new context developed under Oracle DFG Data Base. The main systems’ platform is composed of SUN Spark servers, with Solaris 10 operating system.

All business processes, from origination to account opening, issue of plastics, transaction validation, loan management, customer management, generation and printing of bills, payments, collections, delinquency management and processing, are supported by these system.

The systems allow the on-line capturing and validation of purchases, receiving transactions through Posnet, LaPos (Visa), and direct communication with the major Shopping Center, Hypermarket and Department Store chains, and cash withdrawal transactions through Banelco and Link ATMs.

Tarjeta Shopping’s equipment and IT systems are comparable to those used by large-scale credit card companies, which will allow it to respect its current cost structure while still maintaining the speed in the growth of accounts and portfolio it has been showing so far.

Summary Balance Sheet and Other Data

The following table sets forth certain balance sheet and other data for Tarshop as of June 30, 2005, 2006 and 2007:

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	As of June 30,
	2005		2006		2007
	(in million Ps., except percentage)
Balance Sheet Data
Current assets:
Cash and banks	5.74		4.65		8.83
Investments	10.76		10.79		35.29
Accounts receivable	20.09		46.06		67.72
Other receivables	6.62		6.66		16.16
Total current assets	43.21		68.16		128.00
Non-current assets:
Other receivables	2.11		7.43		24.31
Property, plant and equipment	2.88		4.88		9.68
Investments	19.26		39.81		55.68
Accounts receivable	6.93		19.74		40.58
Intangible Assets net	0.04		0.03		0.02
Other assets	0.00		0.03		0.01
Total non-current assets	31.22		71.92		130.28
Total assets	74.43		140.08		258.28
Current liabilities:
Accounts payable	39.69		87.68		156.90
Customer advances	1.31		2.20		4.40
Short-term debt	3.11		5.83		12.28
Related parties	8.38		6.77		3.19
Salaries and social security payable	2.21		2.15		5.02
Taxes payable	5.44		6.44		21.78
Other liabilities	0.00		0.07		0.73
Total current liabilities	60.14		111.14		204.30
Non-current liabilities:
Long-term debt	0.00		0.00		5.60
Other liabilities	0.00		0.10		0.53
Total non-current liabilities	0.00		0.10		6.13
Total liabilities	60.14		111.24		210.43
Shareholders’ equity	14.29		28.84		47.85
Total liabilities and shareholders’ equity	74.43		140.08		258.28
Other Financial Data
Return on assets	10.0	%	10.4	%	7.4	%
Return on shareholders’ equity	107.7	%	101.8	%	65.9	%
Net interest margin	62.08	%	62.84	%	64.72	%
Non-performing loans as a percentage of total loans	26.65	%	25.20	%	24.48	%
Reserve for loan losses as a percentage of total loans	26.37	%	16.80	%	15.17	%
Reserve for loan losses as a percentage of non-performing loans	98.98	%	66.65	%	61.98	%

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E-Commerce Activities

Altocity.Com S.A. (“Altocity”) was a company engaged in delivering e-commerce services providing information tailored to customers’ needs, to make informed decisions. Retailers also benefited from such services, since they had access to a large customer data base. Altocity was a wholly owned subsidiary of E-Commerce Latina S.A., (“E-Commerce Latina”), an Internet venture between us and Telefónica de Argentina S.A. (“Telefónica”), in which each had a 50% interest.

On October 24, 2006, we entered into a share purchase agreement with Telefónica, by which we acquired 808,354 ordinary shares issued and outstanding of E-Commerce Latina, and 11 ordinary shares issued and outstanding of Altocity.Com for a total price of Ps.85,876. The agreement was subject to approval by the Comisión Nacional de Defensa de la Competencia, or Antitrust Authority. By the end of December 2006, we received the approval and in January 2007, the transaction was closed. Thus, we obtained total share control of E-Commerce Latina S.A. During January 2007, the total price agreed was fully paid.

The board of directors of Altocity decided to restructure a large part of its activities by increasing those activities described in its social purpose. On January 6, 2007 the meeting of shareholders complied with such initiative in order to incorporate activities which allowed the company to reach an adequate economic and financial equilibrium.

The sale of products in the web ended in March 2007. The reason for this decision was that although our operations registered a significant increase, it was not sufficient to achieve economies of scale.

On November 6, 2007, as part of a corporate restructuring, we redefined our organizational structure, with the purpose of optimizing our operations. Accordingly, we sold to IRSA the interest it held in our controlled non-operative company E-Commerce Latina S.A., which consisted of 1,616,702 common shares for an aggregate price of Ps. 3,495,217.

Competition

Shopping centers

Because most of our shopping centers are located in developed and highly populated areas, there are competing shopping centers within, or in close proximity to, our targeted areas. The number of shopping centers in a particular area could have a material effect on our ability to lease space in our shopping centers and on the amount of rent that we are able to charge. We believe that due to the limited availability of large plots of land and zoning restrictions in the City of Buenos Aires, it will be difficult for other companies to compete with us in areas through the development of new shopping center properties. Our principal competitor is Cencosud S.A. which owns and operates Unicenter shopping center and the Jumbo hypermarket chain, among others.

The following chart shows certain information relating to the most important owners and operators of shopping centers in Argentina:

Company	Shopping Center	Location(1)	Leasable gross area	Shops	% Overall national leasable area(2)		% Shop(2)
Alto Palermo
	Alto Avellaneda(5)	GBA	49,604	152	3.77	%	3.08	%

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Company	Shopping Center	Location(1)	Leasable gross area	Shops	% Overall national leasable area(2)		% Shop(2)
	Abasto de Buenos Aires	BA	39,683	171	3.01	%	3.47	%
	Mendoza Plaza Shopping(3)(5)	Mendoza	39,392	151	2.99	%	3.06	%
	Paseo Alcorta(5)	BA	48,893	116	3.71	%	2.35	%
	Alto Palermo Shopping	BA	18,210	150	1.38	%	3.04	%
	Buenos Aires Design(4)	BA	13,988	61	1.06	%	1.24	%
	Patio Bullrich	BA	10,978	83	0.83	%	1.68	%
	Alto Noa(5)	Salta	18,831	85	1.43	%	1.72	%
	Córdoba Shopping(5)	Córdoba	23,428	108	1.78	%	2.19	%
	Alto Rosario(5)	Rosario	40,415	143	3.07	%	2.90	%
	Subtotal		303,422	1.220	23.04	%	24.72	%
Cencosud
	Unicenter Shopping(5)	GBA	90,869	287	6.90	%	5.82	%
	Plaza Oeste Shopping(5)	GBA	38,720	138	2.94	%	2.80	%
	Quilmes Factory(5)	GBA	31,373	47	2.38	%	0.95	%
	Lomas Center Shopping(5)	GBA	24,271	50	1.84	%	1.01	%
	San Martin Factory(5)	GBA	24,388	31	1.85	%	0.63	%
	Parque Brown Factory(5)	GBA	23,553	41	1.79	%	0.83	%
	Las Palmas del Pilar Shopping(5)	GBA	37,662	102	2.86	%	2.07	%
	Jumbo Palermo Centro Comercial(5)	BA	22,763	46	1.73	%	0.93	%
	El Portal de la Patagonia(5)	Neuquén	21,700	45	1.65	%	0.91	%
	El Portal de Escobar(5)	GBA	18,886	24	1.43	%	0.49	%
	El Portal de los Andes(5)	Mendoza	22,962	40	1.74	%	0.81	%
	Portal de Madryn(5)	Chubut	0	0	0.00	%	0.00	%
	El Portal de Rosario(5)	Rosario	57,419	182	4.36	%	3.69	%
	Subtotal		414,566	1.033	31.48	%	20.93	%
Other Operators
	Bahia Blanca		17,887	73	1.36	%	1.48	%
	Caballito Shopping Center		4,800	75	0.36	%	1.52	%
	Del Parque Shopping		2,985	61	0.23	%	1.24	%
	Devoto Shopping		17,615	90	1.34	%	1.82	%

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Company	Shopping Center	Location(1)	Leasable gross area	Shops	% Overall national leasable area(2)		% Shop(2)
	El Solar del Abadia		6,825	90	0.52	%	1.82	%
	Galerias Pacifico		12,647	151	0.96	%	3.06	%
	Libertad Poeta Lugones		24,000	164	1.82	%	3.32	%
	Los Gallegos Shopping		12,000	65	0.91	%	1.32	%
	Nine Shopping		25,295	95	1.92	%	1.93	%
	Nordelta Centro Comercial		8,808	69	0.67	%	1.40	%
	Nuevocentro Shopping		25,700	121	1.95	%	2.45	%
	Palace Garden Centro Comercial		4,230	58	0.32	%	1.18	%
	Palmares Open Mall		22,570	97	1.71	%	1.97	%
	Parque Comercial Auchan Quilmes		10,500	14	0.80	%	0.28	%
	Parque Comercial Avellaneda		57,000	81	4.33	%	1.64	%
	Parque Comercial Bs As II		26,300	32	2.00	%	0.65	%
	Paseo del Sol		29,664	73	2.25	%	1.48	%
	Paseo Diagonal		4,050	24	0.31	%	0.49	%
	Patio Casey		4,023	41	0.31	%	0.83	%
	Patio Olmos		13,198	121	1.00	%	2.45	%
	Plaza Liniers Shopping		5,800	64	0.44	%	1.30	%
	Posadas Plaza Shopping		5,347	59	0.41	%	1.20	%
	San Luis Shopping Center		27,754	37	2.11	%	0.75	%
	Shopping del Jardin		12,521	41	0.95	%	0.83	%
	Shopping del Siglo		12,540	81	0.95	%	1.64	%
	Showcenter Haedo		24,644	40	1.87	%	0.81	%
	Showcenter Norte		39,688	19	3.01	%	0.39	%
	Spinetto Shopping		15,047	47	1.14	%	0.95	%
	Tren de la Costa		28,399	102	2.16	%	2.07	%
	Village Recoleta		0	22	0.00	%	0.45	%
	Boulevard Shopping		0	0	0.00	%	0.00	%
	El Palacio Galerias		1,500	30	0.11	%	0.61	%
	Estacion Recoleta		0	0	0.00	%	0.00	%
	Paseo Pilar		4,618	65	0.35	%	1.32	%
	Paseo Shopping		6,921	72	0.53	%	1.46	%
	Solei Factory		25,330	101	1.92	%	2.05	%
	Portal Tucumán Shopping		28,050	93	2.13	%	1.88	%

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Company	Shopping Center	Location(1)	Leasable gross area	Shops	% Overall national leasable area(2)		% Shop(2)
	Village Caballito		5,471	13	0.42	%	0.26	%
	Torres del Sol		12,095	163	0.92	%	3.30	%
	Catamarca Shopping Tucumán		13,040	38	0.99	%	0.77	%
	Subtotal		598,862	2.682	45.48	%	54.35	%
Total			1,316,850	4.935	100	%	100	%

(1) “GBA” means Gran Buenos Aires, the Buenos Aires metropolitan area, and “BA” means the city of Buenos Aires.

(2) Percentage over total shopping centers in Argentina. Figures may not sum due to rounding.

(3) Our effective interest in Mendoza Plaza Shopping is 85.4%.

(4) We have an effective interest of 54% in ERSA, a company that operates the concession of this building.

(5) Includes total leaseable area occupied by supermarkets and hypermarkets.

Source: Argentine Chamber of Shopping Centers.

Credit Card Operations

The credit card market in Argentina is highly competitive due to (i) the active participation in this market of substantially all international and domestic banks conducting business in Argentina, most of which have substantially greater financial resources than we do and (ii) the strong market position of both Visa and Mastercard in Argentina. Our principal competitors in various segments of the credit card market include:

• International and domestic Cards: Visa, Master, AMEX, Cabal, Diners and Carta Franca.

• Regional cards: Naranja, Provencred, Efectivo Sí and Credilogros.

• Zonal cards: Italcred, Carta Sur, Crédito Actual and Credial.

• Closed cards: Falabella, Garbarino, Frávega, Musimundo, Carrefour and Century.

• Banks: Columbia, Itaú, Comafi, Privado and others.

• International financial companies: GE Capital and Cetelem.

Seasonality

Our business is directly related to seasonality, which affects the sales’ level of our tenants. During the summer holiday season (January and February) our tenants experience their minimum sales levels, compared to the winter holidays (July) and the month of December (Christmas) when our tenants tend to reach their peak sales figures. Clothes and footwear tenants usually change their collections in spring and autumn. This has a positive effect in shopping sales. Discount sales at the end of each season are also a major source of impact in our business.

Regulation and Government Supervision

The laws and regulations governing the acquisition and transfer of real estate, as well as municipal zoning ordinances, are applicable to the development and operation of our properties.

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Currently, Argentine law does not specifically regulate shopping center lease agreements. Since our shopping center leases generally differ from ordinary commercial leases, we have created standard provisions that govern the relationship with our shopping center tenants. In compliance with applicable laws and our own policies, we have established specific provisions regarding store hours, fines and other penalties, tenants’ sales information duties, centralized administration, control and supervision.

Leases

Argentine law imposes certain restrictions on landlords, including:

• a prohibition to include price adjustment clauses based on inflation increases in lease agreements; and

• the imposition of a three-year minimum lease term for retail property, except in the case of stands and/or spaces in markets and fairs.

Although our lease agreements were U.S. dollar-denominated, Decree No. 214/2002, Decree No. 762/2002 and Law N° 25,820 that amended the Public Emergency Law, provided that monetary obligations in force as of January 7, 2002 arising from agreements governed by private law and which provided for payments in U.S. dollars were subject to the following rules:

• financial obligations were to be paid in Pesos at the exchange rate of Ps.1.00 = US$1.00 plus the CER for commercial leases;

• from October 1, 2002 and until March 31, 2004 for residential leases, the obligations where the tenant is an individual and the dwelling is used as the family residence of permanent use were to be paid in Pesos at the exchange rate of Ps.1.00 = US$1.00 plus the CVS;

• if because of the application of these provisions, the amount of the installment were higher or lower than the amount at the moment of the payment, any of the parties could require an equitable adjustment of the price. If the parties did not reach an agreement, the judicial courts could decide about the difference in each particular case; and

• pursuant to Decree No. 117/2004 and Law No. 25,796 that amends Law No. 25,713, the CVS became unenforceable since April 1, 2004.

Under the Argentine Civil Code and the Lease Law No. 23,091, lease terms may not exceed ten years, except for leases regulated by Law No. 25,248 (which provides that real estate leases containing purchase options –leasing inmobiliario- are not subject to term limitations). Generally, terms in our lease agreements go from 3 to 10 years.

Lease Law No. 23,091, as amended by Law No. 24,808 provides that tenants may rescind commercial lease agreements after the first six months by sending a written notice at least 60 days before the termination of the contract. Such rescission is subject to penalties which range from one to one and a half months of rent. If the tenant rescinds during the first year of the lease the penalty is one and a half month’s rent and if the rescission occurs after the first year of lease the penalty is one month’s rent.

Argentine Law permits the parties to a lease agreement to freely set their rights and obligations thereunder. However, in the past, in response to housing shortages, high rates of inflation and difficult access to credit, the Argentine Government imposed strict and burdensome regulations regarding leases. Such regulations limited or prohibited rental increases and prohibited the eviction of tenants even for failure to pay rent. These regulations discouraged both property rental and the construction of new housing.

While current argentine government policy discourages government regulation of lease agreements, there can be no assurance that additional regulations will not be imposed in the future by the Argentine

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Congress, including regulations similar to those previously in place. Furthermore, most of our leases provide that the tenants pay all costs and taxes related to the property in proportion to their respective leasable areas. In the event of a significant increase in the amount of such costs and taxes, the argentine government may respond to political pressure to intervene by regulating this practice, thereby negatively affecting our rental income. On August 16, 2006, economy minister Felisa Miceli announced a loosening of requirements on mortgage loans up to Ps.300,000. Banks were enabled to finance 100 percent of house purchases on property valued at up to Ps.200,000 and 90 percent of purchases of property worth up to Ps.300,000. The duration of these loans will be up to 30 years. These measures were taken in response to the escalating cost of leases and the difficulties in accessing the mortgage loan market. These measures became effective in September, 2006.

The Argentine Civil and Commercial Procedure Code enables the lessor to pursue what is known as an “executory proceeding” where lessees fail to pay rent. In executory proceedings debtors have fewer defenses available to prevent foreclosure, making these proceedings substantially shorter than ordinary ones. In executory proceedings the origin of the debt is not under discussion; the trial focuses on the instrument of the debt itself. The aforementioned code also permits special eviction proceedings, which are carried out in the same way as ordinary proceedings. The Argentine Civil Code enables judges to summon tenants who fall two months in arrears to vacate the property they are renting within 10 days of having received notice to such effect. However, historically, large court dockets and numerous procedural hurdles have resulted in significant delays to evictions proceedings, which generally last from six months to two years from the date of filing of the suit to the time of actual eviction.

Development and Land Use

Buenos Aires Urban Planning Code. Our real estate activities are subject to several municipal zoning, building and environmental regulations. In the city of Buenos Aires, where the vast majority of our real estate properties are located, the Buenos Aires Urban Planning Code (Código de Planeamiento Urbano de la Ciudad de Buenos Aires) generally restricts the density and use of property and controls physical features of improvements on property, such as height, design, set-back and overhang, consistent with the city’s urban landscape policy. The administrative agency in charge of the Urban Planning Code is the Secretary of Urban Planning of the City of Buenos Aires.

Buenos Aires Building Code. The Buenos Aires Building Code (Código de la Edificación de la Ciudad de Buenos Aires) complements the Buenos Aires Urban Planning Code and regulates the structural use and development of property in the city of Buenos Aires. The Buenos Aires Building Code requires builders and developers to file applications for building permits, including the submission to the Secretary of Work and Public Services (Secretaría de Obras y Servicios Públicos) of architectural plans for review, to assure compliance therewith.

We believe that all of our real estate properties are in material compliance with all relevant laws, ordinances and regulations.

Sales and Ownership

Buildings Law. Buildings Law No. 19,724, as amended, sets forth a regime for the construction of buildings for later subdivision into condominium (Propiedad Horizontal). Under this law, developers must inform potential purchasers of their intention to sell the building as a condominium, as well as of all sale conditions, and the size of each unit in relation to the whole building. The sale of these units is subject to subdivision approval and in order to be included in Buildings Law regime must be registered with the Real Estate Registry (Registro de la Propiedad Inmueble). This law also states that, in the event that construction is not completed, all amounts already deposited must be repaid to the purchasers.

Protection for the Disabled Law. The Protection for the Disabled Law No. 22,431, enacted on March 20, 1981, as amended, provides that in connection with the construction and renovation of buildings, obstructions to access must be eliminated in order to enable access by handicapped individuals. In the construction of public buildings, entrances, transit pathways and adequate facilities for mobility impaired individuals must be provided.

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Buildings constructed before the enforcement of the Protection for the Disabled Law must be adapted to provide accesses, transit pathways and adequate facilities for mobility-impaired individuals. Those pre-existing buildings, which due to their architectural design may not be adapted to the use by mobility-impaired individuals, are exempted from the fulfillment of these requirements. The Protection for the Disabled Law provides that residential buildings must ensure access by mobility impaired individuals to elevators and aisles.

Real Estate Installment Sales Law. The Real Estate Installment Sales Law No. 14,005, as amended by Law No. 23,266 and Decree No. 2015/1985, imposes a series of requirements on contracts for the sale of subdivided plots of land regarding, for example, the sale price which is paid in installments and the deed, which is not conveyed until final payment. The provisions of this law require, among other things:

• the registration of the intention to sell the property in subdivided plots in the Real Estate Registry (Registro de la Propiedad Inmueble) corresponding to the jurisdiction of the property. Registration will only be possible with regards to unencumbered property. Mortgaged property may only be registered where creditors agree to divide the debt in accordance with the subdivided plots. However, creditors may be judicially compelled to agree to the division.

• the preliminary registration with the Real Estate Registry of the purchase instrument within 30 days of execution of the agreements.

Once the property is registered, the installment sale may not occur in a manner inconsistent with the Real Estate Installment Sales Act, unless seller registers his decision to desist from the sale in installments with the Real Estate Registry. In the event of a dispute over the title between the purchaser and third-party creditors of the seller, the installment purchaser who has duly registered the purchase instrument will obtain the deed to the plot. Further, the purchaser can demand conveyance of title after at least 25% of the purchase price has been paid, although the seller may demand a mortgage to secure payment of the balance of the purchase price.

After payment of 25% of the purchase price or the construction of improvements on the property equal to at least 50% of the property value, the Real Estate Installment Sales Act prohibits the rescission of the sales contract for failure by the purchaser to pay the balance of the purchase price. However, in such event the seller may take action under any mortgage on the property.

Mortgage Regulation. The Argentine Civil Code regulates mortgages both as a contract and as a right over property. There are no special provisions in the Civil Code aimed at protecting mortgagors. Any agreement entered into by a mortgagor and a mortgagee at time of execution of the mortgage or prior to the default of the mortgagor allowing the mortgagee to recover the property without a public auction of the property will not be enforced by the courts as contrary to Argentine public policy.

Until the enactment of Trust Law No. 24,441, the only procedure available to collect unpaid amounts secured by a mortgage was a proceeding regulated by the Civil and Commercial Procedure Code. The heavy caseload on the courts that hear such matters usually delays the proceeding, which currently takes 1 to 2 years to complete.

Chapter V of Trust Law No. 24,441 institutes a new procedure which may expedite collection of unpaid amounts secured by a mortgage. To be applicable, the new rules, which allow an out-of-court auction, need to be expressly agreed to by the parties in the mortgage contract.

Currently, we include in our mortgages a clause enabling the enforcement of Law No. 24,441. However, there can be no assurance that such collection provisions will accelerate the recovery of unpaid amounts under mortgage guarantees.

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On the other hand, the Public Emergency Law, as amended, established the suspension for the term of 270 days from the enactment of that law, of all the judicial or non-judicial enforcement procedures, including the enforcement of mortgages and pledges, regardless of their origin. On February 14, 2002, Law No. 25,563 amending the Bankruptcy Law (the “New Bankruptcy Law”) was enacted. Under the New Bankruptcy Law, certain bankruptcies and foreclosures (including foreclosures on mortgage loans) were suspended for a period of 180 days from the law’s effective date. Such period was extended for 90 days more by Law No. 25,640 dated September 2002, expiring on February, 2003.

On February 4, 2003, the Executive Branch enacted Decree No. 204/2003 creating a mediation proceeding, for a limited period of 90 days, to be conducted through the Legal Emergency Units (Unidades de Emergencias Legales) depending from the Ministry of Labor, Employment and Social Security and the Ministry of Production. Such Legal Emergency Units shall intervene at the request of debtors or creditors in foreclosure cases.

The mediation proceeding is voluntary and free. Proposals and negotiations made by the parties during the mediation proceedings are subject to the confidentiality of ordinary mediations. No mediation proceeding will result in the suspension or interruption of the legal terms running in judicial or out-of-court foreclosure proceedings.

The Legal Emergency Units will attempt to facilitate an agreement between the parties, enabling the debtor the performance of his obligations without lessening the creditor’s rights. The intervention of the Legal Emergency Units shall conclude with an agreement or with the impossibility of reaching such agreement. The Decree establishes that the conciliation proceeding shall be in force from the day of its publication in the Official Gazette and will have a term of force of 90 days.

On May 8, 2003 the Congress enacted Law No. 25,737 which suspended foreclosures for a period of 90 days more. Afterwards, private and financial entities have voluntarily decided to suspend foreclosures. On November 2005, the Argentine Congress enacted a new Law (No. 26,062) which extended the foreclosures suspension for an additional 120 days, which was again extended for 90 days more by Law No. 26,084 and for 180 days more by Law No. 26,103. Pursuant to these successive extensions, foreclosures on mortgaged property were suspended until December 2006.

On November 6, 2003 Law No. 25,798 was enacted. It established a mechanism to reschedule debts resulting from unpaid mortgages, by creating a trust (paid by the Argentine Government) which would purchase the mortgage debts and reschedule the maturity date. Financial institutions were given until June 22, 2004 to accept said terms. This law was partially modified by Law No. 25,908 (enacted on July 13, 2004) which included various conditions referring to the incorporation into this system of the mortgage loans that were in judicial or private execution proceedings. The parties to secured loan agreements were given a term to express their adhesion to this system. This term was extended twice first by Decree No. 352/2004 and then by Law No. 26,062 effective as of November 4, 2005, which extended the foreclosures suspension for an additional 120 days, which was again extended for 90 days more by Law No. 26,084 and for 180 days more by Law No. 26,103.

Law No. 26,167, enacted on November 29, 2006, suspended foreclosures and has also established a special proceeding within the ordinary trials for the enforcement of certain mortage loans. Such special proceedings give creditors a 10-day period to inform the court the amounts owed under the mortgage loan. Soon after, the judge is to call the parties for a hearing in order to reach an agreement on the amount and terms of payment thereunder. In case of failure by the parties to reach such agreement, they will have a 30-day negotiation period, and if such negotiations still result unsuccessful, then, payment and conditons will be determined by the court.

Most mortgages executed by us provide that we are empowered to declare the anticipated expiration of the loan upon non-payment of an installment. This enables us to recover the unpaid amounts through the sale of the relevant property pursuant to the Civil and Commercial Procedure Code of Argentina as Law No. 24,441. Pursuant to the Argentine law, fees and expenses related to collection procedures must be borne by the debtor, and the proceeds from any auction of the property may be used for the settlement of such obligation.

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Although our mortgages are U.S. dollar-denominated, Decree No. 214/2002 and Decree No. 762/2002 that amend the Public Emergency Law provide that monetary obligations in force as of January 7, 2002, resulting from agreements governed by private law and which provide for payments in U.S. dollars are subject to the following rules:

• financial obligations were to be paid in Pesos at the exchange rate of Ps.1.00 = US$1.00 plus the CER for commercial leases;

• from October 1, 2002 and until March 31, 2004 for residential leases, the obligations where the tenant is an individual and the dwelling is used as the family residence of permanent use were to be paid in Pesos at the exchange rate of Ps.1.00 = US$1.00 plus the CVS;

• if because of the application of these provisions, the amount of the installment were higher or lower than the amount at the moment of the payment, any of the parties could require an equitable adjustment of the price. If the parties did not reach an agreement, the judicial courts could decide about the difference in each particular case; and

• pursuant to Decree No. 117/2004 and Law No. 25,796 that amends Law No. 25,713, the CVS became unenforceable since April 1, 2004.

Other Regulations

Consumer Protection Act .Consumer Protection Law No. 24,240, as amended, regulates several issues concerning the protection of consumers in the arrangement and execution of contracts. The Consumer Protection Law purports to prevent potential abuses deriving from the strong bargaining position of sellers of goods and services in a mass-market economy where standard form contracts are widespread. As a result, the Consumer Protection Law deems void and unenforceable certain contractual provisions in consumer contracts, including those which:

• warranty and liability disclaimers;

• waiver of consumer rights;

• extension of seller rights; and

• shifting of the burden of proof against consumers.

In addition, the Consumer Protection Law imposes penalties ranging from fines to closing down of establishments in order to induce compliance from sellers.

The Consumer Protection Law defines consumers or users, as the individuals or legal entities that contract for a price for final use or that of their own benefit or their family or social group:

• the acquisition or rental of movable property;

• the supply of services; and

• the acquisition of new real estate intended for housing, including plots of land acquired with the same purpose, when the offer is public and directed to undetermined persons.

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It also establishes that those who acquire, store, utilize or consume goods or services to integrate them into a production, transformation, commercialization or supplying to third parties process will not be considered consumers or users.

In addition, the Consumer Protection Law defines the suppliers of goods and services as the individuals or legal entities, either public or private that in a professional way, even occasionally, produce, import, distribute or commercialize goods or supply services to consumers or users.

The following are excluded from the application of the Consumer Protection Law:

• services supplied by professionals that require a college degree and registration in officially recognized professional organizations or by a governmental authority; and

• contracts involving used assets, executed between consumers.

The Consumer Protection Law determines that the information contained in the offer addressed to undetermined prospective consumers, binds the offeror during the period in which the offer takes place and until its public revocation. Further, it determines that specifications included in advertisements, announcements, prospectuses, circulars or other media bind the offeror and are considered part of the contract entered into by the consumer. On June 2005, Resolution No. 104/05, which complements the Consumer Protection Law, adopted MERCOSUR’s Resolution on which requires that those who engage in commerce over the Internet (E-Business) to disclose in a precise and clear manner the characteristics of the products and/or services offered and the sale terms.

Antitrust Law. Law No. 25,156 prevents trust practices and requires administrative authorization for transactions that according to the Antitrust Law constitute an economic concentration. According to this law, mergers, transfers of goodwill, acquisitions of property or rights over shares, capital or other convertible securities, or similar operations by which the acquirer controls or substantially influences a company, are considered as an economic concentration. Whenever an economic concentration involves a company or companies (i) which hold 25% or more of the relevant market or (ii) which exceed the accumulated sales volume by approximately Ps.200.0 million in Argentina or Ps.2,500 million worldwide; then the respective concentration should be submitted for approval to the Comisión Nacional de Defensa de la Competencia, or Antitrust Authority. The request for approval may be filed, either prior to the transaction or within a week after its completion.

The Antitrust Law provides that economic concentrations in which the transaction amount and the value of the assets absorbed, acquired, transferred or controlled in Argentina, do not exceed Ps.20.0 million are exempted from the administrative authorization. Notwithstanding the foregoing, when the transactions effected during the prior 12-month period exceed in total Ps.20.0 million or Ps.60.0 million in the last 36 months, these transactions must be notified to the Antitrust Authority. As our and our major shareholder, IRSA’s consolidated annual sales volume exceeds Ps.200.0 million, we and IRSA are required to notice to the Antitrust Authority of any concentration provided for by the Antitrust Law.

Credit Cards Law. Law No. 25,065, amended by Law No. 26,010, regulates different aspects of the business known as “credit card system.” The regulations impose minimum contractual contents and the approval thereof by the Industry, Commerce and Mining Secretary (Secretaría de Industria, Comercio y Minería de la Nación), as well as the limitations on the interest to be collected by users and the commissions to the stores adhering to the system. The Credit Card Law applies to banking and non-banking cards, such as “Tarjeta Shopping”, issued by Tarshop S.A.

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C. Organizational Structure

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(1) We own a 100% interest in Empalme S.A.I.C.F.A. y G. Currently our shares of Empalme S.A.I.C.F.A. y G. are pledged to secure our payment of the deferred purchase price payable to the sellers of Empalme.

(2) Owned through a 100% interest in Shopping Villa Cabrera, 95% through our subsidiary Empalme S.A. and a 5% directly through APSA.

(3) Owned through a 53.7% equity interest in our subsidiary Emprendimiento Recoleta, which holds the concession to operate the Buenos Aires Design Shopping Center.

(4) As of November 6, 2007, we sold our 100% equity interest in our former subsidiary E-Commerce Latina S.A. to IRSA Inversiones y Representaciones S.A., our major shareholder.

(5) As of April 17, 2007, our subsidiary Altocity.com S.A. changed its name to Comercializadora Los Altos S.A.

(6) As of November 6, 2007, we own a 100% interest in Comercializadora Los Altos S.A. 10% through our subsidiary Shopping Alto Palermo S.A., and a 90% directly through APSA.

(7) The country of residence of our subsidiaries is Argentina.

The following table presents information relating to our ownership interest and the percentage of our consolidated total net revenues represented by our subsidiaries as of June 30, 2007:

Subsidiary	Activity	Country of Incorporation	Percent Ownership (%) (1)		Percent of voting power (%) (1)		Percentage of our total net revenues
Shopping Alto Palermo S.A.	Real estate investments and development	Argentina	100	%	100	%	11.9	%
Fibesa S.A.	Real estate agent	Argentina	100	%	100	%	2.8	%
Tarshop S.A.	Credit card operations	Argentina	80	%	80	%	44.1	%
Emprendimiento Recoleta S.A. (2)	Building	Argentina	54	%	54	%	2.1	%
Inversora del Puerto S.A. (3)	Real estate investments	Argentina	100	%	100	%	0.0	%
Shopping Neuquén S.A.	Development of undertakings	Argentina	95	%	95	%	0.0	%
Mendoza Plaza Shopping S.A	Real estate investments	Argentina	85	%	85	%	3.9	%
Conil S.A	Real estate investments	Argentina	50	%	50	%	0.0	%
E-Commerce Latina S.A.(5)(6)	Holding services	Argentina	100	%	100	%	0.0	%
Comercializadora Los Altos S.A.(4)(7)	Real estate agent	Argentina	100	%	100	%	0.0	%
Empalme S.A.I.C.F.A. Y G.	Real estate investments	Argentina	100	%	100	%	0.8	%
Panamerican Mall S.A.	Real estate investments	Argentina	80	%	80	%	0.0	%

(1) Percentage of equity interest has been rounded.

(2) During fiscal year ended June 30, 2006, we increased our interest in Emprendimiento Recoleta from 51% to 54%.

(3) As of September 28, 2007, this subsidiary has been liquidated.

(4) As of June 30, 2007, we owned this subsidiary indirectly through E-Commerce Latina S.A., and on November 6, 2007, we acquired a 100% equity interest from E-Commerce Latina S.A.

(5) As of October 24, 2006 we acquired the remaining 50% equity interest from Telefónica Argentina S.A., thus increasing our equity interest in E-Commerce Latina S.A. up to a 100%.

(6) As of November 6, 2007, we sold our 100% equity interest in our former subsidiary E-Commerce Latina S.A. to IRSA Inversiones y Representaciones S.A., our major shareholder.

(7) As of April 17, 2007, our subsidiary Altocity.com S.A. changed its name to Comercializadora Los Altos S.A.

D. Property, Plant and Equipment

Our properties include shopping centers and land reserves for the construction of shopping centers or apartment buildings. All of our properties are located in Argentina.

We lease our headquarters, located at Moreno 877, 22^nd floor, (C1091AAQ), Buenos Aires, Argentina, from Inversora Bolivar S.A., a subsidiary of IRSA, pursuant to a lease agreement that will expire in October 2008. We believe that all of our facilities are adequate for our present needs and suitable for their intended purposes.

The following table sets forth certain information about our owned properties:

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Property	Location	Encumbrance
Alto Palermo	City of Buenos Aires, Argentina	—
Abasto	City of Buenos Aires, Argentina	—
Alto Avellaneda	City of Avellaneda, Argentina	—
Paseo Alcorta	City of Buenos Aires, Argentina	—
Patio Bullrich	City of Buenos Aires, Argentina	—
Alto Noa	City of Salta, Argentina	—
Buenos Aires Design	City of Buenos Aires, Argentina	—
Alto Rosario	City of Rosario, Argentina	—
Mendoza Plaza	City of Mendoza, Argentina	—
Caballito project(1)	City of Buenos Aires, Argentina	—
Neuquén project(2)	City of Neuquén, Argentina	Mortgage
Córdoba Shopping Villa Cabrera(3)	City of Córdoba, Argentina	Mortgage	(5)
Patio Olmos Building(6)	City of Córdoba, Argentina	—
Panamerican Mall SA	City of Buenos Aires, Argentina	—
Espacio Aéreo Coto	City of Buenos Aires, Argentina	—
Torres de Abasto	City of Buenos Aires, Argentina	—
Other properties(4)	City of Buenos Aires, Argentina	—

(1) We have a parcel of land with a surface area of 25,539 square meters in the “Caballito” neighborhood, one of the most highly populated areas in the City of Buenos Aires. This land could be used to build a 30,000 square meter shopping center including a hypermarket. We have not yet obtained the authorization from the government of the City of Buenos Aires to develop the center on this land and cannot at this stage guarantee that such authorization will be granted. As of July 5, 2006, the Federal Administration of Public Revenues (“AFIP”) filed a preliminary injunction with the Federal Court for Administrative Proceedings for an aggregate amount of Ps.3,689,485.5, plus an added amount, provisionally estimated, of Ps.900,000 in order to respond to legal costs and interests. The main dispute is about the amount due for the admission rights of the income tax. In the first instance, AFIP pleaded for a general restraining order. As of June 30, 2007, under court proceedings, this building is subject to a legal attachment.

(2) As of June 30, 2007, includes Ps. 105,754 from a mortgage on the land purchased by Shopping Neuquén S.A. for Ps 3,313,620 within the short-term debt. As of December 17, 2007, such mortgage has been fully cancelled, but the mortgage cancellation deed has not been suscribed.

(3) We own a 100% interest in Empalme S.A.I.C.F.A. y G. Currently our shares of Emplame S.A.I.C.F.A. y G are pledged.

(4) Includes properties nearby Alto Palermo and Patio Bullrich, and other properties located in the City of Buenos Aires.

(5) Right over real property granted by a debtor to a creditor whereby the creditor is authorized to receive the income from such property to cancel interest and/or principal under our existing debt.

(6) Acquired on September 25, 2007.

We do not currently lease any material properties other than our headquarters.

A detailed description of each of our different properties and plans to expand, build or develop have been previously disclosed in this document under “Business—Overview”, including information about size, use and location of the properties and estimations of cost and methods of financing the planned expansions and developments.

ITEM 4A. Unresolved staff comments

This item is not applicable

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ITEM 5. Operating and Financial Review and Prospects

A. Operating Results

The following Operating and Financial Review and Prospects have been derived from our consolidated financial statements as of the dates and for each of the periods indicated below. This information should be read together with “Item 3. Key Information—Selected Financial Data” and our consolidated financial statements appearing elsewhere in this annual report. This Operating and Financial Review and Prospects discussion contains forward-looking statements that involve risks, uncertainties and assumptions. These forward-looking statements include, among others, those statements including the words “expects”, “anticipates”, “intends”, “believes” and similar language. Our actual results may differ materially and adversely from those anticipated in these forward-looking statements as a result of many factors, including those set forth elsewhere in this annual report.

For purposes of the following discussion, unless otherwise specified, references to fiscal years 2007, 2006 and 2005 relate to the fiscal years ended June 30, 2007, 2006 and 2005, respectively. The consolidated financial statement for those years have been audited by Price Waterhouse & Co. S.R.L., Buenos Aires, Argentina, member firm of PriceWaterhouseCoopers, an independent registered public accounting firm.

Our consolidated financial statements are presented in Pesos. Except as discussed in the following paragraph, we prepare our consolidated financial statements in conformity with Argentine GAAP and the regulations of the Comisión Nacional de Valores. See Note 19 to our consolidated financial statements for a description of the main differences between Argentine GAAP and U.S. GAAP as they relate to us, and a reconciliation to U.S. GAAP of net income and total shareholders’ equity. The differences involve methods of measuring the amounts shown in the consolidated financial statements as well as additional disclosures required by U.S. GAAP and Regulation S-X of the SEC.

As discussed in Notes 2.d. and 3.k. to our consolidated financial statements, contained elsewhere in this annual report, in order to comply with regulations of the Comisión Nacional de Valores, we discontinued inflation accounting as from March 1, 2003 as well as recognized deferred income tax assets and liabilities on an undiscounted basis. These accounting practices represent departures from generally accepted accounting principles in Argentina. However, we believe such departures have not had a material effect on our consolidated financial statements.

Critical Accounting Policies and Estimates

In connection with the preparation of the consolidated financial statements included in this annual report, we have relied on variables and assumptions derived from historical experience and various other factors that we deemed reasonable and relevant. Although we review these estimates and assumptions in the ordinary course of business, the portrayal of our financial condition and results of operation often requires our management to make judgments regarding the effects of matters that are inherently uncertain on the carrying value of our assets and liabilities. Actual results may differ from those estimated under different variables, assumptions or conditions. In order to provide an understanding about how management forms its judgments about future events, including the variables and assumptions underlying the estimates, and the sensitivity of those judgments to different variables and conditions, we have included comments related to each critical accounting policy described as follows:

• revenue recognition

• provision for allowances and contingencies;

• impairment of long-lived assets;

• deferred income tax;

• minimum presumed income tax; and

• extension of our Convertible Notes’ maturity date.

Revenue Recognition

Leases and services from shopping center operations. We account for our leases with tenants as operating leases. We generally charge tenants a rent which consists of the higher of (i) a monthly base rent (the

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“Base Rent”) and (ii) a specified percentage of the tenant’s monthly gross retail sales (the “Percentage Rent”) (which generally ranges between 4% and 8% of tenant’s gross sales). Furthermore, pursuant to the rent escalation clause in most leases, the tenant’s Base Rent generally increases between 4% and 7% each year during the term of the lease. Certain of our lease agreements contain provisions which provide for rents based on a percentage of sales or based on a percentage of sales volume above a specified threshold. We determine the compliance with specific targets and calculate the additional rent on a monthly basis as provided for in the contracts. Thus, we do not recognize contingent rents until the required thresholds are exceeded.

Our lease agreements vary from 36 to 120 months. Law No. 24,808 provides that tenants may rescind commercial lease agreements after the initial six months, upon not less than 60 days’ written notice, subject to penalties of one and a half months rent if the tenant rescinds during the first year of its lease, and one month of rent if the tenant rescinds after the first year of its lease.

We also charge our tenants a monthly administration fee, prorated among the tenants according to their leases, which varies from shopping center to shopping center, relating to the administration and maintenance of the common area and the administration of contributions made by tenants to finance promotional efforts for the overall shopping centers operations. We recognize administration fees monthly when earned. In addition to rent, we generally charge tenants admission rights. Admission rights are non-refundable admission fees that tenants may be required to pay upon entering into a lease or upon lease renewal. An admission right is normally paid in one lump sum or in a small number of monthly installments. We recognize admission rights using the straight-line method over the life of the respective lease agreements. Furthermore, the lease agreements generally provide for the reimbursement of real estate taxes, insurance, advertising and certain common area maintenance costs. These additional rents and tenant reimbursements are accounted for on the accrual basis.

We also derive revenues for parking lot fees charged to visitors. We recognize parking revenues as services are performed.

Credit card operations. We derive revenues from credit card transactions which primarily are comprised of (i) merchant discount fees which are recognized when transactional information is received and processed by the Company; (ii) data processing services which consist of processing and printing cardholders account statements, and which are recognized as services are provided; and (iii) life and disability insurance charges to cardholders which are recognized on an accrual basis.

Provision for allowances and contingencies

We provide for losses relating to accounts and mortgage receivables. The allowance for losses is based on management’s evaluation of various factors, including the credit risk of customers, historical trends and other information. While management uses the information available to make evaluations, future adjustments to the allowance may be necessary if future economic conditions differ substantially from the assumptions used in making the evaluations. Management has considered all events and/or transactions that are subject to reasonable and normal methods of estimations, and the consolidated financial statements reflect that consideration.

We have certain contingent liabilities with respect to existing or potential claims, lawsuits and other proceedings, including those involving labor and other matters. We accrue liabilities when it is probable that future costs will be incurred and such costs can be reasonably estimated. Such accruals are based on developments to date, our estimate of the outcomes of these matters and our lawyers’ experience in contesting, litigating and settling other matters. As the scope of the liabilities becomes better defined, there may be changes in the estimates of future costs, which could have a material effect on our future results of operations and financial condition or liquidity.

We believe that this accounting policy is a “critical accounting policy” because if future conditions differ substantially from the assumptions used in making the evaluations, this could have a material effect on our consolidated balance sheet as well as on our results of operations.

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Impairment of long-lived assets

As a matter of policy, we evaluate the carrying value of our long-lived assets on a segment-by-segment basis every June 30 of each year. In addition, we periodically evaluate the carrying value of our long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Prior to the changes to the accounting standards introduced by the Comisión Nacional de Valores, we considered the carrying value of a long-lived asset to be impaired when the expected cash flows, undiscounted and without interest, from such asset were separately identifiable and less than its carrying value. In that event, a loss was recognized based on the amount by which the carrying value exceeded the fair market value of the long-lived asset. We determined the fair market value primarily using independent appraisals which apply different valuation methods as applicance. Effective July 1, 2006, due to the adoption of the new accounting standards by the Comisión Nacional de Valores, the carrying value of a long-lived asset is considered impaired by us when the expected cash flows from such asset are separately identifiable and less than its carrying value. Expected cash flows are determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. The adoption of this accounting standard did not have an impact in our results of operations or financial position.

Under Argentine GAAP, a previously recognized impairment loss should only be reversed when there is a subsequent change in estimates used to compute the fair market value of the asset. In that event, the new carrying amount of the asset should be the lower of its fair market value or the net carrying amount the asset would have had if no impairment had been recognized. Both the impairment charge and the impairment reversal are recognized in earnings. U.S. GAAP prohibits the reversal of a previously recognized impairment charge.

We believe that the accounting policy related to the impairment of long-lived assets is a “critical accounting policy” because:

• it requires our management, in determining fair market value, to make estimates and assumptions (such as, future revenues and cost of revenues, future vacancy rates and future rental prices) that are highly susceptible to change from period to period, and

• the impact that recognizing or reversing an impairment would have on assets reported on our consolidated balance sheet as well as on the results of our operations could be material. Estimates about future rental prices and future vacancy rates require significant judgment because actual rental prices and vacancy rates have fluctuated in the past and are expected to continue to do so.

As of June 30, every year we review our assets related to leases and services, and other segments for impairments. Due to the continued deterioration of the Argentine economy during our fiscal years ended June 30, 2002, 2003 and 2006 we recognized impairment losses related to the Leases and Services and Other segments amounting to Ps.62.8 million and Ps.12.7 million and Ps.0.4 million, respectively. As a result of increases in their fair market values, during fiscal years 2003, 2004, 2005, 2006 and 2007, we partially reversed previously recognized impairment losses recognizing gains of Ps.15.7 million, Ps.26.9 million, Ps.13.1 million, Ps.9.9 million and Ps.2.3 million, respectively. In addition, amortization related to the impairment charges amounted to Ps.1.6 million, Ps 0.6 million and Ps.0.3 million during the years ended June 30, 2004, 2005 and 2006, respectively. Assets reviewed for impairment purposes vis-à-vis those two segments represent 62.2% and 80.6% of our total assets as of June 30, 2007 and 2006, respectively.

Fair market values were determined by independent appraisals using either the “rent value method” or the “open market method”, as applicable. As of June 30, 2007, the valuation of each shopping center was performed according to “the rent value method”. This method determines the value of each property considering the specific projected cash flows discounted at a rate commensurate with its risk. We calculated discount rates considering each property’s location, competition in its market, its historical vacancy rates and historical cash flows. The average discount rates we used were between 10.0% and 10.4%, the average price per leasable square meter was Ps. 7,043 and the average vacancy rate was calculated taking into consideration the real vacancy. The performance of a sensitivity analysis which reduces prices per square meter by 5% resulted in an increase impairment as of June 30, 2007 equal to Ps. 0.03 million.

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We used the “open market method” for the valuation of land reserved and non-current inventories. We estimated the value of each site by taking into consideration the value of the property according to its surface area and location, as well as the availability of inventory. Our land reserve constitutes an added value as a unique portfolio for shopping centers development in CBD (Central Business Districts). Caballito and Neuquén are the largest locations in our portfolio. The performance of a sensitivity analysis, which reduced prices by 5%, resulted in an increased impairment as of June 30, 2007 equal to Ps.0.03 million.

The above mentioned potential impairment losses totaled Ps.0.06 million and would affect the balance sheet lines “Non Current Inventories, net”, and “Fixed Assets, net”, reducing the value of our total assets by approximately 0.003%. These impairment losses would have reduced our net income for the year ended June 30, 2007 by 0.091%.

Deferred income tax

We recognize income tax using the liability method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recorded or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Technical Resolution No. 17 requires companies to record a valuation allowance for that component of net deferred tax assets which is not recoverable.

We believe that the accounting estimate related to deferred income tax is a “critical accounting estimate” because:

• it is highly susceptible to change from period to period because it requires company management to make assumptions, such as future revenues and expenses, exchange rates and inflation among others; and

• the impact that calculating income tax using this method would have on assets or liabilities reported on our consolidated balance sheet as well as on the income tax result reported in our consolidated statement of income could be material.

Minimum presumed income tax

We calculate the minimum presumed income tax provision by applying the current 1% rate on computable assets at the end of the year. This tax complements the income tax. Our tax obligation each year will coincide with the highest amount due under either of these two taxes. However, if the minimum presumed income tax provision exceeds income tax in a given year, the amount in excess of income tax can be offset against income tax arising in any of the following ten years.

We have recognized the minimum presumed income tax provision paid in previous years as a credit as we estimate that it will offset future years’ income tax.

We believe that the accounting policy relating to the minimum presumed income tax provision is a “critical accounting policy” because it requires management to make estimates and assumptions with respect to our future results that are highly susceptible to change from period to period, and as such the impact on our financial position and results of operations could be material.

Extension of our Convertible Notes’ maturity date

On August 20, 2002, we issued an aggregate amount of US$50.0 million of uncollateralized convertible

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notes (the “Convertible Notes”) in exchange for cash and the settlement of certain liabilities. The Convertible Notes accrue interest at a fixed annual interest rate of 10% (payable semiannually), are convertible at any time at the option of the holder into common shares of Ps. 0.10 par value per share and originally matured on July 19, 2006. On May 2, 2006 a Meeting of Noteholders resolved to extend the maturity date of the Convertible Notes through July 19, 2014, leaving the remaining terms and conditions unchanged.

Argentine GAAP, requires that an exchange of debt instruments with substantially different terms be considered a debt extinguishment. Argentine GAAP clarifies that from a debtor’s perspective, an exchange of debt instruments between, or a modification of a debt instrument by, a debtor and a creditor shall be deemed to have been accomplished with debt instruments that are substantially different if the present value of the cash flows under the terms of the new debt instrument is at least 10% different from the present value of the remaining cash flows under the terms of the original instrument. The new debt instrument should be initially recorded at fair value, and that amount should be used to determine the extinguishment gain or loss to be recognized.

Fair value should be determined by the present value of the future cash flows to be paid under the terms of the new debt instrument discounted at a rate commensurate with the risks of the debt instrument and time value of money. If it is determined that the original and new debt instrument are not substantially different, then a new effective interest rate is to be determined based on the carrying amount of the original debt instrument and the revised cash flows. Based on the analysis performed, we concluded that the instruments were not substantially different and accordingly the original Convertible Notes were not considered to have been extinguished.

We believe that the accounting policy related to the extension of our Convertible Notes’ maturity date is a “critical accounting policy” because it required us to make an estimate of the present value of the future cash flows, using an estimated discount rate which is highly susceptible to changes from period to period, and as a result the impact on the fair market value of our debt instruments could be material.

U.S. GAAP Reconciliation

The principal differences, other than inflation accounting, between Argentine GAAP and U.S. GAAP are the following:

• the appraisal revaluation of certain fixed assets under Argentine GAAP while fixed assets are valued at cost under U.S. GAAP;

• the deferral of certain preoperating expenses under Argentine GAAP which are expensed as incurred under U.S. GAAP;

• the treatment of expenses incurred for the development and acquisition of software under the provisions of SOP 98-1;

• the application of certain U.S. GAAP adjustments to the estimation of the fair value of net assets acquired;

• the reversal of the amortization expense related to goodwill recognized under Argentine GAAP;

• the impact of certain U.S. GAAP adjustments on our equity investees;

• the accounting for increasing rate debt;

• the accounting for securitized credit card receivables in accordance with SFAS No. 140;

• the accounting for available-for-sale securities;

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• the amortization of fees related to the Senior Notes;

• the present-value accounting of asset tax credits;

• the restoration of previously recognized impairment losses;

• the reversal of the gain from recognition of inventories at net realizable value;

• the debtor’s accounting for a modification of convertible debt instruments;

• the deferral of certain revenues from life and disability insurance and origination fees under US GAAP.

• the revenue recognition of deferred brokerage commissions over the term of the respective leases under US GAAP.

• the recognition of escalation rental revenue under the straight-line method over the term of the leases, under US GAAP, accordingly to the SFAS No. 13 and FTB 85-3.

• the differences between the price-level restated amounts of assets and liabilities and their historical basis, that under Argentine GAAP, are treated as permanent differences for deferred income tax calculation purposes while under U.S. GAAP are treated as temporary differences. In addition, the U.S. GAAP adjustment effect on deferred income tax of the foregoing reconciling items,

• the effect on minority interest of the foregoing reconciling items, and

• the reversal of capitalized exchange differences under Argentine GAAP.

In addition, certain other disclosures required under U.S. GAAP have been included in the U.S. GAAP reconciliation. See Note 19 to our consolidated financial statements included elsewhere in this annual report for details.

Net income under Argentine GAAP for the years ended June 30, 2007, 2006 and 2005 was Ps. 64.1 million, Ps. 44.7 million and Ps. 33.3 million, respectively, as compared to Ps. 75.7 million, Ps. 47.0 million and Ps. 36.2 million, respectively, under U.S. GAAP. Shareholders’ equity under Argentine GAAP as of June 30, 2007 and 2006, was Ps. 823.9 million and Ps. 806.8 million, respectively, as compared to 668.1 million and Ps. 643.8 million, respectively, under U.S. GAAP.

Overview

Effects of Devaluation and Economic Crisis on us

Our historical financial results have been, and are expected to continue to be, materially affected by the general level of economic activity and growth of per capita disposable income in Argentina, where all of our assets are located and our operations are performed. From December 2001 through most of 2002, Argentina experienced a crisis that virtually paralyzed its economy and led to radical changes in government policies. Argentina’s trade and fiscal deficits and the rigidity of its fixed exchange rate system (known as the convertibility regime), combined with the country’s excessive reliance on foreign capital and with its mounting external debt, resulted in a deep contraction of the economy and in banking and fiscal crises when capital started to leave the country.

In response to the political and economic crisis, the Argentine government undertook a number of far-reaching initiatives that significantly changed the monetary and foreign exchange regime and the regulatory framework for conducting business in Argentina. Between December 2001 and January 2002, Argentina abolished the fixed parity between the Peso and the U.S. dollar, rescheduled bank deposits, asymmetrically pesified debts and suspended payment on a significant portion of its public debt.

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Most sectors of the Argentine economy were severely affected by the crisis and regulatory changes. In April 2002, the economy started its path to stabilization and realized a clear improvement of economic variables during the second half of the year, mainly as a result of expanding exports and decreasing imports. While the devaluation of the Peso had significant adverse consequences, it did result in a positive balance for Argentina’s current account, which fostered a reactivation of domestic production. The sharp decline in the Peso’s value against foreign currencies, together with a decline in production costs in U.S. dollar terms, made Argentine products relatively inexpensive in the export markets. At the same time, the costs of imported goods increased significantly due to the devaluation of the Peso, forcing Argentine consumers to substitute their purchase of foreign goods with domestic products, substantially boosting domestic demand for domestic products.

During the second half of 2002, Argentina’s Gross Domestic Product (GDP) increased 4.4%, and the consumer price index inflation was 8.0% for the six-month period ended December 31, 2002, as compared to 30.5% for the six-month period ended June 30, 2002. The improving economic conditions, particularly the reduction of capital outflows from the Argentine economy and the banking system, allowed the government to begin lifting restrictions on bank withdrawals in November 2002.

Despite the improvement in economic conditions during the second half of 2002, Argentina’s overall GDP contracted 10.9% for the full year, receding to 1993 values, investment collapsed (with, for example, negative growth of 43% in the second quarter compared to the second quarter of 2001), and inflation increased sharply. The main impact of the crisis was the tremendous social hardship. Unemployment rose from 12.9% to 19.7% between 1998 and 2002, real wages declined 24% in 2002, and the poverty index increased from 29% of the population in 2000 to 52% in 2002.

In May 2003, Argentina’s political environment was reorganized when Dr. Néstor Kirchner took office as president. The economy continued to show indications of recovery, as GDP grew 8.8% in 2003. A combination of sound fiscal and monetary policies kept consumer price inflation under control at 3.5% in 2003. During 2003, Argentina moved towards normalizing its relationship with the IMF, withdrew all the national and provincial governments’ quasi-money securities from circulation (amounting to Ps.7.8 billion), and eliminated all deposit restrictions. The trade balance experienced a sustained surplus, aided by the rise in commodity prices and export volumes. Social indicators also improved. The unemployment rate decreased to 17.3% in 2003 and real wages began to recover.

During 2004 and 2005, the Argentine economy continued to grow. GDP grew 9.0% in 2004 and 9.0% in 2005 according to the Central Bank’s survey of independent forecasting firms. Inflation remained relatively low in 2004 although it almost doubled to 6.1% from 2003, and it increased to 12.3% during 2005 and 9.8% during 2006.

In June 2005, the Argentine government completed a restructuring of the federal government’s public debt, which had been in default since December 2001. Argentina reduced the outstanding principal amount of its public debt from US$191.3 billion to US$126.6 billion and negotiated lower interest rates and extended payment terms. Approximately US$19.5 billion of defaulted bonds held by creditors who did not participate in the exchange offer remain outstanding.

Over the past four years, the Argentine economy has recovered significantly from the crisis, and the business environment has largely stabilized. We believe that the current recovery has led to significant improvements and sets the stage for growth opportunities. Nevertheless, we cannot assure you that the favorable economic conditions that Argentina has experienced in recent years will continue. See “Risk Factors—Risks Related to Argentina.”

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Effects of inflation

From 1997 until the end of year 2001, policies adopted by the Argentine government have substantially reduced the level of inflation. Therefore, during that period inflation did not significantly affect our financial condition and results of operations. The following are annual inflation rates’ figures published by the Argentine Ministry of Economy and Production:

Year ended June 30,	Consumer Price Index		Wholesale Price Index
2002	30.5	%	95.6	%
2003	10.2	%	8.3	%
2004	4.9	%	0.1	%
2005	9.0	%	7.7	%
2006	11.0	%	12.2	%
2007	8.8	%	9.3	%

The inflationary risk increase may erode macroeconomic stability held at present in the country, causing a negative impact on the development of our operations.

During 2006 retail prices increased significantly, making inflation one of the main economic issues. In order to hold back inflation, the government signed trade agreements, primarily within the food and textile sectors. In this regard, the CPI increased by 3.9% and 7.2% for the Wholesale Price Index (“IPIM”) for the first semester of 2007. This shows that inflation is one of the most important problems to be solved by the new administration.

Effects of interest rate fluctuations

Most of our U.S.dollar denominated debt accrues interest at a fixed rate. An increase in interest rates do not imply a significant increase in our financial costs and do not materially affect our financial condition and our results of operations.

Effects of foreign currency fluctuations

A significant portion of our financial debt is denominated in U.S.dollars. Therefore, a devaluation of the Argentine Peso against the U.S.dollar would increase our indebtedness measured in Pesos and materially affect our results of operations. Foreign currency exchange rate fluctuations significantly increase the risk of default on our mortgages and lease receivables. Due to the fact that many of our customers have their cash flows in Pesos, a fluctuation of exchange rate may increase their U.S.dollar-denominated liabilities. Foreign currency exchange restrictions hereafter imposed by the Argentine Government could prevent or restrict our access to U.S.dollars, affecting our ability to service our U.S.dollar denominated liabilities.

Business Segment Reporting

We are required to disclose segment information in accordance with Technical Resolution (“RT”) No. 18 “Specific Considerations for the Preparation of Financial Statements.” RT No. 18 establishes standards for reporting information about operating segments in annual financial statements issued to shareholders. Operating segments are components of a company about which separate financial information is available that is regularly evaluated by the chief operating decision maker(s) in deciding how to allocate resources and assess performance. The statement also establishes standards for related disclosures about a company’s products and services, geographical areas and major customers.

We have determined that our reportable segments are those based on our method of internal reporting. Accordingly, we have three reportable segments. These segments are “leases and services,” “credit card operations” and “other.”

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A general description of each segment follows:

Leases and services. The majority of our revenues are derived from leases with retail tenants in our ten shopping centers. We generally charge our tenants a rent, based on the higher of: (i) a monthly base rent and (ii) a specified percentage of the tenant’s monthly gross retail sales. For the fiscal years ended June 30, 2005, 2006 and 2007, a majority of our tenants paid the rent on the basis of the specified percentage of its monthly gross sales. We also charge our tenants a monthly management fee, prorated among all tenants in the relevant shopping center according to their leases, relating to the administration and maintenance of the common areas and administration of contributions made by tenants to finance promotional efforts for our shopping centers. We recognize management fees monthly when earned. We also generate revenues from admission rights (a non-refundable admission fee tenants may be required to pay upon entering into or renewing a lease), leasing agent fees paid by tenants calculated as a percentage of the final rental value and parking lot fees charged to visitors. We recognize admission rights using straight-line method over the live of the respective lease agreements. We recognize parking revenues as serviced performed.

Credit Card Operations. We operate a credit card consumer finance business through our majority-owned subsidiary Tarshop. Our Credit Card Operations consist primarily of lending and servicing activities relating to the credit card products we offer to consumers at shopping centers, hypermarkets and street stores. We finance a substantial majority of our credit card activities through securitization of the receivables underlying the accounts we originate. Our revenues from credit card transactions are primarily comprised of (i) merchant discount fees which are recognized when transactional information is received and processed by the Company; (ii) data processing services which consist of processing and printing cardholders statement of accounts, and which are recognized as services are provided; (iii) life and disability insurance charges to cardholders which are recognized on an accrual basis, and (iv) interest income generated by financing and lending activities.

Other. Our Other segment includes the development and sale of residential properties, acquisitions of undeveloped parcels of land for future development, sales from time to time of such undeveloped parcels and gains or losses from our investment in E-Commerce Latina S.A. which offered on-line shopping until March 2007 when it restructured its business activities away from internet-based operations. For the fiscal years ended June 30, 2005, 2006 and 2007, revenues from our Other segment were not significant, except for Ps. 23.0 million of revenues from our sale of the Alcorta Plaza parcel of land in December 2005.

We measure our reportable segments based on net income. Inter-segment transactions, if any, are accounted for at current market prices. We evaluate performance of our segments and allocate resources to each segment based on net income. We do not depend on any one customer.

The following tables provide the consolidated statement of income data for each of the fiscal years ended June 30, 2005, 2006 and 2007 by segment activity. Certain other operating data by business segment is included herein. The consolidated statement of income data for each of the fiscal years ended June 30, 2005, 2006 and 2007, has been derived from our annual audited consolidated financial statements included elsewhere in this annual report.

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	Fiscal year ended June 30,
	2005		2006		2007
Revenues by Business Segment
Leases and services	72.0	%	59.7	%	56.1	%
Credit card operations	28.0	%	34.0	%	44.1	%
Others	0.1	%	6.5	%	0.1	%
Intersegment eliminations(2)	(0.2	)%	(0.2	)%	(0.3	)%
Total	100.0	%	100.0	%	100.0	%
Total Revenues (1)	230.2		361.4		483.2

(1) In million of Pesos.

(2) Includes intersegment eliminations from lease revenues and expenses which means eliminations due to consolidation of the financial statements.

As of and for the year ended June 30, 2007	Leases and services		Credit card Operations		Others		Total reportable segments		Eliminations		Total as of and for the year ended June 30, 2007
	Ps.		Ps.		Ps.		Ps.		Ps.		Ps.
Revenues	271,248,380		212,965,332		395,507		484,609,219		(1,378,065	)(1)	483,231,154
Costs	(90,644,235	)	(77,417,344	)	(1,411,386	)	(169,472,965	)	1,166,397	(1)(2)	(168,306,568	)
Gross profit (loss)	180,604,145		135,547,988		(1,015,879	)	315,136,254		(211,668	)	314,924,586
Selling expenses	(20,003,558	)	(61,966,341	)	(2,342,096	)	(84,311,995	)	—		(84,311,995	)
Administrative expenses	(33,548,025	)	(46,234,062	)	(378,785	)	(80,160,872	)	288,000	(1)	(79,872,872	)
Net income from retained interest in securitized receivables	—		3,253,789		—		3,253,789		—		3,253,789
Gain from recognition of inventories at net realizable value	—		—		545,400		545,400		—		545,400
Operating income (loss)	127,052,562		30,601,374		(3,191,360	)	154,462,576		76,332		154,538,908
Equity loss from related companies	—		—		(678,569	)	(678,569	)	—		(678,569	)
Amortization of goodwill	(4,366,356	)	—		—		(4,366,356	)	—		(4,366,356	)
Financial results, net	(19,458,713	)	825,313		(756,679	)	(19,390,079	)	(76,332	)(2)	(19.466.411	)
Other (expense) income, net	(6,738,157	)	3,034,256		356,435		(3,347,466	)	—		(3,347,466	)
Income before taxes and minority interest	96,489,336		34,460,943		(4,270,173	)	126,680,106		—		126,680,106
Income tax (expense) income	(45,243,616	)	(15,454,533	)	4,445,217		(56,252,932	)	—		(56,252,932	)
Minority interest	(2,569,327	)	(3,801,283	)	—		(6,370,610	)	—		(6,370,610	)
Net income	48,676,393		15,205,127		175,044		64,056,564		—		64,056,564

(1) Represents inter-segment lease revenues and expenses.

(2) Represents interest expense generated by inter-segment loan used to fund the credit card activity.

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As of and for the year ended June 30, 2006	Leases and services		Credit card Operations		Others		Total reportable segments		Eliminations		Total as of and for the year ended June 30, 2006
	Ps.		Ps.		Ps.		Ps.		Ps.		Ps.
Revenues	215,894,651		122,968,616		23,384,250		362,247,517		(891,604	)(1)	361,355,913
Costs	(76,634,274	)	(45,532,952	)	(18,497,882	)	(140,665,108	)	1,599,732	(1)(2)	(139,065,376	)
Gross profit	139,260,377		77,435,664		4,886,368		221,582,409		708,128		222,290,537
Selling expenses	(15,296,283	)	(30,900,024	)	(709,021	)	(46,905,328	)	—		(46,905,328	)
Administrative expenses	(26,415,282	)	(26,349,116	)	(8,672	)	(52,773,070	)	—		(52,773,070	)
Net income from retained interest in securitized receivables	—		2,625,001		—		2,625,001		—		2,625,001
Gain from recognition of inventories at net realizable value	—		—		3,497,632		3,497,632		—		3,497,632
Operating income	97,548,812		22,811,525		7,666,307		128,026,644		708,128		128,734,772
Equity loss from related companies	—		—		(678,881	)	(678,881	)	—		(678,881	)
Amortization of goodwill	(4,516,101	)	(223,574	)	—		(4,739,675	)	—		(4,739,675	)
Financial results, net	(16,477,323	)	106,367		1,445,218		(14,925,738	)	(708,128	)(2)	(15,633,866	)
Other expenses, net	(9,634,483	)	(124,863	)	(2,422	)	(9,761,768	)	—		(9,761,768	)
Income before taxes and minority interest	66,920,905		22,569,455		8,430,222		97,920,582		—		97,920,582
Income tax expense	(34,284,744	)	(8,238,421	)	(5,933,972	)	(48,457,137	)	—		(48,457,137	)
Minority interest	(1,873,491	)	(2,910,922	)	—		(4,784,413	)	—		(4,784,413	)
Net income	30,762,670		11,420,112		2,496,250		44,679,032		—		44,679,032

(1) Represents inter-segment lease revenues and expenses.

(2) Represents interest expense generated by inter-segment loan used to fund the credit card activity.

As of and for the year ended June 30, 2005	Leases and services		Credit card Operations		Others		Total reportable segments		Eliminations		Total as of and for the year ended June 30, 2005
Revenues	165,824,082		64,557,977		121,430		230,503,489		(346,168	)(1)	230,157,321
Costs	(69,203,912	)	(24,474,324	)	(204,586	)	(93,882,822	)	1,372,456	(1)(2)	(92,510,366	)
Gross profit (loss)	96,620,170		40,083,653		(83,156	)	136,620,667		1,026,288		137,646,955
Selling expenses	(11,027,272	)	(13,496,245	)	(250,839	)	(24,774,356	)	—		(24,774,356	)
Administrative expenses	(16,948,434	)	(14,890,490	)	(36,376	)	(31,875,300	)	—		(31,875,300	)
Net income from retained interest in securitized receivables	—		423,508		—		423,508		—		423,508
Operating income (loss)	68,644,464		12,120,426		(370,371	)	80,394,519		1,026,288		81,420,807
Equity loss from related companies	(79,935	)	—		(626,684	)	(706,619	)	—		(706,619	)
Amortization of goodwill	(4,584,543	)	(242,255	)	—		(4,826,798	)	—		(4,826,798	)
Financial results, net	1,525,233		96,316		1,815,939		3,437,488		(1,026,288	)(3)	2,411,200
Other expenses (income), net	(7,383,867	)	55,526		(53,619	)	(7,381,960	)	—		(7,381,960	)
Income before taxes and minority interest	58,121,352		12,030,013		765,265		70,916,630		—		70,916,630
Income tax expense	(28,874,276	)	(4,864,295	)	122,697		(33,615,874	)	—		(33,615,874	)
Minority interest	(2,563,762	)	(1,481,594	)	—		(4,045,356	)	—		(4,045,356	)
Net income	26,683,314		5,684,124		887,962		33,255,400		—		33,255,400

(1) Represents inter-segment lease revenues and expenses.

(2) Represents interest expense generated by inter-segment loan used to fund the credit card activity.

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The following tables set forth certain information regarding our revenues from Leases and Services by geographical area:

	Fiscal year ended June 30, (1)
	2005	2006	2007
Revenues from leases and services by Geographical Area
City of Buenos Aires	127,789,991	158,149,549	194,193,992
Greater Buenos Aires (2)	19,149,474	25,151,278	31,248,833
Rest of the country	18,538,449	31,702,220	44,689,149
Total Revenues	165,477,914	215,003,047	270,131,975

(1) Includes inter-segment eliminations.

(2) Excluding revenues derived from the City of Buenos Aires.

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Operating Results

Fiscal Year 2007 as compared to Fiscal Year 2006

Revenues

Our net revenues increased 33.7% from Ps361.4 million during fiscal year ended June 30, 2006, to Ps.483.2 million during fiscal year ended June 30, 2007. This was mainly as a result of: (i) a Ps.90.0 million increase in revenues from our Credit Card Operations segment and; (ii) a Ps.55.4 million increase in revenues from our Leases and Services segment partially offset by (iii) the non-recurring sale of the Alcorta Plaza parcel of land which generated revenues in our Others segment amounting to Ps.23.0 million during fiscal year ended June 30, 2006.

Leases and Services. Revenues from Leases and Services increased 25.6% from Ps.215.9 million during fiscal year ended June 30, 2006 to Ps.271.2 million during fiscal year ended June 30, 2007. This was mainly due to a Ps.48.0 million increase in revenues from leases and admission rights as a result of (i) a 18% increase in the average price per square meter, and (ii) a 24.2% increase in total sales from our tenants, which increased from Ps.2,275.1 million during fiscal year ended June 30, 2006, to Ps.2,825.8 million during fiscal year ended June 30, 2007, resulting in higher percentage rents.

Credit Card Operations. Revenues from Credit Card Operations increased 73.2%, from Ps.123.0 million during fiscal year ended June 30, 2006, to Ps.213.0 million during fiscal year ended June 30, 2007. This was a result of the favorable macroeconomic conditions, the increase in the general consumption level, and the continuing expansion in our services, as reflected by a 90.5% increase in Tarjeta Shopping sales and a 49% increase in the number of member stores.

Other. Revenues from our Other segment decreased 98.3% from Ps.23.4 million during fiscal year ended June 30, 2006, to Ps.0.4 million during fiscal year ended June 30, 2007, mainly because of the non-recurring sale of the Alcorta Plaza parcel of land which generated revenues in our Other segment for Ps.23.0 million during fiscal year ended June 30, 2006.

	Revenues for the fiscal years ended June 30,
	2006		2007
	(in million of Ps)
Leases and Services	215.9		271.2
Credit Cards	123.0		213.0
Other	23.4		0.4
Eliminations	(0.9	)	(1.4	)
Total income	361.4		483.2

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Costs

Costs increased 21.0%, from Ps.139.1 million during fiscal year ended June 30, 2006, to Ps.168.3 million during fiscal year ended June 30, 2007. This was mainly as a result of: (i) a Ps.31.9 million increase in the costs of our Credit Card segment as a result of the growth and expansion of its operations; (ii) a Ps.14.0 million increase in the costs of our Leases and Services segment as a result of an increase in costs related to renovation and refurbishment of our leasable areas; partially offset by (iii) a Ps.17.1 million decrease in the costs of our Other segment mainly because of the non-recurring sale of the Alcorta Plaza parcel of land which generated costs amounting to Ps.18.4 million during fiscal year ended June 30, 2006. Total costs as a percentage of total revenues decreased from 38.5% during fiscal year ended June 30, 2006 to 34.8% during fiscal year ended June 30, 2007, as a result of a 33.7% increase in total revenues as compared to a 21.0% increase in total costs.

Leases and Services. Cost from Leases and Services increased 18.3%, from Ps.76.6 million during fiscal year ended June 30, 2006, to Ps.90.6 million during fiscal year ended June 30, 2007. This increase was mainly attributable to: (i) an increase in costs related to renovation and refurbishment of our leaseable areas amounting to Ps.6.6 million; (ii) the fact that one of the main components of costs for this segment relates to depreciation of fixed assets, which during fiscal year ended June 30, 2007 increased Ps.4.7 million and (iii) a Ps.2.3 million increase in the costs of non-recovered general expense. Costs of our Leases and Services segment as a percentage of revenues from this segment decreased from 35.5%, during fiscal year ended June 30, 2006, to 33.4% during fiscal year ended June 30, 2007, mainly due to a lesser increase of costs from this segment of 18.3% as compared to a 25.6% increase in its revenues.

Credit Card Operations. Cost from Credit Card Operations increased 70.0%, from Ps. 45.5 million during fiscal year ended June 30, 2006, to Ps.77.4 million during fiscal year ended June 30, 2007, mainly as a result of an increase of costs related to the expansion of Tarshop’s business reflected in: (i) a Ps.11.0 million increase in the costs of salaries and social security expenses; (ii) a Ps.9.8 million increase in interest and commission expenses; (iii) a Ps.5.7 million increase in taxes, duties and contribution expenses; (iv) a Ps.2.8 million increase in expenses for third parties’ fees and services. Costs of our Credit Card Operations segment as a percentage of revenues from this segment slightly decreased from 37.0% during fiscal year ended June 30, 2006 to 36.4% during fiscal year ended June 30, 2007.

Other. Costs from our Other segment decreased 92.4%, from Ps.18.5 million during fiscal year ended June 30, 2006 to Ps. 1.4 million during fiscal year ended June 30, 2007, mainly due to absence during fiscal year ended June 30, 2007 of the costs related to the non-recurring sale of the Alcorta Plaza parcel of land which took place during fiscal year ended June 30, 2006; partially offset by a Ps.1.2 million increase in costs related to the sale of a parcel of land located in the neighborhood of Saavedra (previously acquired from Philips Argentina S.A.) to Panamerican Mall S.A., a company organized in December 2006 in which we own an 80% interest.

	Costs for the fiscal years ended June 30,
	2006		2007
	(in million of Ps.)
Leases and Services	(76.6	)	(90.6	)
Credit Cards	(45.5	)	(77.4	)
Other	(18.5	)	(1.4	)
Eliminations	1.6		1.2
Total Costs	(139.1	)	(168.3	)

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Gross Profit

Due to the factors above mentioned, gross profit increased 41.7%, from Ps.222.3 million during fiscal year ended June 30, 2006, to Ps.314.9 million during fiscal year ended June 30, 2007. Gross profit as a percentage of total revenues increased from 61.5% during fiscal year ended June 30, 2006, to 65.2% during fiscal year ended June 30, 2007, mainly as a result of an improvement in the gross margin of our Leases and Services segment partially offset by a decrease in the gross margin of our Other segments.

Leases and Services. Gross profit from Leases and Services increased 29.7%, from Ps.139.3 million for the fiscal year ended June 30, 2006, to Ps.180.6 million during fiscal year ended June 30, 2007, mainly as a result of a 24.2% increase in our shopping center tenants’ sales total, which increased from Ps.2,275.1 million during fiscal year ended June 30, 2006, to Ps.2,825.8 million during fiscal year ended June 30, 2007. Gross profit from our Leases and Services segment as a percentage of revenues from this segment increased from 64.5% during fiscal year ended June 30, 2006, to 66.6% during fiscal year ended June 30, 2007, mainly due to a 25.6% increase in revenues from this segment compared to a 18.3% increase in its costs during such fiscal year, for the reasons above mentioned.

Credit Card Operations. Gross profit from Credit Card operations increased 75.0%, from Ps 77.4 million during fiscal year ended June 30, 2006, to Ps.135.5 million during fiscal year ended June 30, 2007, as a consequence of the continuing expansion of our subsidiary Tarshop’s operations. Gross profit from Credit Card operations segment as a percentage of revenues from this segment increased slightly from 63.0% during fiscal year ended June 30, 2006, to 63.6% during fiscal year ended June 30, 2007. This was mainly attributable to a 73.2% increase in revenues, compared to a 70.0% increase in costs from this segment for such fiscal year.

Other. Gross profit from our Other segment decreased from a gain of Ps.4.9 million during fiscal year ended June 30, 2006, to a loss of Ps.1.0 million during fiscal year ended June 30, 2007, mainly as a consequence of the results of the non-recurring sales which took place during fiscal years ended June 30, 2007 and 2006, of which the sale of Alcorta Plaza parcel of land during fiscal year ended June 30, 2006, generated a Ps. 4.9 million profit as compared to the costs related to the sale of the parcel of land located in the neighborhood of Saavedra during fiscal year ended June 30, 2007, which generated a Ps.1.2 million loss. Gross profit from Other segment as a percentage of revenues from this segment decreased during fiscal year ended June 30, 2007, mainly due to a 98.3% decrease of revenues from this segment partially offset by a 92.4% decrease in costs from this segment for such fiscal year.

	Gross profit for the fiscal years ended June 30,
	2006	2007
	(in million of Ps)
Leases and Services	139.3	180.6
Credit Cards	77.4	135.5
Other	4.9	(1.0	)
Eliminations	0.7	(0.2	)
Total gross profit	222.3	314.9

Selling expenses

Selling expenses increased 79.7%, from Ps.46,9 million during fiscal year ended June 30, 2006, to Ps.84.3 million during fiscal year ended June 30, 2007, mainly as a result of a Ps.31.1 million increase in expenses from

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our Credit Card operations segment due the grow of its operations. Total selling expenses, as a percentage of total revenues, increased from 13.0% during fiscal year ended June 30, 2006 to 17.4% during fiscal year ended June 30, 2007, as a result of a 79.7% increase in selling expenses related to a 33.7% increase in revenues during such year.

Leases and Services. Selling expenses from Leases and Services increased 30.8%, from Ps.15.3 million during fiscal year ended June 30, 2006 to Ps.20.0 million during fiscal year ended June 30, 2007, as a result of: (i) a Ps.2.0 million increase in cost of salaries and social security expenses; (ii) a Ps.1.4 million increase in gross income tax expenses and; (iii) an increase in the allowance for doubtful accounts of Ps.1.2 million. Selling expenses, as a percentage of revenues from the Leases and Services segment, increased slightly from 7.1% during fiscal year ended June 30, 2006 to 7.4% during fiscal year ended June 30, 2007.

Credit Card Operations. Selling expenses from Credit Card operations increased 100.5%, from Ps.30.9 million during fiscal year ended June 30, 2006 to Ps.62.0 million during fiscal year ended June 30, 2007, mainly due to: (i) an increase in allowance for doubtful accounts of Ps.11.8 million; (ii) a Ps.11.7 million increase in advertising expenses and; (iii) a Ps.5.8 million increase in gross income tax expenses. Selling expenses, as a percentage of revenues from the Credit Card Operations segment, increased from 25.1% during fiscal year ended June 30, 2006 to 29.1% during fiscal year ended June 30, 2007.

Other. Selling expenses from our Other segment increased from Ps.0.7 million during fiscal year ended June 30, 2006 to Ps.2.3 million during fiscal year ended June 30, 2007, mainly as a result of gross income tax expenses arising from the aforementioned sale of the parcel of land located in the neighborhood of Saavedra.

	Selling Expenses for the fiscal years ended June 30,
	2006		2007
	(in million of Ps.)
Leases and services	(15.3	)	(20.0	)
Credit cards	(30.9	)	(62.0	)
Other	(0.7	)	(2.3	)
Eliminations	0.0		0.0
Total selling expenses	(46.9	)	(84.3	)

Administrative expenses

Administrative expenses increased 51.4% from Ps. 52.8 million during fiscal year ended June 30, 2006 to Ps 79.9 million during fiscal year ended June 30, 2007. This increase is mainly as a result of: (i) a Ps 19.9 million increase in expenses of our Credit Card operations segment and (ii) a Ps.7.1 million increase in expenses from our Leases and Services segment. Total administrative expenses, as a percentage of total revenues, increased from 14.6% during fiscal year ended June 30, 2006 to 16.5% during fiscal year ended June 30, 2007, mainly due to an increase in administrative expenses from our Credit Card operations segment at a higher rate than its respective revenues during such fiscal year.

Leases and Services. Administrative expenses from Leases and Services increased 27.0%, from Ps.26.4 million during fiscal year ended June 30, 2006 to Ps.33.5 million during fiscal year ended June 30, 2007, as a result of: (i) a Ps.3.7 million increase in expenses for third parties’ fees and services; (ii) a Ps.2.0 million increase in compensation to our board of directors and; (iii) a Ps.1.3 million increase in expenses for taxes, duties and contribution expenses, mainly arising from the tax on bank debits and credits. Administrative expenses of Leases and Services, as a percentage of revenues from this segment, had a slightly variation increasing from 12.2% during fiscal year ended June 30, 2006 to 12.4% during fiscal year ended June 30, 2007.

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Credit Card Operations. Selling expenses from Credit Card Operations increased 75.5%, from Ps.26.3 million during fiscal year ended June 30, 2006 to Ps.46.2 million during fiscal year ended June 30, 2007, as a result of: (i) a Ps.11.4 million increase in salaries, bonus, and social security expenses; (ii) a Ps.3.3 million increase in taxes, duties and contribution expenses and rent expenses and; (iii) a Ps. 3.0 million increase in expenses for third parties’ fees and services. Administrative expenses from Credit Card Operations, as a percentage of revenues from this segment, increased from 21.4% during fiscal year ended June 30, 2006 to 21.7% during fiscal year ended June 30, 2007 due to a proportional increase of these expenses compared to the increase of its revenues.

Other. Administrative expenses from our Other segment did not change significantly.

	Administrative Expenses for the fiscal years ended June 30,
	2006		2007
	(in million of Ps.)
Leases and services	(26.4	)	(33.5	)
Credit cards	(26.3	)	(46.2	)
Other	0.0		(0.4	)
Eliminations	0.0		0.3
Total administrative expenses	(52.8	)	(79.9	)

Net income from retained interest in securitized receivables

Net income from credit card trusts increased Ps 0.6 million, from a Ps 2.6 million profit during fiscal year ended June 30, 2006 to a Ps 3.3 million profit during fiscal year ended June 30, 2007 mainly as a result of new issuances of credit card trusts.

Gain from recognition of inventories at net realizable value

Gain from recognition of inventories at net realizable value is generated as a result of valuing at net realizable value those inventories for which we have received purchase price or lease advances that fix prices, and the contract states the consummation of the sale and the gain. The result provided by the valuation of inventories at their net realizable value decreased 84.4%, from a Ps.3.5 million profit during fiscal year ended June 30, 2006 to a Ps.0.5 million profit during fiscal year ended June 30, 2007. As for both fiscal years, this gain was provided by the valuation at its net realizable value (in compliance with the conditions provided for in Technical Resolution No. 17) of a parcel of land located in the City of Rosario, in respect of which a preliminary sale agreement was entered into between us and Villa Hermosa S.A. during December 2005.

Operating income

Operating income increased 20.0%, from Ps. 128.7 million during fiscal year ended June 30, 2006 to Ps.154.5 million during fiscal year ended June 30, 2007, mainly as a result of an increase in operating income from Leases and Services and Credit Card Operations of Ps.29.5 million and Ps.7.8 million, respectively, partially offset by a Ps.10.9 million decrease in operating income from our Other segment. Operating income as a percentage of total revenues decreased from 35.6% during fiscal year ended June 30, 2006 to 32.0% during fiscal year ended June 30, 2007, mainly as a result of a decrease in the operating margin of our Other segment.

Leases and Services. Income from Leases and Services increased 30.2%, from Ps.97.5 million during fiscal year ended June 30, 2006 to Ps.127.1 million during fiscal year ended June 30, 2007, mainly as a

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consequence of a 25.6% increase in revenues from this segment, partially offset by a 18.3% increase in costs from this segment and a 27.0% increase in administrative expenses from this segment. Operating income from Leases and Services, as a percentage of revenues from this segment, increased from 45.2% during fiscal year ended June 30, 2006 to 46.8% during fiscal year ended June 30, 2007.

Credit Card Operations. The operating income from Credit Card Operations increased 34.1%, from Ps.22.8 million during fiscal year ended June 30, 2006 to Ps.30.6 million during fiscal year ended June 30, 2007. This change was mainly the result of greater revenues from this segment as a consequence of our subsidiary Tarshop’s expansion of operations, partially offset by its costs, selling expenses and administrative expenses. Operating income from Credit Card Operations, as a percentage of revenues from this segment, decreased from 18.6% during fiscal year ended June 30, 2006 to 14.4% during fiscal year ended June 30, 2007 as a result of increases of 70.0%, 100.5% and 75.5% in costs, selling expenses and administrative expenses, respectively, related to this segment compared to a 73.2% increase in revenues during such fiscal year.

Other. Operating income from our Other segment decreased Ps.10.9 million, from an operating income of Ps.7.7 million during fiscal year ended June 30, 2006 to a loss of Ps.3.2 million during fiscal year ended June 30, 2007, mainly as a result of the comparison of the real property sales registered in both fiscal years, which during fiscal year ended June 30, 2007, generated greater costs than revenues.

	Operating income for the fiscal years ended June 30,
	2006	2007
	(in thousands of Ps)
Leases and services	97.5	127.1
Credit cards	22.8	30.6
Other	7.7	(3.2	)
Eliminations	0.7	0.1
Total income from recurring operations	128.7	154.5

Equity loss from related companies

The loss from our share in other companies did not change during fiscal years ended June 30, 2007 and 2006, maintaining a Ps 0.7 million loss for both fiscal years. This loss was generated by our 50% interest in E-Commerce Latina S.A. through December 2006, as from which date we disclosed their results in a consolidated manner.

Amortization of goodwill

Amortization of goodwill decreased 7.9%, from Ps.4.7 million during fiscal year ended June 30, 2006 to Ps.4.4 million during fiscal year ended June 30, 2007, mainly as a result of the amortization of the negative goodwill resulting from the purchase of Empalme S.A.I.C.F.A. y G. which took place during fiscal year ended June 30, 2007. This result reflects our continuing amortization of goodwill generated by our acquisition of Shopping Alto Palermo S.A., Fibesa S.A., Tarshop S.A, Emprendimiento Recoleta S.A. and Empalme S.A.I.C.F.A. y G.

Financial results, net

Financial results, net increased 24.5%, from a net loss of Ps.15.6 million during fiscal year ended June 30, 2006 to a net loss of Ps.19.5 million during fiscal year ended June 30, 2007.

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Financial results generated by assets decreased 23.8%, from a Ps. 17.6 million gain during fiscal year ended June 30, 2006 to a Ps.13.4 million gain during fiscal year ended June 30, 2007, mainly due to: (i) a higher reversal of impairment losses during fiscal year ended June 30, 2006 of Ps.8.8 million; (ii) a Ps.7.6 million increase in interest income due to higher average balances of interest-bearing deposits and collateral deposits; partially offset by (iii) a Ps.3.5 million loss from foreign exchange differences.

Financial results generated by liabilities decreased 1.0% from a Ps.33.2 million loss during fiscal year ended June 30, 2006 to a Ps.32.9 million loss during fiscal year ended June 30, 2007. This change was mainly due to: (i) the stability of the U.S. dollar’s selling exchange rate during the fiscal year under analysis (it increased from US$ 1=3.086 as of June 30, 2006 to US$1=3.093 as of June 30, 2007), unlike what happened during the previous fiscal year, when the dollar exchange rate recorded a significant increase (from US$1=2.887 as of June 30, 2005 to US$1=3.086 as of June 30, 2006). These changes in the exchange rate have an impact on our U.S. dollar-denominated indebtedness, mainly consisting of convertible securities (held by related parties), which represented a Ps.8.8 million gain; partially offset by a Ps.9.0 million increase in financing expenses (net of capitalized interest) generated by the new indebtedness carried out by the company to finance our expansion projects in the short and medium term.

Other expenses, net

Other expenses, net decreased 65.7%, from a of Ps.9.8 million loss during fiscal year ended June 30, 2006 to a Ps.3.3 million loss during fiscal year ended June 30, 2007. This decrease was mainly due to: (i) a Ps.6.2 million recovery recorded in our provisions for contingencies and other receivables; (ii) a Ps. 2.9 million recovery recorded in other provisions and; (iii) a Ps.0.9 million reduction in expenses for stamp tax of Mendoza Plaza Shopping S.A. partially offset by: (iv) the absence during fiscal year ended June 30, 2007 of a Ps.2.4 million non-recurring income accrued during fiscal year ended June 30, 2006 due to a property acquisition by our subsidiary Mendoza Plaza Shopping S.A. and; (v) a Ps1.9 million increase in donations.

Income before taxes and minority interest

Due to the factors described above, income before taxes and minority interest increased 29.4%, from Ps.97.9 million during fiscal year ended June 30, 2006 to Ps.126.7 million during fiscal year ended June 30, 2007.

Income tax

Income tax expenses increased 16.1%, from Ps. 48.5 million during fiscal year ended June 30, 2006 to Ps.56.3 million during fiscal year ended June 30, 2007. Our effective income tax rate decreased from 49.5% for the fiscal year ended June 30, 2006, to 44.4% for the fiscal year ended June 30, 2007. It should be noted that in determining the income tax expense, we used deferred tax method, thus recognizing temporary differences between the accounting and tax measurement of assets and liabilities and the application of tax losses. Therefore, the registered income tax figure does not only relate to the amount payable but it also reflects the recognition of the tax on an accounting accrual basis.

Minority interest

Minority interest increased 33.2%, from a Ps. 4.8 million loss during fiscal year ended June 30, 2006 to a Ps.6.4 million loss during fiscal year ended June 30, 2007, as a result of an increase in the results of the companies in which we hold a majority interests.

Net income

As a result of the aforementioned factors, our net income increased 43.4%, from Ps.44.7 million during fiscal year ended June 30, 2006 to Ps. 64.1 million during fiscal year ended June 30, 2007.

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Fiscal Year 2006 as compared to Fiscal Year 2005

Revenues

Revenues increased 57.0%, from Ps.230.2 million during fiscal year ended June 30, 2005 to Ps.361.4 million during fiscal year ended June 30, 2006 as a result of increased revenues in each of our three business segments.

Leases and Services. Revenues from Leases and Services increased 30.2% from Ps.165.8 million during fiscal year ended June 30, 2005 to Ps.215.9 million during fiscal year ended June 30, 2006, mainly resulting from: (i) a 24.5% increase in our tenants´sales (from Ps. 1,488 million during fiscal year ended June 30, 2005 to Ps.1,853 million during fiscal year ended June 30, 2006) which resulted in a Ps.35.8 million increase in our revenues from rental and admission rights; (ii) a Ps.6.3 million increase in Alto Rosario Shopping’s revenues, resulting from the comparison of eight months of revenues from fiscal year ended June 30, 2005 against the twelve months of revenues from fiscal year ended June 30, 2006 and (iii) a Ps.5.4 million increase in Mendoza Plaza Shopping’s revenues resulting from the comparison of nine months of revenues from fiscal year ended June 30, 2005 against the twelve months of revenues from fiscal year ended June 30, 2006.

Credit Card Operations. Revenues from Credit Card Operations increased 90.5% from Ps.64.6 million during fiscal year ended June 30, 2005 to Ps.123.0 million during fiscal year ended June 30, 2006. The increase in revenues from our credit card operation segment was mainly due to the growth of our customer portfolio, our sales and the number of cardholders, all driven by the economic recovery that has taken place during the year, as reflected by a 83.8% increase in our portfolio (from Ps.209.2 million during fiscal year ended June 30, 2005 to Ps.384.6 million during fiscal year ended June 30, 2006), a 90.5% increase in our credit card sales (from Ps.64.6 million during fiscal year ended June 30, 2005 to Ps.123.0 million during fiscal year ended June 30, 2006, both periods including the securitized portion of the credit card receivables) and a Ps.22.2 million increase in premiums for life and disability insurance.

Other. Revenues from our Other segment increased from Ps.0.1 million during fiscal year ended June 30, 2005 to Ps.23.4 million during fiscal year ended June 30, 2006, mainly due to an income of Ps.23.0 million generated by the sale of Alcorta Plaza, which is a parcel of land located next to our Paseo Alcorta shopping center in the City of Buenos Aires, sold to Raghsa S.A. on December 2005 for the construction of two residential towers.

	Revenues for the fiscal years ended June 30,
	2005		2006
	(in million of Pesos)
Leases and services	165.8		215.9
Credit card operations	64.6		123.0
Other	0.1		23.4
Intersegment eliminations	(0.3	)	(0.9	)
Total revenues	230.2		361.4

Costs

Costs increased 50.3%, from Ps.92.5 million during fiscal year ended June 30, 2005 to Ps.139.1 million during fiscal year ended June 30, 2006. This increase in costs is mainly attributable to (i) higher costs from our Credit Card Operations segment due to the increase in our subsidiary´s Tarshop employees, as a consequence of the opening of new branches country-wide and (ii) the increase in costs from our Other segment as a

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consequence of the sale of the Alcorta Plaza parcel of land. Costs as a percentage of total revenues decreased from 40.2% for fiscal year ended June 30, 2005 to 38.5% for the fiscal year ended June 30, 2006 mainly due to a 50.3% increase in total costs, compared to a 57.0% increase in revenues, reflecting lower costs as a percentage of revenues in each of our three business segments.

Leases and Services. Costs from Leases and Services increased 10.7%, from Ps. 69.2 million during fiscal year ended June 30, 2005 to Ps.76.6 million during fiscal year ended June 30, 2006. This increase was mainly due to: (i) a Ps.4.5 million increase in depreciation and amortization charges as a result of an increase in our fixed assets and (ii) a Ps.2.6 million increase in unrecoverable management fees. Costs from our Leases and Services segment as a percentage of revenues from this segment fell from 41.7% in fiscal year ended June 30, 2005 to 35.5% for the fiscal year ended June 30, 2006 as a result of a 30.2% increase of revenues from this segment, compared to a 10.7% increase in costs from this segment.

Credit Card Operations. Cost from Credit Card Operations increased 86.0%, from Ps.24.5 million during fiscal year ended June 30, 2005 to Ps.45.5 million during fiscal year ended June 30, 2006. This increase was mainly due to: (i) a Ps.5.6 million increase in commissions and interest charges; (ii) a Ps. 3.0 million increase in taxes, duties and contributions and a Ps.1.3 million increase resulting from the opening of new branches; (iii) a Ps.6.2 million increase in the cost of salaries and social security charges due to the increase in Tarshop´s payroll; and (iv) a Ps.2.3 million increase in fees and services expenses related to the issuance of new series of Financial Trusts. Costs from our Credit Card Operations segment as a percentage of revenues from this segment decreased from 37.9% in fiscal year ended June 30, 2005 to 37.0% for fiscal year ended June 30, 2006 as a result of a 90.5% increase in revenues from this segment, compared to an 86.0% increase in costs during such period.

Other. Costs from our Others segment increased significantly from Ps.0.2 million during fiscal year ended June 30, 2005 to Ps.18.5 million during fiscal year ended June 30, 2006, mainly due to Ps. 18.4 million of costs generated by the sale of Alcorta Plaza parcel of land. Costs related to our Other segment as a percentage of revenues from this segment decreased from 168.5% for the fiscal year ended June 30, 2005 to 79.1% for fiscal year ended June 30, 2006 mainly due to the fact that revenues from this segment increased at a substantially higher rate during fiscal year ended June 30, 2006 than did costs during such year.

	Costs for the fiscal years ended June 30,
	2005		2006
	(in million of Pesos)
Leases and services	(69.2	)	(76.6	)
Credit card operations	(24.5	)	(45.5	)
Other	(0.2	)	(18.5	)
Intersegment eliminations	1.4		1.6
Total costs	(92.5	)	(139.1	)

Gross Profit

Due to the factors above mentioned, gross profit increased 61.5%, from Ps. 137.6 million during fiscal year ended June 30, 2005 to Ps. 222.3 million during fiscal year ended June 30, 2006. Gross profit, as a percentage of total revenues, increased from 59.8% during fiscal year ended June 30, 2005 to 61.5% during fiscal year ended June 30, 2006 primarily as a result of improvements in the gross margin of our Leases and Services segment and Other segment.

Leases and Services. Gross profit from Leases and Services increased 44.1% from Ps. 96.6 million during fiscal year ended June 30, 2005 to Ps. 139.3 million during fiscal year ended June 30, 2006. Gross profit from Leases and Services segment as a percentage of revenues from this segment increased from 58.3% during fiscal

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year ended June 30, 2005 to 64.5% during fiscal year ended June 30, 2006. This improvement in this segment of our income statement is mainly due to a 30.2% increase in revenues from this segment compared to a 10.7% increase in costs during such period.

Credit Card Operations. Gross profit from Credit Card operations increased 93.2% from Ps. 40.1 million during fiscal year ended June 30, 2005 to Ps.77.4 million during fiscal year ended June 30, 2006. Gross profit from Credit Card Operations as a percentage of revenues from this segment increased from 62.1% during fiscal year ended June 30, 2005 to 63.0% during fiscal year ended June 30, 2006, reflecting the significant expansion of our subsidiary Tarshop during fiscal year ended June 30, 2006 but, partially offset by increased costs incurred in connection with the new branches opened country wide.

Other. Gross profit from our Other segment increased from a loss of Ps.0.1 million during fiscal year ended June 30, 2005 to a profit of Ps.4.9 million during fiscal year ended June 30, 2006. Gross profit from Other segment as a percentage of revenues from its segment increased from a loss of (68.5)% during fiscal year ended June 30, 2005 to an income of 20.9% during fiscal year ended June 30, 2006 due to a greater revenue derived from the sale of the Alcorta Plaza parcel of land, compared to the cost related to that sale.

	Gross Profit for the fiscal years ended June 30,
	2005		2006
	(in million of Pesos)
Leases and services	96.6		139.3
Credit card operations	40.1		77.4
Other	(0.1	)	4.9
Intersegment eliminations	1.0		0.7
Total gross profit	137.6		222.3

Selling expenses

Selling expenses increased 89.3% from Ps. 24.8 million during fiscal year ended June 30, 2005 to Ps. 46.9 million during fiscal year ended June 30, 2006, mainly due to significantly higher selling expenses in our Credit Card Operations segment as a result of the nationwide expansion of our subsidiary Tarshop. Selling expenses, as a percentage of total revenues, increased from 10.8% for fiscal year ended June 30, 2005 to 13.0% for fiscal year ended June 30, 2006 due to proportionately higher selling expenses in our Leases and Services and Credit Card Operations segments, partially offset by proportionately lower selling expenses in our Other segment.

Leases and Services. Selling expenses from Leases and Services increased 38.7% from Ps. 11.0 million during fiscal year ended June 30, 2005 to Ps. 15.3 million during fiscal year ended June 30, 2006. This increase was mainly due to: (i) a Ps. 2.0 million increase in gross revenue tax charges related to the increase in our revenues during this period; (ii) a Ps. 1.1 million increase in the charge for allowance for doubtful accounts; and (iii) a Ps. 0.5 million increase in advertising expenses. Selling expenses from our Leases and Services segment as a percentage of revenues from this segment, increased from 6.6% during fiscal year ended June 30, 2005 to 7.1% during fiscal year ended June 30, 2006 as a result of a 38.7% increase in revenues from this segment compared to a 34.1% increase in selling expenses for such period primarly as a result of our increased allowance for doubtful accounts.

Credit Card Operations. Selling expenses from Credit Card Operations increased 129.0% from Ps. 13.5 million during fiscal year ended June 30, 2005 to Ps. 30.9 million during fiscal year ended June 30, 2006. This increase was mainly due to the expansion of this business segment, which resulted in: (i) a Ps. 6.7 million increase of advertising expenses; (ii) a Ps. 6.2 million increase in the charge for allowance for doubtful accounts related to the increase of our credit portfolio; and (iii) a Ps. 3.8 million increase in the gross revenue tax charges

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related to the increase of our revenues previously stated. Selling expenses as a percentage of revenues from this segment increased from 20.9% during fiscal year ended June 30, 2005 to 25.1% during fiscal year ended June 30, 2006, mainly as a result of a 90.5% increase in revenues from this segment, compared to a 129.0% increase in selling expenses during such period primarily as a result of our increased allowance for doubtful accounts and our higher promotional expenses which did not generate a commensurate increase in revenues.

Other. Selling expenses from our Other segment increased from Ps. 0.3 million during fiscal year ended June 30, 2005 to Ps. 0.7 million during fiscal year ended June 30, 2006, mainly due to an increase in gross revenue tax charges related to the sale of Alcorta Plaza parcel of land during fiscal year ended June 30, 2006. Selling expenses from Other segment as a percentage of its revenues decreased from 206.6% during fiscal year ended June 30, 2005 to 3.0% during fiscal year ended June 30, 2006, due to the Ps.23.0 million revenues related to the sale of the Alcorta Plaza parcel of land.

	Selling expenses for the fiscal years ended June 30,
	2005		2006
	(in million of Pesos)
Leases and services	(11.0	)	(15.3	)
Credit card operations	(13.5	)	(30.9	)
Other	(0.3	)	(0.7	)
Intersegment eliminations	0.0		0.0
Total selling expenses	(24.8	)	(46.9	)

Administrative expenses

Administrative expenses increased 65.6% from Ps. 31.9 million during fiscal year ended June 30, 2005 to Ps. 52.8 million during fiscal year ended June 30, 2006, mainly due to the increase of such expenses in our Credit Card Operations segment. Administrative expenses as a percentage of total revenues increased from 13.8% during fiscal year ended June 30, 2005 to 14.6% during fiscal year ended June 30, 2006 as a result of proportionately higher administrative expenses in our Leases and Services segment, partially offset by lower administrative expenses in our Credit Card and Other segments.

Leases and Services. Administrative expenses from Leases and Services increased 55.9%, from Ps. 16.9 million during fiscal year ended June 30, 2005 to Ps. 26.4 million during fiscal year ended June 30, 2006 mainly due to: (i) a Ps. 3.4 million increase in the board of directors´ fees; (ii) a Ps. 3.2 million increase in fees and third parties services; (iii) a Ps. 1.9 million increase in the amount of salaries, bonuses and social security charges; and (iv) a Ps. 0.6 million increase in tax charges, duties and contributions, mainly due to an increase of the financial transactions tax. Administrative expenses from our Leases and Services segment, as a percentage of revenues from this segment increased from 10.2% during fiscal year ended June 30, 2005 to 12.2% in fiscal year ended June 30, 2006, mainly as a result of a 30.2% increase in revenues from this segment compared to a 55.9% increase in administrative expenses during such period due to our adoption of a new SAP system and our continuing costs of complying with the requirements of Sarbanes Oxley.

Credit Card Operations. Administrative expenses from Credit Card Operations increased 77.0%, from Ps. 14.9 million during fiscal year ended June 30, 2005 to Ps. 26.3 million during fiscal year ended June 30, 2006 mainly due to: (i) a Ps. 5.9 million increase in salaries, bonuses and social security charges as a result of a 83.8% increase in the size of our portfolio during our fiscal year ended June 30, 2006; (ii) a Ps. 2.4 million increase in fees and third parties services related to our increased securitization activities; and (iii) a Ps. 1.3 million increase in tax charges, duties and contributions and a Ps. 1.6 million increase in rent expenses due to the nationwide opening of new branches. Administrative expenses from Credit Card Operations segment, as a percentage of revenues from this segment, decreased from 23.1% during fiscal year ended June 30, 2005 to 21.4% during

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fiscal year ended June 30, 2006 as a result of a 90.5% increase in revenues from this segment, compared to a 77.0% increase in administrative expenses for such period primarily as a result of the increase in the payroll generated by the opening of new branches.

Other. Administrative expenses from our Other segment did not change significantly from the previous fiscal year, recording charges of Ps. 0.04 million during fiscal year ended June 30, 2005 and Ps. 0.01 million during fiscal year ended June 30, 2006. Administrative expenses from our Other segment, calculated as a percentage of revenues from this segment, decreased from 30.0% during fiscal year ended June 30, 2005 to 0.04% during fiscal year ended June 30, 2006, mainly as a consequence of the sale of the Alcorta Plaza parcel during our last fiscal year ended June 30, 2006.

	Administrative expenses for the fiscal years ended June 30,
	2005		2006
	(in million of Pesos)
Leases and services	(16.9	)	(26.4	)
Credit card operations	(14.9	)	(26.3	)
Other	0.0		(0.0	)
Intersegment eliminations	0.0		0.0
Total administrative expenses	(31.9	)	(52.8	)

Net income from retained interest in securitized receivables

Net income in credit card trust increased 519.8% from Ps. 0.4 million during fiscal year ended June 30, 2005 to Ps. 2.6 million during fiscal year ended June 30, 2006, mainly as a result of the new issuances by the credit card trust.

Gain from recognition of inventories at net realizable value

Gain from recognition of inventories at net realizable value is generated as a result of valuing at net realizable value those inventories for which we have received purchase price or lease advances that fix prices, and the contract states the consummation of the sale and the gain. We recognized a Ps. 3.5 million gain during fiscal year ended June 30, 2006 according to this criteria, which was principally applied to a parcel of land in the City of Rosario which was the subject of a sale agreement we had entered into with Villa Hermosa S.A., as purchaser.

Operating income

Operating income increased 58.1% from Ps. 81.4 million during fiscal year ended June 30, 2005 to Ps. 128.7 million during fiscal year ended June 30, 2006 as a result of increases in revenues generated by operations within each of our three business segments. Operating income, as a percentage of our total revenues, increased from 35.4% during fiscal year ended June 30, 2005 to 35.6% during fiscal year ended June 30, 2006 due to a higher operating margin in our Leases and Services and Other segments, partially offset by lower operating margins in our Credit Card Operations segment (i) the significant increase in revenues of 57.0%, (ii) a significant margin of our gross profit of 61.5%, when calculated as a percentage of total revenues, and (iii) a decrease in total costs calculated as a percentage of total revenues from 40.2% during our fiscal year ended June 30, 2005 to 38.6% during fiscal year ended June 30, 2006, partially offset by increases in selling expenses and administrative expenses, as a percentage of total revenues, from 10.8% and 13.8%, respectively, during fiscal year ended June 30, 2005 to 12.9% and 14.6%, respectively, for fiscal year ended June 30, 2006.

Leases and services. Operating income from Leases and Services had a significant increase of 42.1%, from Ps. 68.6 million during fiscal year ended June 30, 2005 to Ps. 97.5 million during fiscal year ended June 30, 2006 as a consequence of greater revenues recorded from this segment when compared to costs and expenses

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from the same segment. Operating income as a percentage of revenues from this segment, increased from 41.4% during fiscal year ended June 30, 2005 to 45.2% during fiscal year ended June 30, 2006. This increase is mainly attributable to a higher gross margin from this segment, selling and administrative expenses from this segment.

Credit Card Operations. Operating income from Credit Card operations increased Ps. 10.7 million, from Ps. 12.1 million during fiscal year ended June 30, 2005 to Ps. 22.8 million during fiscal year ended June 30, 2006 mainly due to the significant expansion of our subsidiary Tarshop, with the opening of new branches country-wide. Operating income from Credit Card Operations as a percentage of revenues from this segment, decreased from 18.8% during fiscal year ended June 30, 2005 to 18.6% during fiscal year ended June 30, 2006. This was mainly attributable to a greater porcentual increase in costs and expenses from this segment compared to revenues from the same segment. Revenues from this segment increased 90.5% during fiscal year ended June 30, 2006, while the corresponding costs, selling expenses and administrative expenses from this segment increased 86.0%, 129.0% and 77.0%, respectively.

Other. Operating income from our Other segment increased Ps. 8.0 million, from a loss of Ps. 0.4 million during fiscal year ended June 30, 2005 to an income of Ps. 7.7 million during fiscal year ended June 30, 2006 mainly as a result of the sale of the Alcorta Plaza parcel of land. Selling expenses related to this segment increased slightly from Ps.0.3 million during fiscal year ended June 30, 2005 to Ps. 0.7 million during fiscal year ended June 30, 2006. On the other hand, administrative expenses related to this segment decreased slightly from Ps. 0.04 million during fiscal year ended June 30, 2005 to Ps. 0.01 million during fiscal year ended June 30, 2006.

	Operating income for the fiscal years ended June 30,
	2005		2006
	(in million of Pesos)
Leases and services	68.6		97.5
Credit card operations	12.1		22.8
Other	(0.4	)	7.7
Intersegment eliminations	1.0		0.7
Total operating income	81.4		128.7

Equity loss from related companies

The loss arising from our investments in other companies remained constant at Ps. 0.7 million during both fiscal years 2005 and 2006 due to our participation in the loss from E-Commerce Latina S.A. in which we shared an interest of 50%.

Amortization of goodwill

The amortization of goodwill did not change significantly from the previous fiscal year, amounting to Ps. 4.8 million for fiscal year ended June 30, 2005 and Ps. 4.7 million for fiscal year ended June 30, 2006. Such amount represents the amortization of the goodwill generated by the acquisition of Shopping Alto Palermo S.A., Fibesa S.A. and Tarshop S.A.

Financial results, net

Financial results, net decreased Ps. 18.0 million, from an income of Ps. 2.4 million during fiscal year ended June 30, 2005 to a loss of Ps. 15.6 million during fiscal year ended June 30, 2006.

Financial results generated by assets decreased Ps. 0.7 million, from an income of Ps. 18.2 million during fiscal year ended June 30, 2005 to an income of Ps. 17.6 million during fiscal year ended June 30, 2006, mainly

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due to a higher reversal of impairment losses during fiscal year ended June 30, 2005 of Ps. 3.6 million, partially offset by: (i) an increase of Ps. 0.9 million from exchange differences and (ii) a higher interest income of Ps. 2.0 million.

Financial results generated by liabilities increased Ps. 17.4 million, from a loss of Ps. 15.8 million during fiscal year ended June 30, 2005 to a loss of Ps. 33.2 million during fiscal year ended June 30, 2006. This increase was mainly attributed to: (i) a higher charge for interest of Ps. 13.0 million mainly resulting from a 6.9% depreciation of the Argentine Peso against the U.S. dollar. Such depreciation produces a negative impact on our U.S. dollar denominated debt for our Convertible Notes; and (ii) the absence in our fiscal year ended June 30, 2006 of the Ps. 5.2 million gain and the Ps. 2.2 million gain that we recorded in our fiscal year ended June 30, 2005 in connection with our cancellation of certain derivative instruments and our prepayment of certain debt at a discount, partially offset by a Ps. 5.0 million decrease of financing expenses generated by a reduction of our debt through the re-structuring of such debt during fiscal year ended June 30, 2005.

Other expenses, net

Other expenses, net increased Ps. 2.4 million, from Ps. 7.4 million during fiscal year ended June 30, 2005 to Ps. 9.8 million during fiscal year ended June 30, 2006, mainly due to: a Ps. 7.5 million allowance for doubtful expenses, partially offset by (i) an income of Ps. 2.4 million generated by the cancellation of a liability owing to Mendoza Plaza due to our acquisition of Mendoza Plaza; (ii) a decrease of charitable donations of Ps. 1.5 million; and (iii) a higher loss of Ps. 1.1 million related to the tax on personal assets of shareholders, as a consequence of the board of directors´ decision to have us pay such tax on their behalf.

Income before taxes and minority interest

As a result of the factors described above, income before taxes and minority interest registered a Ps. 27.0 million increase from Ps. 70.9 million during fiscal year ended June 30, 2005 to Ps. 97.9 million during fiscal year ended June 30, 2006.

Income tax

The income tax charge increased Ps. 14.8 million, from Ps. 33.6 million during fiscal year ended June 30, 2005 to Ps. 48.5 million during fiscal year ended June 30, 2006. The effective tax rate for fiscal year ended June 30, 2006 was 49.5% and 47.4% for fiscal year ended June 30, 2005. The effective rate differs from the statutory tax rate mainly due to non deductible amortization and depreciation charges originated by inflation accounting. We record income taxes using the deferred tax method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We have treated the differences between the price-level restated amounts of assets and liabilities and their historical basis as permanent differences for deferred income tax calculation purposes as prescribed by Argentine GAAP.

Minority interest

Minority interest registered a Ps. 0.7 million increase, from a loss of Ps. 4.0 million during fiscal year ended June 30, 2005 to a loss of Ps. 4.8 million during fiscal year ended June 30, 2006.

Net income

As a result of the factors explained above, net income increased Ps. 11.4 million, from Ps. 33.3 million during fiscal year ended June 30, 2005 to Ps. 44.7 million during fiscal year ended June 30, 2006.

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Fiscal Year 2005 as compared to Fiscal Year 2004

Revenues

Revenues increased 60.7%, from Ps. 143.3 million during fiscal year 2004 to Ps. 230.2 million during fiscal year ended June 30, 2005. This increase in total revenues was mainly due to the increase in revenues from our Leases and Services segment and our Credit Card Operations segment.

Leases and Services. Revenues from Leases and Services registered a 46.2% increase from Ps. 113.4 million during fiscal year 2004 to Ps. 165.8 million during fiscal year ended June 30, 2005. This was mainly resulting from: (i) a sustained increase of 29.6% in sales of our tenants (from Ps. 1,148.0 million in 2004 to Ps. 1,488.0 million in 2005), shown in the growth of our revenues from rental and admission rights for Ps. 37.7 million; (ii) the inclusion of Mendoza Plaza Shopping’s revenues of Ps. 9.2 million resulting from the consolidation of such company as from October 1, 2004 due to gaining control as a result of the acquisition of an additional 49.9% interest and; (iii) the inauguration of Alto Rosario Shopping that took place on November 9, 2004, which produced an increase in revenues of Ps. 5.5 million.

Credit Card Operations. Revenues from our Credit Card operations increased 114.9% from Ps. 30.0 million during fiscal year 2004 to Ps. 64.6 million during fiscal year ended June 30, 2005. The increased revenue from Credit Card Operation recorded by Tarshop was due to the growth of our customer portfolio, our sales and the number of cardholders, all driven by the economic recovery that has taken place during the year, as reflected by a 122.4% in our portfolio (from Ps. 94.1 million during fiscal year ended June 30, 2004 to Ps. 209.2 million during fiscal year ended June 30, 2005, both periods including the securitized portion of the credit card receivables), a 114.9% increase in our credit card sales (from Ps. 30.0 million during fiscal year ended June 30, 2004 to Ps. 64.6 million during fiscal year ended June 30, 2005) and a Ps. 13.6 million increase in premiums for life and disability insurance.

Other. Revenues from Other segment did not change significantly from the previous fiscal year, recording amounts of Ps. 0.1 million in both fiscal years.

	Revenues for the fiscal years ended June 30,
	2004		2005
	(in million of Pesos)
Leases and services	113.4		165.8
Credit card operations	30.0		64.6
Other	0.1		0.1
Intersegment eliminations	(0.3	)	(0.3	)
Total revenues	143.3		230.2

Costs

Total costs increased 26.0%, from Ps. 73.4 million during fiscal year ended June 30, 2004 to Ps. 92.5 million during fiscal year ended June 30, 2005. Total costs as a percentage of total revenues decreased from 51.2% during fiscal year ended June 30, 2004 to 40.2% for fiscal year ended June 30, 2005. This was mainly as a result of a higher increase in revenues of 60.7% as compared to the 26.0% increase in total costs due to a decrease in costs of our Leases and Services and Credit Card Operations segments.

Leases and Services. Costs from Leases and Services increased 12.7%, from Ps. 61.4 million during fiscal year ended June 30, 2004 to Ps. 69.2 million during fiscal year ended June 30, 2005. This increase was mainly due to: (i) the costs related to the opening of Alto Rosario Shopping, which amounted to Ps. 4.9 million; and (ii) the consolidation in fiscal year ended June 30, 2005 of Mendoza Plaza Shopping’s costs for nine months totaling Ps. 3.2 million. Most of the costs affected were amortization charges and non-recovered general expenses. Costs from the Leases and Services segment as a percentage of revenues from this segment decreased from 54.1% during fiscal year ended June 30, 2004 to 41.7% for fiscal year ended June 30, 2005. This is attributable to a higher increase in revenues of 46.2% recorded from this segment compared to the 12.7% increase in costs from the same segment.

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Credit Card Operation. Costs from our Credit Card operations increased 77.1%, from Ps. 13.8 million during fiscal year ended June 30, 2004 to Ps. 24.5 million during fiscal year ended June 30, 2005. This increase was mainly due to: (i) an increase of the cost of salaries and social security charges of Ps. 3.6 million resulting from the expansion and opening of new branches, (ii) an increase of commissions and interest charges of Ps. 2.3 million; (iii) an increase of fees and services expenses of Ps. 1.6 million altogether related to the issue of new series of Financial Trusts and (iv) an increase of taxes, duties and contributions of Ps. 1.5 million also resulting from the reason explained in (i). Costs related to our Credit Card operations segment as a percentage of revenues from this segment decreased from 46.0% during fiscal year ended June 30, 2004 to 37.9% during fiscal year ended June 30, 2005. This was mainly due to an increase in revenues from this segment of 114.9% as compared to an increase of 77.1% in costs.

Other. Costs from our Other segment did not change significantly from the previous fiscal year, although it increased from Ps. 0.03 million during fiscal year ended June 30, 2004 to Ps. 0.2 million during fiscal year ended June 30, 2005. Costs from Other segment as a percentage of revenues from this segment increased from 44.3% during fiscal year ended June 30, 2004 to 168.5% during fiscal year ended June 30, 2005, as a result of the 89.3% variation of revenues from this segment as compared to the increase of 619.4% in costs related to this segment.

	Costs for fiscal years ended June 30,
	2004		2005
	(in million of Pesos)
Leases and services	(61.4	)	(69.2	)
Credit card operations	(13.8	)	(24.5	)
Other	0.0		(0.2	)
Intersegment eliminations	1.9		1.4
Total costs	(73.4	)	(92.5	)

Gross Profit

Gross profit increased 97.1%, from Ps. 69.8 million during fiscal year ended June 30, 2004 to Ps. 137.6 million during fiscal year ended June 30, 2005. This increase was mainly attributable to greater revenues derived from our Leases and Services and Credit Card Operations segments as a consequence of the expansion of private consumption and our subsidiary Tarshop S.A. during fiscal year ended June 30, 2005. Gross profit, calculated in terms of total revenues percentage, increased from 48.8% during fiscal year ended June 30, 2004 to 59.8% during fiscal year ended June 30, 2005. This was mainly as a result of a greater increase in total revenues of 60.7% as compared to the 26.0% increase in total costs.

Leases and Services. Gross profit from Leases and Services, increased 85.7% from Ps. 52.0 million during our fiscal year ended June 30, 2004 to Ps. 96.6 million during fiscal year ended June 30, 2005. This was mainly as a result of an increase in the sales of our tenants in all of our shopping centers. Gross profit from Leases and Services calculated as a percentage of revenues from this segment, increased from 45.9% during fiscal year ended June 30, 2004 to 58.3% during fiscal year ended June 30, 2005. This was mainly due to the higher increase in revenues from this segment of 46.2% as compared to the increase of 12.7% in costs related to this same segment.

Credit Card Operations. Gross profit from our Credit Card operations, increased 147.2% from Ps. 16.2 million during fiscal year ended June 30, 2004 to Ps. 40.1 million during fiscal year ended June 30, 2005. This was mainly as a result of greater sales recorded from this segment derived from the expansion and opening of new branches of our subsidiary Tarshop. Gross profit from Credit Card Operations calculated as a percentage of revenues from the same segment, increased from 54.0% during fiscal year ended June 30, 2004 to 62.1% during fiscal year ended June 30, 2005. This was mainly attributable to a greater increase in revenues from this segment of 114.9% as compared to an increase of 77.1% in costs from the same business segment.

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Other. Gross profit from our Other segment did not suffer significant variations. Nevertheless when calculated as a percentage of revenues from this segment, gross profit fell from 55.7% during fiscal year ended June 30, 2004 to (68.5)% during fiscal year ended June 30, 2005. This was mainly as a result of the increase in costs from this segment from Ps. 0.03 million during fiscal year ended June 30, 2004 to Ps. 0.2 million during fiscal year ended June 30, 2005.

	Gross profit for fiscal years ended June 30,
	2004	2005
	(in million of Pesos)
Leases and services	52.0	96.6
Credit card operations	16.2	40.1
Other	0.0	(0.1	)
Intersegment eliminations	1.6	1.0
Total gross profit	69.8	137.6

Selling expenses

Selling expenses registered a 152.1% increase, from Ps. 9.8 million during fiscal year ended June 30, 2004 to Ps. 24.8 million during fiscal year ended June 30, 2005 as a consequence of (i) the increase recorded in selling expenses from our Credit Card Operations segment, derived from the expansion of our subsidiary Tarshop S.A., and (ii) the increase in expenses of our Leases and Services segment. Selling expenses, as a percentage of total revenues, increased from 6.9% during fiscal year ended June 30, 2004 to 10.8% during fiscal year ended June 30, 2005. This is mainly attributable to an increase in selling expenses of 152.1% as compared to the increase of 60.7% in total revenues due to an increase in selling expenses in our Leases and Services and Credit Card Operations segments.

Leases and Services. Selling expenses from Leases and Services increased 112.7% from Ps. 5.2 million during the fiscal year ended June 30, 2004 to Ps. 11.0 million during fiscal year ended June 30, 2005. This increase was mainly due to: (i) an increase in the charge of allowance for doubtful accounts of Ps. 3.4 million; (ii) an increase in the gross revenue tax charges of 1.4 million related to the increase of our revenues previously mentioned; (iii) the consolidation of Mendoza Plaza Shopping expenses of Ps. 1.3 million; and (iv) stamp taxes of Ps. 0.4 million due to the opening of Alto Rosario Shopping. Selling expenses from this segment, calculated as a percentage of revenues from this segment, increased from 4.6% during fiscal year ended June 30, 2004 to 6.6% during fiscal year ended June 30, 2005. This was mainly attributable to the greater increase in selling expenses from this segment already mentioned above, as compared to an increase in revenues from this segment of 46.2%, reflecting primarily our increased allowance for doubtful accounts and selling expenses related to Mendoza Plaza and Alto Rosario shopping centers which we began to consolidate in our fiscal year ended June 30, 2005.

Credit Card Operations. Selling expenses from our Credit Card operations increased 198.9% from Ps. 4.5 million during fiscal year ended June 30, 2004 to Ps. 13.5 million during fiscal year ended June 30, 2005. This increase was mainly due to: (i) an increase of advertising expenses of Ps. 6.3 million as a consequence of the opening of new branches of our subsidiary Tarshop; (ii) an increase in the gross revenue tax charges of Ps. 2.1 million related to the increase of our revenues previously stated; and (iii) an increase of the charge of allowance for doubtful accounts of Ps. 0.5 million related to the increase of our credit portfolio. Selling expenses from Credit Card Operations, calculated as a percentage of revenues from this segment increased from 15.0% during fiscal year ended June 30, 2004 to 20.9% during fiscal year ended June 30, 2005. This was mainly as a result of the higher increase of 198.9% in selling expenses from this segment already mentioned above, as compared to a 114.9% increase in revenues from this segment, due primarily to our increased advertising expenses incurred in connection with opening of new Tarshop branches.

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Other. Selling expenses from our Other segment did not change significantly from the previous fiscal year, recording losses of Ps. 0.1 million during fiscal year ended June 30, 2004 and Ps. 0.3 million during fiscal year ended June 30, 2005. Selling expenses from Other segment calculated as a percentage of revenues from this same segment increased from 197.2% during fiscal year ended June 30, 2004 to 206.6% during fiscal year ended June 30, 2005. This was mainly as a result of the none variation in revenues from this segment compared to a slightly positive variation in selling expenses from this segment as shown above.

	Selling expenses for the fiscal years ended June 30,
	2004		2005
	(in million of Pesos)
Leases and services	(5.2	)	(11.0	)
Credit card operations	(4.5	)	(13.5	)
Other	(0.1	)	(0.3	)
Intersegment eliminations	0.0		0.0
Total selling expenses	(9.8	)	(24.8	)

Administrative expenses

Administrative expenses increased 53.8% from Ps. 20.7 million during fiscal year ended June 30, 2004 to Ps. 31.9 million during fiscal year ended June 30, 2005 as a consequence of the increases in administrative expenses recorded in our Credit Card Operations and Leases and Services segments. Administrative expenses as a percentage or total revenues slightly decreased from 14.5% during fiscal year ended June 30, 2004 to 13.8% during fiscal year ended June 30, 2005. This was mainly as a result of the higher increase in revenues of 60.7% as compared to the increase of 53.8% in administrative expenses already mentioned above, reflecting proportionately lower administrative expenses in each of our segments.

Leases and Services. Administrative expenses from Leases and Services increased from Ps. 12.5 million during fiscal year ended June 30, 2004 to Ps. 16.9 million during fiscal year ended June 30, 2005. This was mainly due to: (i) an increase of the board of directors´ fees of Ps. 1.5 million; (ii) the consolidation of Mendoza Plaza Shopping’s administrative expenses of Ps. 1.3 million; (iii) an increase of the amount of salaries, bonuses and social security charges of Ps. 1.4 million; and (iv) an increase of tax charges, duties and contributions of Ps. 1.1 million. This was mainly due to an increase of the financial transactions tax. Administrative expenses from Leases and Services, calculated as a percentage of revenues from this segment, decreased from 11.0% during fiscal year ended June 30, 2004 to 10.2% during fiscal year ended June 30, 2005. This was mainly as a result of greater revenues recorded from this segment of 46.2% as compared to the 35.5% increase in administrative expenses from the same segment, primarily due to the fact that the additional revenues contributed by our consolidation in our fiscal year ended June 30, 2005 of Alto Rosario and Mendoza Shopping far exceeded the incremental administrative expenses related to such two shopping centers.

Credit Card Operations. Administrative expenses from Credit Card Operations increased Ps. 6.7 million from Ps. 8.2 million during fiscal year ended June 30, 2004 to Ps. 14.9 million during fiscal year ended June 30, 2005. This was mainly due to: (i) an increase of the amount of salaries, bonuses and social security charges of Ps. 3.5 million as a consequence of an increase in the Company’s payroll; (ii) an increase in fees and third parties services of Ps. 1.6 million related to new issues of our securitization programs; and (iii) an increase of tax charges, duties and contributions of Ps. 0.6 million and rent expenses of Ps. 0.5 million due to the opening of new branches. Administrative expenses from Credit Card Operations, calculated as a percentage of revenues from this segment, decreased from 27.3% during fiscal year ended June 30, 2004 to 23.1% during fiscal year ended June 30, 2005. This is mainly attributable to the greater increase in revenues recorded from this segment of 114.9%, derived from the expansion of our subsidiary Tarshop, as compared to an increase in administrative expenses from this segment of 81.9%. This was mainly due to a lower increase in Tarshop’s payroll as compared to the previous period.

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Other. Administrative expenses from our Other segment did not change significantly from the previous fiscal year, recording charges of Ps. 0.03 million during fiscal year ended June 30, 2004 and Ps. 0.04 million during fiscal year ended June 30, 2005. Administrative expenses from this segment, calculated as a percentage of revenues from this segment, decreased from 47.3% during fiscal year ended June 30, 2004 to 30.0% during fiscal year ended June 30, 2005.

	Administrative expenses for the fiscal years ended June 30,
	2004		2005
	(in million of Pesos)
Leases and services	(12.5	)	(16.9	)
Credit card operations	(8.2	)	(14.9	)
Other	0.0		0.0
Intersegment eliminations	0.0		0.0
Total administrative expenses	(20.7	)	(31.9	)

Net Income from Retained Interest in Securitized Receivables

Net income in credit card trust increased from Ps. 0.3 million during fiscal year ended June 30, 2004 to Ps. 0.4 million during fiscal year ended June 30, 2005.

Operating income

Operating income increased from Ps. 39.6 million during fiscal year ended June 30, 2004 to Ps. 81.4 million during fiscal year ended June 30, 2005, which represented a 105.8% increase. This increase was mainly due to significant increases in gross profits from our Leases and Services and Credit Card Operations segments of 85.7% and 147.2%, respectively. This is mainly attributable to greater sales from all our Shopping Centers and the increase in revenues derived from the expansion of our subsidiary Tarshop. Operating income, as a percentage of our total revenues, increased from 27.6% during fiscal year ended June 30, 2004 to 35.4% during fiscal year ended June 30, 2005. This increase was mainly attributable to (i) a higher increase of gross profit as compared to total revenues from 48.8% during fiscal year ended June 30, 2004 to 59.8% during fiscal year ended June 30, 2005, partially offset by (i) a smaller increase of selling expenses as compared to total revenues from 6.9% during fiscal year ended June 30, 2004 to 10.8% during fiscal year ended June 30, 2005, and (ii) a decrease in administrative expenses as compared to total revenues from 14.5% during fiscal year ended June 30, 2004 to 13.8% during fiscal year ended June 30, 2005.

Leases and Services. Operating income from Leases and Services increased 99.9%, from Ps. 34.3 million during fiscal year ended June 30, 2004 to Ps. 68.6 million during fiscal year ended June 30, 2005 as a result of a significant increase in sales in all of our shopping centers. Operating income from this segment as a percentage of revenues from the same segment, increased from 30.3% during fiscal year ended June 30, 2004 to 41.4% during fiscal year ended June 30, 2005. This was mainly attributable to a 12.4% increase in gross profit related to this segment as a percentage of its revenues. This reflects the recognition of sales during fiscal year ended June 30, 2005 from two new Shopping Centers as of such fiscal year, Mendoza Plaza Shopping and Alto Rosario Shopping.

Credit Card Operations. Operating income from Credit Card Operation increased 221.1%, from Ps. 3.8 million during fiscal year ended June 30, 2004 to Ps. 12.1 million during fiscal year ended June 30, 2005. This highlights the significant expansion and opening of new branches of our subsidiary Tarshop. Operating income as a percentage of revenues, both from our Credit Card Operation, increased from 12.6% during fiscal year ended June 30, 2004 to 18.8% during fiscal year ended June 30, 2005. This was mainly due to (i) a greater increase in revenues of 114.9% from this segment as compared to the increase in costs from this segment of

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77.1%, and (ii) an increase of 8.1% in gross profit from this segment as a percentage of revenues from this same segment, derived from (i), as compared with a decrease in administrative expenses as a percentage of revenues and a lower increase in selling expenses as a percentage of revenues, all from our Credit Card Operations segment.

Other. Operating income from our Other segment decreased 205.7%, from a loss of Ps. 0.1 million during fiscal year ended June 30, 2004 to a loss of Ps. 0.4 million during fiscal year ended June 30, 2005. This was mainly as a result of the small increase in costs from this segment of Ps. 0.2 million, that, nothwithstanding, represented a porcentual increase of 619.4%. Operating loss from Other segment, as a percentage of total revenues from this segment, increased from 188.8% during fiscal year ended June 30, 2004 to 305.0% during fiscal year ended June 30, 2005, primarily as a result of a higher increase in costs as compared to the increase in revenues.

	Operating Income for the fiscal years ended June 30,
	2004		2005
	(in million of Pesos)
Leases and services	34.3		68.6
Credit card operations	3.8		12.1
Other	(0.1	)	(0.4	)
Intersegment eliminations	1.6		1.0
Total operating income	39.6		81.4

Equity loss from related companies

The result arising from our share in other companies registered a Ps. 0.4 million increase, from a loss of Ps. 1.1 million during fiscal year ended June 30, 2004 to a loss of Ps. 0.7 million during fiscal year ended June 30, 2005. This was mainly due to: (i) a decrease in the loss from E-Commerce Latina S.A. in which we share an interest of 50.0%; and (ii) the consolidation of Mendoza Plaza Shopping as from October 2004 as a consequence of our acquisition of an additional 49.9% ownership interest.

Amortization of goodwill

The amortization of goodwill did not change from the previous fiscal year, amounting to Ps. 4.8 million for both fiscal years ended June 30, 2004 and 2005. Such amount represents the amortization of the goodwill generated by the acquisition of Shopping Alto Palermo S.A., Fibesa S.A. and Tarshop S.A.

Financial results, net

Financial results, net decreased Ps. 4.9 million, from an income of Ps. 7.3 million during fiscal year ended June 30, 2004 to an income of Ps. 2.4 million during fiscal year ended June 30, 2005.

Financial results, net generated by assets decreased Ps. 13.6 million, from an income of Ps. 31.8 million during fiscal year ended June 30, 2004 to an income of Ps. 18.2 million during fiscal year ended June 30, 2005. This was mainly due to a higher recovery recorded during fiscal year ended June 30, 2004 in the allowance for impairment of long-lived assets.

Financial results, net generated by liabilities decreased Ps. 8.7 million, from a loss of Ps. 24.5 million during fiscal year ended June 30, 2004 to a loss of Ps. 15.8 million during fiscal year ended June 30, 2005. This decrease was mainly attributed to: (i) a lower charge for interest with affiliated companies and other related parties of Ps. 12.0 million mainly resulting from the Argentine peso appreciation vs. the U.S. dollar of 2.4%, taking into account that during year 2004 the value of the foreign currency had an inverse performance by depreciating 5.6%. Such appraisal produces a positive impact on our US$ debt for convertible notes, the

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majority of which is held by our major shareholders; (ii) less income of Ps. 6.0 million recorded in year 2005 in connection with derivative financial instruments cancelled in April 2005; (iii) a higher income of Ps. 2.1 million originated during fiscal year ended June 30, 2005. This was mainly due to the cancellation with discount of financial loans owed by Mendoza Plaza Shopping S.A.; (iv) a decrease of the financial expenses of Ps. 0.9 million primarily due to less indebtedness originated after the repurchase and cancellation of Negotiable Obligations and the capitalization of interest allocated to the development of Alto Rosario, that were partially offset by the inclusion of the financing expenses of Mendoza Plaza Shopping S.A. and charges arising from the new loans taken by us. We would like to mention that these new loans accrue a lower rate of interest if compared with the loans previously cancelled during the year.

Other expenses, net

Other expenses, net increased Ps. 2.2 million, from Ps. 5.2 million during fiscal year ended June 30, 2004 to Ps. 7.4 million during fiscal year ended June 30, 2005. This was mainly due to: (i) an increase of donations of Ps. 1.6 million and (ii) a loss of Ps. 1.5 million related to the tax on personal assets of shareholders, as a consequence of the board of directors´ decision of not transferring such tax, which was partially offset by the non-existence of negative results for the rejection of a gross income tax exemption on construction for Ps. 2.1 million that were recorded in fiscal year ended June 30, 2004.

Income before taxes and minority interest

As a result of the factors described above, income before taxes and minority interest registered a Ps. 35.2 million increase from Ps. 35.7 million during fiscal year ended June 30, 2004 to Ps. 70.9 million during fiscal year ended June 30, 2005.

Income tax

The income tax charge increased Ps. 17.3 million, from Ps. 16.3 million during fiscal year ended June 30, 2004 to Ps. 33.6 million during fiscal year ended June 30, 2005. The effective tax rate for fiscal year ended June 30, 2005 was 47.4% and 45.7% for fiscal year ended June 30, 2004. The effective rate differs from the statutory tax rate mainly due to non deductible amortization and depreciation charges originated by inflation accounting. We record income taxes using the deferred tax method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We have treated the differences between the price-level restated amounts of assets and liabilities and their historical basis as permanent differences for deferred income tax calculation purposes as prescribed by Argentine GAAP.

Minority interest

Minority interest registered a Ps. 3.5 million decrease, from a loss of Ps. 0.6 million during fiscal year ended June 30, 2004 to a loss of Ps. 4.0 million during fiscal year ended June 30, 2005. This increase was mainly due to the consolidation of the nine-month period results of Mendoza Plaza Shopping S.A. and an increase in the income registered by our subsidiary Tarshop.

Net income

As a result of the factors explained above, net income increased Ps. 14.4 million, from Ps. 18.8 million during fiscal year ended June 30, 2004 to Ps. 33.3 million during fiscal year ended June 30, 2005.

B. Liquidity and Capital Resources

Our main liquidity and capital resources requirements include:

• the acquisition of shopping centers;

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• the development of new shopping centers;

• the improvement of existing shopping centers;

• the development of residential properties for sale;

• working capital needs; and

• the maintenance of cash and other liquid assets to enable us to take advantage of the acquisition and development opportunities as they arise.

As of June 30, 2007 we had working capital of Ps. 324,5 million. At the same date, we had cash and cash equivalents totaling Ps. 485.5 million, an increase of Ps. 429.1 million, from Ps. 56.4 million held as of June 30, 2006, primarily due to an increase in cash provided by operating activities of Ps. 9.0 million and an increase in cash provided by financing activities of Ps. 473.5 million, mainly generated by the cash and cash equivalent generated by the issuance of Notes and the cash acquired from Empalme S.A.I.C.F.A. y G. and Panamerican Mall S.A., partially offset by an increase in cash used in investing activities of Ps. 60.2 million.

Cash Flow Information

Operating Activities

Fiscal Year 2007. Our operating activities generated net cash of Ps. 179.7 million for fiscal year ended June 30, 2007. Net cash generated by operations during fiscal year ended June 30, 2007 increased 5.3% by Ps. 9.0 million as compared to fiscal year ended June 30, 2006, primarily due to an increase in operating cash inflows without considering changes in certain assets and liabilities of Ps. 52.1 million, an increase in trade accounts payable, salaries and social securities and customer advances of Ps. 31.8 million and a decrease in accounts receivable of Ps. 8.7 million. This was partially offset by increases in other receivable and prepaid expenses, and inventory of Ps. 61.7 million and a decrease in taxes payable of Ps. 23.8 million.

Fiscal Year 2006. Our operating activities generated net cash of Ps. 170.7 million for fiscal year ended June 30, 2006. Net cash generated by operations during the fiscal year ended June 30, 2006 increased 79.5% by Ps. 75.6 million as compared to fiscal year ended June 30, 2005, primarily due to an increase in operating cash inflows without considering changes in certain assets and liabilities of Ps. 62.8 million, an increase in trade accounts payable and accrued interests of Ps. 45.2 million and a decrease in inventory of Ps. 18.2 million. This was partially offset by increases in accounts receivable of Ps. 32.0 million and a decrease in customer advances and taxes payable of Ps. 21.0 million.

Fiscal Year 2005. Our operating activities generated net cash of Ps. 95.1 million for fiscal year ended June 30, 2005. Net cash generated by operations during the fiscal year ended June 30, 2005 increased 21.1% by Ps. 16.6 million as compared to fiscal year ended June 30, 2004, primarily due to an increase in operating cash inflows without considering changes in certain assets and liabilities of Ps. 49.7 million and an increase in customer advances of Ps. 15.0 million. This was partially offset by increases in accounts receivable and other receivables and prepaid expenses totaling Ps. 43.5 million and a decrease in accrued interest of Ps. 7.7 million.

Investment Activities

Fiscal Year 2007. The net cash used in investing activities was Ps. 184.2 million for fiscal year ended June 30, 2007. Net cash used in investing activities increased by Ps. 60.2 million as compared to fiscal year ended June 30, 2006, primarily due to: (i) an increase of Ps. 25 million in cash used for the construction of garages, to be located in a building next to our Paseo Alcorta shopping center, (ii) an increase of Ps. 18.5 million related to the construction of Panamerican Mall, (iii) a down payment of Ps. 9.7 million for the acquisition of the building known as Ex Escuela Gobernador Vicente Olmos, located in Cordoba, (iv) an increase of Ps. 44.4 million related to the acquisition of the 100% of the capital stock of Empalme S.A.I.C.F.A. y G. and the 80% of the capital stock of Panamerican Mall S.A., and (v) an increase of Ps. 28.2 million related to other investments. This was partially offset by a decrease in the net cash used for the acquisition of undeveloped parcels of land of Ps. 60.7 million.

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Fiscal Year 2006. The net cash used in investing activities was Ps. 124.0 million fiscal year ended June 30, 2006. Net cash used in investing activities increased by Ps. 62.5 million as compared to fiscal year ended June 30, 2006. The increase in net cash used in investing activities was primarily the result of: (i) the increase in cash used for the acquisition of Philips Argentina S.A.’s parcel of land and other land reserves amounting to Ps. 61.3 million during fiscal year ended June 30, 2006 as compared to Ps. 0.7 million during fiscal year ended June 30, 2005, (ii) an increase of Ps. 17.8 million related to other investments, and (iii) Ps. 8.6 million corresponding to a guarantee deposited in escrow with Deustche Bank in favor of Argentimo S.A. related to an agreement entered into between Alto Palermo S.A., Argentimo S.A. and Constructora San José Argentina S.A. by which the guidelines are established for negotiating the acquisition of land for the development of a shopping center and a dwelling and / or office building . This was partially offset by a decrease in the net cash used in the improvements of our shopping center properties of Ps. 20.3 million.

Fiscal Year 2005. The net cash used in investing activities was Ps. 61.5 million for fiscal year ended June 30, 2005. The increase in net cash used in investing activities was primarily the result of the increase in cash used for the construction of Alto Rosario Shopping and for the acquisition of other fixed assets amounting to Ps. 50.6 million during fiscal year ended June 30, 2005 as compared to Ps. 20.4 million during fiscal year ended June 30, 2004, (ii) Ps. 0.7 million related to the acquisition of undeveloped parcels of land and (iii) Ps. 4.2 million (US$1.77 million corresponding to the first installment, net of cash acquired) related to the acquisition of 49.9% of the capital stock of Mendoza Plaza Shopping S.A. We acquired Mendoza Plaza Shopping S.A. for a total amount of US$5.3 million, of which US$1.77 million was paid on December 2, 2004 and the remaining balance was paid in two equal annual installments of US$1.77 million each due on September 29, 2005 and 2006.

Financing Activities

Fiscal Year 2007. The net cash used in financing activities was Ps. 433.6 million for fiscal year ended June 30, 2007, primarily due to cash equivalent generated by the issuance of Notes and other new loans of Ps. 696.2 million, partially offset by cash used in (i) the cancellation of Ps. 190.2 million of loans and advances in current account, (ii) the payment of dividends for Ps. 47.0 million, and (iii) the cancellation of Ps. 24.9 million related to the seller financing for the acquisition of Empalme S.A.I.C.F.A. Y G., Shopping Neuquén S.A. and Mendoza Plaza Shopping S.A.

Fiscal Year 2006. The net cash used in financing activities was Ps. 40.0 million for fiscal year ended June 30, 2006, primarily due to the payment of debts of Ps. 42.0 million, the payment of dividends of Ps. 29.0 million and the cancellation of Ps. 5.1 million corresponding to the second installment related to the acquisition of 49.9% of the capital stock of Mendoza Plaza Shopping S.A., partially offset by cash inflows of Ps. 38.4 million as a result of new loans and advances in current account.

Fiscal Year 2005. The net cash used in financing activities was Ps. 52.2 million for fiscal year ended June 30, 2005, mainly due to the payment of debts of Ps. 133.3 million and the payment of dividends of Ps. 18.4 million, partially offset by cash inflows of Ps. 99.5 million as a result of new loans and the settlement of the swap agreement.

Our working capital and our cash from operating activities are adequate for our present and future requirements. In the event that cash generated from our operations is at any time insufficient to finance our working capital, we would seek to finance such working capital needs through debt or equity financing or selective asset sales.

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Our Indebtedness

Our total pending debt as of June 30, 2007, amounted to Ps 756.0 million, out of which 72.4% was debt denominated in US dollars and 27.6% was in Pesos.

Certain information on our debt as of June 30, 2007, and a description of the main components thereof are disclosed in the following table:

Debt as of June 30, 2007

	Currency	Less than 1 year		From 1 to 2 years		From 2 to 3 years		From 3 to 5 years		Over 5 years		Total		Average rate
	(in thousands)
Bank and financial loans
Convertible Notes Due 2014 (1)	US$	6,483.3		—		—		—		146,076.0		152,559.3		10	%
Serie I Notes (1)	US$	4,059.6		—		—		—		371,160.0		375,219.6		7.88	%
Serie II Notes (1)	Ps.	2,353.0		22,002.8		44,005.7		44,005.7		44,005.7		156,373.0		11	%
Notes issuance expenses	Ps.	(1,016.5	)	(1,016.5	)	(741.5	)	(536.4	)	(2,529.1	)	(5,839.9	)
Checking account Overdrafts	Ps.	40,006.3		—		—		—		—		40,006.3		11	%
Standard Bank (former Bank Boston)	Ps.	8,500.0		2,800.0		—		—		—		11,300.0		14	%
Banco Ciudad Loan	Ps.	1,926.0		2,200.1		597.2		—		—		4,723.3		13	%
Other financial loans	US$	618.4		536.0		—		—		—		1,154.4
Other financial loans	Ps.	90.8		—		—		—		—		90.8
Interest payable on account of financial trust	Ps.	1,108.7		—		—		—		—		1,108.7
Other interest payable	Ps.	593.4		—		—		—		—		593.4
Total bank and financial loans		64,723.0		26,522.4		43,861.4		43,469.3		558,712.6		737,288.7
Other loans
Mortgage loans	Ps.	105.8		—		—		—		—		105.8
Total other loans		105.8		—		—		—		—		105.8
Mortgage loans
Seller financing—Empalme S.A.I.C.F.A.yG. (1)	US$	12,381.3		6,186.0		—		—		—		18,567.3		6	%
Total mortgage loans		12,381.3		6,186.0		—		—		—		18,567.3
Total debt		77,210.1		32,708.4		43,861.4		43,469.3		558,712.6		755,961.8

(1) Including interest accrued as of June 30, 2007.

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Convertible Notes due 2014

On August 20, 2002 we issued US$50.0 million of uncollateralized convertible notes (the “Convertible Notes”) in exchange for cash and the settlement of certain liabilities with our shareholders. Raymond James Argentina Sociedad de Bolsa S.A. acted as subscription and placement agent and the offer was subscribed in full. Proceeds from the issuance of Convertible Notes were used to repay short-term bank loans for Ps.27.3 million and for the redemption of certain senior notes we had issued for a principal amount of Ps.52.8 million. The Convertible Notes bear interest (payable semiannually) at a fixed annual rate of 10.0% and are convertible, at any time at the option of the holder, into common shares of Ps.0.10 par value per share. The conversion rate per U.S. dollar is the lesser of 3.08642 and the result obtained from dividing the exchange rate in effect at the conversion date by the par value of our common shares. The Convertible Notes were originally scheduled to mature on July 19, 2006. However, on May 2, 2006 during an extraordinary noteholders’ meeting, the noteholders approved to extend the maturity date of the Convertible Notes to July 19, 2014, leaving unchanged all other terms and conditions. During fiscal years 2006, 2005, 2004 and 2003 holders of approximately US$2.77 million of our Convertible Notes exercised their conversion rights and, as a result, we issued 1,539,000; 52,741,373; 22,852,514 and 4,829,745 common shares, respectively. As of June 30, 2007 the outstanding balance of our Convertible Notes was US$47.2 million. In the event all the bondholders exercise their conversion rights, our common shares would increase from Ps.782.1 million to Ps.2,239.7 million.

Bank Boston and Banco Ciudad loans.

Our subsidiary Tarshop obtained a Ps. 4.9 million loan from Banco de la Ciudad de Buenos Aires secured by certificates of participation of Tarjeta Shopping’s Series XII, XIV, XVI, and XVIII financial trusts. It also obtained Ps. 11.7 million from Bank Boston N.A., Sucursal Buenos Aires, partially secured through a security interest on the certificates of participation of Tarjeta Shopping’s Series XXI, XXIII, XXV, and XXVI financial trusts.

Purchase of shares – Empalme S.A.I.C.F.A. y G.

On July 7, 2006, we executed a share purchase agreement jointly with our subsidiary Shopping Alto Palermo S.A. for the acquisition of all the shares held by Empalme S.A.I.C.F.A. y G., owner of Córdoba Shopping Villa Cabrera. The price agreed upon for such transaction was set at a gross amount of US$12.0 million plus a variable amount (originally established in the contract), that was determined at Ps.4 million. The Company’s incorporation was effective on December 31, 2006. To date, our company and our subsidiary Shopping Alto Palermo S.A. paid over US$6.0 million and the amount related to the “year-end adjustment”. As of June 30, 2007, 3 US$2.0 million installments are pending payment; such installments will become due and payable semi-annually as from December 2007, accruing interest at 6.0% p.a. To secure the unpaid payment price, we have pledged in favor of the sellers 100% of our equity interests in Empalme. Upon repaying each of the remaining installments, the encumbrance will be partially lifted.

Series I and II Notes.

On May 11, 2007, we issued two new series of notes in an aggregate principal amount of US$170 million. Series I consists of US$120 million of notes due on May 11, 2017, which accrue interest at a fixed rate of 7.875% payable semi-annually on May 11 and November 11 of each year, commencing on November 11, 2007. The Series I notes mature in a single installment on May 11, 2017.

Series II consists of Ps.154 million (equivalent to US$50 million) of notes which mature in seven, equal and consecutive semi-annual installments commencing on June 11, 2009, and which accrue interest at 11% per annum, payable on June 11 and December 11 of each year commencing on December 11, 2007.

The Series I and II were issued within the Global Corporate Bonds Issuance Program for a face value of up to US$ 200 million (“the Program”) authorized by the Comisión Nacional de Valores through Resolution No. 15,614 dated April 19, 2007.

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Notes Series I and II were rated by Standard & Poor’s Rating Services (“S&P”) and Fitch Ratings Ltd. (“Fitch”). S&P has rated both classes B+ internationally and raAA- locally, while Fitch rated both series B+ internationally and AA-(arg) locally.

Our capital expenditures

Fiscal year 2007

During fiscal year 2007 we had capital expenditures of Ps.96.3 million of which (i) Ps.25 million were related to the construction of garages, to be located in a building next to our Paseo Alcorta Shopping Center, (ii) Ps.22.9 million were related to the improvements of our shopping center properties, (iii) a down payment of Ps.9.7 million related to our acquisition of the building known as Ex Escuela Gobernador Vicente de Olmos, located in the City of Córdoba, (iv) Ps. 19.6 million related to furniture and computer equipment, (v) Ps.18.5 million related to the construction of Panamerican Mall, and (vi) Ps. 0.6 million related to the acquisition of undeveloped plots of land.

Fiscal year 2006

During fiscal year 2006 we invested approximately Ps. 100.2 million in capital expenditures of which Ps. 61.3 million were related to the acquisition of a plot of land in the Northern Area of the City of Buenos Aires, in the district of Saavedra, and other undeveloped plots of land, Ps. 30.3 million correspond to improvements made to our shopping center properties and Ps. 8.6 million are kept in escrow in the Deustche Bank in favor of Argentimo S.A. pursuant to an agreement entered into between Alto Palermo S.A., Argentimo S.A. and Constructora San José Argentina S.A. which sets forth the guidelines for negotiating the acquisition of land in which we plan to develop a commercial center and a dwelling and / or office building. For more information on our capital expenditures after June 30, 2006.

Fiscal year 2005

During fiscal year 2005 we invested approximately Ps. 51.3 million in capital expenditures, Ps. 50.6 million were related to the development of Alto Rosario and improvements of our shopping center properties, Ps. 4.2 million (US$ 1.77 million corresponding to the first installment, net of cash acquired) related to the acquisition of 49.9% of the capital stock of Mendoza Plaza Shopping S.A. We acquired Mendoza Plaza Shopping S.A. for a total amount of US$ 5.3 million and Ps. 0.6 million related to the acquisition of undeveloped plots of land.

Five month period-Fiscal Year 2008.

During the first five months of fiscal year 2008 we had capital expenditures of Ps. 95.6 million of which (i) Ps. 8.0 million were related to the construction of garages, to be located in a building next to our Paseo Alcorta Shopping Center, (ii) Ps. 31.5 million were related to the improvements of our shopping center properties, (iii) Ps. 23.1 million related to our acquisition of the building known as Ex Escuela Gobernador Vicente de Olmos, located in the City of Córdoba, (iv) Ps. 32.2 million related to the construction of Panamerican Mall, and (v) Ps. 0.8 million related to the acquisition of an option exercised for acquiring 75% of the capital stock and votes of a company the purpose of which is the development of a cultural and recreational complex in the Palermo district of the City of Buenos Aires.

Recent Developments

Patio Olmos Building. On September 25, 2007 we signed the transfer deed to purchase the real estate in which the Patio Olmos commercial center is currently operating from the Government of the Province of Córdoba. We also signed the transfer deed to purchase the related concession contract relating to the use the property. The balance of Ps. 22.7 million for the property and the concession was also paid on this date.

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Neuquén Project. On September 20, 2007 the Municipality of Neuquén decreed the feasibility of the urban project and environmental impact study. As from such date Shopping Neuquén S.A. has a 150 days term to submit the work plans.

Torres Rosario, City of Rosario. We own a plot of land spanning a surface of approximately 50,000 square meters in the City of Rosario in the same place where our local Shopping Center, Alto Rosario, is located.

On October 11, 2007, we entered into a barter agreement with Condominios del Alto S.A. whereby Condominios del Alto S.A. proposed to acquire plot G, located in the City of Rosario, Province of Santa Fe, Argentina, which belongs to us, for the construction at its own expense and under its own responsibility of a housing building. As consideration for the barter over the plot, Condominios de Alto S.A. agreed to deliver: (i) fifteen (15) housing units, with a total constructed surface of 1,504.45 square meters, which will represent upon completion in aggregate 14.85% of the area of housing units to be built in plot G, and (ii) fifteen (15) garages, which will represent upon completion in aggregate 15% of the area of garage units to be built in the same building.

As additional consideration in our favor, Condominios del Alto S.A. will pay us US$15,300 and guarantee its obligations: (i) Condominios del Alto S.A. granted a first degree mortgage in our favor on plot G in the amount of US$1,100,000; (ii) established a security insurance of which we will be assigner of the insured amount of US$1,600,000, and (iii) the shareholders of Condominios del Alto S.A. are the guarantors of the obligations of the latter up to the amount of US$800,000.

Finally, we granted to Condominios del Alto S.A. an option of to enter into a barter agreement in relation to plot 2h, close to the transferred plot G.

C. Research and Development, Patents and Licenses, etc.

We do not have any research, development, patents or licenses that are material for the conduct of our business.

D. Trend Information

Development and Perspectives of Shopping Centers in Argentina

On the basis of the last available data provided by Argentine statistical and census agency or INDEC, the first quarter of calendar year 2007 showed a new improvement in total consumption, reaching record values both in its private component (with an interannual positive 8.2% variation) and in its public component (with a positive 6.4% variation). Although there is no official data up today, it is expected for calendar 2007 that private consumption increases by 7%. Such indicator would be anticipating a good behavior of household consumption, as can be seen from the development of wholesaling, retailing and auto sales in a context where consumer loans continue to show increased growth rates.

The increase in the retail consumption was evidenced in a greater quantity of registered revenues for the shopping centers at constant prices. In the January – October period, unseasonalized sales at constant prices by shopping centers showed a positive interannual 18.01% variation while total sales booked in the same period show a interannual 28.11% increase regarding the same period of the prior year.

Unemployment would continue to shrink in interannual terms, taking into account increase labor demand

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that would accompany the expansion of the economic activity. Thus, the uptrend of year 2006 would extend all throughout year 2007, although the reduction would be lower than that of the last two years. For the third quarter of the calendar year 2007, unemployment rate measured by the Permanent Household Survey (EPH) prepared by INDEC stood at 8.1% of economically active population (PEA), continuing its upward trend seen since the crisis onset.

The perspectives on the consumption behavior and the ensuing performance of shopping centers are closely linked to the economy trend and the preference of the affluent tourism for the commercial alternatives in the country and the competitiveness of the nominal exchange rate. According to the IMF as to GDP development during the calendar years 2006 and 2007, which will exceed 7.5%, it should be expected that the sales at shopping centers continue to improve in the coming year.

The Shopping Center industry in Argentina has been benefited from the recovery of the economy. Our net revenues increased 33.7% from Ps 361.4 million during fiscal year ended June 30, 2006, to Ps 483.2 million during fiscal year ended June 30, 2007. This was mainly as a result of: (i) a Ps 90.0 million increase in revenues from our Credit Card Operations segment and; (ii) a Ps 55.4 million increase in revenues from our Leases and Services segment partially offset by (iii) the non-recurring sale of the Alcorta Plaza parcel of land which generated revenues in our Others segment amounting to Ps 23.0 million during fiscal year ended June 30, 2006.

The occupancy of our shopping centers has been one of the ratios that we have been able to maintain in almost optimum levels during fiscal year 2007. GLA percentage occupied as of June 30, 2007 was 97.0%. Vacancy levels in our shopping centers suffered minimum variations reflecting an increase in demand as a result of our excellent commercial offering, and the ability of our commercial department to properly manage this growth in demand from potential tenants.

Tarshop, our credit card subsidiary, showed good results which were reflected in the substantial growth of its credit portfolio, which amounted to Ps. 723.6 million as of June 30, 2007 as compared to Ps. 384.6 million as of June 30, 2006. In addition, the amount of sales and the number of member stores increased 90.5% and 49.0%, respectively, while short and medium term delinquency rates were maintained at historically low levels. We expanded our operations in the interior of the country, where our performance was highly satisfactory, and decided to expand into other densely populated cities.

Costs increased 21.0%, from Ps. 139.1 million during fiscal year ended June 30, 2006, to Ps 168.3 million during fiscal year ended June 30, 2007. This was mainly as a result of: (i) a Ps 31.9 million increase in the costs of our Credit Cards segment as a result of the growth and expansion of its operations; (ii) a Ps 14.0 million increase in the costs of our Leases and Services segment as a result of an increase in costs related to renovation and refurbishment of our leasable areas; partially offset by (iii) a Ps.17.1 million decrease in the costs of our Other segment mainly because of the non-recurring sale of the Alcorta Plaza parcel of land which generated costs amounting to Ps. 18.4 million during fiscal year ended June 30, 2006.

Our performance enabled us to distinguish ourselves from our competitors in the shopping center market in the City of Buenos Aires and the greater Buenos Aires area, while maintaining the efficiency gap obtained over the past fiscal year. For the twelve-month period ended June 30, 2007 our tenants’ sales per square meter were a 79.3% more than our competitor’s. Our competitors’ sales per square meter are determined by calculating the difference between total square meters of gross leasable area, in the City of Buenos Aires and greater Buenos Aires area, and the square meters of our gross leasable area. Our tenants’ sales, not including Córdoba Villa Cabrera’s sales, increased 24.2% from Ps. 2,275.1 million during fiscal year ended June 30, 2006, to Ps. 2,825.8 million during the fiscal year ended June 30, 2007.

Due to the increased activity in the retail sector, we have been able to negotiate more favorable leasing conditions with our new tenants and the existing tenants upon renewal.

During fiscal year 2007 we maintained our leading position in the shopping center market, holding more than less 58.9% of the gross leasable area available in the City of Buenos Aires and around 10.8% of the total stores in shopping centers in the greater Buenos Aires area. We are an important channel for positioning first-line brands and high impact promotions.

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As part of our business strategy we will continue making changes to attract new customers, including the generation of new offerings in our shopping centers. We have created several exclusive products with the aim of attracting tourists from abroad, including publicity at hotels, harbors and airports. We also have implemented advertising campaigns at the national and international level. Our customer service centers are now available to respond to questions and confirm the receipt of orders.

These factors have caused demand for our space to increase, allowing us to choose a higher quality of customers and tenant mix appropriate for each shopping center. Our tenants also invested significantly in the development of new commercial offerings, improving the conditions offered by each shopping center. We continue to provide our customers with training, advice, conferences and seminars, thus promoting a stronger relationship with us.

Although we expect the positive economic trends to continue, we cannot assure this will happen. Our business is largely affected by economic downturns. Any decrease in investment and consumption decisions could cause a reduction in retail sales, sales of real estate and commercial space.

E. Off-Balance Sheet Arrangements

There are no transactions, agreements or other contractual agreements involving an unconsolidated entity that are not currently reflected in our consolidated balance sheet.

F. Tabular Disclosure of Contractual Obligations

The table below presents the maturity of our significant contractual obligations, as of June 30, 2007, which consist of loans, bonds, and development obligations and agreements to purchase real estate. The table does not include deferred income tax liability and estimated payments of interest on our loans and bonds, obligations under operating leases, assignment of credits payable, other accounts payable or costs to be incurred on the units not yet sold.

	Payments due by period (Million of Ps.)
	Less than 1 year	1-3 years	3-5 years	More than 5 years	Total
Debt	38,163.0	76,569.9	87,032.1	515,149.9	716,914.9
Purchase obligations	1,010.0	—	—	—	1,010.0
Other long term obligations	181.8	416.3	498.0	568.8	1,664.9
Total (1)	39,354.7	76,986.2	87,530.1	515,718.7	719,589.8

(1) Includes our main financial and related parties debts, foreign suppliers and tax amnesty plan for gross sales tax payable.

G. Safe Harbor

See the discussion at the beginning of this Item 5 and “Forward looking statements” in the introduction of this Annual Report for forward-looking safe harbor provisions.

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ITEM 6. Directors, Senior Management and Employees

A. Directors and Senior Management

Board of Directors

Our administration and management rest with our Board of Directors. Our bylaws provide that the Board of Directors will be comprised of a minimum eight and a maximum twelve directors and between eight and twelve alternate directors. The directors are elected by majority vote by our shareholders at a regular shareholders’ meeting for a three-year term and may be reelected indefinitely.

At present, our Board of Directors is comprised of ten directors and nine alternate directors. Alternate directors will be summoned to act as directors in case of absence, vacancy or demise, until a new director is appointed.

The table below contains the information on our Directors and Alternate Directors:

Name	Date of birth	Position held	Appointed to current position in	Office ending in	Holding current position since
Eduardo S. Elsztain	26/01/1960	Chairman	2006	2009	1994
Saúl Zang	30/12/1945	Vice-chairman	2006	2009	2003
Alejandro G. Elsztain	31/03/1966	Executive vice-chairman	2006	2009	2003
Daniel R. Elsztain	22/12/1972	Director	2004	2009	2004
Abraham Perelman	04/04/1941	Director	2006	2009	2003
Ira Chaplik	21/06/1961	Director	2006	2009	2006
Fernando A. Elsztain	04/01/1961	Director	2006	2009	1998
José Said Saffie	17/04/1930	Director	2006	2009	1998
Leonardo Fernández	30/06/1967	Director	2007	2010	2007
Enrique Antonini	16/03/1950	Director	2007	2010	2007
David A. Perednik	15/11/1957	Alternate director	2006	2009	2003
José D. Eluchans Urenda	06/08/1953	Alternate director	2006	2009	2003
Hernán Büchi Buc	06/03/1949	Alternate director	2006	2009	1996
Juan M. Quintana	11/02/1966	Alternate director	2006	2009	2003
Pablo Daniel Vergara del Carril	03/10/1965	Alternate director	2006	2009	2006
Marcos Oscar Barylka	29/06/1945	Alternate director	2006	2009	2006
Salvador Darío Bergel	17/04/1932	Alternate director	2006	2009	2006
Mauricio Wior	23/10/1956	Alternate director	2006	2009	2006
Gastón Armando Lernoud	04/06/1968	Alternate director	2006	2009	2006
Andrés Olivos	05/14/1958	Alternative director	2007	2010	2007
Gabriel A.G. Reznik	18/11/1958	Alternative director	2007	2010	2004

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The following is a brief biographical description of each member of our board of directors:

Eduardo S. Elsztain. Mr. Elsztain studied Economic Sciences at University of Buenos Aires (Universidad de Buenos Aires). He has been engaged in the real estate business for more than twenty years. He is the chairman of the board of directors of IRSA, Cresud, Shopping Alto Palermo S.A., Consultores Asset Management and BACS Banco de Crédito & Securitización among other companies. He is also vice-chairman of Banco Hipotecario, E-Commerce Latina S.A. and BrasilAgro among other companies. He is Fernando A. Elsztain’s cousin and Alejandro G. Elsztain’s and Daniel R. Elsztain’s brother

Saúl Zang. Mr. Zang obtained a law degree from the University of Buenos Aires. He is a member of the International Bar Association and of the Interamerican Federation of Lawyers. He is a founding partner of Zang, Bergel & Viñes, law firm. He is also second vice chairman of the board of directors of IRSA and Cresud S.A.C.I.F. y A. and he is also a member of the board of directors of Emprendimiento Recoleta, Puerto Retiro S.A., Nuevas Fronteras S.A., Cresud S.A.C.I.F. y A., Banco Hipotecario S.A. and Tarshop S.A.

Alejandro G. Elsztain. Mr. Elsztain obtained a degree in agricultural engineering from the University of Buenos Aires. He is currently chairman of Tarshop S.A. and Emprendimiento Recoleta, director of Altocity and second vice-chairman of IRSA and Cresud S.A.C.I.F. y A. Alejandro G. Elsztain is Eduardo S. Elsztain’s and Daniel R. Elsztain’s brother and Fernando A. Elsztain’s cousin.

Daniel R. Elsztain. Mr. Elsztain obtained a degree in economic sciences at the Torcuato Di Tella University and has a master in business administration. He has been our commercial director since 1998. Mr. Elsztain is Mr. Eduardo S. Elsztain’s and Mr. Alejandro G. Elsztain’s brother and Fernando A. Elsztain’s cousin.

Abraham Perelman. Mr. Perelman studied economic sciences at the University of Buenos Aires. During the last thirty years he was a director of several outstanding companies in areas such as communications, electronics, aviation, farm technology, public services and art. He also was chairman of ISREX Argentina S.A. He is currently a director of Guanaco Mining Co.

Ira Chaplik. Mr. Chaplik obtained a degree in accounting and J.D. from the University of Illinois. He is chief operating officer of Equity International. He has been associated with us since its inception in 1999. Mr. Chaplik joined Equity Group Investments, LLC (EGI) in 1989. Prior to the formation of Equity International, he played a key role in many real estate transactions involving Equity Office Properties Trust (EOP), Equity Residential (EQR), and Equity Lifestyle Properties, Inc. (ELS), as well as the four Zell/Merrill Lynch funds, which led to the creation of EOP. Mr. Chaplik is also a certified public accountant.

Fernando A. Elsztain. Mr. Elsztain obtained a degree in architecture at the University of Buenos Aires. He has been the chief commercial officer of IRSA since March 1994. He has been engaged in the real estate business as consultant and as managing officer of a familiar real estate company. He is a director of IRSA, and Baldovinos S.A.; and alternate director of Banco Hipotecario S.A., among others. Mr. Fernando A. Elsztain is Eduardo S. Elsztain’s and Alejandro G. Elsztain’s cousin.

José Said Saffie. Mr. Said obtained a law degree at the University of Chile. He is the chairman of Banco BBVA of Chile and Parque Arauco S.A.; and director of the Asociación de Bancos e Instituciones Financieras A.G.

Leonardo F. Fernández. Mr. Fernández obtained a degree in law at the University of Buenos Aires. He serves as an alternate director on the board of directors of Disco S.A. and Transportadora de Gas del Norte S.A.

Enrique Antonini. Mr. Antonini holds a degree in law from the University of Buenos Aires. He is currently a member of the board of directors of Banco Mariva S.A. (since 1992), Mariva Bursátil S.A. (since 1997). He has also served as a director of Inversiones y Representaciones S.A. from 1993 to 2002. He is a member of the Banking Lawyers Committee and the International Bar Association.

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David A. Perednik. Mr. Perednik obtained a degree as a public accountant from the University of Buenos Aires. He has worked in various companies such as Marifran Internacional S.A., a subsidiary of Louis Dreyfus Amateurs, where he acted as finance director from 1986 to 1997. Earlier he worked as a senior consultant in the Administration and Systems management of Deloitte & Touche from 1983 until 1986. He currently works as administrative director of Cresud S.A.C.I.F. y A. and IRSA.

José D. Eluchans Urenda. Mr. Eluchans Urenda obtained a law degree at the Pontifician Catholic University of Chile (Pontificia Universidad Católica de Chile). He is a partner of the Chilean law firm Eluchans and is a permanent advisor to Parque Arauco’s board of directors and an advisor to Banco BHIF’s board of directors.

Hernán Büchi Buc. Mr. Büchi obtained a degree in civil engineering at the University of Chile and a master’s degree in economy at Columbia University, New York, U.S.A. From 1979 to 1989, he worked as Undersecretary of Economy, Undersecretary of Health, Minister of Odeplan, Superintendent of Banks and Financial Institutions, and Minister of Finance of Chile. Currently, he is the President of Forestal Terranova and Luchetti and a director of SQM and Madeco.

Juan M. Quintana. Mr. Quintana obtained a law degree at the University of Buenos Aires. He is a partner of the law firm Zang, Bergel & Viñes. He is a director of APSA and an alternate director of Nuevas Fronteras S.A. and Fibesa.

Pablo Daniel Vergara del Carril. Mr. Vergara del Carril obtained a law degree from the Argentine Catholic University where he teaches Commercial Law and Contract Law. He also teaches Corporate Law, Contracts and Capital Markets in post-graduate courses. He is a member of the Legal Advisory Committee of the Cámara de Sociedades Anónimas as well as Vice President of the Antitrust Law Committee of the Colegio de Abogados de la Ciudad de Buenos Aires. He is a member of the board of directors of Emprendimiento Recoleta, Nuevas Fronteras S.A., Milkaut S.A. and Banco Hipotecario S.A. Mr. Pablo Vergara del Carril is the son of our syndic Mr. Ángel D. Vergara del Carril.

Marcos Oscar Barylka. Mr. Barylka obtained a degree in commercial activities from the Gral. San Martín School. Oscar Barylka has been involved in the retail and the gastronomy industries for over 35 years, having served as partner, manager and consultant for several companies. Since 2006, Mr. Barylka serves as Secretary of the Pele Ioetz Foundation, which provides support to families suffering economic and social problems in Argentina.

Salvador D. Bergel. Mr. Bergel obtained a law degree and a Ph.D from Litoral University (Universidad del Litoral). He is a founding partner of Zang, Bergel & Viñes law firm and a consultant at Repsol YPF S.A. He is also an alternate director of Cresud S.A.C.I.F. y A.

Mauricio Wior. Mr. Wior obtained a masters degree in finance, as well as a bachelors degree in economics and accounting from Tel Aviv University in Israel. Mr. Wior is currently a director of Ertach S.A. and Banco Hipotecario S.A. He has held positions at Bellsouth were he was Vice-President for Latin America from 1995 to 2004. Mr. Wior was also CEO of Movicom Bellsouth from 1991 to 2004. In addition, he led the operations of various cellular phone companies in Uruguay, Chile, Peru, Ecuador and Venezuela. He was president of the Asociación Latinoamericana de Celulares (ALCACEL); U.S. Chamber of Commerce in Argentina and the Israeli-Argentine Chamber of Commerce. He was director of Instituto para el Desarrollo Empresarial de la Argentina (IDEA), Fundación de Investigaciones Económicas latinoamericanas (FIEL) and Tzedaka.

Gastón Armando Lernoud. Mr. Lernoud obtained a law degree from El Salvador University (Universidad de El Salvador) in 1992. He finished his master in corporate law at the Palermo University (Universidad de Palermo) in 1996. He was a senior associated member of Zang, Bergel & Viñes Law Firm until June 2002, and then he entered Cresud S.A.C.I.F. y A as a senior manager.

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Andrés Olivos. Mr. Olivos graduated as a commercial engineer from the University of Chile. He is Managing Director of Parque Arauco S.A. and Constructora y Administradora Uno S.A.

Gabriel A. G. Reznik. Mr. Reznik obtained a degree in civil engineering from the University of Buenos Aires. He worked for IRSA since 1992 until May 2005 at which time he resigned. He formerly worked for an independent construction company in Argentina. He is an alternate director of Emprendimiento Recoleta, Puerto Retiro S.A., Tarshop S.A. and Fibesa S.A., as well as member of the board of directors of Banco Hipotecario S.A., among others.

Employment Contracts With Our Directors

We do not have written contracts with our directors. However, Alejandro Elsztain, Fernando Elsztain and Daniel Elsztain are employed by us under the Labor Contract Law No. 20.744. This law governs certain conditions of the labor relationship, including remuneration, protection of wages, hours of work, holidays, paid leave, maternity protection, minimum age requirements, protection of young workers and suspension and termination of the contract.

Executive Committee

In conformity with our by-laws, the aspects related to the organization of the decision-making process are the responsibility of the Executive Board, which is made up by four directors, including our chairman and vice chairman. The current members of the Executive Board are Mrs. Eduardo S. Elsztain, Saúl Zang, Alejandro G. Elsztain, and Fernando Elsztain.

The Executive Board is in charge of the daily management of the activities delegated by the Board of Directors in conformity with current laws and our by-laws. Our by-laws authorize the Executive Board to:

• designating managers and establishing their duties and compensation;

• granting and revoking powers on behalf of our company;

• hiring, penalizing, and terminating personnel, as well as determining salaries and compensation;

• entering into contracts related to our company’s activity;

• managing our company’s assets;

• executing credit agreements for our company’s activities and creating encumbrances to secure our obligations;

• and engaging in all the acts necessary to manage our company’s daily activities.

Supervisory Committee

Our Supervisory Committee (“Comisión Fiscalizadora”) is responsible for reviewing and supervising our administration and affairs, and verifying compliance with our by-laws and the resolutions adopted at shareholders’ meetings. The members of the Supervisory Committee are appointed at our annual general ordinary shareholders’ meeting for a one-year term. The Supervisory Committee is composed of three members and three alternate members.

The following table sets forth information about members of our Supervisory Committee who were elected at the annual general ordinary shareholders’ meeting held on October 25, 2007. Positions will expire when the next annual general ordinary shareholders’ meeting takes place:

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Name and Position	Date of Birth	Occupation in APSA	Current Position Held Since
Guillermo E. Matta y Trejo	11/08/1949	Syndic	2006
José D. Abelovich	07/20/1956	Syndic	2005
Ángel. D. Vergara del Carril	03/15/1935	Syndic	2006
Armando Fabián Ricci	03/06/1964	Alternate Syndic	2006
Fabián Cainzos	11/07/1966	Alternate Syndic	2006
Marcelo Héctor Fuxman	11/30/1955	Alternate Syndic	2005

Set forth below is a brief biographical description of each member of our Supervisory Committee:

Guillermo E. Matta y Trejo. Mr. Matta y Trejo obtained a law degree at the University of Buenos Aires. He is a member of the International Bar Association and of the Insolvency International Institute. From 1975 to 1998 he taught Commercial Law at the University of Buenos Aires. He also teaches Corporate Law and legal aspects of Capital Markets in post-graduate courses at University of Buenos Aires, Argentine Catholic University, Austral University and Belgrano University. He is the President of the board of directors of Ganadera del Villaguay, S.A.

José D. Abelovich. Mr. Abelovich obtained a degree in accounting from the University of Buenos Aires. He is a founding member and partner of Abelovich, Polano & Asociados/SC International, a public accounting firm in Argentina. Formerly, he had been a manager of Harteneck, López y Cía/Coopers & Lybrand and has served as a senior advisor in Argentina for the United Nations and the World Bank. He is a member of the Supervisory Committees, among others of APSA, SAPSA, Hoteles Argentinos and Inversora Bolívar S.A.

Ángel D. Vergara del Carril. Mr. Vergara del Carril obtained a law degree at the Universidad de Buenos Aires. In 1976 he received the degree of Doctor of Juridical Sciences (S.J.D.) from Argentine Catholic University with a thesis on Merger of Business Companies. He served as in-house counsel to the Bunge & Born Corporation. He was Head of the Legal Department of Acindar S.A. He founded the law firm Cassagne & Asociados with other lawyers. He has been teaching Commercial Law at Argentine Catholic University. He is also director of the capital markets postgraduate course at the same University, as well as member of the Argentine Institute on Commercial Law of the National Law Academy and the International Bar Association. From 2002 to 2006 he acted as external legal advisor of the Securities Committee of the Bolsa de Comercio de Buenos Aires. Currently he is counsel at law firm Zang, Bergel & Viñes, as well as chairman of the Club de Abogados de Empresas. He is an alternate member of the Arbitration Board of the Bolsa de Comercio de Buenos Aires of which rules of arbitration he contributed to enact, as well as syndic of Atanor S.A. and Bodegas Hispano Argentinas S.A. Mr. Ángel D. Vergara del Carril is the father of our alternate director Mr. Pablo Daniel Vergara del Carril.

Armando F. Ricci. Mr. Ricci obtained a law degree at the Universidad de Buenos Aires. He serves as an alternate director on the board of directors of Nuevas Fronteras S.A., Pereiraola S.A., Canteras Natal Crespo S.A., Inversora Bolívar S.A., Palermo Invest S.A. y Tarshop S.A. Mr. Ricci has a master on corporate law at the ESEADE (Escuela Superior de Economía y Administración de Empresas). He is a trained mediator and is advisor of several argentine listed companies. He is an associate of the law firm Zang, Bergel & Viñes, where he specializes in corporate law.

Fabián Cainzos. Mr. Cainzos obtained a law degree from the University of Buenos Aires. Currently, he is partner of the law firm Cainzos, Fernández & Premrou. He also serves as director of Sullair Argentina S.A. and of the Supervisory Committee of Editorial Atlántida S.A.

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Marcelo H. Fuxman. Mr. Fuxman obtained a degree in accounting from the University of Buenos Aires. He is a partner of Abelovich, Polano & Asociados/SC International, a public accounting firm in Argentina. He is a member of the Supervisory Committees of SAPSA, Inversora Bolívar S.A. and Banco Hipotecario S.A.

Senior Management

The board of directors appoints and removes the senior management. Senior management performs its duties in accordance with the instructions of the board of directors.

The following table shows information about our current senior management, appointed by the board of directors at the meeting held on December 26, 2004:

Name	Date of birth	Position	Current position held since
Alejandro G. Elsztain	03/31/1966	Chief Executive Officer	2002
Gabriel Blasi	11/22/1960	Chief Financial Officer	2004
David A. Perednik	11/15/1957	Chief Administrative Officer	2002
Daniel R. Elsztain	12/22/1972	Chief Commercial Officer	2004

The following is a brief description of each of our managers who are not directors:

Gabriel Blasi. Mr. Blasi obtained a degree in business administration and carried out post-graduate studies in Finance at CEMA University (Universidad del CEMA -Centro de Estudios Macroeconómicos Argentinos-) and in the IAE (Universidad Austral). He formerly worked as a senior securities trader in Citibank N.A. Sucursal, Buenos Aires. He also held several management positions related to investment banking and capital markets at Banco Río de la Plata S.A. (BSCH) and was financial director of the Carrefour Group and Goyaique SACIFIA (Grupo Perez Companc). Currently, he also serves as chief financial officer of IRSA and Cresud.

B. Compensation

Members of the Board of Directors and Executive Committee

The Law of Corporations No. 19,550 establishes that if the compensation of the members of the board of directors and the Supervisory committee is not established in our bylaws, the shareholders meeting should determine it. The maximum amount of total compensation of the members of the board of directors and the Supervisory committee, including wages and compensation for technical or administrative permanent activities, cannot exceed 25% of our earnings.

That amount should be limited to 5% when there is no distribution of dividends to shareholders, and will be increased proportionally to the distribution until reaching the limit set when all profits are distributed. In applying this rule any reduction in dividend distribution from the deduction of Board and Supervisory committee compensation shall not be taken into account.

When one or more directors perform special commissions or technical or administrative activities, and there are no earnings to distribute, or they are reduced, the shareholders meeting may approve compensation in excess of the above-mentioned limits.

The compensation of our directors for each fiscal year is determined pursuant to the Corporations Law, and taking into consideration if the directors perform technical or administrative activities and our fiscal year’s results. Once the amount is determined, they are considered by the shareholders meeting.

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During our annual ordinary shareholders meeting which was held October 25, 2007 the shareholders agreed to pay Ps.8.2 million to the members of the board of directors for the fiscal year ended June 30, 2007.

The members of the executive committee did not receive compensation other than fees for their services as members of the board of directors.

Supervisory Committee

The shareholders’ meeting held on October 25, 2007, further approved unanimously not to pay any compensation to the Supervisory Committee.

Senior Management

During the fiscal year ended June 30, 2007 we paid an aggregate amount of approximately Ps.2.3 million as compensation to our senior management.

Audit Committee

The members of the Audit Committee do not receive compensation other than fees for their services as members of the board of directors.

Compensation plan for executive management

During fiscal year 2007, we developed a special compensation plan for our key managers (the “Plan”) by means of contributions to be made by the employees and us.

Such Plan is directed to key managers and aims to retain them by increasing their total compensation package. It is granted to those who have met certain conditions. Participation and contributions under the Plan are voluntary. Once the invitation to participate has been accepted by the employee (the “Participant”), he/she is required to make two kinds of contributions: monthly contributions (salary based) and extraordinary contribution (annual bonus based). The suggested contribution to be made by Participants is up to 2.5% of their monthly salary and up to 15.0% of their annual bonus.

Our contribution will be 200% of the employees´ monthly contributions and 300% of the extraordinary employees’ contributions.

The funds as a result of the Participants’ contributions are transferred to a special independent vehicle created and located in Argentina as a Investment Fund approved by the Comisión Nacional de Valores. Such funds (including the rents derived thereof) are freely redeemable upon request of the Participants.

Contributions made by us under the Plan are transferred to another separate and independent vehicle (e.g., a trust fund).

Participants or their assigns, as the case may be, will have access to 100% of the benefits of the Plan (that is, our contributions made on the Participants’ behalf to the specially created vehicle) under the following circumstances:

• ordinary retirement in accordance with applicable labor regulations;

• total or permanent incapacity or disability; and

• death.

In case of resignation or termination without good cause, the manager may redeem the amounts contributed by us only if he or she has participated in the Plan for at least 5 years.

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As of June 30, 2007 our contributions amounted to Ps.0.9 million.

C. Board Practices

Benefits upon Termination of Employment

There are no contracts providing for benefits to Directors upon termination of employment.

Audit Committee

In accordance with the Regime of Transparency in Public Offerings provided by Decree No. 677/01, the regulations of the Comisión Nacional de Valores and Resolutions No. 400 and 402 of the Comisión Nacional de Valores, our board of directors established an audit committee which would focus on assisting the board in exercising its duty of care, compliance with disclosure requirements, the enforcement of accounting policies, management of our business risks, the management of our internal control systems, ethical conduct of our businesses, monitoring the sufficiency of our financial statements, our compliance with the laws, independence and capacity of independent auditors and performance of our internal audit duties both by our company and our external auditors.

On November 7, 2007, our board of directors appointed Abraham Perelman, Enrique Antonini and Leonardo Fernández, all of them independent members, as members of the audit committee. We have a fully independent audit committee as per the standard provided in Rule 10(A)-3(b)(1) of the General rules and regulations promulgated under the Securities Exchange Act of 1934.

Remuneration Committee

There is no remuneration committee.

D. Employees

As of June 30, 2007, we had 2,285 employees, and as of June 30, 2006 we had 1,945 employees. We believe that our relationship with our employees is good. Through a bidding process, we subcontract to third parties the construction of our development projects and the provision of security, maintenance and cleaning services for our shopping centers.

The following table shows the number of our employees as of the dates indicated:

	As of June 30,
	2004	2005	2006	2007
Alto Palermo S.A.	499	615	680	709
Shopping Alto Palermo S.A.	87	99	100	101
Emprendimiento Recoleta S.A.	36	37	42	40
Fibesa S.A.	22	26	26	27
Altocity.Com S.A.	35	40	49	3
Alto Research and Development S.A.	2	—	—
Tarshop S.A.	390	556	979	1,302
Mendoza Plaza Shopping S.A.(1).	—	55	69	64
Empalme S.A.I.C.F.A. y G. (2)	—	—	—	39
Total	1,071	1,428	1,945	2,285

(1) We obtained a controlling interest in this subsidiary during fiscal year ended June 30, 2005.

(2) We obtained a controlling interest in this subsidiary during fiscal year ended June 30, 2006.

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E. Share Ownership

The following table sets forth the amount and percentage of our shares beneficially owned by our Directors, Senior Managers, members of the Supervisory Committee and members of the Audit Committee as of November 30, 2007.

		Share Ownership
Name	Position	Amount	Percentage
Directors
Eduardo S. Elsztain(1)	Chairman	48,862,668	62.5	%
Saúl Zang	Vice Chairman	—	—
Alejandro G. Elsztain	Executive Vice Chairman / Chief Executive Officer	132,576.8	0.17	%
Abraham Perelman	Director	—	—
Ira Chaplik	Director	—	—
Fernando A. Elsztain	Director	—	—
José Said Saffie	Director	—	—
Leonardo F. Fernández	Director	—	—
Daniel R. Elsztain	Director / Chief Comercial Officer	—	—
David A. Perednik	Alternate director / Chief Administrative Officer	—	—
Gabriel A.G. Reznik	Alternate Director	—	—
José D. Eluchans Urenda	Alternate Director	—	—
Juan M. Quintana	Alternate Director	—	—
Gastón Lernoud	Alternate Director	—	—
Hernán Büchi Buc	Alternate Director	—	—
Marcos O. Barylka	Alternate Director	—	—
Pablo D. Vergara del Carril	Alternate Director	—	—
Salvador D. Bergel	Alternate Director	—	—
Mauricio Wior	Alternate Director	—	—
Andrés Olivos	Alternate Director
Senior Management
Gabriel Blasi	Chief Financial Officer	—	—
Supervisory Committee
Angel D. Vergara del Carril	Member	17,372	0.02	%
Guillermo E. Matta y Trejo	Member	—	—
José D. Abelovich	Member	—	—
Marcelo H. Fuxman	Alternate Member	—	—
Fabián Cainzos	Alternate Member	—	—
Armando F. Ricci	Alternate Member	—	—

(1) Common shares benefiacially owned by IRSA

Convertible Notes

The following persons own our Convertible Notes as of June 30, 2007.

Convertible Notes Holder	Number of Notes
Eduardo S. Elsztain(1)	31,738,262	(1)
Alejandro G. Elsztain	10,000

(1) Beneficially owned through IRSA.

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The Convertible Notes originally matured on July 19, 2006. A meeting of noteholders resolved to extend the maturity date of the Convertible Notes through July 19, 2014 although the remaining terms and conditions were left unchanged. The Convertible Notes accrue interest (payable semiannually) at a fixed annual rate of 10% and are convertible, at any time at the option of the holder, into common shares of Ps.0.10 par value per share. The conversion rate per U.S. dollar is the lesser of 30.8642 and the result obtained from dividing the exchange rate in effect at the conversion date by the par value of our common shares.

Assuming IRSA exercises its conversion rights of all of its Convertible Notes and no exercise of such rights by any of our other bondholders, IRSA would own 83.34% of our common shares. In the case all shareholders exercise their conversion rights and IRSA exercises them as well, IRSA would own 65.6% of our common stock.

Option Ownership

No options to purchase shares have been granted to our Directors, Senior Managers, members of the Supervisory Committee or Audit Committee.

Employees’ Participation in our Capital Stock

There are no arrangements for involving our employees in our capital stock or related to the issuance of options, shares or securities.

ITEM 7. Major Shareholders and Related Party Transactions

A. Major Shareholders

Information about Major Shareholders

Share Ownership

The following table shows as of November 30, 2007 the information known by us, regarding shareholders that beneficially own a significant percentage of our capital stock:

Shareholder(s)	Number of Shares	Percent (3)
IRSA(1)	488,626,680	62.5	%
Parque Arauco (2)	231,116,952	29.6	%
Total	719,743,632	92.0	%

(1) The number of shares will increase to 1,468,202,668 assuming full conversion of the US$31.7 million Convertible Notes held by IRSA.

(2) Parque Arauco owns 57,338,554 shares through Parque Arauco, 21,188.698 through Sociedad Inversora Internacional Parque Arauco and 152,589,700 shares through Parque Arauco Argentina S.A., a wholly owned subsidiary. The number of shares beneficially owned by Parque Arauco in the aggregate will increase to 708,661,150 assuming full conversion of 15,472,432 Convertible Notes owed by Parque Arauco.

(3) Figures may not sum due to rounding.

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Through its ownership of our common stock, IRSA currently shares with Parque Arauco the voting control over us and has the power to direct or cause the direction of our management and policies.

IRSA is an Argentine real estate company engaged in a range of real estate activities in Argentina. IRSA’s shares are listed and traded on the Bolsa de Comercio de Buenos Aires and the NYSE. Mr. Eduardo S. Elsztain, Chairman of our board of directors, is the beneficial owner of 101,936,754 shares of Cresud, representing 31.8% of its total share capital. As a result of his 31.8% interest in Cresud, Mr. Elsztain has an 8.2% indirect economic interest in IRSA. Although Mr. Elsztain does not have a majority of the shares of Cresud, he is its largest shareholder and exercises substantial influence over Cresud. If Mr. Elsztain were considered the beneficial owner of Cresud due to his substantial influence over Cresud, he would be the beneficial owner of 31.8% of IRSA’s shares (without taking into account his indirect interest in IRSA through Inversiones Financieras del Sur S.A. (“IFISA”)). Also, Mr. Eduardo S. Elsztain is the Chairman of the board of directors of IFISA and is the beneficial owner of shares representing 100% of its capital stock. If Mr. Elsztain were to be considered the beneficial owner of IFISA due to his substantial influence over IFISA, he would be deemed to be the beneficial owner of an additional 1.1% of IRSA’s shares (without taking into account his indirect interest in IRSA through Cresud). Although Mr. Elsztain does not have a majority of the shares of IRSA, he is its largest shareholder and exercises substantial influence over IRSA. If Mr. Elsztain were considered the beneficial owner of IRSA due to his substantial influence over IRSA, he would be the beneficial owner of 62.5% of our shares.

Parque Arauco is a Chilean commercial real estate developer engaged in the acquisition, development and operation of shopping centers, and its shares are listed and traded on the Santiago Stock Exchange.

Changes in Share Ownership

Shareholder	Share Ownership as of November 30, 2007		Share Ownership as of June 30,
			2007		2006		2005		2004
IRSA(1)	62.5	%	62.5	%	61.6	%	61.6	%	53.8	%
Parque Arauco(2)	29.6	%	29.6	%	29.6	%	29.6	%	27.8	%
Dolphin Fund Plc	0.0	%	0.0	%	0.0	%	0.0	%	1.7	%
GSEM/AP	0.0	%	0.0	%	0.0	%	0.0	%	6.1	%

(1) IRSA share ownership is 65.6% assuming full conversion of its holding of Convertible Notes as of November 30, 2007.

(2) Parque Arauco share ownership is 31.6% assuming full conversion of its holding of Convertible Notes as of November 30, 2007.

Differences in Voting Rights

Our major shareholders do not have different voting rights.

Other Share Ownership Information

There are no differences in voting rights among shareholders.

As of November 30, 2007, we had 782,064,214 shares outstanding which 90.0% were held in Argentina. As of November 30, 2007, we had 1,963,607 ADS outstanding (representing 78,544,280 of our common shares, or 10.0% of all of our shares). As of such date, we had four registered holders of our ADS in the United States.

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On July 19, 2002 we issued US$50.0 million of Convertible Notes, which are convertible into US$50 million of our shares of common stock. The offering was subscribed in full. Our Convertible Notes mature on July 19, 2014 and are convertible from August 28, 2002 to July 19, 2014. Of the US$50.0 million of Convertible Notes that we issued, IRSA and Parque Arauco subscribed for US$31.7 million and US$15.4 million, respectively.

In the event that all the bondholders converted their Convertible Notes on November 30,2007, our share capital would increased from 782,064,214 shares to 2,239,716,498 shares.

B. Related Party Transactions

Lease of our Headquarters

As of December 2003, we moved our headquarters to the 22nd floor of the Intercontinental Plaza tower, located at Moreno 877, in the City of Buenos Aires. We lease our headquarters and parking lot spaces from Inversora Bolivar S.A., a subsidiary of IRSA, pursuant to two lease agreements, the first one for our headquarters and ten parking lot spaces and the second one for our subsidiary Fibesa S.A.’s headquarters and another eight parking lot spaces. The first agreement has an initial duration of 60 months with an optional extension of 36 additional months, and the second one, effective as of January 2005, has an initial duration of 46 months with an optional extension of 36 additional months. We pay a monthly rent of US$ 5,958 for the first agreement and US$ 2,979 for the second one, with the first two months free.

As of December 2005, we lease the entire 9^th floor and one third of the 24^th floor of the Intercontinental Plaza Tower from Inversora Bolivar pursuant to two lease agreements, the first one for our headquarters and eight parking lot spaces and the second one for our headquarters (one third of the floor) and three parking lot spaces. The first agreement, effective as from January 2005, has an initial duration of 46 months with optional extension of 36 additional months, and the second one, effective as from September 2005, has a duration of 35 months with no optional extension. We pay a monthly rent of US$ 5,386 for the first agreement and US$ 2,648 for the second one, with the first month free.

We lease the entire 2^th floor and eight parking lot spaces of the Intercontinental Plaza Tower from Inversora Bolivar pursuant to a lease agreement, for our headquarters. The lease has a three-year term scheduled to expire in December 2007 with an optional extension for 36 additional months. We pay a monthly rent of US$ 4,488 with the first two months free.

As of October 2007, we lease the entire 4^th floor of the Intercontinental Plaza Tower from Inversora Bolivar. The agreement, effective as from October 2007, has an initial duration of 60 months We pay a monthly rent of US$ 5,958 for the agreement.

Saúl Zang is our Vice-Chairman and director of Inversora Bolivar S.A. and Alejandro Elsztain is our executive Vice-Chairman and Vice-president of Inversora Bolivar S.A. Fernando Elsztain is a director of APSA and President of Inversora Bolivar S.A. and Gabriel Reznik is a director in APSA and Inversora Bolivar S.A.

Lease of Tarshop’s Headquarters

As of today, Tarshop leases 5 floors of the Suipacha building, located at Suipacha 664, in the City of Buenos Aires, from IRSA pursuant to five lease agreements, the agreements are effective until 2007, 2008 and 2010 depending on the agreement. Tarshop pays a monthly rent of US$35,405, for all the agreements.

Our 1^st Vice-president Saúl Zang is the Vice-Chairman of Tarshop and director of Inversora Bolivar S.A. and our 2^nd Vice-president Alejandro Elsztain is the president of Tarshop and the executive Vice-Chairman and Vice-president of Inversora Bolivar S.A. Our director Fernando Elsztain is the President of Inversora Bolivar S.A. and our director Gabriel Reznik is a director in Inversora Bolivar S.A.

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Loan agreement with Tarshop

On October 30, 2007, we entered into a loan agreement with Tarshop S.A. whereby APSA granted a loan to Tarshop for the total amount of Ps. 10,000,000, to be repaid in a single payment on April 30, 2008. The applicable interest rate is the rate published by the Argentine Central Bank, known as “BADLAR” Bancos Privados plus four hundred basis points. The rate will be redetermined every 90 days. In addition, it was agreed that the loan will be accelerated in the event of a changes in the current shareholding structure of Tarshop S.A.,

Lease of our Chairman offices

Our Chairman’s offices are located at Bolívar 108, City of Buenos Aires. We have leased them from Isaac Elsztain e Hijos S.C.A., a company controlled by relatives of Eduardo S. Elsztain, our chairman, and also from Hamonet S.A., a company controlled by Fernando A. Elsztain, one of our Directors, and certain of his relatives. A lease agreement was signed among us, IRSA, Cresud and Isaac Elsztain e Hijos S.C.A., in March 2004. This lease has a term of 120 months and monthly rent of Ps.8,490. We, IRSA and Cresud each pay one-third of such rent in an amount of Ps.2,830 each.

Agreement for Shared Corporate Services with IRSA and CRESUD S.A.C.I.F. y A.

In order to reduce administrative expenses and to achieve a more efficient allocation of corporate resources, we entered into an Exchange of Operating Services Agreement with Cresud and IRSA, on June 30, 2004. This agreement has a term of two years, which may be renewed for an equal term unless any of the parties decides to terminate it. Pursuant to this agreement tasks are performed by one or more of the companies for the benefit of one or more of other companies in exchange for a fee to be paid primarily through the provision of services in other areas. Through this agreement, each company continues to maintain its strategic and commercial independence while increasing operating efficiency. This agreement will not affect the independence of each company’s record and accounting systems or adversely affect internal control systems or external audit tasks. Each company will continue to maintain separate assets and liabilities.

Alejandro Gustavo Elsztain is the General Coordinator of the program and the program is operated and implemented by Abraham Perelman for us, Gabriel Adolfo Gregorio Reznik for Cresud and Cedric Bridger for IRSA, all of whom are directors and members of the Supervisory Committees of their respective companies. The main duties for implementation of the project are (a) monitoring the project’s implementation in accordance with the agreement; (b) reviewing the billing report on a monthly basis to analyze and check it against the provisions of the agreement, and, in the event of discrepancies or deviations, preparing a report to submit for the consideration of the General Coordinator, and by each company’s boards of directors and (c) assessing, on a permanent basis, the results derived from the project’s implementation and proposing to the General Coordinator changes in the event of a conflict with the agreement or, if appropriate, the possibility of establishing cost or benefit allocation mechanisms or criteria more consistent with the goals of the agreement. The areas originally involved were Human Resources, Finance, Institutional Relations, Administration, Systems, Insurance, Purchasing, Messenger Services, Contracts, Operations and Directors’ Assistants, among others. This program was implemented to reduce operating costs by optimizing the individual administrative efficiencies of each company.

Currently, the program includes Internal Audit and the other Shared Corporate Services, while the sharing of Directors’ Assistants has been dropped.

In the future and in order to continue our policy of achieving a more efficient allocation of corporate resources, we may extend the areas in which we share corporate services with Cresud and IRSA. Our chairman is also chairman of Cresud and IRSA and our vice-chairman is also vice-chairman of Cresud and IRSA. We believe that the terms and conditions of these transactions are consistent in all material respects with those prevailing in the market at the relevant time for agreements between unaffiliated parties.

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Loans from our Major Shareholders

As of December 31, 2006 IRSA and Parque Arauco owned US$27.2 million and US$15.2 million, respectively, of our Convertible Notes.

As of June 30, 2007, IRSA owned 62.5% of our common shares. Assuming IRSA exercises its conversion rights of all of its Convertible Notes and no exercise of such rights by any of our other bondholders, IRSA would own 83.3% of our common shares. In the case all shareholders exercise their conversion rights and IRSA exercises them as well, IRSA would own 65.6% of our common stock.

The Convertible Notes originally matured on July 19, 2006. A meeting of noteholders resolved to extend the maturity date of the Convertible Notes through July 19, 2014 although the remaining terms and conditions were left unchanged. The Convertible Notes accrue interest (payable semiannually) at a fixed annual rate of 10% and are convertible, at any time at the option of the holder, into common shares of Ps.0.10 par value per share. The conversion rate per U.S. dollar is the lesser of 30.8642 and the result obtained from dividing the exchange rate in effect at the conversion date by the par value of our common shares.

Sale of E-Commerce Latina S.A. to IRSA.

On November 6, 2007, as part of a corporate restructuring, we redefined our organizational structure, with the purpose of optimizing our operations. Accordingly, we sold to IRSA the interest we held in our controlled non-operative company E-Commerce Latina S.A., which consisted of 1,616,702 common shares for an aggregate price of Ps. 3,495,217.

Options to Purchase Shares of Comercializadora Los Altos S.A. (formerly known as Altocity.com S.A.)

In January 2000, E-Commerce Latina, a company owned 50% by us and 50% by Telefónica, granted Consultores Internet Managers Ltd. an option to purchase certain of its class B shares of Comercializadora Los Altos S.A. (formerly know as Altocity.com S.A.). Consultores Internet Managers Ltd. is a special-purpose Cayman Islands’ corporation created to act on behalf of its management and is represented by an independent attorney-in-fact.

The option granted to Consultores Internet Managers represents 15% of the capital stock of Comercializadora Los Altos S.A. (formerly know as Altocity.com S.A.) and was granted for a period of eight years.

Pursuant to the terms of the agreement, the exercise price is equal to the quotient of (i) the original value of class B shares at the time of the contribution to Comercializadora Los Altos S.A. (formerly know as Altocity.com S.A.) by E-Commerce Latina, plus interest accrued at an annual fixed interest rate of 14% through the exercise date of the option, over (ii) the total number of class B shares owned by E-Commerce Latina at the exercise date of the option.

The option was granted to Consultores Internet Managers Ltd. to be allocated by it among the management of Comercializadora Los Altos S.A. (formerly know as Altocity.com S.A.) as an incentive compensation for their services, but as of today, no individual awards have been determined for participating employees under this option. Upon exercise of the option, Consultores Internet Managers Ltd.’s sole asset will be its 15% interest in Comercializadora Los Altos S.A. (formerly know as Altocity.com S.A.).

On October 24, 2006, we entered into a share purchase agreement with Telefónica, where we acquired 808,354 ordinary shares issued and outstanding of E-Commerce Latina S.A., and 11 ordinary shares issued and outstanding of Comercializadora Los Altos S.A. (formerly know as Altocity.com S.A.) for a total price of

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Ps.85,876. Such agreement was subject to approval by the Comisión Nacional de Defensa de la Competencia. By the end of December 2006, the commission approved the transaction and in January 2007 the agreed upon price was settled and the shareholders duly transferred their shares.

Through this operation, we have obtained total share control of E-Commerce Latina. During January 2007, the total price agreed was fully paid.

As of April 17, 2007, our subsidiary Altocity.com S.A. change its name to Comercializadora Los Altos S.A.

On November 6, 2007, E-Commerce Latina sold its 90% equity interest in Comercializadora Los Altos S.A. (formerly know as Altocity.com S.A.) a 10% to our subsidiary Shopping Alto Palermo S.A. and the remaining 80% to us; and furthermore we sold our 100% equity interest in E-Commerce Latina to our major shareholder IRSA Inversiones y Representaciones S.A.

Donations to Fundación IRSA and Fundación Museo de los Niños

On October 31, 1997, our shareholders approved the execution of an agreement granting Fundación IRSA the free right to use 3,800 square meters of constructed area in the Abasto for a 30-year period.

Moreover, on November 29, 2005, our shareholders approved the execution of an agreement granting Fundación Museo de los Niños, the free right to use approximately 2,670.11 square meters of constructed area in the Shopping Rosario for a 30-year period.

Fundación IRSA is a charitable, non-profit organization whose Chairman is Eduardo S. Elsztain and whose Secretary, is Mariana Carmona de Elsztain, Mr. Elsztain’s wife. Our Chairman Eduardo S. Elsztain is also the Chairman of IRSA. Fundación IRSA has used the available area to house a museum called “Museo de los Niños, Abasto,” an interactive learning center for both children and adults which was opened to the public in April 1999. On September 27, 1999 Fundación IRSA assigned and transferred for free, the Museo de los Niños, Abasto’s total rights and obligations to Fundación Museo de los Niños.

Fundación Museo de los Niños is a charitable non-profit organization created by the same founders of Fundación IRSA and has the same members of the administration committee as Fundación IRSA. Fundación Museo de los Niños acts as special vehicle for the developments of “Museo de los Niños, Abasto” and “Museo de los Niños, Rosario.” On October 29, 1999, our shareholders approved the assignment of “Museo de los Niños, Abasto” agreement to Fundación Museo de los Niños, and on December 12, 2005, the agreement granting the free right to use of the space designated for “Museo de los Niños, Rosario” was signed.

During the fiscal years ended June 30, 2005, 2006 and 2007 we made unconditional promises to give money to Fundación IRSA amounted our donation to Ps. 4.0 million, Ps .2.5 million and Ps. 4.4 million, respectively. These donations are paid in the subsequent year. As of December 17, 2007 donations related to fiscal year ended June 30, 2007 have not yet been fully paid.

Legal Services

During the years ended June 30, 2005, 2006 and 2007, we and our subsidiaries paid the law firm Zang, Bergel & Viñes an aggregate amount of approximately Ps. 0.5 million, Ps. 0.7 million, and Ps. 1.6 million, respectively as payment for legal services. Our Vice-Chairman Saúl Zang; our alternate directors Juan M. Quintana, Salvador D. Bergel, and Pablo D. Vergara del Carril; our syndic Ángel. D. Vergara del Carril and our alternate syndic Armando F. Ricci are members of the law firm Zang, Bergel & Viñes.

C. Interests of Experts and Counsel

This section is not applicable.

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ITEM 8. Financial Information

A. Consolidated Statements and Other Financial Information

See Item 18 for our consolidated financial statements.

Legal or Arbitration Proceedings

Neuquén Project

On July 6, 1999, we acquired 94.6% ownership of Shopping Neuquén for Ps.4.2 million. Shopping Neuquén’s sole asset is a parcel of land of approximately 50,000 square meters in which we seek to develop a shopping center. We paid Ps.0.9 million on September 1, 1999, and the remaining Ps.3.3 million were originally scheduled to be paid on the earlier to occur of July 5, 2001, and the completion of the construction of the shopping center. On August 15, 2003, the former holders of 85.8% of Shopping Neuquén filed a complaint against us seeking recovery of the unpaid balance of the purchase price, plus interest and legal costs. In September 2003, we answered the complaint and raised several defenses including, plaintiffs’ non-compliance with her duties under the contract and the pesification of the purchase price balance pursuant to emergency legislation adopted in 2002. We also filed a counterclaim alleging there should be a readjustment of the terms of the contract which became excessively burdensome given the 2001 economic, social and political crisis. In November 2003, the plaintiffs replied to our counterclaim alleging that the payment under the purchase agreement was overdue before the economic and social crisis emerged and thus our contract readjustment claim was inadmissible. On February 2, 2007, we reached an agreement with Shopping Neuquén S.A. former shareholders, in which both parties decided to accept the judge’s ruling. On that date, and pursuant to the aforementioned agreement, we paid the amount of US$3.45 million to the former shareholders of Shopping Neuquén S.A., not having the latter anything else to claim to us.

Legal issues with the City Hall of Neuquén

In June 2001, Shopping Neuquén requested that the City Hall of Neuquén allow it to transfer certain parcels of land to third parties so that each participant in the commercial development to be constructed would be able to build on its own land. The City Hall Executive Branch previously rejected this request under Decree No. 1437/2002 which also established the expiration of the rights arising from Ordinance 5178, including the loss of any improvement and expenses incurred. As a result, Shopping Neuquén had no right to claim indemnity charges and annulled its buy-sell land contracts.

Shopping Neuquén submitted a written appeal to this decision on January 21, 2003. It also sought permission to submit a revised schedule of time terms, taking account of the current situation and including reasonable short and medium term projections. The City Hall Executive Branch rejected this request in Decree 585/2003. Consequently, on June 25, 2003, Shopping Neuquén filed an “Administrative Procedural Action” with the High Court of Neuquén requesting, among other things, the annulment of Decrees 1,437/2002 and 585/2003 issued by the City Hall Executive Branch. On December 21, 2004, the High Court of Neuquén communicated its decision that the administrative procedural action that Shopping Neuquén had filed against the City Hall of Neuquén had expired. Shopping Neuquén filed an extraordinary appeal for the case to be sent to the Argentine Supreme Court, which is yet to be decided.

On December 13, 2006, Shopping Neuquén signed an agreement with both the City Hall and the Province of Neuquén stipulating a new timetable for construction of the commercial and housing enterprises (the “Agreement”). Also, Shopping Neuquén was permitted to transfer certain parcels to third parties so that each participant in the commercial development to be constructed would be able to build on its own land, with the exception of the land in which the shopping center will be constructed. The Legislative Council of the City Hall of Neuquén duly ratified the Agreement. The City Hall Executive Branch promulgated the ordinance issued on February 12, 2007.

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The Agreement also provides that Shopping Neuquén will submit, within 120 days after the Agreement is signed, a new urban project draft with an adjustment of the environmental impact survey, together with a map of the property subdivision, which the City Hall of Neuquén will approve or disapprove within 30 days after its presentation. If the project is approved, Shopping Neuquén will submit the final maps of the works to the City Hall within 150 days of this decision and construction must commence within a maximum period of 90 days thereafter. The first stage of construction (including minimum construction of 21,000 square meters of the shopping center and 10,000 square meters of the hypermarket) is expected to be completed within a maximum period of 22 months. The Agreement is conditional upon the City Hall declaring the feasibility of the draft project submitted, and upon the terms and conditions of this decision being accepted by Shopping Neuquén S.A. The City Hall of Neuquén reserves its right to rescind the Agreement and file the legal actions it deems pertinent if its conditions are contravened.

On March 28, 2007, Shopping Neuquén submitted the new project draft and revised environmental impact survey to the City Hall of Neuquén. On May 10, 2007, the City Hall of Neuquén, requested certain explanations and made recommendations for our consideration before issuing an opinion on the feasibility of the draft project. On July 17, 2007, Shopping Neuquén answered the City Hall’s requests and on September 20, 2007, the City Hall approved the feasibility of the project.

Other Litigation

As of July 5, 2006, the Federal Administration of Public Revenues (“AFIP”) filed a preliminary injunction with the Federal Court for Administrative Proceedings for an aggregate amount of Ps. 3,689,485.5, plus an added amount, provisionally estimated, of Ps. 900,000 in order to respond to legal costs and interests. The main dispute is about the amount due for the admission rights of the income tax. In the first instance, AFIP pleaded for a general restraining order. As of November 29, 2006, the Federal Court ordered such order to be substituted for an attachment on the plot of land located in Caballito neighborhood, city of Buenos Aires, where we are planning to develop a shopping center.

We are involved in other litigation which derives from the ordinary course of our business. We accrue liabilities when it is probable that future costs will be incurred and such costs can be reasonably estimated. Such accruals are based on developments to date, our estimates of the outcomes of these matters and the lawyers’ experience in contesting, litigating and settling other matters. As the scope of the liabilities becomes better defined, there will be changes in the estimates of future costs, which could have a material effect on our future results of operations and financial condition or liquidity.

Dividend Policy

Pursuant to Argentine law, the distribution and payment of dividends to shareholders is allowed only if they result from realized and net earnings of the company pursuant to annual financial statements approved by the shareholders. The approval, amount and payment of dividends are subject to the approval by our shareholders at our annual ordinary shareholders meeting. The approval of dividends requires the affirmative vote of a majority of the shares entitled to vote at the meeting.

In accordance with Argentine law and our by-laws, net and realized profits for each fiscal year are allocated as follows:

• 5% of such net profits is allocated to our legal reserve, until such reserve amounts to 20% of our capital stock;

• a certain amount determined at a shareholders’ meeting is allocated to compensation of our directors and the members of our Supervisory Committee; and

• additional amounts may be allocated for the payment of dividends or to optional reserve funds, or to establish reserves or for whatever other purpose our shareholders determine.

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According to rules issued by the Comisión Nacional de Valores, cash dividends must be paid to shareholders within 30 days of the resolution approving their distribution. In the case of stock dividends, the shares must be delivered to shareholders within three months of the annual ordinary shareholders’ meeting that approved them.

The board of directors’ proposal for the distribution of a cash dividend amounting to Ps. 55.7 million, of which the shareholders will collect Ps.0.07125 per share, was approved during the annual shareholders’ meeting, held on October 25, 2007. The payment was made on November 9, 2007.

The table below presents the dividend payment ratio and the total amount of dividends paid for, each paid entirely in common shares, for the mentioned years. Figures in Pesos are stated in historical Pesos of their respective payment date.

Year declared	Cash dividends	Stock dividends	Total per share
	(Pesos)	(Pesos)	(Pesos)
2003	10,000,000	—	0.0140
2004	17,895,663	—	0.0229
2005	29,000,000	—	0.0371
2006	47,000,000	—	0.0601
2007	55,721,393	—	0.0712

Although we intend to maintain the adopted dividend policy, there can be no assurance that our future earnings will not be needed to finance the operations and expansion of our business.

B. Significant changes

Patio Olmos Building. On September 25, 2007 we signed the transfer deed to purchase the real estate in which the Patio Olmos commercial center is currently operating from the Government of the Province of Córdoba. We also signed the transfer deed to purchase the related concession contract relating to the use of the property. The balance of Ps. 22.7 million for the property and the concession was also paid on this date.

Neuquén Project. On September 20, 2007 the Municipality of Neuquén decreed the feasibility of the urban project and environmental impact study. As from such date Shopping Neuquén S.A. has a 150 days term to submit the work plans.

Torres Rosario, City of Rosario. We own a plot of land spanning a surface of approximately 50,000 square meters in the City of Rosario in the same place where our local Shopping Center, Alto Rosario, is located.

On October 11, 2007, we entered into a barter agreement with Condominios del Alto S.A. whereby Condominios del Alto S.A. proposed to acquire plot G, located in the City of Rosario, Province of Santa Fe, Argentina, which belongs to us, for the construction at its own expense and under its own responsibility of a housing building. As consideration for the barter over the plot, Condominios de Alto S.A. agreed to deliver: (i) fifteen housing units, with a total constructed surface of 1,504.45 square meters will represent upon completion in aggregate 14.85% of the area of housing units to be built in plot G, and (ii) fifteen garages will represent upon completion in aggregate 15% of the area of garage units to be built in the same building.

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As additional consideration in our favor, Condominios del Alto S.A. will pay us U.S.$ 15,300 and guarantee its obligations: (i) Condominios del Alto S.A. granted a first degree mortgage in our favor on plot G in the amount of U.S.$ 1,100,000; (ii) established a security insurance of which we will be assigner of the insured amount of U.S$ 1,600,000, and (iii) the shareholders of Condominios del Alto S.A. are the guarantors of the obligations of the latter up to the amount of U.S.$ 800,000.

Finally, we granted to Condominios del Alto S.A. an option to enter into a barter agreement in relation to plot 2h, close to the transferred plot G.

ITEM 9. The Offer and Listing

A. The offer and listing details

The following summary provides information concerning our share capital and briefly describes all material provisions of our bylaws and the Argentine Corporation Law.

Stock Exchanges in which our securities are listed

Our common shares are listed on the Buenos Aires Stock Market (Bolsa de Comercio de Buenos Aires) and our ADS are listed on the NASDAQ National Market.

As of November 30, 2007, our authorized capital stock consists of 782,064,214 shares of common stock, Ps. 0.1 face value per share. In addition, we have issued US$ 50.0 million of Convertible Notes. The Convertible Notes mature on July 19, 2014, accrue interest (payable semiannually) at a fixed annual rate of 10% and are convertible, at any time at the option of the holder, into common shares of Ps. 0.10 par value per share. The conversion rate per U.S. Dollar is the lesser amount of 30.8642 and the result obtained from dividing the exchange rate in effect at the conversion date by the par value of our common shares.

In the event that all the bondholders were to convert their Convertible Notes, our share capital would increase from 782,064,214 shares as of November 30, 2007 to approximately 2,239,716,498 shares.

The common stock has one vote per share. All of the common shares are validly issued, fully paid and non assessable.

The following description of the material terms of our capital stock is subject to our certificate of incorporation and bylaws, which are included as exhibits to the registration statement of which this Form 20-F forms part, and the provisions of applicable Argentine Law.

Price history of our stock

Our shares are listed and traded on the BCBA under the denomination “APSA”. The shares started to be listed on the BCBA on March 26, 1996. Each APSA ADS represents 40 shares of common stock. ADSs in custody are listed and traded on the NASDAQ under the denomination “APSA”. ADSs were first listed on the NASDAQ on November 15, 2000, and they were issued by the Bank of New York, Inc. acting as depository of the ADSs. The following chart shows, for the period indicated, the maximum and minimum closing listed prices of our shares on the BCBA for a face value of Ps 0.10 and on the Nasdaq.

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	Buenos Aires Stock Exchange		NASDAQ
	Ps. per Share		US$ per ADS
	High	Low	High	Low
Fiscal Year 2003
Annual	0.489	0.234	5.69	2.03
Fiscal Year 2004
Annual	0.619	0.299	7.26	3.05
Fiscal Year 2005
1st Quarter	0.855	0.546	11.09	6.07
2nd Quarter	0.727	0.590	9.71	6.88
3rd Quarter	0.678	0.546	9.13	6.76
4th Quarter	0.693	0.609	8.82	7.17
Annual	0.855	0.546	11.09	6.07
Fiscal Year 2006
1st Quarter	0.697	0.618	8.53	6.95
2nd Quarter	0.672	0.539	8.33	7.02
3rd Quarter	0.742	0.667	9.14	7.08
4th Quarter	0.946	0.781	11.94	8.91
Annual	0.946	0.539	11.94	6.95
Fiscal Year 2007
1st Quarter	1.125	0.886	13.90	11.49
2nd Quarter	1.622	0.995	20.90	12.63
3rd Quarter	1.582	1.344	20.56	15.21
4th Quarter	1.630	1.000	22.00	13.30
June 2007	1.622	1.443	20.76	17.32
July 2007	1.582	1.433	20.56	17.11
August 2007	1.463	1.364	19.00	15.54
September 2007	1.393	1.344	17.93	15.21
October 2007	1.543	1.373	18.52	16.61
November 2007	1.500	1.300	17.70	15.40
December 2007 (through December 18, 2007)	1.255	1.230	15.999	15.999

Source: Bloomberg

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Due to the aggregate ownership of approximately 92.0% as of June 30, 2007 by our two principal shareholders, the liquidity of our shares is restricted and may cause our stock not to be traded daily.

B. Plan of Distribution

This section is not applicable.

C. Markets

Comisión Nacional de Valores

The Comisión Nacional de Valores is a separate governmental entity with jurisdiction covering the territory of Argentina. Its main purpose is to ensure transparency of Argentina’s securities markets, to watch over the market price formation process and to protect investors. The Comisión Nacional de Valores supervises corporations authorized to issue securities to the public, the secondary markets where these securities are traded, and all persons and corporations involved in any capacity in the public offering and trading of these securities. Pension funds and insurance companies are regulated by separate government agencies. The Argentine markets are governed generally by Law No. 17,811, as amended, which created the Comisión Nacional de Valores and regulates stock exchanges, stockbrokers, market operations and the public offerings of securities. There is a relatively low level of regulation of the market for Argentine securities and of investors’ activities in such market, and enforcement of existing regulatory provisions has been extremely limited. Furthermore, there may be less publicly available information about Argentine companies than is regularly published by or about companies in the United States and certain other countries. However, the Argentine government and the Comisión Nacional de Valores, taking into consideration the deeper global awareness of the importance of having adequate corporate governance practices and a legal framework to enforce principles such as “full information,” and “transparency,” have issued decree No. 677/2001. This decree has the objective of determining the rights of the “financial consumer,” increasing market transparency and an adequate legal framework to increase the investor’s protection within the capital market. Most of its reforms are in line with world trends pertaining to corporate governance practices that have already been adopted by many emerging markets.

In order to offer securities to the public in Argentina, an issuer must meet certain requirements of the Comisión Nacional de Valores regarding assets, operating history, management and other matters, and only securities for which an application for a public offering has been approved by the Comisión Nacional de Valores may be listed on the Buenos Aires Stock Exchange . This approval does not imply any kind of certification or assurance related to the merits or the quality of the securities, or the issuer’s solvency. Issuers of listed securities are required to file unaudited quarterly financial statements and audited annual financial statements, as well as various other periodic reports, with the Comisión Nacional de Valores and the Buenos Aires Stock Exchange .

Securities Exchanges in Argentina

There are 10 securities exchanges in Argentina, of which the principal exchange for the Argentine securities market is the Buenos Aires Stock Exchange , which handles approximately 99% of all equity trading in the country.

Buenos Aires Stock Exchange

The Buenos Aires Stock Exchange is a complex, non-profit and self-regulated organization. Various markets require different self-organizations of brokers within the Buenos Aires Stock Exchange , which is one of its particular characteristics. The most important and traditional of such markets is Mercado de Valores S.A. (“MERVAL”).

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The securities that may be listed on the Buenos Aires Stock Exchange are: Stocks, Corporate Bonds, Convertible Corporate Bonds, Close-ended Investment Funds, Financial Trust, Indexes, Derivatives and Public Bonds. The Buenos Aires Stock Exchange is legally qualified for admission, suspension, and delisting of securities according to its own rules approved by the Comisión Nacional de Valores. Furthermore, the Buenos Aires Stock Exchange works very closely with the Comisión Nacional de Valores in surveillance activities. Also under a special agreement, registration and listing applications are directly filed with the Buenos Aires Stock Exchange for simultaneous processing.

MERVAL

The MERVAL is a corporation whose 133 shareholder members are the only individuals and entities authorized to trade, either as principal or as agent, in the securities listed on the Buenos Aires Stock Exchange . Trading on the Buenos Aires Stock Exchange is conducted by continuous open outcry, or the traditional auction system, from 11:00 a.m. to 5:00 p.m. each business trading day of the year. Trading on the Buenos Aires Stock Exchange is also conducted through a Sistema Integrado de Negociación Asistida por Computación (“SINAC”). SINAC is a computer trading system that permits trading in debt securities and equity securities. SINAC is accessed by brokers directly from workstations located at their offices. Currently, all transactions relating to listed notes and listed government securities can be effected through SINAC.

Over the Counter Market

The Electronic Open Market (Mercado Abierto Electrónico or “MAE”) is an exchange organized under the laws of Argentina, which operates as a self-regulatory organization under the supervision of the Comisión Nacional de Valores.

The MAE works as an electronic environment to process Over The Counter transactions. It is an electronic exchange where both government securities and corporate bonds are traded through spot and forward contracts.

The MAE has 90 brokers/dealers members, which include national banks, provincial banks, municipal banks, private national banks, foreign banks, cooperative banks, financial institutions, foreign exchange entities and pure brokers/dealers (exclusively engaged in brokerage activities). Both Argentine or foreign capital banks and financial institutions may be the MAE’s brokers/dealers.

Securities to be traded must be registered with the pertinent supervising authorities and may be traded in the Mercado Abierto Electrónico, in other exchanges or in both of them concurrently.

Securities Central Depositary

Caja de Valores S.A. is a corporation organized under the laws of Argentina, totally private, which acts as central depositary of public bonds and private securities. It was established in 1974 by Act 20,643, and it is supervised by the Comisión Nacional de Valores.

Those authorized to make deposits of securities with the Caja de Valores are stockbrokers, banking financial institutions, and mutual funds.

The majority shareholders of the Caja de Valores S.A. are the Buenos Aires Stock Exchange and the MERVAL (49.98% each).

Information regarding the Buenos Aires Stock Exchange

	As of December 31,		As of June 30,
	2004	2005	2006	2007
Market capitalization (Ps. billion)	689.9	771.3	1,229.3	1,335.91
Average daily trading volume (Ps. million)	52.6	74.6	61.4	69.9
Number of listed companies	107	104	106	107

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Although companies may list all of their capital stock on the Buenos Aires Stock Exchange , in many cases a controlling block is retained by the principal shareholders resulting in only a relatively small percentage of many companies’ stock being available for active trading by the public on the Buenos Aires Stock Exchange .

As of June 30, 2007, approximately 107 companies had equity securities listed on the Buenos Aires Stock Exchange . As of June 30, 2007, approximately 9.63% of the total market capitalization of the Buenos Aires Stock Exchange was represented by the securities of ten national companies.

The Argentine securities markets are substantially more volatile than the securities markets in the United States and certain other developed countries. The MERVAL experienced a 13% increase in 1995, a 25% increase in 1996, a 6% increase in 1997, a 37% decrease in 1998, a 28% increase in 1999, a 24% decrease in 2000, a 29% decrease in 2001, a 77% increase in 2002, a 104% increase in 2003, a 28% increase in 2004, a 13% increase in 2005, a 34% increase in 2006 and a 5% increase for the six month period ended June 30, 2007. In order to control price volatility, the MERVAL operates a system pursuant to which the negotiation of a particular stock or debt security is suspended for a 15- minute period when the price of the security registers a variation on its price between 10% and 15% and between 15% and 20%. Any additional 5% variation on the price of the security after that results in additional 10 – minute successive suspension periods.

Nasdaq´s Stock Market.

Our ADS are listed and traded in the Nasdaq National Market of the Nasdaq Stock Market under the trading symbol “APSA”.

D. Selling Shareholders

This section is not applicable.

E. Dilution

This section is not applicable.

F. Expenses of the Issue

This section is not applicable.

ITEM 10. Additional Information

A. Share Capital

This section is not applicable.

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B. Memorandum and Articles of Association

Our corporate purpose

Our legal name is “Alto Palermo S.A. (APSA)”. We were organized and incorporated on August 29, 1889 under Argentine law as a stock corporation (Sociedad Anónima or S.A.). Our by-laws were registered in the Superintendence of Corporations (Inspección General de Justicia) on February 27, 1976 under number 323, on page 6, book 85 of the stock corporations volume. Pursuant to our bylaws, our term of duration expires on August 28, 2087. Article 4 of our bylaws defines our corporate purpose as follows:

• Invest, develop and operate real estate, and specially shopping centers;

• Invest, develop and operate personal property, and specially securities;

• Manage real or personal property, whether owned by us or by third parties;

• Build, recycle or repair real property whether owned by us or by third parties;

• Advise third parties with respect to the aforementioned activities;

• Fund projects, undertakings, works and/or real estate transactions of third parties.

Board of Directors

Voting of proposals in which Directors have material interest

The Comisión Nacional de Valores enacted Resolution No. 677/01, which establishes in Section 8 that the directors, administrators and members of the Supervisory Committee of companies whose securities are publicly offered, shall act in a loyal and diligent manner when exercising their functions. In that sense, they have to:

(a) place the corporate interests of the company and the common interest of the shareholders above any other interest, including the controlling shareholder’s interests;

(b) refrain from obtaining a personal benefit from the issuer other than the compensation paid for their functions;

(c) organize and implement preventive systems and mechanisms to protect the corporate interests, reducing the risk of conflicts of interests, either permanent or temporary, in the personal relationship with the company or with entities related to the company. This duty specifically refers to activities in competition with the company, the use or imposition of a lien on corporate assets, the determination of compensation or proposals related thereto, the use of non public information, the use of business opportunities for their own benefit or for the benefit of third parties and, in general, any situation that may generate a conflict of interests affecting the issuer;

(d) make the necessary arrangements to perform the company’s activities and implement the necessary internal control to ensure a careful management and avoid breaches of the duties established by the applicable regulations; and

(e) act with due diligence when preparing and disclosing the information to the market, and maintain the independence of external auditors.

The Law of Corporations No 19,550 establishes in Section 271 that directors may contract with the company when the contract is related to the regular activities of the company and terms and conditions are in accordance to market terms. All other contracts with directors should be approved by the shareholders.

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Further, Section 73 of Resolution No. 677/01 establishes a specific procedure for transactions of a company whose securities are publicly offered, entered into with its directors, members of the Supervisory Committee, or senior managers and which involve a relevant amount. The transaction is considered to have a relevant amount when it exceeds: (i) one percent (1%) of the corporate capital, measured pursuant to the last approved financial statements, and (ii) the equivalent of one hundred thousand Pesos (Ps. 100,000).

The related person with an interest in the transaction should submit all the relevant documentation to the approval of the Board of Directors. The directors must request a report (i) of the audit committee stating if the conditions of the transaction may be reasonably considered adequate according to normal market conditions; or (ii) of two independent evaluating firms that shall have informed about the same matter and about the other transaction conditions. Immediately after being approved by the Board of Directors the transaction has to be informed to the Comisión Nacional de Valores.

Notwithstanding the above Section 272 of the Law of Corporations N° 19,550 provides that when a director has an opposite interest to that of the company, he or she should notify that situation to the Board of Directors and the Supervisory Committee and abstain from voting in that respect. The violation of this provision results in the director being jointly and severally liable without limit.

In the event that the results of the reports are not favorable to the transaction, its approval should be considered by the shareholders’ meeting.

Approval of compensation of Directors and Supervisory Committee

Our bylaws do not establish the compensation to be paid to members of the Board of Directors and the supervisory committee, and therefore pursuant to Section 261 of the Law of Corporations No. 19,550, it should be approved by the majority of the shareholders. The maximum amount that may be paid as compensation to members of the Board of Directors and the supervisory committee should not exceed 25% of the realized and net earnings of the company and 5% when there is no distribution of dividends. If the company does not distribute the total earnings, the amount of the compensation should be proportional to that distribution and within the mentioned limits. These limits may only be surpassed by express approval of majority of the shareholders.

Borrowing powers of Directors

Our bylaws establish, in Section 17, that the board of directors has full and broad powers to organize, manage and direct us, aimed at fulfilling the corporate purpose.

In case one of our directors borrowed from us, the matter would be subject to the requirements described above for transactions in which directors have material interest.

Retirement of Directors and ownership of shares requirement

Our bylaws do not establish any requirements or provisions regarding age limits for directors’ retirement nor do they require ownership of a certain number of shares in order to be eligible for appointment as director.

Rights, preferences and restrictions attaching to the common shares

Dividend rights

The Law of Corporations No. 19,550 establishes that the distribution and payment of dividends to shareholders is valid only if they result from realized and net earnings of the company pursuant to an annual financial statements approved by the shareholders. The approval, amount and payment of dividends is subject to the approval of our annual ordinary shareholders meeting of the company. That approval requires the affirmative vote of the majority of the present votes with right to vote at the meeting.

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Pursuant to the Law of Corporations No. 19,550 and Section 28 of our bylaws, liquid and realized profits of each fiscal year shall be distributed as follows:

• allocate 5% of such net profits to legal reserve, until the amount of such reserve equals 20% of the capital stock;

• the sum established by the shareholders’ meeting as remuneration of the of Directors and the supervisory committee;

• dividends, additional dividends to preferred shares if any, or to optional reserve funds or contingency reserves or to a new account, or for whatever purpose the shareholders’ meeting determines.

Dividends are paid pro rata according to the interests held by shareholders within thirty days after approval and the right to collection expires upon the expiration of a term of three years since they were made available to shareholders.

The shareholders’ meeting may authorize payment of dividends on a quarterly basis provided no applicable regulations are violated. In that case, all and each of the members of the Board of Directors and the supervisory committee will be jointly and severally liable for the refund of those dividends if, as of the end of the respective fiscal year, the realized and net earnings of the company are not sufficient to allow the payment of dividends.

Voting rights and Staggered Elections

Our stock capital is composed by book-entry common shares with face value of Ps. 0.1 per share and entitled to one vote each.

• All directors and alternate directors are elected for a three-year term.

• Our bylaws do not establish staggered elections.

Rights to share in APSA’s profits

The holders of our common shares have the right to participate in our net and realized profits on a pro rata basis of their respective interests.

Surplus rights to share in the event of liquidation

Section 29 of our bylaws determine that, in the event of liquidation, dissolution or winding-up, our assets (i) will be applied to satisfy liabilities and (ii) will be proportionally distributed among holders of preferred stock if there are any and in accordance with the terms of the preferred stock. If any surplus remains, the holders of common shares are entitled to receive and share on a pro rata basis in all net assets remaining for distribution.

Procedure to change the rights of stockholders

The rights of stockholders are established in the Law of Corporations No. 19,550 and in the bylaws. The rights of shareholders provided for by the Law of Corporations No. 19,550 may not be diminished by the bylaws. Section 235 of the Law of Corporations No. 19,550 establishes that the amendment of the bylaws should be approved by shareholders in an extraordinary shareholders meeting.

On October 31, 2003 under an annual ordinary and extraordinary meeting decided not to adhere to the

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Optional Statue of Public Offerings of Compulsory Acquisition (Régimen Estatutario Optativo de Oferta Pública de Adquisición Obligatoria) established by Decree No. 677/2001. Therefore, shareholders decided to incorporate said provision under section 1 of our bylaws.

Ordinary and extraordinary Shareholders’ Meeting

General

Shareholders’ meetings may be ordinary or extraordinary. We are required to hold an ordinary shareholders’ meeting within four months of the close of each fiscal year to approve our financial statements, the allocation of net income for the fiscal year, the approval of the reports of the Board of Directors and the audit committee and the election and remuneration of directors and members of the audit committee. Other matters which may be considered at an ordinary meeting include the responsibility of directors and members of the audit committee, capital increases and the issuance of certain corporate bonds. Extraordinary shareholders’ meetings may be called at any time to consider matters beyond the scope of an ordinary meeting, including amendment of the bylaws, issuance of debentures, early dissolution, merger, spin-off, reduction of capital stock and redemption of shares, changing the limiting or extending the shareholders liability by changing our corporate legal status and limitation of shareholders preemptive rights.

Notices

Notice of shareholders’ meetings must be published for five days in the Official Gazette of the Republic of Argentina, in an Argentine newspaper of wide circulation and in the publications of Argentine exchanges or securities markets in which our shares are traded, at least ten days prior to the date on which the meeting is to be held as per Argentine Corporation Law, and at least 20 days prior to the meeting as per Executive Order 677/01. The notice must include information regarding the type of meeting to be held, the date, time and place of the meeting and the agenda. If there is no quorum at the meeting, notice for a meeting on second call must be published for three days, at least eight days before the date of the second meeting, and must be held within 30 days of the date for which the first meeting was called. The first call and second call notices may be sent simultaneously in order for the meeting on second call to be held on the same day as the meeting on first call, but only in the case of ordinary shareholders’ meetings. Shareholders’ meetings may be validly held without notice if all shares of our outstanding capital stock are present and resolutions are adopted by unanimous vote.

The Board of Directors will determine appropriate publications for notice outside Argentina in accordance with requirements of jurisdictions and exchanges where our shares are traded.

Quorum and Voting Requirements

The quorum for ordinary meetings of shareholders on first call is a majority of the shares entitled to vote, and action may be taken by the affirmative vote of an absolute majority of the shares present that are entitled to vote on such action. If a quorum is not available, a second call meeting may be held at which action may be taken by the holders of an absolute majority of the shares present, regardless of the number of such shares. The quorum for extraordinary shareholders’ meeting on first call is sixty percent of the shares entitled to vote, and if such quorum is not available, a second call meeting may be held, for which there are no quorum requirements.

Action may be taken at extraordinary shareholders’ meetings by the affirmative vote of an absolute majority of shares present that are entitled to vote on such action, except that the approval of a majority of shares with voting rights, without application of multiple votes, is required in both first and second call for: (i) the transfer of our domicile outside Argentina, (ii) a fundamental change of the corporate purpose set forth in the bylaws, (iii) our anticipated dissolution, (iv) the total or partial repayment of capital, (v) a merger of our company, if we are not the surviving entity, (vi) a spin-off of our company, or (vii) changing our corporate legal status.

Shareholders’ meetings may be called by the Board of Directors or the members of the statutory audit committee whenever required by law or whenever they deem it necessary. Also, the board or the members of

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the statutory audit committee are required to call shareholders’ meetings upon the request of shareholders representing an aggregate of at least five percent of our outstanding capital stock. If the board or the statutory audit committee fails to call a meeting following this request, a meeting may be ordered by the Comisión Nacional de Valores or by the courts. In order to attend a meeting, a shareholder must deposit with us a certificate of book-entry shares registered in his name and issued by Caja de Valores at least three business days prior to the date on which the meeting is to be held. A shareholder may be represented by proxy. Proxies may not be granted to directors, members of the audit committee or officers or employees of our company.

Conflict of Interest

A shareholder who votes on a matter involving our Company in which he has a conflicting interest may, under Argentine law, be liable for damages suffered by the Company as a result of the decision, provided the transaction would not have been approved without his vote.

Limitations to own securities

There are no legal limitations to own securities or exercise voting rights for residents, non-resident or foreign shareholders.

Ownership threshold above which ownership should be disclosed

The Comisión Nacional de Valores regulations require that transactions, which cause a person’s holdings of capital stock of a registered Argentine company, to equal or exceed 5% of the voting power, should be immediately notified to the Comisión Nacional de Valores. Thereafter, every change in the holdings that represents a multiple of 5% of the voting power should also be notified.

Directors, senior managers, executive officers, members of the supervisory committee, and controlling shareholders of an Argentine company whose securities are publicly offered, should notify the Comisión Nacional de Valores on a monthly basis, their beneficial ownership of shares, debt securities, and call and put options related to securities of such companies and their controlling, controlled or affiliated companies.

Further, the Comisión Nacional de Valores must be immediately notified of transactions which cause a person’s holdings of capital stock of an Argentine company whose securities are publicly offered to equal or exceed 5% of the voting power and every change in the holdings that represents a multiple of 5% of the voting power. Holders of more than 50% of the common shares or who otherwise control decision making in shareholders’ meetings, as well as directors, officers and members of the supervisory committee must provide the Comisión Nacional de Valores with annual reports of their holdings in the capital stock of such companies and monthly reports of any change in their holdings.

Amendment to the by-laws.

On the shareholders’ meeting held on October 25, 2007, our shareholders decided to amend the following sections of the by-laws: (i) Section Twelve in order to adapt the performance bonds granted by directors to current rules and regulations, and (ii) Section Fifteen in order to incorporate the possibility of holding remote board meetings pursuant the provisions of section 65 of Decree 677/01. Such amendment is attached here to as Exhibit 1.2.

Compliance with NASDAQ Listing Standards on Corporate Governance

Significant differences between our corporate governance practices and US Companies’ practices under NASDAQ Rules:

Our corporate governance practices are governed by the applicable Argentine law; particularly, the Business Companies Law, Decree N°677/01 and the Standards of the Comisión Nacional de Valores, as well as by its Bylaws. APSA has securities that are registered with the Securities and Exchange Commission (the “SEC”) and are listed on the NASDAQ Stock Market (the “NASDAQ”), and is therefore subject to corporate governance requirements applicable to NASDAQ-listed non-US companies (a “NASDAQ-listed” company).

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Pursuant to NASDAQ Marketplace Rule 4350(a), NASDAQ-listed non-U.S. companies that are categorized as “Foreign Private Issuers” may follow home country corporate governance practices in lieu of the requirements of Rule 4350, provided that the foreign private issuer complies with certain mandatory sections of Rule 4350, discloses each requirement of Rule 4350 that it does not follow and describes the home country practice followed in lieu of such requirement. The requirements of Rule 4350 and the Argentine corporate governance practices that the Company follows in lieu thereof are described below:

NASDAQ Standards for U.S. companies

APSA’s Corporate Practices

Rule 4350(b)(1)(A) - Distribution of Annual and Interim Reports.

In lieu of the requirements of Rule 4350(b)(1)(A), we follow Argentine law, which requires that companies make public an annual report in Spanish, including annual audited consolidated financial statements prepared in accordance with generally accepted accounting principles in Argentina, by filing such annual report with the Comisión Nacional de Valores and the Buenos Aires Stock Exchange (Bolsa de Comercio de Buenos Aires), within 70 calendar days of the end of the company’s fiscal year. Interim reports must be filed with the Comisión Nacional de Valores and the Bolsa de Comercio de Buenos Aires within 42 calendar days of the end of each fiscal quarter. The Bolsa de Comercio de Buenos Aires publishes the annual reports and interim reports in the BCBA bulletin and makes the bulletin available for inspection at its offices. In addition, our shareholders can receive copies of annual reports and any interim reports upon such shareholders’ request. English language translations of our annual reports and interim reports are furnished to the Securities and Exchange Commission (the “SEC”). We also post the English language translation of our annual reports and quarterly press releases on its website. Furthermore, under the terms of the Deposit Agreement, dated November 10, 2000, among us, The Bank of New York, as depositary, and owners of ADS issued thereunder, we are required to furnish The Bank of New York with, among other things, English language translations of their annual reports. Annual reports are available for inspection by ADR holders at the offices of The Bank of New York located at, 101 Barclay Street, 22nd Floor, New York, New York. Finally, Argentine law requires that 20 calendar days before the date of a shareholders’ meeting, the board of directors must provide to our shareholders, at our executive office or through electronic means, all information relevant to the shareholders’ meeting, including copies of any documents to be considered by the shareholders (which includes the annual report).

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NASDAQ Standards for U.S. companies	APSA’s Corporate Practices
Rule 4350(c)(1) - Majority of Independent Directors.	In lieu of the requirements of Rule 4350(c)(1), we follow Argentine law which does not require that a majority of the board of directors be comprised of independent directors. Argentine law instead requires that public companies in Argentina such as the Company must have a sufficient number of independent directors to be able to form an audit committee of at least three members, the majority of which must be independent pursuant to the criteria established by the Comisión Nacional de Valores.
Rule 4350(c)(2) - Executive Sessions of the Board of Directors.	In lieu of the requirements of Rule 4350(c)(2),we follow Argentine law which does not require independent directors to hold regularly scheduled meetings at which only such independent directors are present (i.e., executive sessions). Our board of directors as a whole is responsible for monitoring our affairs. In addition, under Argentine law, the Board of Directors may approve the delegation of specific responsibilities to designated directors or non-director managers of the company. Also, it is mandatory for public companies to form a supervisory committee (composed of syndics) which is responsible for monitoring the legality of the company’s actions under Argentine law and the conformity thereof with its by-laws.
Rule 4350(c)(3) - Compensation of Officers.	In lieu of the requirements of Rule 4350(c)(3), we follow Argentine law which does not require companies to form a compensation committee comprised solely of independent directors. For the determination of the compensation of the chief executive officer and all other executive officers no decision of a majority of independent directors or a compensation committee comprised solely of independent directors is required under Argentine law. Under Argentine law, the board of directors is the corporate body responsible for determining the compensation of the chief executive officer and all other executive officers, so long as they are not directors. In addition, under Argentine law, the audit committee shall give its opinion about the reasonableness of management’s proposals on fees and option plans for directors or managers of the Company.
Rule 4350(c)(4) - Nomination of Directors.	In lieu of the requirements of Rule 4350(c)(4), we follow Argentine law which requires that directors be nominated directly by the shareholders at the shareholders’ meeting and that they be selected and recommended by the shareholders themselves. Under Argentine law, it is the responsibility of the ordinary shareholders’ meeting to appoint and remove directors and to set their compensation.

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NASDAQ Standards for U.S. companies	APSA’s Corporate Practices
Rule 4350(d)(1) - Audit Committee Charter.	In lieu of the requirements of Rule 4350(d)(1), we follow Argentine law which requires that audit committees have a charter but does not require that companies certify as to the adoption of the charter nor does it require an annual review and assessment thereof. Argentine law instead requires that companies prepare a proposed plan or course of action with respect to those matters which are the responsibility of the company’s audit committee. Such plan or course of action could, at the discretion of our audit committee, include a review and assessment of the audit committee’s charter.
Rule 4350(d)(2) - Audit Committee Composition.	Argentine law does not require that companies have an audit committee comprised solely of independent directors and it is equally not customary business practice in Argentina to have such a committee. Argentine law instead requires that companies establish an audit committee with at least three members comprised of a majority of independent directors as defined by Argentine law. Nonetheless, although not required by Argentine law, the Company has a three member audit committee comprised of entirely independent directors in accordance with Rule 10(A)-3(b)(1) of the General rules and regulations promulgated under the Securities Exchange Act of 1934, as independence is defined in Rule 10(A)-3(b)(1). Further, Argentine law does not require companies to identify or designate a financial expert. As such, Although all the members of the audit committee have large corporate experience, as of the date of this annual report, the Board of Directors have not named designated a financial expert in accordance with the relevant SEC rules on the audit committee. Although it is noted that all members of the audit committee have had significant corporate experience. In addition, the Company has a supervisory committee (“comisión fiscalizadora”) composed of three ‘syndics’ which are in charge of monitoring the legality, under Argentine law, of the actions of our board of directors and the conformity of such actions with our by-laws.
Rule 4350(f) - Quorum.	In lieu of the requirements of Rule 4350(f), the Company follows Argentine law and our bylaws, which distinguish between ordinary meetings and extraordinary meetings and require, in connection with ordinary meetings, that a quorum consist of a majority of stocks entitled to vote. If no quorum is present at the first meeting, a second meeting may be called, in which the shareholders present, regardless of their number, constitute a quorum. Resolutions may be adopted by an absolute majority of the votes present. Argentine law, and our bylaws, requires in connection with extraordinary meetings, that a quorum consist of 60% of the stock entitled to vote. However, if such quorum is not present at the first meeting, our bylaws provide that a second meeting may be called and may be held with the number of shareholders present. In both ordinary and extraordinary meetings, decisions are adopted by an absolute majority of votes present at the meeting, except for certain fundamental matters (such as mergers and spin-offs (when the Company is not the surviving entity and the surviving entity is not listed on any stock exchange), anticipated liquidation, change in its domicile outside of

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NASDAQ Standards for U.S. companies	APSA’s Corporate Practices
	Argentina, total or partial recapitalization of its statutory capital following a loss, any transformation in our corporate legal form or a substantial change in our corporate purpose, or the issue of bonds) which require an approval by vote of the majority of all the stock entitled to vote (all stock being entitled to only one vote.
Rule 4350(g) - Solicitation of Proxies.	In lieu of the requirements of Rule 4350(g), the Company follows Argentine law which requires that notices of shareholders’ meetings be published, for five consecutive days, in the Official Gazette and in a widely published newspaper in Argentina no earlier than 45 calendar days prior to the meeting and at least 20 calendar days prior to such meeting. In order to attend a meeting and be listed on the meeting registry, shareholders are required to submit evidence of their book-entry share account held at Caja de Valores up to three business days prior to the scheduled meeting date. If entitled to attend the meeting, a shareholder may be represented by proxy (properly executed and delivered with a certified signature) granted to any other person, with the exception of a director, syndic, member of the Comisión fiscalizadora, manager or employee of the issuer, which are prohibited by Argentine law from acting as proxies. In addition, our ADS holders receive, prior to the shareholders’ meeting, a notice listing the matters on the agenda, a copy of the annual report and a voting card.
Rule 4350(h) - Conflicts of Interest	In lieu of the requirements of Rule 4350(h), the Company follows Argentine law which requires that related party transactions be approved by the audit committee when the transaction exceeds one percent (1%) of the corporation’s net worth, measured pursuant to the last audited balance sheet, so long as the relevant transaction exceeds the equivalent of three hundred thousand Argentine Pesos (Ps. 300,000). Directors can contract with the corporation only on an arm’s length basis. If the contract is not in accordance with prevailing market terms, such transaction must be pre-approved by the board of directors (excluding the interested director). In addition, under Argentine law, a shareholder is required to abstain from voting on a business transaction in which its interests may be in conflict with the interests of the company. In the event such shareholder votes on such business transaction and such business transaction would not have been approved without such shareholder’s vote, such shareholder may be liable to the company for damages and the resolution may be declared void.

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C. Material Contracts

We have not entered into any material contracts outside the ordinary course of business other than those contracts described in the Related Party Transactions and Our Indebtedness Sections contained in this annual report.

D. Exchange Controls

Currency Exchange Regulation

All foreign currency exchange transactions must be carried out in the free exchange market, in which the Argentine Central Bank participates by purchasing and selling foreign currency.

Import and Export of Capital

Import of Capital

Currently, there are no laws, executive orders or regulations nor any exchange controls in force in Argentina which limits the import of capital.

Pursuant to the Argentine Foreign Investment Law No. 21,382, and Decree No. 1,853/93, enacted in 1993, the purchase by foreign investors (any natural or legal person domiciled out of Argentina or an Argentine company of “foreign capital”) of capital participation in a company existing in Argentina (according to the Foreign Investment Act) shall constitute a foreign investment.

At present there are no restrictions on foreign investments in industries other than public broadcasting media, and no prior authorization is required to make foreign investments.

Therefore, no prior authorization is required in order to purchase our securities.

See Item 3: “Key Information – Exchange Rates”

Export of Capital, including the availability of cash or cash equivalents

From 1989 to December 3, 2001, there were no exchange controls restricting the peso-U.S. Dollar translation or the remittance of U.S. Dollars abroad. In compliance with the economic measures set forth by the Government by means of Decree No. 1570/01 dated December 3, 2001 and subsequent amendments thereto, aimed at protecting the integrity of the Argentine financial system, money could not be transferred abroad, unless expressly authorized by the Argentine Central Bank.

For purposes of accessing the funds deposited with financial institutions, clients were allowed to make electronic transfers between accounts of the same institution or others and in favor of the same holder or other persons; pay expenses by means of debit cards, checks, automatic debits and credit cards. Additionally, the Decree declared that new foreign currency deposits can only be received as time deposits, and no demand accounts denominated in foreign currency may be opened. Such restrictions were later relaxed and deposits of foreign currency in savings accounts (“cajas de ahorro”) by residents were allowed. Law No. 25,561 declared a public emergency in social, economic, administrative, financial and foreign exchange market matters, delegating to the Argentine executive branch until December 10, 2003, the powers to reorganize the financial, banking and foreign exchange system, reactivate the performance of the economy and improve the employment level and distribution of income, focusing on a program for the development of regional economies, creating the conditions for a sustainable economic growth, consistent with the public debt restructuring, and restructuring outstanding obligations affected by the new foreign exchange system. Such period was extended until December 31, 2006 by Law No. 26,077. Among other provisions, this law put an end to the convertibility system that had been in effect since April 1991, whereby pesos were convertible to U.S. Dollars at a rate of Ps. 1.0 per U.S Dollar.

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As a consequence of the enactment of Decree 260/02, as of February 8, 2002 a single and free exchange market was implemented, through which all foreign currency exchange transactions are made. Exchange transactions are freely entered into by parties, but subject to the regulations and requirements set forth by the Central Bank. The Central Bank issued Communication “A” 3471, as amended, establishing restrictions or special requirements for exchange transactions. Lack of compliance with requirements and conditions shall result in the application of sanctions established by the Criminal Law Exchange Regime.

Such regulation has been modified several times and, therefore, only the most important provisions currently in force are mentioned below:

• Argentine individuals and companies are authorized to buy up to US$ 2,000,000 per month;

• the sale of foreign currency to non-residents, with the exception of international organizations, in an aggregate monthly amount exceeding US$ 5,000 shall also be previously authorized by the Central Bank, except when it is evidenced that the amounts used to purchase foreign currency (i) come from the payment of a resident to the non-resident which orders the transfer; and (ii) the payment is performed in relation to import, services, revenues or other commercial transfers for which the resident should have accessed to the exchange market in accordance to the exchange rules that regulated payments abroad to commercial account;

• foreign currency exchange or arbitrage transactions with financial institutions located abroad must be previously authorized by the Central Bank, except where such financial institutions are located in countries which are members of the Basel Committee and have an international credit rating not lower than “A” granted by international rating agencies registered with the Central Bank, or where such transactions are entered into with branches of Argentine official banks located abroad;

• future operations in regulated markets, options or forwards transactions and any other type of derivatives entered into and cancelled in Argentina and settled in local currency are not subject to any restriction, provided, however, that: (i) such operations do not contemplate any payment or transfer obligation of a resident to a foreign country; (ii) any inflow of foreign currency into the local exchange market for the purposes of such an operation by a non resident who is party to such a transaction is subject to a non-transferable deposit denominated in U.S. Dollars for an amount equal to 30% of the relevant transaction for a period of 365 days in accordance to such further conditions as indicated below (the “Non- Transferable Deposit”); and (iii) transfer of foreign currency abroad by a non resident derived from such transactions involving an aggregate monthly amount exceeding US$ 5,000 shall also be previously authorized by the Central Bank.

• Communication “A” 4285 dated January 17, 2005, relaxed restrictions on foreign currency transactions by abrogating the requirement of prior approval of the Central Bank for the execution of certain future and forward operations and for the access to the foreign exchange market for their cancellation. These operations include: (i) transactions executed by the financial system for the acquisition of certain time deposits having variable retribution; (ii) agreements for the coverage of foreign currencies and interest rates, (iii) agreements executed by exporters or importers for the coverage of commodity prices, as long as they are related to argentine foreign trade transactions; and (iv) the execution of external transactions in the form of Repos provided that they are executed for a term of at least 180 days. With the exception of inflows related to the external transactions in the form of Repos mentioned in (iv), any other inflow of foreign currency devoted to future or forward operations mentioned in (i) to (iii) is exempted from the obligation to constitute the Non- Transferable Deposit.

• financial institutions must obtain prior authorization of the Central Bank in order to purchase any kind of asset, where the payment for such a transaction is made against delivery of foreign currency or any other kind of foreign denominated asset that is part of the General Exchange Position (Posición General de Cambios) (the “GEP”) of these financial institutions;

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• new imports of goods may be fully paid in advance, without consideration of the kind of good, as well as debts for imports with any maturity date;

• access to the free and sole exchange market is allowed for payment of expired capital services originated in financial debts, except for financial entities subject to advance refinancings and rediscounts granted by the Central Bank and restructuring of its foreign debt (Decree No. 739/03 and Communication “A” 3940);

• non-residents may have access to the exchange market for purposes of transferring funds in foreign currency collected in Argentina, originated from the amortization installments from national public bonds issued in foreign currency, to accounts in foreign banks;

• there are no restrictions to make payments abroad for services rendered by non-residents on any basis (freight, insurance, royalties, technical advise, fees, etc.);

• transfers abroad for the payment of indebtedness of private entities (comprising both financial and non-financial institutions) and government owned entities; provided that they fulfill certain regulatory requirements–among others–such as (i) a sworn statement affirming the fulfillment of Communication “A” 3602 informative requirements; (ii) the possession of documents which evidence the genuineness of the operation being cancelled, i.e., the entry into the country of the finance proceed and/or its use to cancel the financial or commercial debt, etc.; (iii) the amounts to be transferred have been adjusted, as the case may be, in accordance to Decree 214/02 as amended; and (iv) the fact that the inflows have remained in the country for the legal minimum term (180 days until May 26, 2005 or 365 days for funds entered into after that date) has been verified;

• effective as of January 8, 2003, Argentine companies may freely transfer corporate profits and dividends corresponding to audited financial statements of local companies without prior Central Bank approval and transfers of funds abroad in order to pay reinsurance premiums will be subject only to the issuance of a statement from the regulatory authority on insurance matters Superintendencia de Seguros de la Nación (“Superintendent of Insurance Board”), with respect to the reason and amount to be transferred;

• there is an obligation to enter the funds received as payment for the export of goods and services into the exchange market and to convert them into local currency within a time limit established by the Ministry of Economy and Production;

• foreign currency obtained from the collection of exports corresponding to bills of lading shall be sold at the reference exchange rate when the foreign currency so obtained was not clear at the exchange market within the applicable legal terms, in accordance with applicable regulation.

• before September 2005, inflows of foreign currency which would be applied to export advances and prefinancing were allowed into the local exchange market avoiding the non-transferable deposit requirement established by Decree No. 616/05, issued on June 10, 2005 by providing a sworn statement stating that foreign funds would be used for a specific purchase transaction entered into with the buyer. Subsequently, the BCRA by means of the Communication “A” 4415 substituted the sworn statement requirement with the exhibition of the shipping contract involved in said transaction. Later, on November 22, 2005 BCRA’s Communication “A”4443 relaxed this requirement exempting exporters from providing such documentary evidence if they proved that the inflow of funds would not exceed more than 25% of the amount they received during the last year for similar transactions.

The Government, through the Central Bank, holds control over capital inflows and outflows, enacting the applicable rules in this regard. Decree No. 616/05, issued on June 10, 2005, established that inflows and outflows of foreign currency into the local exchange market, and indebtedness transactions incurred by local residents that may result in a foreign currency-denominated payment to non-residents, need to be registered

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with the Central Bank. Furthermore, as from May 26, 2005, the following situations will be subject to certain requirements and conditions: (a) inflows of funds derived from foreign borrowing by the private financial and non financial sector, and (b) inflows of foreign currency by non-residents for the purpose of (i) holding a position in local currency, (ii) purchasing financial debt or assets and (iii) investing in government bonds in the secondary market. In these situations, the following requirements must be met: (i) inflows must remain in Argentina for 365 days to be computed as from the day they were negotiated in the local exchange market; (ii) the funds involved in the transactions covered by this decree must be deposited in a local bank account; (iii) a non-transferable deposit denominated in U.S. Dollars for an amount equal to 30% of the relevant transaction has to be made with the resulting proceeds. This deposit will only be reimbursed after the expiration of a 365 term, cannot bear interest (nor yield any other type of profit) and may not be used as collateral in any credit transaction. Such requirements do not apply to: (a) foreign direct investment, (b) primary placement of publicly traded debt or equity securities listed in one or more exchange markets, and (c) foreign trade and export finance debt related transactions.

Subsequently, Resolution No. 365/2005 from the Ministry of Economy and Production established that non-resident capital inflows destined for the primary subscription of Argentine Central Bank notes and income derived from the sale by residents of foreign assets for an amount greater than US$ 2 million per month, will also be subject to the aforementioned requirements.

Moreover, said resolution provided certain exemptions to the requirement of making the non-transferable deposit requirement such as: (i) inflows derived from borrowings extended by multilateral and bilateral financial institutions and official credit agencies, and (ii) inflows derived from financial borrowings extended by foreign creditors, so long as they are devoted to investments in non-financial assets and the borrowed amounts are repaid at least 24 months after they were granted.

In that sense, non-financial assets include:

(i) investments recorded in the category “PP&E” of the financial statements (Notice 42303);

(ii) “intangible assets related to mine cost” and/or “research, prospection and exploration expenses” (Notice 42884);

(iii) “acquisition of rights to use” that had been recorded for accounting purposes in the category “intangible assets” of the company’s financial statements ( Notice 44670); and

(iv) investments in assets that are comparable to intellectual property rights, which are commercialized through the assignment of rights to use and should be recorded for accounting purposes in the category “intangible assets” of the company’s financial statements (Notice 46394).

This exemption automatically expires when the reported use is modified. In that case, the deposit established in item 6 of Communication “A” 4359 must be made within 10 business days of such event.

Communications “A” 4554 and “A” 4711, both dated September 24, 2007, established certain requirements and terms to file the documentation evidencing the correct classification of the transaction under the above mentioned exemption.

By contrast, according to Communication “C” 43075 dated September 26, 2005, inflows of foreign currency caused by a non-resident and devoted to the cancellation of payment obligations under a purchase agreement (including installment payments thereof) concerning a real estate property under construction may be registered as foreign direct investments provided that certain conditions are met.

Finally, Resolution No. 637/2005 from the Ministry of Economy and Production dated November 16, 2005 established that any inflow of foreign currency to the local exchange market devoted to the primary subscription of notes, bonds or participation certificates issued by the trustee of a trust, regardless of the channels in which they are traded (public or private offerings, or listings in self-regulated markets) is subject to the non-transferable deposit requirement established by Decree 616/05 if such requirement would be deemed applicable to the acquisition of the underlying assets of the trust.

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Reporting requirements on Direct Investments

On March 4, 2005 the Argentine Central Bank issued Communication “A” 4305 that regulates the reporting system of direct investments and real estate investments carried out by non-residents in Argentina and by Argentine residents abroad, which had been implemented through Communication “A” 4237 dated November 10, 2004.

Direct investments in Argentina of non-Argentine residents

Non-Argentine residents are compelled to comply with the reporting regime if the value of their investments in Argentina reaches or surpasses the equivalent of US$ 500,000 – measured in terms of the net worth of the company in which they participate or fiscal value of the real estate owned. If the investments do not reach such amount, the compliance with such regime is optional.

According to Communication “A” 4237, companies in which non-Argentine residents participate in and administrators of real estate pertaining to non-Argentine residents are those obliged to comply with the reporting regime.

Direct investments made abroad by Argentine residents

Argentine investors are compelled to comply with the reporting regime if the value of their investments abroad reaches or surpasses the equivalent of US$ 1,000,000 – measured in terms of net worth of the company in which they participate or the fiscal value of the real estate they own.

If the value of those investments abroad does not exceed the equivalent of US$ 5,000,000, the declaration could be carried out annually instead of semiannually. If the investments do not reach the equivalent of US$ 1,000,000, the compliance with such regime is optional.

The first declarations will correspond to the semester ended on December 31, 2004, and will have to be filed within 90 calendar days as of such date.

Conclusion:

While the foreign exchange market system in Argentina has become increasingly flexible under recent regulations, Decree No. 616/05 severely deters short term inflows of foreign currency which are presumed to be of a speculative nature. Such determination on the part of the government is associated also to another short term economic policy goal and combined measures aimed at pegging or reasonably adjusting the U.S. dollar value around Ps. 3.10 per U.S. dollar. We cannot assess whether these policies will be maintained in the longer run and how changes made therein may affect the economy and our business perspectives. Furthermore, we cannot predict how changes in the evolution of the world economy and commodity prices which constitutes an important part of Argentina’s exports may influence exchange rates and control policies. Moreover, failure of the government to comply with financial commitments with the IMF or failure to reach an agreement with said institution may have an impact on the foreign exchange system. No assurance can be made as to the extent to which all such factors may lead to future restrictions that might further tighten foreign exchange controls or otherwise change the current foreign exchange system.

E. Taxation

United States Taxation

The following summary describes the material United States federal income tax consequences of the

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ownership of shares and ADS as of the date hereof. The discussion set forth below is applicable to U.S. Holders (as defined below). Except where noted, this discussion deals only with U.S. Holders that hold the shares or ADS as capital assets. This summary does not represent a detailed description of the United States federal income tax consequences applicable to you if you are subject to special treatment under the United States federal income tax laws, including if you are:

• a bank;

• a dealer in securities or currencies;

• a financial institution;

• a regulated investment company;

• a real estate investment trust;

• an insurance company;

• a tax exempt organization;

• a person holding the shares or ADS as part of a hedging, integrated or conversion transaction, constructive sale or straddle;

• a trader in securities that has elected the mark-to-market method of accounting for your securities;

• a person liable for alternative minimum tax;

• a person who owns 10% or more of the voting stock of our company;

• a partnership or other pass –through entity for United States federal income tax purposes; or

• a person whose “functional currency” is not the U.S. Dollar.

Furthermore, the discussion below is based upon the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be replaced, revoked or modified so as to result in federal income tax consequences different from those discussed below. In addition, this summary is based, in part, upon representations made by the depositary (the “Depositary”) to us and assumes that the deposit agreement governing the ADS, and all other related agreements, will be performed in accordance with their terms. IF YOU ARE CONSIDERING THE PURCHASE, OWNERSHIP OR DISPOSITION OF SHARES OR ADS YOU SHOULD CONSULT YOUR OWN TAX ADVISOR CONCERNING THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO YOU AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.

“U.S. Holder” means a beneficial owner of a share, or ADS that is for United States federal income tax purposes:

• an individual citizen or resident of the United States;

• a corporation created or organized in or under the laws of the United States or any political subdivision of the United States;

• an estate or the income of which is subject to United States federal income taxation regardless of its source; or

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• a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United States persons has authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person.

If a partnership holds shares or ADS, the tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. If you are a partner of a partnership holding shares or ADS, you should consult your tax advisors.

ADS

In general, for United States federal income tax purposes, U.S. Holders of ADS will be treated as the owners of the underlying shares that are represented by the ADS. However, the United States Treasury has expressed concerns that intermediaries in the chain of ownership between the holder of an ADS and the issuer of the security underlying the ADS may be taking actions that are inconsistent with the claiming of foreign tax credits by the holders of ADS. Such actions would also be inconsistent with the claiming of the reduced rate of tax, described below, applicable to dividends received by certain non-corporate holders. Accordingly, the analysis of the creditability of Argentine taxes and the availability of the reduced tax rate for dividends received by certain non-corporate U.S. Holders, each discussed below, could be affected by actions taken by intermediaries in the chain of ownership between the holder of an ADS and our company. Deposits or withdrawals of shares by U.S. Holders for ADS will not be subject to United States federal income tax.

Distributions on Shares or ADS

Subject to the discussion under “Passive Foreign Investment Company Rules” below, the gross amount of distributions on the shares or ADS, (including amounts withheld to reflect Argentine withholding taxes, if any) will be taxable as dividends to the extent paid out of our current and accumulated earnings and profits (as determined under United States federal income tax principles). Such income (including withheld taxes) will be includable in your gross income as ordinary income on the day actually or constructively received by you, in the case of shares, or by the Depositary, in the case of ADS. Such dividends will not be eligible for the dividends-received deduction allowed to corporations under the Code.

With respect to non-corporate United States investors, certain dividends received before January 1, 2011 from a qualified foreign corporation may be subject to reduced rates of taxation. A foreign corporation is treated as a qualified foreign corporation with respect to dividends received from that corporation on shares (or ADS backed by such shares) that are readily tradable on an established securities market in the United States. United States Treasury Department guidance indicates that our ADS (which are listed on the NASDAQ National Market), but not our Shares, are readily tradable on an established securities market in the United States. Thus, we do not believe that dividends that we pay on our shares that are not backed by ADS currently meet the conditions required for these reduced tax rates. There can be no assurance that our ADS will be considered readily tradable on an established securities market in later years. Non-corporate holders that do not meet a minimum holding period requirement during which they are not protected from the risk of loss or that elect to treat the dividend income as “investment income” pursuant to Section 163(d)(4) of the Code will not be eligible for the reduced rates of taxation regardless of our status as a qualified foreign corporation. In addition, the rate reduction will not apply to dividends if the recipient of a dividend is obligated to make related payments with respect to positions in substantially similar or related property. This disallowance applies even if the minimum holding period has been met.

The amount of any dividend paid in Pesos will equal the U.S. Dollar value of the Pesos received calculated by reference to the exchange rate in effect on the date the dividend is actually or constructively received by you in the case of shares, or by the Depositary, in the case of ADS, regardless of whether the Pesos are converted into U.S. Dollars. If the Pesos received are not converted into U.S. Dollars on the day of receipt, you will have a basis in the Pesos equal to their U.S Dollar value on the date of receipt. Any gain or loss you realize on a subsequent conversion or other disposition of the Pesos will be treated as United States source ordinary income or loss.

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Subject to certain significant conditions and limitations, Argentine tax withheld from dividends, if any, may be treated as foreign income tax eligible for credit or deduction against your United States federal income tax liability. For purposes of the foreign tax credit, dividends paid on the shares or ADS will be treated as income from sources outside the United States and will generally constitute passive income. Further, in certain circumstances, if you:

• have held ADS or shares for less than a specified minimum period during which you are not protected from risk of loss, or

• are obligated to make payments related to the dividends,

• you will not be allowed a foreign tax credit for foreign taxes imposed on dividends paid on ADS or shares.

The rules governing the foreign tax credit are complex. Investors are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

To the extent that the amount of any distribution exceeds our current and accumulated earnings and profits for a taxable year, as determined under United States federal income tax principles, the distribution will first be treated as a tax-free return of capital, causing a reduction in the adjusted basis of the ADS or Shares (thereby increasing the amount of gain, or decreasing the amount of loss, to be recognized by you on a subsequent disposition of the ADS or Shares), and the balance in excess of adjusted basis will be taxed as capital gain recognized on a sale or exchange. Consequently, such distributions in excess of our current and accumulated earnings and profits would generally not give rise to foreign source income and you would generally not be able to use the foreign tax credit arising from any Argentine withholding tax imposed on such distributions unless such credit can be applied (subject to applicable limitations) against United States federal income tax due on other foreign source income in the appropriate category for foreign tax credit purposes. However, we do not expect to keep earnings and profits in accordance with United States federal income tax principles. Therefore, you should expect that a distribution will generally be treated as a dividend (as discussed above).

Taxation of Capital Gains

Subject to the discussion under “Passive Foreign Investment Company Rules” below, upon the sale, exchange or other disposition of shares or ADS, you generally will recognize capital gain or loss equal to the difference between the U.S. Dollar value of the amount realized upon the sale, exchange or other disposition and the adjusted tax basis of the shares or ADS, determined in U.S. Dollars. The capital gain or loss will be long-term capital gain or loss if at the time of sale, exchange or other disposition you have held the shares or ADS for more than one year. Capital gains of individuals derived with respect to capital assets held for more than one year are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations. Any gain or loss you recognize will generally be treated as United States source gain or loss. Consequently, you may not be able to use the foreign tax credit arising from any Argentine tax imposed on the disposition of an ADS or Share unless such credit can be applied (subject to applicable limitations) against tax due on other income treated as derived from foreign sources.

Passive Foreign Investment Company Rules

Although it is an inherently uncertain factual issue, we may be a PFIC for the current or future taxable years.

In general, we will be a PFIC for any taxable year in which, either (i) at least 75% of the gross income of our company for the taxable year is passive income or (ii) at least 50% of the value (determined on the basis of a quarterly average) of our assets is attributable to assets that produce or are held for the production of passive income. For this purpose, passive income generally includes dividends, interest, royalties, rents (other than rents and royalties derived in the active conduct of a trade or business and not derived from a related person),

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annuities and gains from assets that produce passive income. If we own at least 25% by value of the stock of another corporation, we will be treated for purposes of the PFIC tests as owning a proportionate share of the assets of the other corporation, and as receiving directly a proportionate share of the other corporation’s income.

The determination of whether we are a PFIC is made annually. If we are a PFIC for any taxable year during which you hold shares or ADS in our company, unless you make the mark-to-market election discussed below, you will be subject to special tax rules discussed below.

If we are a PFIC for any taxable year during which you hold our shares or ADS, you will be subject to special tax rules with respect to any “excess distribution” received and any gain realized from a sale or other disposition, including a pledge, of such shares or ADS. Distributions received in a taxable year that are greater than 125% of the average annual distributions received during the shorter of the three preceding taxable years or your holding period for the equity interests will be treated as excess distributions. Under these special tax rules (i) the excess distribution or gain will be allocated ratably over your holding period for the equity interests, (ii) the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, will be treated as ordinary income, and (iii) the amount allocated to each other year will be subject to tax at the highest tax rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.

In certain circumstances, in lieu of being subject to the excess distribution rules discussed above, you may make an election to include gain on the stock of a PFIC as ordinary income under a mark-to-market method provided that such stock is regularly traded on a qualified exchange. Under current law, the mark-to-market election is only available for stock traded on certain designated United States exchanges and foreign exchanges which meet certain trading, listing, financial disclosure and other requirements to be treated as a qualified exchange under applicable United States Treasury regulations. Consequently, the mark-to-market election may be available to you with respect to the ADS because the ADS will be listed on the Nasdaq, which constitutes a qualified exchange under the regulations, although there can be no assurance that the ADS will be regularly traded. You should note that only the ADS and not the shares are listed on the Nasdaq. The shares are listed on the Buenos Aires Stock Exchange. Consequently, the Buenos Aires Stock Exchange would need to meet the trading, listing, financial disclosure and other requirements of the United States Treasury regulations. The ADS or shares would need to be regularly traded on such exchanges in order for the ADS or shares to be potentially eligible for the mark-to-market election.

If we are a PFIC in any taxable year in which you hold our shares or ADS, but you do not make a mark-to-market election until a subsequent taxable year, you will be subject to special rules in the taxable year of the election. You should consult your own tax advisors regarding the application of the mark-to-market election in your particular situation.

If you make an effective mark-to-market election, you will include in income each year as ordinary income, rather than capital gain, the excess, if any, of the fair market value of your PFIC shares or ADS at the end of the taxable year over your adjusted tax basis in the shares or ADS and will be permitted an ordinary loss in respect of the excess, if any, of the adjusted basis of such shares or ADS over their fair market value at the end of the taxable year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. Your basis in the shares or ADS will be adjusted to reflect any such income or loss amounts. Any gain or loss on the sale of the shares or ADS will be ordinary income or loss, except that such loss will be ordinary loss only to the extent of the previously included net mark-to-market gain.

If you make a mark-to-market election it will be effective for the taxable year for which the election is made and all subsequent taxable years unless the shares or ADS are no longer regularly traded on a qualified securities exchange or the IRS consents to the revocation of the election. Under proposed Treasury regulations, mark-to-market inclusions and deductions will be suspended during taxable years in which are not a PFIC, but would resume if they subsequently become a PFIC. You are urged to consult your own tax advisor about the availability of making such a mark-to-market election.

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Alternatively, a United States Holder of shares or ADS in a PFIC can sometimes avoid the rules described above by electing to treat the company as a “qualified electing fund” under section 1295 of the Code. This option is not available to you because we do not intend to comply with the requirements necessary to permit you to make this election.

A United States Holder who owns shares or ADS during any year that we are a PFIC must file IRS Form 8621.

You should consult your own tax advisors concerning the United States federal income tax consequences of holding the shares or ADS if we are considered a PFIC in any taxable year.

Argentine Personal Assets Taxes

Amounts paid on account of the Argentine Personal Assets Taxes, if any, will not be eligible as a credit against your United States federal income tax liability, but may be deductible subject to applicable limitations in the Code.

Information Reporting and Backup Withholding

In general, information-reporting requirements will apply to distributions on shares or ADS and to the proceeds of sale of a share or ADS paid to you within the United States (and in certain cases, outside the United States), unless you are an exempt recipient (such as a corporation). Backup withholding may apply to such payments if you fail to provide a correct taxpayer identification number or certification of foreign or other exempt status or fail to report in full dividend and interest income.

Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against your United States federal income tax liability provided you furnish the required information to the IRS.

Argentine Taxation

The following discussion is a summary of certain Argentine tax considerations associated with an investment in, ownership or disposition of, the shares or the ADSs by (i) an individual holder that is resident in Argentina, (ii) an individual holder that is neither domiciled nor resident in Argentina, (iii) a legal entity organized under the laws of Argentina and (iv) a legal entity that is not organized under the laws of Argentina, that does not have a permanent establishment in Argentina and is not otherwise doing business in Argentina on a regular basis. The discussion is for general information only and is based on current Argentine tax laws. Moreover, while this summary is considered to be a correct interpretation of existing laws in force as of the date of this 20-F Form, no assurance can be given that the courts or administrative authorities responsible for the administration of such laws will agree with this interpretation or that changes in such laws or interpretations will not occur. PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISOR REGARDING THE PARTICULAR TAX CONSEQUENCES ARISING UNDER ANY TAXING JURISDICTION.

Taxation of Dividends

Dividends, either in cash, shares or kind approved by our shareholders are currently exempt from Argentine withholding or other taxes.

Notwithstanding the foregoing, according to Argentine law, income tax will be applied to the amount of dividends distributed in excess of a company’s net taxable income determined in accordance with general income tax regulations for the fiscal years preceding the date of the distribution of such dividends. The legislation requires that companies withhold 35% of the amount of distributed dividends in excess of the net taxable income of such distribution, as determined in accordance with the income tax law. The withholding would not be applied to the payment of future dividends derived out of retained earnings obtained in the fiscal years ended prior to December 30, 1998. Dividends distributed by an Argentine company are not subject to this tax to the extent that those dividends arise from dividend income or other distributions received by such company from other Argentine companies.

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Taxation of Capital Gains

Due to certain amendments made to the Argentine Income Tax Law, it is not entirely clear whether certain amendments concerning payment of income tax on capital gains arising from the sale, exchange or other disposition of shares are in effect or not. Although Opinion No. 351 of the National Treasury General Attorney Office clarified the legal status of certain matters affecting the tax treatment of capital gains certain issues still remain unclear.

Resident individuals

Under what we believe to be a reasonable interpretation of existing applicable tax laws and regulations: (i) income derived from the sale, exchange or other disposition of shares or ADSs by resident individuals who do not sell or dispose of Argentine shares on a regular basis would not be subject to Argentine income tax, and (ii) although there still exists uncertainty regarding this issue, income derived from the sale, exchange or other disposition of shares or ADSs by resident individuals who sell or disposes of Argentine shares on a regular basis should be exempt from Argentine income tax.

Foreign beneficiaries

Capital gains obtained by non residents or foreign entities from the sale, exchange or other disposition of shares or ADSs are exempt from income tax. Pursuant to a reasonable interpretation of existing applicable laws and regulations, and although the matter is not completely free from doubt, such treatment should also apply to those foreign beneficiaries that qualify as “offshore entities” for Argentine tax law purposes, when the shares are not listed in Argentina or in other jurisdictions. For this purpose, an offshore entity is any foreign legal entity which pursuant to its by-laws or to the applicable regulatory framework: (i) its principal activity is to invest outside the jurisdiction of its incorporation and/or (ii) cannot perform in such jurisdiction certain transactions.

Local entities

Capital gains obtained by Argentine entities (generally entities organized or incorporated under Argentine law, certain traders and intermediaries, local branches of non Argentine entities, sole proprietorships and individuals carrying on certain commercial activities in Argentina) derived from the sale, exchange or other disposition of shares or ADSs are subject to income tax at the rate of 35%.

Losses arising from the sale, exchange or other disposition of shares and ADSs can be applied only to offset such capital gains arising from the sale, exchange or other disposition of these securities.

WE RECOMMEND PROSPECTIVE INVESTORS TO CONSULT THEIR OWN TAX ADVISOR REGARDING THE PARTICULAR TAX CONSEQUENCES CONCERNING THE SALE OR OTHER DISPOSITIONS OF SHARES AND ADSs.

Value Added Tax

The sale, exchange, disposition, or transfer of shares or ADSs is not subject to Value Added Tax.

Personal Assets Tax

Law No. 25,585 issued on April 24, 2002 and published in the Official Gazette on May 15, 2002 (and applicable to personal assets held as of December 31, 2002) introduces amendments to Law No. 23,966 and imposes the personal assets tax on shares and ADSs held by individuals and undivided estates domiciled or located in Argentina or abroad and legal entities not domiciled in Argentina, separately from other assets.

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This amendment imposes the obligation to pay the personal assets tax on the Argentine private issuer of the shares and ADSs, and authorizes it to seek recovery of the amount so paid, without limitation, by way of withholding or by foreclosing on the assets that gave rise to such payment. The tax is levied on the proportional equity value of the shares as reflected in the most recent balance sheet closed as of December 31 of the taxable year, at the rate of 0.5% without any non-taxable minimum being applicable.

Minimum Presumed Income Tax (Impuesto a la Ganancia Mínima Presunta, IGMP)

Companies domiciled in Argentina, partnerships, foundations, sole proprietorships, trusts, certain mutual funds organized in Argentina, and permanent business establishments owned by foreign persons, among other taxpayers, shall apply a 1% rate to the total value of assets held by such persons, above an aggregate nominal amount of Ps. 200,000. Nevertheless, shares and ADSs issued by entities subject to such tax are exempt from paying the IGMP.

Gross Income Tax

The gross income tax is a local tax; therefore, the rules of the relevant provincial jurisdiction should be considered, which may levy this tax on the customary purchase and sale, exchange or other disposition of shares and ADSs, and/or the collection of dividends at an average rate of 3%, unless an exemption is applicable. In the particular case of the City of Buenos Aires, any transaction involving shares and/or the collection of dividends and revaluations is exempt from this tax.

There is no gross income tax withholding system applicable to the payments made to foreign beneficiaries.

Stamp Tax

The stamp tax is a local tax that is generally levied on the instrumentation of onerous acts executed within a certain territorial jurisdiction or outside a certain territorial jurisdiction but with effects in such jurisdiction.

In the City of Buenos Aires, the stamp tax has been repealed for all those acts that do not imply an onerous conveyance of real property or the lease of real property. However, most provincial tax authorities maintain this tax in effect for all acts in general; therefore, the instruments which implement onerous transactions (including issuance, subscription, placement and transfer) involving the shares or ADSs, executed in other jurisdictions, or with effects in those jurisdictions, could be deemed to be subject to this tax.

Tax on Credits and Debits in Bank Accounts

This tax is levied upon debits and credits in bank accounts and upon other transactions which, due to their special nature and characteristics, are similar or could be used in substitution for a checking account, such as payments on behalf of or in the name of third parties, procedures for the collection of securities or documents, drafts and transfers of funds made by any means, when these transactions are performed by local banks.

The tax law and its regulations provide several exemptions to this tax. For example, it does not apply to entities recognised as exempt from income tax, to debits and credits relating to salaries, to retirement and pension emoluments credited directly by banking means and withdrawals made in connection with such credits, to credits in checking accounts originating from bank loans, and to transfers of cheques by endorsement.

The general rate of the tax is 0.6%. An increased rate of 1.2% applies in cases in which there has been a substitution for the use of a checking account.

Pursuant to Argentine Regulatory Decree 380/2001, as amended, 34% of the tax paid on credits levied at the 0.6% rate and 17% of the tax paid on transactions levied at the 12% tax rate can be used, to its exhaustion, as a credit against income tax, tax on minimum notional income and/or the special contribution on cooperatives capital.

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Court and Other Taxes

In the event that it becomes necessary to institute legal actions in relation to the shares or ADS’s in Argentina, a court tax (currently at a rate of 3.0%) will be imposed on the amount of any claim brought before the Argentine courts sitting in the City of Buenos Aires.

The City of Buenos Aires imposes a special contribution to the Lawyers’ Social Security System (“CASSABA Contribution”), in addition to the court tax of 3.0%. The CASSABA Contribution will be equal to 3.0% of the amount of the court tax imposed as a result of the claim.

Argentina imposes neither an estate nor gift tax on a decedent, donor, legatee or donee. No Argentine tax is imposed on the deposit or withdrawal of shares in exchange for ADSs. Other than the taxes discussed above, no other Argentine taxes are applicable to an investment in shares or ADSs. At present, there is no national tax specifically applicable to the transfer of securities.

Tax Treaties

Argentina has entered into tax treaties with several countries. There is currently no tax treaty or convention in effect between Argentina and the United States.

F. Dividends and Paying Agents

This section is not applicable.

G. Statement by Experts

This section is not applicable.

H. Documents on Display

We file annual, quarterly and other information with the SEC. You may read and copy any document that we file at the public reference rooms of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549; 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. You may obtain information on the operation of the public reference rooms by calling the SEC at 1-800-SEC-0330. Our Internet address is http://www.apsacc.com.ar. You may request a copy of these filings at no cost, by writing to: finanzas@altopalermo.com.ar or calling the office at +54(11) 4323-7440.

I. Subsidiary Information

This section is not applicable.

ITEM 11. Quantitative and Qualitative Disclosures About Market Risk

Market risk represents the risk of loss that may impact our consolidated financial position, results of operations or cash flows due to adverse changes in financial and commodity market prices and interest rates. We are exposed to market risk in the areas of interest rates and foreign currency exchange rates. This discussion contains forward-looking statements that are subject to risks and uncertainties. Actual results could vary materially as a result of a number of factors. Uncertainties that are either nonfinancial or nonquantifiable, such as political, economic, tax, other regulatory or credit risks are not included in the following assessment of our market risks.

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Interest Rate Risk

Our exposure to market risk associated with changes in interest rate risk is limited to the exposure related to our current investments and floating rate debt.

We place our cash and current investments in high quality financial institutions in Argentina and the United States. Our policy is to limit exposure with any institution. Our investment portfolio primarily consists of money market, mutual funds and short term deposits. As of June 30, 2007 we had cash and cash equivalents of Ps. 485.5 million. In view of the nature of our total portfolio, an immediate 100 BPs parallel shift change in the interest rate curve would not have a significant impact on the value of our investment portfolio.

We are exposed to changes in interest rates primarily as a result of our borrowing activities, which include short-term, medium-term and long-term debt used to maintain liquidity and fund for our business operations.

Our medium and long term debts are the following:

• Convertible Note

• Series I and Series II notes

• Standard Bank Loan

In August 2002 the Company issued US$ 50 million of Convertible Notes. Under US GAAP, the Company applied APB 14, “Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants”, which requires that no portion of the proceeds be allocated to the conversion feature if the convertible debt securities are convertible into common stock of the issuer at a specified price at the option of the holder and are sold at a price or have a value at issuance not significantly in excess of the face amount. In considering the accounting treatment of the Convertible Notes under US GAAP the Company took account of the guidance provided in EITF 98-5. EITF 98-5 requires that embedded beneficial conversion features present in convertible securities be valued separately at issuance when the non-detachable conversion feature is “in-the-money” at the commitment date. The embedded beneficial conversion feature should be recognized and measured by allocating to additional paid-in capital a portion of the proceeds equal to the intrinsic value of that feature. That amount is calculated at the commitment date as the difference between the conversion price and the fair value of the common stock or other securities into which the security is convertible, multiplied by the number of shares into which the security is convertible (intrinsic value). As a result of the analysis the Company performed, no proceeds were allocated to the embedded conversion feature since it was “out-the-money” at the commitment date (i.e. the intrinsic value at the commitment date was zero).

The terms of the convertible debt instrument were modified to extend the maturity date through July 19, 2014. Argentine GAAP requires that an exchange of debt instruments with substantially different terms be considered a debt extinguishment and that the old debt instrument be derecognized. Argentine GAAP clarifies that from a debtor’s perspective, an exchange of debt instruments between, or a modification of a debt instrument by, a debtor and a creditor shall be deemed to have been accomplished with debt instruments that are substantially different if the present value of the cash flows under the terms of the new debt instrument is at least 10 percent different from the present value of the remaining cash flows under the terms of the original instrument. The new debt instrument should be initially recorded at fair value and that amount should be used to determine the debt extinguishment gain or loss to be recognized. Fair value should be determined by the present value of the future cash flows to be paid under the terms of the new debt instrument discounted at a rate commensurate with the risks of the debt instrument and time value of money. If it is determined that the original and new debt instruments are not substantially different, then a new effective interest rate is to be determined based on the carrying amount of the original debt instrument and the revised cash flows. Based on the analysis performed, the Company concluded that the instruments were not substantially different and accordingly the old instrument was not derecognized. The outstanding balance was reclassified to non-current in these consolidated financial statements.

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Under US GAAP, in November 2006, the EITF reached a final consensus in EITF Issue 06-6 “Debtor’s Accounting for a Modification (or Exchange) of Convertible Debt Instruments”. EITF 06-6 reconsidered the original consensus in Issue 05-7 “Accounting for Modification to Conversion Options Embedded in Debt Instruments and Related Issues” that the change in fair value of an embedded conversion option should be included in the cash flow analysis under EITF Issue 96-19, “Debtor’s Accounting for a Modification or Exchange of Debt Instruments,” in determining whether a debt instrument has been modified or extinguished. This Issue considers the accounting for a modification of debt terms (or exchange in debt instruments) when a change in the fair value of an embedded conversion option has occurred or an embedded conversion option has been added or eliminated from the debt instrument. This Issue also amended the guidance in EITF Issue 96-19.

The consensus stipulates that, in evaluating whether a convertible debt instrument has been modified or extinguished, three aspects of the modification (or exchange of debt instruments) must be considered.

1. Change in cash flows: If the change in cash flows as prescribed by the analysis under Issue 96-19 is greater than 10% of the carrying value of the original debt instrument, the modification (or exchange of debt instruments) should be accounted for as an extinguishment. This test would not include any changes in fair value to the embedded conversion option.

2. Change in fair value of the embedded conversion option: If the change in the fair value of the embedded conversion option is greater than 10% of the carrying value of the original debt instrument immediately before the change (or exchange of debt instruments), the modification (or exchange) should be accounted for as an extinguishment.

3. Addition or removal of an embedded conversion option: The addition or removal of a substantive conversion option would automatically result in extinguishment accounting. Whether an embedded conversion option is substantive would be assessed as of the modification date and would be based on the definition of substantive in EITF Issue 05-1, “Accounting for the Conversion of an Instrument That Becomes Convertible upon the Issuer’s Exercise of a Call Option.”

Any one of the three criteria needs to be met to account for the modification of the debt instrument (or exchange of debt instruments) as an extinguishment. When the result of the three-pronged evaluation above results in a conclusion that a convertible debt instrument has been modified (and not extinguished), the Task Force affirmed as a final consensus that any increase in the fair value of the embedded conversion option should reduce the carrying value of the debt instrument (with a corresponding increase to additional paid-in capital), but any decrease in the fair value of the embedded conversion option is ignored.

Based on the analysis performed, neither of criteria 1, 2 or 3 above are met. Accordingly, the change of the debt instrument has not been accounted for as an extinguishment. Thus, the increase in the fair value of the conversion option reduced the carrying value of the debt instrument with a corresponding increase to additional paid-in-capital. This resulted in an increase in interest expense prospectively. As of June 30, 2007 the fair market value in pesos equivalent of Convertible Note was Ps. 2.118 million. Such fair value was determined based on the market price of the shares assuming full conversion of the notes at year-end. Because of convertion condition is deep in the money Convertible Note fair value is almost not sensitive to interest rate movements.

On May 11, 2007, Alto Palermo issued two new series of notes in an aggregate principal amount of US$170 million. Series I consists of US$120 million of notes due on May 11, 2017, which accrue interest at a fixed rate of 7.875% payable semi-annually on May 11 and November 11 of each year, commencing on November 11, 2007. The Series I notes mature in a single installment on May 11, 2017. As of June 30, 2007 the fair market value in pesos equivalent of Series I was Ps. 375 million (includes accrued interest).

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As a mesure of sensitivity, an upward shift of 100 Bps in general interest level would implie a dicrease of 6% in Series I fair market value. Also, rise of 1% in Pesos / dollars exchange rate increases our interest expenses in Ps. 0,3 million annually.

Series II consists of Ps.154 million (equivalent to US$50 million) of notes which mature in seven, equal and consecutive semi-annual installments commencing on June 11, 2009, and which accrue interest at 11% per annum, payable on June 11 and December 11 of each year commencing on December 11, 2007. As of June 30, 2007 the fair market value of Series II was Ps. 156 million (includes accrued interest).

As a mesure of sensitivity, an upward shift of 100 Bps in general interest level would implie a dicrease of 2% in Series II fair market value.

On November 24, 2006 Standard Bank S.A. granted us a Ps. 40.0 million loan accruing a monthly fixed interest rate of 11.9%. The loan was cancelled in one installment of Ps. 40.0 million plus a fee of 0.4% (Ps. 0.16 million) on November 26, 2007.

Our current debt expenses are not sensitive to changes in the general level of interest rates because they are determinated by fixed interest rates.

For our debt obligations, the following table presents principal cash flows and related weighted average interest rates by expected maturity dates.

	June 30, 2007 Expected Maturity Date (U.S.$ Equivalent in million)
Significant liabilities	FY2008		FY2009		FY2010		FY2011 to FY2016		FY2017		Total		Fair Value(4)
Fixed Rate Debt (US$). Principal Payment (1)							47.23				47.23		684.81
Average interest rate	10	%	10	%	10	%	10	%			10	%
Fixed Rate Debt (US$). Principal Payment (2)									120		120		121.31
Average interest rate	7.875	%	7.875	%	7.875	%	7.875	%	7.875	%	7.875	%
Fixed Rate Debt (Pesos). Principal Payment (2) (3)			7.11		14.23		28.46				49.80		50.56
Average interest rate (3)	11	%	11	%	11	%	11	%
Standard Bank Loan (Pesos). Principal Payments (3)	3.65										3.65		3.65
Average interest rate (3)	11.9	%

(1) It corresponds to Convertible Note.

(2) It corresponds to the series I Note due 2017.

(3) Peso-denominated loans were converted to U.S. Dollar at an exchange rate of Ps. 3.093 per U.S. Dollar.

(4) It includes accrued interest.

As a matter of policy, from time to time, we use derivative instruments only to minimize our financing costs. However, there can be no assurance that such risks would be managed in the future through a variety of strategies, including the use of hedging transactions. We do not use derivative instruments for trading or speculative purposes.

During the year ended June 30, 2007 the Company celebrated seven NDF (non Deliverable Forward),

172

two of them were settled before June 30, 2007 producing a gain of Ps. 55,000 (US$ 17,782¹). As of June 30, 2007 we had a short position in NDF of US$25 million with an average price of 3.086 Ps. per US$ and an average tenor of 37.2 days.

Foreign Exchange Exposure

We transact our business primarily in Pesos. Accordingly, our earnings are subject to exposure from adverse movements in currency exchange rates primarily related to our U.S. Dollar denominated debt.

Historically, volatility has been caused by currency devaluation, among other factors. Most of theses factors have occurred at various times in the last two decades in Argentina.

From April 1, 1991, until the beginning of year 2002, the Convertibility Law No. 23,928 was applicable in Argentina. This law established a fixed exchange rate, under which the Argentine Central Bank was forced to sell U.S. Dollars to any person at a fixed rate of Ps. 1.00 per US$ 1.00. Accordingly, the foreign currency fluctuations were reduced to a minimum level during this period.

The primarily economic change implemented by the Argentine government in January 2002 was the announcement of the devaluation of the Peso. Most of our lease contracts and most of our liabilities were denominated in U.S. Dollars. Decree No. 214/02 and Decree No. 762/02 mandatorily converted into Pesos all monetary obligations in U.S. Dollars entered into between parties under Argentine Law. Consequently, all of our leases and most of our liabilities were pesified at a one-to-one exchange rate and, additionally, those leases and liabilities would be adjusted by the CER index (a daily compounding of the Consumer Price Index).

Both Convertible Notes (due 2014) and serie I Note due 2017 are denominated in US Dollars. Currently all of our revenues are derived from our operations in Argentina and foreign exchange volatility will probably affect our Peso-denominated revenues, making it more burdensome for us to pay our U.S. Dollar-denominated debt.

Foreign currency exchange fluctuations may additionally affect the risk of default on our leases and services and other receivables, as any of our customers that have Peso-denominated revenue streams may experience a relative increase in their U.S. Dollar-denominated liabilities compared to their Peso-denominated revenues. Foreign currency exchange restrictions hereafter imposed by the Argentine government could prevent or restrict our access to U.S. Dollars, affecting our ability to service our U.S. Dollar-denominated liabilities.

Our strategies may prove ineffective to address the effect of foreign currency exchange movement on our financial condition. We have experienced net losses in the past, and we could experience such losses in the future to the extent that foreign exchange rates shift in excess of the risk covered by derivative financial instruments. In entering into foreign currency contracts, we bear the credit risk of counterparties being unable to meet the terms of their contracts; and we may be unable to recover damages from any such defaulting counterparty through legal enforcement actions due to laws affording bankruptcy or protection to insolvent obligors, foreign laws limiting cross-border enforcement actions or otherwise.

Due to the fact that our income stream is basically in pesos our exposure to foreign exchange risk is derived from our liabilities. To see our exposure to such Dollar denominated liabilities please refer to the above table.

¹ Converted to U.S. Dollar at an exchange rate of Ps. 3.093 per U.S. Dollar

173

ITEM 12. Description of Securities Other than Equity Securities

This item is not applicable.

PART II

ITEM 13. Defaults, Dividend Arrearages and Delinquencies

This item is not applicable.

ITEM 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

This item is not applicable.

ITEM 15.

A. Disclosure Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer, Chief Financial Officer and Chief Administrative Officer, as appropriate, to allow timely decisions regarding required disclosure. In connection with the preparation of this Annual Report on Form 20-F, we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer, Chief Financial Officer and Chief Administrative Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2007. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of fiscal year 2007.

B. Management’s Annual Report on Internal Control Over Financial Reporting

The management of Alto Palermo S.A. (APSA) is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a–15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with applicable generally accepted accounting principles.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of June 30, 2007. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control–Integrated Framework. Based on this assessment and the criteria set forth in Internal Control–Integrated Framework, management concluded that, as of the end of fiscal year 2007, our internal control over the financial reporting was effective.

C. Attestation Report of the Registered Public Accounting Firm

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report on internal control over financial reporting was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report on internal control over financial reporting in this annual report.

174

D. Changes in Internal Control Over Financial Reporting

During the period covered by this Annual Report on Form 20 F, the company has implemented a new ERP software. The Company’s internal control over financial reporting has been adopted accordingly, for the change in our accounting system. After carrying out an evaluation under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures, the Company concludes that our disclosure controls and procedures were effective.

ITEM 16.

A. Audit Committee Financial Expert

In our annual ordinary shareholders’ meeting held on October 31, 2003, the audit committee plan was unanimously approved. Pursuant to this plan, the Board of Directors shall appoint the members of the audit committee. The Board of Directors established that the Audit Committee shall be a Committee of the Board of Directors. The Audit Committee will focus on assisting the Board in exercising its duty of care, the enforcement of accounting policies, disclosure requirements, the management of our business risk, the management of our internal control systems, the ethical conduct of the company’s business, maintenance of the integrity of our financial statements, compliance with legal provisions, the independence and capability of our independent auditors and the performance of our internal audit function and of our external auditors.

On November 7, 2007, our board of directors officially appointed Leonardo Fernández, Abraham Perelman and Enrique Antonini, all of them whom are independent members, as members of the audit committee in accordance with Rule 10(A)-3(b)(1) of the General rules and regulations promulgated under the Securities Exchange Act of 1934. We have a fully independent audit committee as per the standard provided in Rule 10(A)-3(b)(1). Although all of them have large corporate experience, as of the date of this annual report, the Board of Directors have not named a financial expert in accordance with the relevant SEC rules. Argentine law does not require companies to identify or designate a financial expert. As such, the Board of Directors have not designated a financial expert on the audit committee. Although it is noted that all members of the audit committee have had significant corporate experience.

B. Code of Ethics

We have adopted a code of ethics that applies to our directors, officers and employees. On date July 25 2005, our Code of Ethics was amended by our Board of Directors. The reformed Code was informed by means of a 6K Form filing on August 1, 2005. Our code of ethics is available on our web site at www.apsacc.com.

An Ethics Committee comprised by three members of the board of directors how will be responsible for the solution of issues related to the Code of Ethics for Directors and officers and shall determine the appropriate disciplinary action for any violation of such Code of Ethics.

If we make any substantive amendment to the code of ethics, we will disclose the nature of such amendment on our website, www.apsacc.com or in our next Form 20-F. If we grant any waivers, including any implicit waiver, from a provision of the code of ethics, we will disclose the nature of such waiver in a Form 6-K or in our next Form 20-F.

C. Principal Accountant Fees and Services

Audit Fees

During fiscal years ended June 30, 2007 and 2006, we were billed for a total amount of Ps. 0.9 million and Ps. 0.5 million, respectively, for professional services rendered by our principal accountants for the audit of our annual financial statements and other services normally provided in connection with regulatory filings or engagements, such as the review of our interim financial statements.

175

Audit-Related Fees

During fiscal years ended June 30, 2007 and 2006, we were billed for a total amount of Ps. 0.4 million and Ps. 0.04 million, respectively, for professional services rendered by our principal accountants related to the performance of the audit or review of our financial statements, not included in the Audit Fees category, such as internal control reviews.

Tax Fees

During both fiscal years ended June 30, 2007 and 2006, we were billed for a total amount of Ps. 0.03 million each year for professional services rendered by our principal accountants for tax compliance, tax advice and tax planning.

All Other Fees

During fiscal year ended June 30, 2007, we were billed for a total amount of Ps. 4,500 for other professional services rendered by our principal accountants, mainly including fees related to previsional advice. During fiscal year ended June 30, 2006, we were not billed for such services.

Audit Committee Pre-Approval Policies and Procedures

Our audit committee approves, in advance, the engagement of auditors and their fees for audit and non-audit services pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

Our Audit Committee pre-approves all services, fees and services provided by the external auditors to ensure auditors’ independence. One of the main tasks of the Audit Committee is to give it opinion in relation to the appointment of the external auditors, proposed by the Board of Directors to the General Shareholder’s Meeting. In order to accomplish such task, the Audit Committee shall:

Require any additional and complementary documentation related to this analysis.

• Verify the independence of the external auditors;

• Analyze different kinds of services that the external auditor would provide to the company. This description must also include an estimate of the fees payable for such services, specifically in order to maintain the principle of independence;

• Inform the fees billed by the external auditor, separating the services related to the Audit Committee and other special services that could be not included as fees related to the Audit Committee;

• Take notice of any strategy proposed by of the external auditors and review it in accordance with the reality other business and the risks involved;

• Analyze and supervise the working plan of the external auditors considering the business’ reality and the estimated risks;

• Propose adjustments (if necessary) to such working plan;

• Hold meetings with the external auditors in order to: (a) analyze the difficulties, results and conclusions of the proposed working plan; (b) analyze eventual possible conflicts of interests, related party transactions, compliance with the legal framework and information transparency;

176

• Evaluate the performance of external auditors and their opinion regarding the Financial Statements.

D. Exemption from the Listing Standards for Audit Committees

This section is not applicable.

E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers

There were no repurchases of shares or other units of any class of our equity securities that are registered pursuant to Section 12 of the Exchange Act during fiscal years 2005, 2006 and 2007.

PART III

ITEM 17. Financial Statements

Our Financial Statements have been prepared in accordance with Item 18 hereof.

ITEM 18. Financial Statements

Reference is made to pages F-1 through F-74.

ITEM 19. Exhibits

INDEX OF EXHIBITS

Exhibit No.	Description of Exhibit
1.1*	Estatutos of the registrant, which serve as the registrant’s articles of incorporation and bylaws, and an English translation thereof.
1.2	English translation of the amendment to the bylaws.
2.1*	Form of Deposit Agreement among the Company, The Bank of New York, as Depositary, and the holders from time to time of American Depositary Receipts issued there under.
2.2*	Shareholders Agreement, dated November 18, 1997, among IRSA International Limited, Parque Arauco S.A. and Sociedad Anónima Mercado de Abasto Proveedor (SAMAP).
2.3*	Put Option Agreement dated November 17, 1997, among IRSA Inversiones y Representaciones Sociedad Anónima and GSEM/AP
2.4*	Offering Circular, dated March 24, 2000, regarding the issuance of Ps. 85,000,000 of the Company’s 14.875% Notes due 2005.
2.5	Indenture dated May 11, 2007, between the Company as Issuer, The Bank of New York as trustee, Co-Registrar, Principal Paying Agent and Transfer Agent, and Banco

177

	Santander Río S.A. as Registrar, Paying Agent, Transfer Agent and Representative of the Trustee in Argentina for the US$ 200,000,000 Global Note Program for Notes due no less than 30 days from date of original issue.
4.1**	Agreement for the exchange of Corporate Service between the Company, IRSA and Cresud dated June 30, 2004.
4.2	English translation of the Amendment to the Agreement for the exchange of Corporate Service between the Company, IRSA and Cresud dated August 23, 2007.
11.1***	Code of Ethics of the Company.
12.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act 2002
12.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act 2002
13.1	Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
13.2	Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* Incorporated herein by reference to the same-numbered exhibit to the registrant’s registration statement on Form 20-F (File No. 000-30982)

** Incorporated herein by reference to the registrant’s registration statement on Form 6-K (SEC File No. 000-30982).

*** Incorporated herein by reference to the registrant’s registration statement on Form 6-K reported on August 1, 2005.

178

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

ALTO PALERMO S.A. (APSA)

/s/ Alejandro G. Elsztain

Alejandro G. Elsztain

Chief Executive Officer

Date: December 27, 2007

179

Alto Palermo S.A. (APSA)

Index to Consolidated Financial Statements

	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of June 30, 2007 and 2006	F-3
Consolidated Statements of Income for the years ended June 30, 2007, 2006 and 2005	F-4
Consolidated Statements of Changes in Shareholders’ Equity for the years ended June 30, 2007, 2006 and 2005	F-5
Consolidated Statements of Cash Flows for the years ended June 30, 2007, 2006 and 2005	F-6
Notes to the Consolidated Financial Statements	F-8

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of

Alto Palermo S.A. (APSA)

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, of changes in shareholders’ equity and of cash flows present fairly, in all material respects, the financial position of Alto Palermo S.A. (APSA) and its subsidiaries at June 30, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 2007 in conformity with accounting principles generally accepted in Argentina. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

Accounting principles generally accepted in Argentina vary in certain significant respects from accounting principles generally accepted in the United States of America and as allowed by Item 18 to Form 20-F. Information relating to the nature and effect of such differences is presented in Note 19 to the consolidated financial statements.

PRICE WATERHOUSE & Co. S.R.L.
By	(Partner)
Andrés Suarez

Buenos Aires, Argentina

August 31, 2007, except for Notes 18 and 19,

as to which the date is December 17, 2007

F-2

Alto Palermo S.A. (APSA)

Consolidated Balance Sheets

as of June 30, 2007 and 2006

(In Argentine Pesos, except as otherwise indicated)

	2007			2006
ASSETS
Current Assets
Cash and banks (Notes 4.a and 20.f)	Ps.	31,829,851		Ps.	38,222,036
Other investments, net (Notes 4.b and 20.f)		485,408,600			32,250,484
Accounts receivable, net (Note 4.d and 20.f)		151,098,736			104,312,709
Other receivables and prepaid expenses, net (Notes 4.e and 20.f)		52,215,741			30,929,095
Inventory, net (Notes 4.f and 20.e)		7,292,187			7,989,246
Total current assets		727,845,115			213,703,570
Non-Current Assets
Accounts receivable, net (Note 4.d and 20.f)		41,967,948			32,539,707
Other receivables and prepaid expenses, net (Note 4.e and 20.f)		32,130,923			13,254,535
Fixed assets, net (Note 20.a)		1,168,027,197			912,795,140
Investments (Note 4.c)		—			129,474
Other investments, net (Note 4.b and 20.f)		125,504,382			167,842,865
Intangible assets, net (Note 20.b)		1,713,927			3,222,276
Subtotal		1,369,344,377			1,129,783,997
(Negative goodwill) / Goodwill (Note 20.c)		(3,478,942	)		11,557,921
Total non-current assets		1,365,865,435			1,141,341,918
Total Assets	Ps.	2,093,710,550		Ps.	1,355,045,488
LIABILITIES
Current Liabilities
Trade accounts payable (Notes 4.g and 20.f)	Ps.	179,489,405		Ps.	101,949,564
Short-term debt (Notes 4.h and 20.f)		77,210,054			90,816,638
Salaries and social security payable (Note 4.i)		19,598,757			10,885,364
Taxes payable (Note 4.j)		44,714,889			23,761,968
Customer advances (Notes 4.k and 20.f)		58,548,037			48,052,765
Related parties (Notes 6 and 20.f)		6,657,550			6,383,668
Dividends payable		926,400			—
Other liabilities (Note 4.l and 20.f)		15,463,188			11,200,163
Total debts		402,608,280			293,050,130
Provisions (Notes 4.m and 20.d)		733,400			506,714
Total current liabilities		403,341,680			293,556,844
Non-Current Liabilities
Trade accounts payable (Notes 4.g and 20.f)		20,804			1,010,150
Long-term debt (Notes 4.h and 20.f)		678,751,885			145,853,844
Taxes payable (Note 4.j)		27,660,854			13,707,025
Customer advances (Note 4.k)		65,725,449			41,535,275
Related parties (Notes 6 and 20.f)		—			925,800
Other liabilities (Note 4.l and 20.f)		10,433,503			10,959,031
Total debts		782,592,495			213,991,125
Provisions (Notes 4.m and 20.d)		12,441,286			10,667,309
Total non-current liabilities		795,033,781			224,658,434
Total Liabilities		1,198,375,461			518,215,278
Minority interest		71,427,862			29,989,705
SHAREHOLDERS’ EQUITY		823,907,227			806,840,505
Total Liabilities and Shareholders’ Equity	Ps.	2,093,710,550		Ps.	1,355,045,488

The accompanying notes are an integral part of these consolidated financial statements.

F-3

Alto Palermo S.A. (APSA)

Consolidated Statements of Income for the years ended June 30, 2007, 2006 and 2005

(In Argentine Pesos, except as otherwise indicated)

	2007			2006			2005
Revenues	Ps.	483,231,154		Ps.	361,355,913		Ps.	230,157,321
Costs (Note 20.e)		(168,306,568	)		(139,065,376	)		(92,510,366	)
Gross profit		314,924,586			222,290,537			137,646,955
Selling expenses (Note 20.g).		(84,311,995	)		(46,905,328	)		(24,774,356	)
Administrative expenses (Note 20.g)		(79,872,872	)		(52,773,070	)		(31,875,300	)
Net income from retained interest in securitized receivables (Note 11)		3,253,789			2,625,001			423,508
Gain from recognition of inventories at net realizable value		545,400			3,497,632			—
Operating income		154,538,908			128,734,772			81,420,807
Loss on equity investees		(678,569	)		(678,881	)		(706,619	)
Amortization of goodwill (Note 20.c)		(4,366,356	)		(4,739,675	)		(4,826,798	)
Financial results, net (Note 7)		(19,466,411	)		(15,633,866	)		2,411,200
Other expenses, net (Note 8)		(3,347,466	)		(9,761,768	)		(7,381,960	)
Income before taxes and minority interest		126,680,106			97,920,582			70,916,630
Income tax expense (Note 14)		(56,252,932	)		(48,457,137	)		(33,615,874	)
Minority interest		(6,370,610	)		(4,784,413	)		(4,045,356	)
Net income	Ps.	64,056,564		Ps.	44,679,032		Ps.	33,255,400
Earnings per share (Note 13):
Basic net income per common share	Ps.	0.08		Ps.	0.06		Ps.	0.04
Diluted net income per common share	Ps.	0.03		Ps.	0.03		Ps.	0.02

The accompanying notes are an integral part of these consolidated financial statements.

F-4

Alto Palermo S.A. (APSA)

Consolidated Statements of Changes in Shareholders’ Equity

for the years ended June 30, 2007, 2006 and 2005

(In Argentine Pesos, except as otherwise indicated)

	Shareholders’ contributions
	Common stock (Note 5.a.)		Inflation adjustment of common stock (Note 5.b.)		Additional paid-in-capital		Total		Appraisal revaluation (Note 3.f.)		Reserve for new developments (Note 5.d)		Legal reserve (Note 5.c.)		Accumulated retained earnings			Shareholders’ equity
Balances as of June 30, 2004	Ps.	72,768,225	Ps.	84,620,909	Ps.	522,805,043	Ps.	680,194,177	Ps.	3,952,571	Ps.	—	Ps	8,050,591	Ps.	78,176,359		Ps.	770,373,698
Conversion of debt into common stock		5,274,138		—		—		5,274,138		—		—		—		—			5,274,138
Increase in legal reserve		—		—		—		—		—		—		941,877		(941,877	)		—
Cash dividends		—		—		—		—		—		—		—		(17,895,663	)		(17,895,663	)
Net income for the year		—		—		—		—		—		—		—		33,255,400			33,255,400
Balances as of June 30, 2005	Ps.	78,042,363	Ps.	84,620,909	Ps.	522,805,043	Ps.	685,468,315	Ps.	3,952,571	Ps.	—	Ps.	8,992,468	Ps.	92,594,219		Ps.	791,007,573
Conversion of debt into common stock		153,900		—		—		153,900		—		—		—		—			153,900
Increase in legal reserve		—		—		—		—		—		—		1,662,770		(1,662,770	)		—
Cash dividends		—		—		—		—		—		—		—		(29,000,000	)		(29,000,000	)
Net income for the year		—		—		—		—		—		—		—		44,679,032			44,679,032
Balances as of June 30, 2006	Ps.	78,196,263	Ps.	84,620,909	Ps.	522,805,043	Ps.	685,622,215	Ps.	3,952,571	Ps.	—	Ps.	10,655,238	Ps.	106,610,481		Ps.	806,840,505
Conversion of debt into common stock		10,158		—		—		10,158		—		—		—		—			10,158
Increase in legal reserve		—		—		—		—		—		—		2,233,952		(2,233,952	)		—
Cash dividends		—		—		—		—		—		—		—		(47,000,000	)		(47,000,000	)
Transfer of retained earnings to reserve for new developments (Note 5.d)		—		—		—		—		—		57,376,529		—		(57,376,529	)		—
Net income for the year		—		—		—		—		—		—		—		64,056,564			64,056,564
Balances as of June 30, 2007	Ps.	78,206,421	Ps.	84,620,909	Ps.	522,805,043	Ps.	685,632,373	Ps.	3,952,571	Ps.	57,376,529	Ps.	12,889,190	Ps.	64,056,564		Ps.	823,907,227

The accompanying notes are an integral part of these consolidated financial statements.

F-5

Alto Palermo S.A. (APSA)

Consolidated Statements of Cash Flows

for the years ended June 30, 2007, 2006 and 2005

(In Argentine Pesos, except as otherwise indicated)

	2007			2006			2005
Cash flows from operating activities:
Net income for the year	Ps.	64,056,564		Ps.	44,679,032		Ps.	33,255,400
Adjustments to reconcile net income to cash flows from operating activities:
Financial results		(4,216,937	)		11,186,017			(4,273,908	)
Depreciation and amortization		74,607,645			68,573,879			63,433,541
Impairment losses		—			395,599			—
Reversal of impairment losses		(2,273,181	)		(9,894,355	)		(13,093,117	)
Loss from sale of fixed assets		—			70,512			—
Holding gain of non current assets		1,532,512			—			—
Provision for contingencies		3,340,844			1,201,459			2,022,504
Allowance for doubtful accounts		24,006,543			10,897,356			2,883,259
Loss on fire damages (net of insurance recoveries)		(1,773,131	)		5,787,577			—
Unreimbursed expenses		298,491			1,743,141			—
Gain on repurchase of debt		—			—			(1,640,411	)
Loss on equity investees		678,569			678,881			706,619
Other provisions		13,956,000			10,302,706			8,972,414
Easement income		—			(2,427,718	)		—
Gain from recognition of inventories at net realizable value		(545,400	)		(3,497,632	)		—
Net loss in credit card trust		9,597,117			882,782			1,047,546
Minority interest		6,370,610			4,784,413			4,045,356
Income tax		56,252,932			48,457,137			33,615,874
Changes in certain assets and liabilities, net of non-cash transactions and the effects of acquisitions:
Increase in accounts receivable		(69,770,120	)		(78,447,914	)		(46,410,340	)
Increase in other receivables and prepaid expenses		(49,377,747	)		(5,964,490	)		(11,972,767	)
Increase in intangible assets		—			(50,000	)		(2,023,118	)
Decrease (increase) in inventory		(188,856	)		18,066,785			(111,108	)
Increase in trade accounts payable		73,606,530			51,054,057			15,265,076
Increase in customer advances		17,268,324			14,017,132			25,367,124
Decrease in taxes payable		(40,165,780	)		(16,387,507	)		(6,693,227	)
Increase in salaries and social security payable		8,430,139			2,441,425			2,497,217
(Decrease) increase in provision for contingencies		(180,526	)		(2,666,057	)		347,348
Decrease in other liabilities		(10,252,788	)		(10,120,650	)		(7,089,728	)
Increase in due to related parties		(6,555	)		2,611,646			2,100,558
Increase (decrease) in accrued interest		4,459,719			2,290,873			(7,151,518	)
Net cash provided by operating activities		179,711,518			170,666,086			95,100,594
Cash flows from investing activities:
Acquisition of fixed assets		(95,756,516	)		(30,261,398	)		(50,607,966	)
Guarantee deposit		9,111,000			(8,610,000	)		—
Share’s purchase advances		(1,108,239	)		—
Insurance recoveries from fire damage in Alto Avellaneda		592,610			—			—
Acquisition of minority interest		—			(163,952	)		—
Acquisition of undeveloped parcels of land		(577,908	)		(61,312,261	)		(680,941	)
Loans granted to third parties		—			(375,000	)		—
Net proceeds from sales of fixed assets		—			484,800			—
Payment for acquisition of Empalme / PAMSA transaction, net of cash acquired		(44,429,476	)		—			(4,163,271	)
Increase in investments		(52,014,079	)		(23,785,702	)		(6,024,728	)
Net cash used in investing activities		(184,182,608	)		(124,023,513	)		(61,476,906	)
Cash flows from financing activities:
Proceeds from short-term and long-term debt		176,707,659			38,426,054			83,667,000
Payments of short-term bank loans		(152,142,359	)		—			—
Cash proceeds from the issuance of Notes, net of expenses		519,471,041			—			—
Payment of short-term and long-term debt		(37,105,350	)		(41,954,440	)		(126,368,358	)
Payment of loans granted by related parties		(918,300	)		(765,000	)		(6,925,340	)
Proceeds from settlement of swap agreement		—			—			15,840,364
Dividends paid by subsidiaries to minority shareholders		(584,492	)		(39,000	)		(523,678	)
Payment to ERSA’s minority shareholders for reduction of common stock		—			(1,470,178	)		—
Payment of seller financing of Empalme		(10,131,054	)		—			—
Payment of seller financing of Shopping Neuquen S.A.		(9,250,600	)		—			—
Payment of seller financing of Mendoza Plaza Shopping S.A.		(5,483,731	)		(5,149,834	)		—
Payment of cash dividends		(47,000,000	)		(29,000,000	)		(17,895,663	)
Net cash provided by (used in) financing activities		433,562,814			(39,952,398	)		(52,205,675	)
Increase (decrease) in cash and cash equivalents		429,091,724			6,690,175			(18,581,987	)
Cash and cash equivalents as of the beginning of the year		56,404,655			49,714,480			68,296,467
Cash and cash equivalents as of the end of the year	Ps.	485,496,379		Ps.	56,404,655		Ps.	49,714,480

The accompanying notes are an integral part of these consolidated financial statements.

F-6

Alto Palermo S.A. (APSA)

Consolidated Statements of Cash Flows

for the years ended June 30, 2007, 2006 and 2005 (continued)

(In Argentine Pesos, except as otherwise indicated)

	2007			2006		2005
Supplemental cash flow information
Cash paid during the year for:
Interest	Ps.	33,406,785		Ps.	24,680,120	Ps.	30,790,090
Income tax		11,798,439			11,094,593		1,417,966
Non-cash investing and financing activities:
Liquidation of interest in credit card receivables		8,873,125			10,364,005		3,348,278
Increase in inventory through a decrease in other investments		—			3,827,433		—
Retained interest in credit card receivables		—			3,555,119		13,976,125
Increase in Trust debt securities through a decrease in credit card receivable		—			1,524,325		222,860
Increase in fixed assets through an increase in other receivables and prepaid expenses		—			348,521		—
Conversion of Convertible Notes into common shares		10,158			153,900		5,274,138
Increase in other receivables through a decrease in fixed assets		—			71,092		—
Increase in other receivables and prepaid expenses through a decrease in intangible assets		—			11,800		—
Increase in fixed assets through a decrease in other investments		59,912,260			8,097		—
Increase in other investments through a decrease in fixed assets		—			—		3,882,712
Increase in fixed assets through an increase in trade accounts payable		—			—		925,610
Increase in intangible assets through a decrease in fixed assets		—			—		1,555,070
Increase in other investments through a decrease in intangible assets		—			—		18,332
Increase in financial bank loans trough a decrease in provisions		2,614,228			—		—
Increase in issuance expenses of Notes through a decrease in accounts payable		1,691,034			—		—
Increase in fixed assets through a decrease in other receivables and prepaid expenses		—			—		103,318
Increase in fixed assets through a decrease in equity investments		—			—		596,076
	2007			2006		2005
Acquisition of Empalme / PAMSA transaction (Note 2.h.):
Cash and cash equivalents acquired		29,416,401			—		1,238,417
Fair value of non-cash assets acquired		165,461,384			—		85,674,963
Fair value of other assets acquired		—			—		11,902,483
Fair value of liabilities assumed		(46,445,797	)		—		(67,516,352	)
Net assets acquired	Ps.	148,431,988		Ps.	—	Ps.	31,299,511
Minority interest		(36,029,344	)		—		(16,310,400	)
Purchase price	Ps.	112,402,644		Ps.	—	Ps.	14,989,111
Negative goodwill		(10,035,616	)		—		—
Seller financing		(28,521,151	)		—		(9,587,423	)
Purchase price paid		73,845,877			—		5,401,688
Cash and cash equivalents acquired		(29,416,401	)		—		(1,238,417	)
Net cash paid for the acquisition	Ps.	44,429,476		Ps.	—	Ps.	4,163,271

The accompanying notes are an integral part of these consolidated financial statements.

F-7

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements

(In Argentine Pesos, except as otherwise indicated)

1. Organization and description of business

Alto Palermo S.A. (APSA) (formerly Sociedad Anónima Mercado de Abasto Proveedor (“SAMAP”)), an Argentine real estate holding company incorporated under the laws of Argentina, and subsidiaries (collectively, “APSA” or the “Company”) are primarily involved in the acquisition, development and operation of shopping center properties in Argentina. APSA was formed in 1889 and, until 1984, was the operator of the principal fresh product market in the city of Buenos Aires, Argentina. The Company’s principal asset during this period was the historic Mercado de Abasto building which served as the location of the market from 1889 to 1984, when the Company largely ceased operations. In July 1994, IRSA Inversiones y Representaciones Sociedad Anónima (“IRSA”) acquired a controlling interest in the Company and, subsequently, the Company resumed its real estate operations. In December 1994, IRSA sold part of its holdings in the Company to Parque Arauco S.A. (“Parque Arauco”). As of June 30, 2007, the Company’s direct and indirect principal shareholders are IRSA (62.5%) and Parque Arauco (29.6%). The Company’s shares are listed and traded on the Buenos Aires Stock Exchange. Effective November 2000, the Company’s shares are listed and traded on the NASDAQ under the ticker symbol “APSA”.

Since recommencing operations, the Company has continued to grow through a series of acquisitions and developments. As of June 30, 2007, the Company owns a majority interest in, and operates, a portfolio of ten shopping centers in Argentina, of which five are located in the City of Buenos Aires (Abasto Shopping, Paseo Alcorta, Alto Palermo Shopping, Patio Bullrich and Buenos Aires Design), one is located in Greater Buenos Aires (Alto Avellaneda) and the other four are located in the cities of Rosario (Alto Rosario), Mendoza (Mendoza Plaza Shopping), Salta (Alto Noa) and Córdoba (Córdoba Shopping Villa Cabrera). (See Note 2.h for details). The Company also constructs residential apartment buildings for sale.

Through Tarshop S.A. (“Tarshop”), a majority-owned subsidiary of the Company, the Company originates credit card accounts, which makes it more attractive for customers to purchase goods and services from the Company’s shopping centers retail, services businesses, hypermarkets and street stores. Tarshop is a limited purpose credit card company and is not affiliated with any bank. As of June 30, 2007, “Tarshop card”, the credit card, accounted for approximately 52% of the total accounts receivable of the Company. Tarshop has ongoing securitization programs through which it transfers a portion of the Company’s credit card customer receivable balances to master trusts that issue certificates to public and private investors. See Note 11 for details.

Effective March 1, 2007, the Company discontinued selling products through its website “altocity.com”.

2. Preparation of financial statements

a. Basis of presentation

The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles used in Argentina, as set forth by the Federación Argentina de Consejos Profesionales de Ciencias Económicas (“FACPCE”) and as implemented, adapted, amended, revised and/or supplemented by the Consejo Profesional de Ciencias Económicas de la Ciudad Autónoma de Buenos Aires (“CPCECABA”) (collectively Argentine GAAP). In addition, the Company must comply with the regulations of the Comisión Nacional de Valores (“CNV”), the National Securities Commission in Argentina, which differ in certain significant respects from generally accepted accounting principles in the United States of America (“US GAAP”). Such differences involve methods of measuring the amounts shown in the consolidated financial statements, as well as additional disclosures required by US GAAP and Regulation S-X of the Securities and Exchange Commission (“SEC”). A description of the significant differences between Argentine GAAP and US GAAP as they relate to the Company are set forth in Note 19 to these consolidated financial statements.

As discussed in Note 2.d., in order to comply with regulations of the CNV, the Company discontinued inflation accounting as from February 28, 2003. The application of such CNV regulations represented a departure from Argentine GAAP. However, such departure did not have a material effect on the accompanying consolidated financial statements.

In addition, in accordance with the CNV regulations, deferred income taxes have been accounted for on an undiscounted basis. The CNV resolution represented a departure from Argentine GAAP for the years ended June 30, 2006 and 2005. Such departure did not have a significant impact on these consolidated financial statements. However, as further discussed in Note 2.e. below, the CPCECABA issued revised accounting standards. One of these standards requires companies to account for deferred income taxes on an undiscounted basis, thus aligning the accounting to that of the CNV. Since the CNV adopted the CPCECABA standards effective for fiscal years beginning January 1, 2006, there is no longer a difference on this subject between Argentine GAAP and the CNV regulations for the year ended June 30, 2007.

F-8

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

2. Preparation of financial statements (continued)

b. Basis of consolidation

The consolidated financial statements include the accounts of APSA and its subsidiaries over which APSA has effective control. Investments in companies in which the Company exercises significant influence, but not control, are accounted for under the equity method. Investments in jointly controlled operations in which the Company exercises joint control are accounted for under the proportionate consolidation method. All significant intercompany balances and transactions have been eliminated in consolidation.

In accordance with Argentine GAAP, the presentation of the parent company’s individual financial statements is mandatory. Consolidated financial statements are to be included as supplementary information to the individual financial statements. For the purpose of these financial statements, individual financial statements have been omitted since they are not required for SEC reporting purposes.

A description of the subsidiaries with their respective percentage of capital stock owned is presented as follows:

Subsidiaries	Percentage of capital stock owned as of June 30, (a)
	2007		2006
Emprendimiento Recoleta S.A. (ERSA)	54	%	54	%
Tarshop S.A. (Tarshop).	80	%	80	%
Shopping Neuquén S.A. .	95	%	95	%
Inversora del Puerto S.A.	100	%	100	%
Shopping Alto Palermo S.A. (SAPSA)	100	%	100	%
Fibesa S.A. (Fibesa)	100	%	100	%
Mendoza Plaza Shopping S.A. .	85	%	85	%
Empalme S.A.I.C.F.A. y G. (Empalme) (i)	100	%	—
Panamerican Mall S.A. (PAMSA) (ii)	80	%	—
E-commerce Latina S.A. (iii) .	100	%	50	%

(a) Percentage of equity interest owned has been rounded.

(i) Acquired on December 27, 2006. See Note 2.h for details. As of June 30, 2007 the amount of Ps. 32.6 million is recorded for pledged shares of Empalme.

(ii) Formed in December 2006. See Note 2.h for details.

(iii) The Company had a 50% ownership interest in E-commerce Latina S.A., through which the Company offered its products via internet on the altocity.com website. Effective March 1, 2007, the website was deactivated. However, E-commerce Latina S.A. started new business activities. On January, 2007, the Company acquired the remaining 50% in E-commerce Latina S.A. See Note 2.h for details. The Company gained control of E-commerce Latina S.A. through this acquisition and accordingly the results of operations of E-commerce Latina S.A. were fully consolidated as from the date.

c. Proportionate consolidation

The Company exercises joint control over Metroshop. As required by Technical Resolution No. 21 “Equity Method of Accounting, Consolidation of Financial Statements and Related Party Transactions” (“RT No. 21”), under Argentine GAAP, the Company accounted for this investment under the proportionate consolidation method. Accordingly, these financial statements reflect the Company’s pro rata equity interest in this investment on a line-by-line basis.

F-9

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

2. Preparation of financial statements (continued)

d. Presentation of financial statements in constant Argentine pesos

On August 22, 1995, the Argentine government issued Decree No. 316/95 discontinuing the requirement that financial information be restated for inflation for any date or period after August 31, 1995. Effective September 1, 1995 in accordance with CNV resolutions and Argentine GAAP, the Company began accounting for its financial transactions on a historical cost basis, without considering the effects of inflation. Prior to September 1, 1995, the financial statements were prepared on the basis of general price level accounting, which reflected changes in purchasing power of the Argentine Peso in the historical financial statements. The financial statement information of periods prior to August 31, 1995 was restated to pesos of general purchasing power as of August 31, 1995. The August 31, 1995 balances, adjusted to the general purchasing power of the Peso at that date, became the historical cost basis for subsequent accounting and reporting.

However, as a result of the inflationary environment in Argentina in 2002, the CPCECABA, approved on March 6, 2002, a resolution reinstating the application of inflation accounting in financial statements as from January 1, 2002. This resolution provided that all recorded amounts restated for inflation through August 31, 1995, as well as those arising between that date and December 31, 2001 are to be considered stated in currency as of December 31, 2001.

On July 16, 2002, the Argentine Government issued a decree, instructing the CNV to issue the necessary regulations for the acceptance of financial statements prepared in constant currency. On July 25, 2002, the CNV reinstated the requirement to submit financial statements in constant currency.

However, after considering inflation levels for the second half of 2002 and the first months of 2003, on March 25, 2003, the Argentine government repealed the provisions of the previous decree related to the inflation adjustment and instructed the CNV to issue the necessary regulations to preclude companies under its supervision from presenting price-level restated financial statements. Therefore, on April 8, 2003, the CNV issued a resolution providing for the discontinuance of inflation accounting as of March 1, 2003. The Company complied with the CNV resolution and accordingly recorded the effects of inflation until February 28, 2003.

Since Argentine GAAP required companies to discontinue inflation accounting as from October 1, 2003, the application of the CNV resolution represented a departure from generally accepted accounting principles. However, due to the low level of inflation rates during the period from March to September 2003, such a departure has not had a material effect on the accompanying consolidated financial statements.

e. Adoption by CNV of accounting standards

The CNV issued General Resolutions No. 485 and No. 487 on December 29, 2005 and January 26, 2006, respectively which adopted, with certain modifications, the new accounting standards previously issued by CPCECABA through its Resolution CD 93/2005. These standards were effective for the fiscal year ended June 30, 2007.

The most significant changes included in the accounting standards adopted by the CNV relate to (i) changes in the impairment test of long-lived assets and (ii) changes to deferred income tax accounting. The new standards provide for the accounting treatment of differences between the tax basis and book basis of non-monetary items for deferred income tax calculation purposes when companies prepare price-level restated financial statements. The new accounting mandates companies to treat these differences as temporary differences. However, the standard allows a one-time accommodation to continue treating the differences between the tax basis and indexed book basis of non-monetary items as permanent differences. As such, the Company elected to continue treating differences as permanent. In addition, deferred income taxes should be accounted on an undiscounted basis. As of June 30, 2007, the estimated effect of treating differences as temporary will be a decrease in shareholders’ equity of approximately Ps. 141.1 million against retained earnings.

Also, under the new standards, the carrying value of a long-lived asset is considered impaired by the Company when the expected cash flows from such asset is separately identifiable and less than its carrying value. Expected cash flows are determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved.

F-10

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

2. Preparation of financial statements (continued)

f. Reclassifications

Certain reclassifications of prior year information have been made to conform to the current year presentation.

g. Use of estimates

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. Significant estimates include those required in the accounting for the allowance for doubtful accounts, the depreciation, amortization and impairment of long-lived assets, the provision for contingencies and income taxes. Actual results could differ from those estimates and evaluations made at the date of preparation of these financial statements.

h. Significant acquisitions, dispositions and development of businesses

Panamerican Mall project

In June 2006, the Company acquired from an unrelated party, Philips Argentina S.A., a 28,741 square meter plot of land (the “Philips land”) located in Saavedra, a neighbourhood in the northern area of Buenos Aires, for an aggregate purchase price of US$ 17.9 million. The Company developed a project for the construction of a mall including a hypermarket, a movie theatre complex and office and/or residential buildings. For that purpose, in December 2006, the Company entered into a Construction, Management and Commercialization Agreement with an unrelated party, Centro Comercial Panamericano S.A. (“CCP”) to partner in the project. The Company incorporated PAMSA for this purpose. The Company contributed cash and the Philips land to PAMSA amounting to Ps. 158.3 million. The Company acquired from CCP an adjacent property amounting to Ps. 36.9 million through cash and 20% of the stock of PAMSA. In addition, the Company and CCP committed to make capital contributions amounting to US$ 37.8 million and US$ 9.4 million, respectively, to complete the project.

Córdoba Shopping

On December 27, 2006, the Company acquired 100% interest in the Cordoba Shopping Villa Cabrera located in Cordoba, Argentina, owned by Empalme. The property, which is located in the Villa Cabrera neighbourhood of the city of Cordoba, is a 35,000 square meter shopping center comprising 106 stores, a 12 movie theatre complex and a 1,500-vehicle parking lot. The interest was acquired for US$ 13.3 million. The Company paid US$ 7.3 million in cash and financed the remaining portion of the purchase price in three equal installments of US$ 2 million each due every six months as from December 2007. This financing accrues interest at a fixed rate of 6% per annum. Governmental approval was obtained in December 2006.

The Company’s purchase of Empalme has been accounted for following the guidance in Technical Resolution No. 18 (RT No. 18), as explained in Note 3.i. The purchase price was allocated based on the fair value of each component. However, since the sum of the individual fair values of the identifiable tangible and intangible assets exceeded the purchase price paid, negative goodwill exists. Under Argentine GAAP, when negative goodwill exists after an acquiring entity initially assigns values to all assets acquired and liabilities assumed, RT No. 18 states that the entity must first reassess whether all acquired assets and assumed liabilities have been identified and properly valued. If an amount of negative goodwill still results after this reassessment, intangible assets acquired (including above and below market leases, in-place leases and tenant relationships, as applicable), are subject to reduction. If after all of these intangible assets are reduced to zero and an amount of negative goodwill still remains, the remaining unallocated negative goodwill is amortized under the straight-line method over the weighted average useful life of the main tangible assets acquired.

F-11

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

2. Preparation of financial statements (continued)

h. Significant acquisitions, dispositions and development of businesses (continued)

Purchase of additional 50% of E-Commerce Latina S.A.

On January, 2007 the Company acquired the remaining 50% in E-commerce Latina S.A., through which the Company offered its products via internet on the altocity.com website. Effective March 1 2007, the website was deactivated. However, E-commerce Latina S.A. started new business activities. E-Commerce Latina S.A. restructured its business activities away from internet-based operations. Activity was not significant as of June 30, 2007.

Bid for the acquisition of Patio Olmos

In November 2006, the Company submitted a bid for the acquisition of a property known as “Edificio Ex Escuela Gobernador Vicente de Olmos” (“Olmos”) located in Cordoba, Argentina for Ps. 32.5 million. The Company made a down payment of Ps. 9.7 million under the terms of the bidding process. The property, which is located in the City of Cordoba, is a 5,147 square meter four-story building comprising commercial space, parking lots and movie theatres. The property is subject to a 40-year concession contract granted to an unrelated party for the commercial use of the building. Pursuant to the concession granted in 1990 from the Provincial Government of Cordoba, the licensee should pay the owner of the building a monthly concession fee actually amounting to Ps. 10,052 increasing in Ps. 2,513 every 47 months. The closing of the purchase is subject to several regulatory approvals. On January 15, 2007, the Company was served notice of certain objections from the Argentine Antitrust Authority seeking to enjoin the Company from completing the bid. In addition, in January 2007, the National Commission for the Defense of Competition notified the Company of two claims filed against it. One claim was filed by an individual and the other by the actual licensee of the concession. As of the date of these financial statements, these claims are still pending resolution.

Sale of the Alcorta Plaza plot of land

On December 22, 2005, the Company subscribed a preliminary purchase contract with possession, by which the Company sold to RAGHSA S.A. the plot of land denominated Alcorta Plaza for a total price of US$ 7.7 million. On March 13, 2006 the deed title of the building was registered and a first privilege degree mortgage guarantee was established on certain functional units to be used as offices and garages of the building property of RAGHSA S.A., located in Buenos Aires. The mortgage amounted to US$ 4.4 million. The agreed terms and conditions of payment were determined in four installments of US$ 1.9 million and 7.5% annual interest on the balance. The first three installments have been collected at the date of these financial statements.

This transaction has been included in the “Others” line of the Segment information (Note 9).

F-12

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

2. Preparation of financial statements (continued)

h. Significant acquisitions, dispositions and development of businesses (continued)

Mendoza Plaza Shopping

On September 29, 2004, the Company entered into a purchase agreement pursuant to which the Company acquired an additional 49.9% ownership interest in Mendoza Plaza Shopping for US$ 5.3 million. The Company paid US$ 1.77 million on December 2, 2004 and the remaining balance was paid in two equal annual installments of US$ 1.77 million each on September 29, 2006 and 2005. Through this acquisition, the Company became the holder record of 68.8% of the capital stock of Mendoza Plaza Shopping, the main activity of which is the operation of the Mendoza Plaza Shopping center in the city of Mendoza. The Company also entered into the following contracts in connection with debt owed by Mendoza Plaza Shopping:

i) Put option with Banco de Chile S.A. (“Banco de Chile”), whereby Banco de Chile was entitled, although not obliged, to assign to the Company two defaulted credit agreements amounting to US$ 18 million originally granted to Mendoza Plaza Shopping. As a result of the economic measures issued in Argentina in 2002, these financial agreements had been converted into Argentine pesos at the exchange rate of Ps. 1.0 per US Dollar and indexed based on the reference stabilization index (CER). On March 30, 2005 Banco de Chile executed the put option, transferring all the rights of the credit facilities to the Company in exchange for US$ 8.5 million (Ps. 24.8 million).

(ii) Call option with HSBC Bank Argentina S.A., whereby the Company was entitled, although not obliged, to acquire, and HSBC Bank Argentina S.A. was obliged to transfer, a defaulted loan agreement originally granted to Mendoza Plaza Shopping amounting to US$ 7.0 million. As a result of the economic measures issued in Argentina in 2002, this financial agreement was converted into Argentine pesos at the exchange rate of Ps. 1.0 per US Dollar and indexed by the reference stabilization index (CER). On March 29, 2005 the Company transferred the purchase option to Mendoza Plaza Shopping, which exercised the option paying Ps. 6.8 million for the settlement of the loan (corresponding to the exercise price of Ps. 7.2 million net of rental fees collected by HSBC Bank Argentina S.A. as guarantee amounting to Ps. 0.4 million). This cash payment was funded through a loan granted by the Company.

The Company also entered into an agreement with Inversiones Falabella Argentina S.A. (“Falabella”), the remaining minority shareholder of Mendoza Plaza Shopping, pursuant to which, among other things, Falabella has the irrevocable right to sell to the Company (put option) its ownership interest in Mendoza Plaza Shopping for a total consideration of US$ 3.0 million. The put option can be exercised until the last business day of October 2008. As of the date of issuance of these financial statements, such option has not been exercised.

On May 31, 2005 the shareholders of Mendoza Plaza Shopping approved the conversion of debt owed to the Company totaling Ps. 36.1 million into common shares. As a result of this transaction, the Company increased its ownership interest in Mendoza Plaza Shopping from 68.8% to 85.4%.

i. Compensation plan for executive management

During fiscal year 2007, the Company has developed a special compensation plan for its key managers (the “Plan”) by means of contributions to be made by the employees and by the Company.

Such Plan is directed to key managers and aims to retain them by increasing their total compensation package, granted to those who have met certain conditions. Participation and contributions under the Plan are voluntary. Once the invitation to participate has been accepted by the employee (the “Participant”), he/she is required to make two kinds of contributions: monthly contributions (salary based) and extraordinary contribution (annual bonus based). The suggested contribution to be made by Participants is up to 2.5% of their monthly salary and up to 15% of their annual bonus.

This Plan is intended to improve the compensation benefits of the key management employees who are encouraged to increase his/her compensation package by getting an extraordinary reward at the end of the Plan for those who have met certain conditions mentioned below.

The Company’s contribution will be 200% of the employees’ monthly contributions and 300% of the extraordinary employees’ contributions.

F-13

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

2. Preparation of financial statements (continued)

i. Compensation plan for executive management (continued)

The funds arising out of the Participants’ contributions are transferred to a special independent vehicle created and located in Argentina as a Investment Fund approved by the National Securities Commission (CNV). Such funds (including the rents derived thereof) are freely redeemable upon request of the participants.

Funds arising out of contributions made by the Company under the Plan are transferred to another separate and independent vehicle (e.g., a trust fund).

Participants or their assigns, as the case may by, will have access to 100% of the benefits of the Plan (that is, the Company’s contributions made on their behalf to the specially created vehicle) under the following circumstances:

(i) ordinary retirement in accordance with applicable labor regulations;

(ii) total or permanent incapacity or disability;

(iii) death.

In case of resignation or termination without good cause, the manager will get the amounts arising out of the Company’s contribution only if he or she has participated in the Plan for at least 5 years.

As of June 30, 2007 the Company’s contributions amounted to Ps. 0.9 million.

3. Significant accounting policies

The following is a summary of significant accounting policies followed by the Company in the preparation of these consolidated financial statements.

a. Revenue recognition

The Company primarily derives its revenues from leases and services operations, the sale and development of properties, credit card operations and to a lesser extent, from e-commerce activities. See Note 9 for details on the Company’s business segments.

• Leases and services

Leases with tenants are accounted for as operating leases. Tenants are generally charged a rent, which consists of the higher of: (i) a monthly base rent (the “Base Rent”) and (ii) a specified percentage of the tenant’s monthly gross retail sales (the “Percentage Rent”) (which generally ranges between 4% and 8% of tenant’s gross sales). Furthermore, pursuant to the rent escalation clause in most leases, a tenant’s Base Rent generally increases between 4% and 7% each year during the term of the lease. For the years ended June 30, 2007, 2006 and 2005, the majority of the tenants were charged with the Percentage Rent.

Certain lease agreements contain provisions, which provide for rents based on a percentage of sales or based on a percentage of sales volume above a specified threshold. The Company determines the compliance with specific targets and calculates the additional rent on a monthly basis as provided for in the contracts. Thus, these contingent rents are not recognized until the required thresholds are exceeded.

Generally, the Company’s lease agreements vary from 36 to 120 months. Law No. 24,808 provides that tenants may rescind commercial lease agreements after the initial six months, upon not less than 60 days’ written notice, subject to penalties which vary from one to one and a half months rent if the tenant rescinds during the first year of its lease, and one month of rent if the tenant rescinds after the first year of its lease.

F-14

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

3. Significant accounting policies (continued)

a. Revenue recognition (continued)

The Company also charges its tenants a monthly administration fee, prorated among the tenants according to their leases, which varies from shopping center to shopping center, relating to the administration and maintenance of the common area and the administration of contributions made by tenants to finance promotional efforts for the overall shopping centers’ operations. Administration fees are recognized monthly when earned.

In addition to rent, tenants are generally charged “admission rights”, a non-refundable admission fee that tenants may be required to pay upon entering into a lease and upon lease renewal. Admission right is normally paid in one lump sum or in a small number of monthly installments. Admission rights are recognized using the straight-line method over the life of the respective lease agreements.

The Company also derives revenues for parking lot fees charged to visitors. Parking revenues are recognized as services are performed.

In September 2000, the Company completed the acquisition of the 99.99% equity interest of Fibesa. Fibesa acts as the leasing agent for the Company bringing together the Company and potential lessees for the retail space available in certain of the Company’s shopping centers. Fibesa’s revenues are derived primarily from success fees paid by tenants calculated as a percentage of the final rental income value for both the lessee and the Company. Revenues related to success fees are recognized at the time that the transaction is successfully concluded. A transaction is considered successfully concluded when both parties have signed the related lease contract.

• Sales and development properties

The Company records revenue from the sale of properties when all of the following criteria are met:

(i) the sale has been consummated;

(ii) the Company has determined that the buyer’s initial and continuing investments are adequate to demonstrate a commitment to pay for the property;

(iii) the Company’s receivable is not subject to future subordination; and

(iv) the Company has transferred to the buyer the risk of ownership.

• Credit card operations

The Company, through its subsidiary, Tarshop, derives revenues from credit card transactions which primarily are comprised of (i) merchant discount fees which are recognized when transactional information is received and processed by the Company; (ii) data processing services which consist of processing and printing cardholders statement of accounts, and which are recognized as services are provided; (iii) life and disability insurance charges to cardholders which are recognized on an accrual basis, and (iv) interest income generated by financing and lending activities.

b. Cash and cash equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Cash equivalents consist of mutual funds, and time deposits with original maturities of less than three months at date of purchase. Mutual funds are considered to be cash equivalents since original maturity is determined by reference to the frequency with which liquidity is available according to current Argentine GAAP guidance and practice.

F-15

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

3. Significant accounting policies (continued)

c. Other investments, net

(i) Current

Current investments include mutual funds, government and mortgage bonds, and time deposits. Mutual funds and government and mortgage bonds are carried at their market value with unrealized gains and losses recorded within “Financial results, net” in the consolidated statements of income. Time deposits are valued at cost plus accrued interest at year-end.

Current investments also include retained interests in securitized receivables pursuant to the securitization programs of the Company’s subsidiary, Tarshop (See Note 11 for details).

(ii) Non-current

Undeveloped parcels of land are valued at acquisition cost, restated in accordance with Note 2.d.

Non-current investments also include the non-current portion of the Company’s retained interests in securitized receivables (CPs) and trust debt securities (TDFs) pursuant to the securitization programs of credit card receivables (See Note 11 for details).

The Company acquired undeveloped properties as land reserves located in strategic areas for the future development of shopping’s centers, residential apartment complex and others.

During the years ended June 30, 2002 and 2006, the Company had recognized impairment losses amounting to Ps. 15.9 million and Ps. 0.2 million, respectively, in connection with Caballito Project and other properties. As a result of increases in their fair market values, during fiscal years 2003, 2004, 2005 and 2006 the Company partially reversed the impairment losses, recognizing a gain of Ps. 0.2 million, Ps. 5.1 million, Ps. 2.7 million and Ps 6.4 million, respectively. The impairment losses and the gains associated with the reversal of previously impairment losses have been included within “Financial results, net” in the accompanying consolidated statements of income.

d. Investments

The Company had a 50% ownership interest in E-commerce Latina S.A. as of June 30, 2006 and 2005. As discussed in Note 2.h, on January, 2007, the Company acquired the remaining 50% in E-commerce Latina S.A. The Company gained control of E-commerce Latina S.A. through this acquisition and accordingly the results of operations of E-commerce Latina S.A. were fully consolidated as from the date.

During the year ended June 30, 2003, the Company had recognized an impairment loss related to the equity investment in Mendoza Plaza Shopping amounting to Ps. 7.5 million. During fiscal years 2004 and 2005, the Company reversed Ps. 0.3 million and Ps. 6.6 million, respectively, of this impairment loss as a result of increases in their recoverable values. The impairment charge has been included within “Gain (loss) on equity investees” in the accompanying consolidated statements of income. The impairment reversal recognized in 2005 has been included within “Financial results, net” in the accompanying consolidated statements of income due to the consolidation of Mendoza Plaza Shopping as from October 1, 2004.

F-16

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

3. Significant accounting policies (continued)

e. Inventory

Properties acquired for purposes of its development and subsequent sale are classified as inventory. Inventory is stated at cost adjusted for inflation as described in Note 2.d less accumulated impairment charges, except in certain circumstances as described further below. The cost of inventory is comprised of all direct contract costs, such as land, materials and construction fees associated with development properties, as well as capitalized interest when applicable. No interest cost was capitalized in inventory during the years ended June 30, 2007, 2006 and 2005 since there were no developments during these periods. Inventory is classified as current or non-current based on the estimated date of sale and the time at which the related receivables are expected to be collected.

Inventory is charged to the statement of income as cost of revenues as the related revenue is recognized, using the percentage-of-completion method.

Certain inventories for which preliminary sale agreement were entered into by the Company and down payments were received are valued at net realizable value at year-end. Gains are shown in the line item “Gain from recognition of inventories at net realizable value”.

During the year ended June 30, 2002, the Company recognized an impairment loss amounting to Ps. 2.2 million in connection with the Alcorta Plaza plot of land. As a result of increases in the fair market value, such impairment losses were subsequently reversed during fiscal years 2003, 2004 and 2005, recognizing gains of Ps. 0.1 million, Ps. 1.6 million and Ps. 0.5 million, respectively. Alcorta Plaza was sold in March 2006. See Note 2.h for details.

In addition, an impairment charge of Ps. 0.2 million was recognized in 2006 in connection with Torres de Abasto. During the year ended June 30, 2007, the Company partially reversed such impairment recognizing a gain of Ps. 0.1 million.

f. Fixed assets, net

Properties purchased for rental purposes are classified as fixed assets. Fixed assets are stated at cost, adjusted for inflation (as described in Note 2.d), less accumulated depreciation and impairment charges, except for a parcel of land acquired prior to June 30, 1986, which was originally recorded at its appraised value as of such date. This appraisal increased the carrying value of the land by Ps. 4.0 million, which was recorded against an appraisal revaluation reserve account within shareholders’ equity. This appraisal revaluation reserve will be charged against income once the land is disposed of or its value becomes impaired.

Depreciation expense has been determined using the straight-line method over the estimated useful lives of the related assets as specified below:

Asset	Estimated useful life (years)
- Properties:
Shopping centers	Between 16 and 34
Other	Between 16 and 50
- Leasehold improvements	3
- Facilities	10
- Furniture and fixtures	Between 3 and 10
- Vehicles	5
- Computer equipment	3
- Software	3
- Other	10

F-17

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

3. Significant accounting policies (continued)

f. Fixed assets, net (continued)

The Company capitalizes interest on real estate development projects. The Company capitalized interest costs amount to Ps. 7.1 million and Ps. 2.1 million during the years ended June 30, 2007 and 2005, respectively.

The cost of maintenance and repairs is charged to expense as incurred. The cost of significant renewals and improvements are added to the carrying amount of the respective asset.

When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in the consolidated statement of income.

During the years ended June 30, 2002 and 2003, the Company had recognized impairment losses amounting to Ps. 44.7 million and Ps. 5.2 million, respectively, in connection with Alto Avellaneda, Alto Noa, Abasto, Shopping Neuquén, Alto Rosario and other properties. As a result of increases in their fair market values, during fiscal years 2003, 2004, 2005, 2006 and 2007, the Company partially reversed the impairment losses, recognizing a gain of Ps. 15.4 million, Ps. 20.2 million, Ps. 3.3 million, Ps. 3.5 million and Ps. 2.2 million, respectively. The impairment losses and the gains associated with the reversal of previously recognized impairments have been included within “Financial results, net” in the accompanying consolidated statements of income. In addition, amortization related to the impairment charges amounted to Ps. 2.9 million, Ps. 1.6 million, Ps. 0.6 million and Ps. 0.3 million during the years ended June 30, 2003, 2004, 2005 and 2006 respectively.

g. Software obtained or developed for internal use

The Company capitalizes certain costs associated with the development of computer software for internal use. Costs capitalized during the years ended June 30, 2007, 2006 and 2005 were Ps. 6.3 million, Ps. 2.4 million and Ps. 0.4 million, respectively. These costs are being amortized on a straight-line basis over 3 years.

h. Intangible assets, net

Intangible assets are stated at cost, adjusted for inflation (as described in Note 2.d), less accumulated amortization.

(i) Trademarks

Fees and expenses related to the registration of trademarks are amortized on a straight-line basis over 10 years.

(ii) Preoperating expenses

Represent primarily expenses incurred relating to pre-opening activities of certain shopping centers. These expenses are amortized on a straight-line basis over a three-year period commencing upon the opening of the shopping center.

i. Negative goodwill and goodwill

Goodwill represents the difference between the purchase price paid and the fair market value of net assets acquired, adjusted for inflation as mentioned in Note 2.d, goodwill is amortized by the straight-line method over a term not exceeding 10 years. Goodwill was generated by Tarshop, E-Commerce S.A., Fibesa and ERSA acquisitions.

When the sum of the individual fair values of the identifiable tangible and intangible assets exceeds the purchase price paid, negative goodwill exists. Under Argentine GAAP, when negative goodwill exists after an acquiring entity initially assigns values to all assets acquired and liabilities assumed, RT No. 18 states that the entity must first reassess whether all acquired assets and assumed liabilities have been identified and properly valued. If an amount of negative goodwill still results after this reassessment, intangible assets acquired (including above and below market leases, in-place leases and tenant relationships, as applicable), are subject to reduction. If after all of these intangible assets are reduced to zero and an amount of negative goodwill still remains, the remaining unallocated negative goodwill is amortized under the straight-line method over the weighted average useful life of the main tangible assets acquired. Negative goodwill was generated by the Empalme acquisition.

F-18

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

3. Significant accounting policies (continued)

j. Foreign currency assets and liabilities

Assets and liabilities denominated in foreign currencies are translated at the prevailing exchange rates as of year-end. Transactions denominated in foreign currencies are translated into Argentine pesos at the prevailing exchange rates on the date of transaction settlement. Foreign currency transaction gains and losses are recorded within “Financial results, net” in the consolidated statements of income.

k. Income tax

The subsidiaries of the Company calculate their income taxes on a separate basis. The Company did not either calculate or pay income taxes on a consolidated basis for any of the years presented. The statutory income tax rate was 35% for all years presented.

The Company records income taxes using the deferred tax method required by Technical Resolution No. 17 (“RT 17”) “Overall Considerations for the Preparation of Financial Statements”. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recorded or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the fiscal years that includes the enactment date. A valuation allowance is recognized for that component of net deferred tax assets which is not recoverable.

As discussed in Note 2.e., the Company has treated the differences between the price-level restated amounts of assets and liabilities and their historical basis as permanent differences for deferred income tax calculation purposes.

In accordance with CNV regulations, deferred tax assets and liabilities have not been discounted. Since Argentine GAAP required (for the Company’s fiscal years ended June 30, 2006 and 2005) the accounting for deferred tax assets and liabilities on a discounted basis, the application of the CNV resolution represented a departure from Argentine GAAP until the Company’s fiscal year ended June 30, 2006. However, such a departure did not have a significant effect on the 2006 and 2005 consolidated financial statements. As from July 1, 2006, there is no such difference between CNV regulations and Argentine GAAP, as discussed in Note 2.e.

l. Minimum Presumed Income Tax (MPIT)

The Company and its subsidiaries are subject to the Minimum Presumed Income Tax Law (“Impuesto a la Ganancia Mínima Presunta” or “MPIT”). The MPIT is calculated on an individual entity basis at the statutory tax rate of 1%, and is based upon the taxable assets of each Argentine entity as of the end of the year. This tax is complementary to income tax and the Company is required to pay the greater of the income tax or the MPIT. Any excess of the MPIT over the income tax may be carried forward and recognized as a payment on account of any excess of income tax over MPIT occurring within the subsequent ten years. In the opinion of management, it is probable that the Company will utilize such asset against future taxable income charges within the next ten years and, as a result, the Company has recognized the accumulated MPIT charge within “Other receivables and prepaid expenses, net”, as appropriate, in the accompanying consolidated balance sheet.

m. Customer advances

Customer advances represent payments received in advance in connection with the lease of properties. Customer advances include admission rights paid by tenants upon entering into a lease and upon lease renewal. See Note 3.a for details.

F-19

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

3. Significant accounting policies (continued)

n. Provisions for contingencies and allowances

The Company provides for losses relating to accounts and mortgage receivables. The allowance for losses is based on management’s evaluation of various factors, including the credit risk of customers, historical trends and other information. While management uses the information available to make evaluations, future adjustments to the allowance may be necessary if future economic conditions differ substantially from the assumptions used in making the evaluations. Management has considered all events and/or transactions that are subject to reasonable and normal methods of estimations, and the consolidated financial statements reflect that consideration.

The Company has certain contingent liabilities with respect to existing or potential claims, lawsuits and other proceedings, including those involving labor and other matters. The Company accrues liabilities when it is probable that future costs will be incurred and such costs can be reasonably estimated. Such accruals are based on developments to date, the Company’s estimates of the outcomes of these matters and the Company’s lawyers’ experience in contesting, litigating and settling other matters. As the scope of the liabilities becomes better defined, there will be changes in the estimates of future costs, which could have a material effect on the Company’s future results of operations and financial condition or liquidity.

o. Advertising expenses

The Company generally expenses advertising and promotion costs as incurred with the exception of advertising and promotion expenses incurred to launch new shopping centers. Advertising and promotion expenses net of recovery collective promotion fund were approximately Ps. 27.8 million, Ps. 16.5 million and Ps. 9.2 million for the years ended June 30, 2007, 2006, and 2005, respectively.

Advertising and promotion expenses to launch new shopping centers are capitalized as preoperating expenses, within intangible assets.

p. Deferred debt costs

Deferred debt costs consist of fees and costs incurred to issue the Non-Convertible Notes. These fees and costs are shown as a deduction of the corresponding liability in Note 4.h. These costs and fees are being amortized over the term of the respective Series I and II Non-Convertible Notes, applying effective interest method. Deferred debt costs totaled Ps. 5.8 million, net of accumulated amortization at June 30, 2007.

q. Impairment of long-lived assets

The Company periodically evaluates the carrying value of its long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying value of a long-lived asset is considered impaired by the Company when the expected discounted cash flows, from such asset is separately identifiable and less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved or based on independent appraisals.

Under Argentine GAAP, the impairment loss is recorded in the income statement against a liability account. This liability account is a contra account to fixed assets, which means that it is presented on the balance sheet as a direct reduction from the book value of the fixed assets to arrive at the fixed asset’s carrying value at any particular point in time. The liability account is depreciated over the useful life of the related asset decreasing depreciation expense each period. Under Argentine GAAP, a previously recognized impairment loss should only be reversed when there is a subsequent change in estimates used to compute the fair market value of the asset. In that event, the new carrying amount of the asset should be the lower of its fair market value or the net carrying amount the asset would have had if no impairment had been recognized. Both the impairment charge and the impairment reversal are recognized in earnings.

F-20

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

3. Significant accounting policies (continued)

r. Impairment of inventories and undeveloped parcels of land

The Company periodically evaluates the carrying value of its inventories and undeveloped parcels of land for impairment. Such evaluation is performed by comparing the respective carrying values against market values determined on the basis of comparable property values. As discussed in note 3.q., if there are increases in the fair market value of the assets previously impaired, assets are restored and reversals are shown in financial results, net.

s. Vacation expenses

Vacation expenses are fully accrued in the year the employee renders services to earn such vacation.

t. Derivative financial instruments

As part of its risk management strategy, the Company may use derivative financial instruments. The Company does not engage in trading or other speculative use of these financial instruments and does not utilize financial instruments to hedge anticipated transactions. The Company applies Technical Resolution No. 20 (“RT No. 20”), “Accounting for Derivative Instruments and Hedging Activities”, which establishes accounting and reporting standards for derivative instruments and for hedging activities. RT No. 20 requires that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and how it is designated. RT No. 20 prescribes that changes in the fair value of effective cash flow hedges are deferred as a separate component of the balance sheet and subsequently reclassified into earnings when the hedged items affect earnings. Gains and losses from fair value hedges are recognized in earnings in the period of any changes in the fair value of the related recognized asset or liability. Gains and losses on derivative instruments that are not designated as a hedging instrument are recognized in earnings in the period of change. RT No. 20 requires that a company must formally document, designate, and assess the effectiveness of transactions that receive hedge accounting. During the years ended June 30, 2007 and 2006, the Company did not have any derivative activity.

u. Monetary assets and liabilities

Monetary assets and liabilities are stated at their face value plus or minus the related financial gain or loss.

v. Receivables from leases and services and trade payables

Receivables from leases and services and trade payables have been valued at the price applicable to spot operations at the time of the transaction plus interest and implicit financial components accrued at the internal rate of return determined at that moment.

w. Financial receivables and payables

Financial receivables and payables have been valued at the amount deposited and collected, respectively, net of related costs, plus accrued interest based on the interest rate estimated at the time of the transaction. In the case, the Company has the intention and feasibility of selling financial receivables after the year-end, those receivables are valued at their net realizable value.

Deferred debt costs consist of fees and costs incurred to issue the Non-Convertible Notes. These fees and costs are shown as a deduction of the corresponding liability in Note 4.h. These costs and fees are being amortized over the term of the respective Series I and II Non-Convertible Notes, which approximates the effective interest method. Deferred debt costs totaled Ps. 5.8 million, net of accumulated amortization at June 30, 2007.

F-21

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

3. Significant accounting policies (continued)

x. Other receivables and liabilities

MPIT credits have been measured based on the best estimate of the amount receivable discounted at the interest rate applicable to freely available savings accounts published by the Argentine Central Bank in effect at the time of incorporation to the balance sheet. The remaining other receivables and liabilities have been valued at their nominal value plus interest, if any.

y. Related party balances

Receivables and liabilities with related parties generated by financial transactions and other sundry transactions have been valued in accordance with the terms agreed by the parties.

z. Earnings per share

The Company is required to disclose earnings per share information for all years presented. Basic earnings per share (“basic EPS”) are computed by dividing the net income available to common shareholders for the year by the weighted-average number of common shares outstanding during the year. Diluted earnings per share (“diluted EPS”) are computed by dividing the adjusted net income for the year by the weighted-average number of common shares and potential common shares outstanding during the year.

In computing diluted EPS, income available to common shareholders used in the basic EPS calculation is adjusted to add back the after-tax amount of interest recognized for the year with respect to any debt convertible to common stock. Additional adjustments are made for any other income or loss items that would result from the assumed conversion of potential common shares. The weighted-average number of common shares outstanding is adjusted to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. Diluted EPS is based on the most advantageous conversion rate or exercise price over the entire term of the instrument from the standpoint of the security holder. The calculation of diluted EPS excludes potential common shares if their effect is anti-dilutive. The Company has considered the dilutive effect of the outstanding convertible debt in calculating diluted EPS.

F-22

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

4. Breakdown of the main captions

a. Cash and banks:

	As of June 30,
	2007		2006
Cash in local currency	Ps.	2,819,359	Ps.	1,896,305
Cash in foreign currency (Note 20.f)		310,513		2,164,853
Bank accounts in local currency		13,382,258		6,205,496
Bank accounts in foreign currency (Note 20.f)		12,268,479		26,311,435
Bank interest-bearing account		3,049,242		1,643,947
	Ps.	31,829,851	Ps.	38,222,036
b.      Other investments, net:
	As of June 30,
	2007		2006
Current
Time deposits		5,024,231		4,201,818
Mutual funds	Ps.	448,642,297	Ps.	13,980,801
Retained interests in securitized receivables (i) (ii)		22,103,730		10,318,797
NOBACS bonds (ii)		6,158,500		602,640
Mortgage bonds issued by Banco Hipotecario S.A. (ii) (Note 6)		1,661,969		2,170,258
Garantizar S.G.R. (ii).		1,380,420		—
TDFs (ii)		—		324,325
Other government bonds (ii)		437,453		651,845
	Ps.	485,408,600	Ps.	32,250,484
	As of June 30,
	2007		2006
Non-current
Undeveloped parcels of land
-Caballito plot of land (iii)	Ps.	36,680,754	Ps.	36,622,004
-Torres Rosario		16,110,481		16,079,162
-Air Space Supermercado Coto – Agüero 616		13,143,445		13,143,445
-General Paz plot of land (iv)		—		59,837,466
-Other real estate		2,778,468		2,347,423
Retained interests in securitized receivables (i)		55,682,995		37,814,171
Share’s purchase advances		1,108,239		—
TDFs.		—		752,114
Others		—		1,247,080
	Ps.	125,504,382	Ps.	167,842,865

(i) As part of its credit card securitization programs, the Company transfers credit card receivables to trusts in exchange for cash and certificates representing undivided interests in such receivables. Trusts debt securities represent debt certificates (TDFs) issued by trusts which are valued at amortized cost. Retained interests in transferred credit card receivables represent equity certificates (CPs) issued by trusts which are accounted for under the equity method of accounting (See Note 11 for details).

(ii) Not considered as cash equivalents for purposes of the consolidated statements of cash flows.

(iii) Encumbered in relation with a tax claim from the Federal Administration of Public Revenues (“AFIP”).

(iv) Transferred to fixed assets.

F-23

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

4. Breakdown of the main captions (continued)

c. Investments:

	As of June 30,
	2007		2006
Non-current
E-Commerce Latina S.A. (i) (Note 6) p	Ps.	—	Ps.	129,474
	Ps.	—	Ps.	129,474

(i) The Company had a 50% ownership interest in E-commerce Latina S.A. as of June 30, 2006 and 2005. As discussed in Note 2.h, on January, 2007, the Company acquired the remaining 50% in E-commerce Latina S.A. The Company gained control of E-commerce Latina S.A. through this acquisition and accordingly the results of operations of E-commerce Latina S.A. were fully consolidated as from the date.

d. Accounts receivable, net:

	As of June 30,
	2007			2006
Current
Credit card receivable	Ps.	86,333,343		Ps.	58,315,941
Checks to be deposited		31,626,070			26,154,553
Leases and services receivable		40,568,938			22,152,659
Debtors under legal proceedings		21,567,616			22,635,986
Pass-through expenses receivable (i)		15,342,081			10,013,772
Receivable from the sale of Alcorta Plaza land (iii)		6,008,654			5,863,550
Notes receivable		2,599,610			2,230,951
Mortgages receivable (ii)		467,107			380,490
Less:
Allowance for doubtful accounts (Note 20.d)		(53,414,683	)		(43,435,193	)
	Ps.	151,098,736		Ps.	104,312,709
Non-current
Credit card receivable – Tarjeta Shopping	Ps.	42,531,777		Ps.	21,076,452
Receivable from the sale of Alcorta Plaza land		—			11,991,670
Mortgages receivable (ii)		413,658			578,155
Leases and services receivable		36,270			—
Notes receivable		940,788			226,248
Less:
Allowance for doubtful accounts (Note 20.d)		(1,954,545	)		(1,332,818	)
	Ps.	41,967,948		Ps.	32,539,707

(i) Represents receivables for common area maintenance and other operating expenses charged to tenants of shopping centers.

(ii) Mortgages receivable consist of fixed-rate mortgage receivables from several borrowers. At June 30, 2007 the amount due from the largest individual borrower was Ps. 73,445 at a contractual interest rate of 14%. (See Note 19.II.r).

(iii) As of June 30, 2007, relates to one pending installment of US$ 1.9 million accruing interest at a rate of 7.5% per annum.

F-24

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

4. Breakdown of the main captions (continued)

e. Other receivables and prepaid expenses, net:

	As of June, 30
	2007			2006
Current
Related parties (Note 6)	Ps.	14,277,423		Ps.	6,716,890
Guarantee deposits (i)		306,357			9,381,584
Receivables from trust guarantee funds (ii)		2,925,726			1,099,855
Prepaid expenses		12,883,270			4,271,499
MPIT		3,734,988			3,171,734
Prepaid services		5,327,165			2,139,765
Other tax credits		1,448,873			1,691,759
Prepaid gross revenue tax		963,185			766,949
Income tax credits, net		212,010			839,624
Other prepaid taxes		445,031			401,901
Valued added tax (VAT)		7,444,500			—
Gross revenue tax, receivable		1,158,026			—
Others		1,089,187			447,535
	Ps.	52,215,741		Ps.	30,929,095
	As of June, 30
	2007			2006
Non-Current
Receivables from trust guarantee funds (ii)		18,975,778			5,369,883
Guarantee deposits	Ps.	503,571		Ps.	274,097
Deferred income tax (Note 14)		10,730,404			5,917,757
Mortgages receivable (iii)		2,208,275			2,208,275
Allowance for doubtful mortgage receivable (Note 20.d)		(2,208,275	)		(2,208,275	)
MPIT		399,445			266,113
Prepaid gross revenue tax		1,149,495			882,620
Other taxes, receivable		139,398			208,440
Others		232,832			335,625
	Ps.	32,130,923		Ps.	13,254,535

(i) As of June 30, 2007 includes restricted deposits amounting to Ps. 0.1 million related mainly to labor claims. As of June 30, 2006, the balance mainly relates to a guarantee deposit held by Deutsche Bank in favor of the owner of an undeveloped land, Argentimo S.A. amounting to US$ 3 million. The deposit was part of an agreement between the Company, Argentimo and a developer, Constructora San José S.A., pursuant to which the Company acquired a parcel of land to build a commercial center and/or office buildings. The guarantee deposit was released on December 26, 2006.

(ii) The accounts receivable financial trusts as credit protection for investors include the contingency funds of financial trust that as of June 30, 2007 amounted to Ps. 11.9 million. They are restricted availability credits until settlement in accordance with the respective prospectuses.

(iii) Corresponds to a loan granted to an unaffiliated third party, which is collateralized by a mortgage on certain properties. During fiscal year 2001, this debtor filed for bankruptcy. As a result, the Company has recognized an allowance for the entire balance based on the opinion of its legal counsel.

F-25

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

4. Breakdown of the main captions (continued)

f. Inventory, net

	As of June 30,
	2007		2006
Current
Torres de Rosario (i)	Ps.	6,337,953	Ps.	7,325,065
Torres de Abasto (ii)		621,628		312,000
Resale merchandise		332,606		340,707
Others		—		11,474
	Ps.	7,292,187	Ps.	7,989,246

(i) Valued at net realizable value. See Note 4.k.ii) for details.

(ii) Net of impairment allowance. See Note 20.d) for details.

g. Trade accounts payable:

	As of June 30,
	2007		2006
Current
Suppliers (i)	Ps.	154,615,086	Ps.	89,923,116
Accruals		23,399,481		10,348,668
Foreign suppliers		1,009,975		1,023,961
Others		464,863		653,819
	Ps.	179,489,405	Ps.	101,949,564
Non-current
Foreign suppliers	Ps.	20,804	Ps.	1,010,150
	Ps.	20,804	Ps.	1,010,150

(i) As of June 30, 2007 and 2006, includes accounts payable to merchants for credit card operations of Ps. 152.1 million and Ps. 85.9 million, respectively

h. Short-term and long-term debt:

Short-term debt consists of the following:

	As of June 30,
	2007			2006
Syndicated loan including accrued interest (i)		—			25,581,973
Deutsche Bank Trust Company Americas including accrued interest (ii)		—			9,601,200
Uncollateralized loans including accrued interest (iii) (vii)		51,025,585			34,512,703
Accrued interest on Notes (iv) (Note 6)		12,896,019			6,588,951
Interest payable to credit card trust		1,108,691			1,489,767
Seller financing for acquisitions including accrued interest (v)		12,381,279			12,843,639
Mortgage loans (vi)		105,754			41,791
Deferred debt costs (Note 3.p)		(1,016,499	)		—
Others		709,225			156,614
	Ps.	77,210,054		Ps.	90,816,638

F-26

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

4. Breakdown of the main captions (continued)

h. Short-term and long-term debt (continued)

Long-term debt consists of the following:

	As of June 30,
	2007			2006
Convertible Notes (iv)	Ps.	146,076,000		Ps.	145,755,576
Non-Convertible Notes (iv)		525,180,000			—
Uncollateralized loans (vii)		5,597,357			—
Deferred debt costs (Note 3.p)		(4,823,494	)		—
Seller financing for acquisitions including accrued interest (v) (Note 2.h)		6,186,000			—
Others		536,022			98,268
	Ps.	678,751,885		Ps.	145,853,844

(i) As of June 30, 2006, related to a Ps. 50 million syndicated loan granted by two financial institutions. This loan was amortized in four six-month equal and consecutive installments beginning October 5, 2005. The syndicated loan accrued interest at a 7.875% fixed rate during the first year and at a variable rate (Encuesta) plus 3% during the second year. The loan included various restrictive covenants, which among other things required the Company to maintain certain financial ratios. Proceeds from this loan were used to repay the outstanding liabilities for Ps. 48.4 million. The loan was fully paid on April 9, 2007.

(ii) As of June 30, 2006, related to a US$ 11.0 million loan granted by Deutsche Bank S.A. This loan accrued interest at LIBOR plus 3.25%. The loan was fully paid on August 1, 2006.

(iii) Generally, the Company’s short-term borrowings are in the form of overdraft facilities and/or bank loans with original maturities of less than one year. The weighted average interest rates on short-term debt were 10.1% and 9.5% as of June 30, 2007 and 2006, respectively. The Company generally used the proceeds from these borrowings for working capital needs and other general corporate purposes. The Company had unused lines of credit under the short-term bank lines of Ps. 381.4 million at June 30, 2007.

(iv) See Note 15, for details of the issuance of Convertible and Non-Convertible Notes.

(v) As of June 30, 2007 represents seller financing for the acquisition of Empalme. This amount accrues 6% nominal annual interest payable in three installments of US$ 2.0 million each, due on December, 2007; June, 2008 and December, 2008. As of June 30, 2006 the balances were primarily comprised of (a) Ps. 3.3 million of principal plus Ps. 3 million of CER-indexing and Ps. 1.2 million of accrued interest relating to the seller financing obtained in the acquisition of Shopping Neuquén, which accrued interest at six-month LIBOR (4.99% as of June 30, 2006), and (b) Ps. 5.4 million relating to the seller financing obtained in the acquisition of Mendoza Plaza Shopping (including imputed interest).

(vi) Related to a debt from Shopping Neuquén S.A. which is guaranteed by a mortgage over the plot of land.

(vii) The banking and financial loans accounts include a loan from Banco de la Ciudad de Buenos Aires to Tarshop for Ps. 5.0 million, which is secured by Certificates of Participation related to the Fideicomisos Financieros Tarjeta Shopping Series XII, XIV, XVI and XVIII. Additionally, Certificates of Participation related to Fideicomisos Financieros Tarjeta Shopping Series XXI, XXIII, XXV and XXVI for Ps. 11.7 million were granted as a pledge to the Standard Bank (formerly Bank Boston N.A.) as guarantee.

F-27

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

4. Breakdown of the main captions (continued)

i. Salaries and social security payable:

	As of June 30,
	2007		2006
Provision for vacation and bonuses	Ps.	14,820,470	Ps.	8,289,725
Social security payable		3,468,431		2,232,366
Salaries payable		643,815		85,770
Others		666,041		277,503
	Ps.	19,598,757	Ps.	10,885,364

j. Taxes payable:

	As of June 30,
	2007		2006
Current
Income tax, net	Ps.	26,214,599	Ps.	13,182,274
VAT payable, net		9,465,250		5,378,086
Other tax withholdings		3,918,065		2,524,548
Gross revenue tax payable		2,162,088		954,062
Provision for tax on personal assets of shareholders		274,939		268,494
Gross revenue tax withholdings		502,190		353,864
Asset tax payable, net		643,533		248,286
Gross revenue tax accrued		176,714		175,907
Property tax payable		—		407
Tax amnesty plan for gross revenue tax payable		181,761		166,173
Others		1,175,750		509,867
	Ps.	44,714,889	Ps.	23,761,968
Non-current
Deferred income tax (Note 14)	Ps.	26,177,713	Ps.	11,690,310
Tax amnesty plan for gross revenue tax payable		1,483,141		1,664,902
Gross revenue tax accrued		—		351,813
	Ps.	27,660,854	Ps.	13,707,025

k. Customer advances:

	As of June 30,
	2007	2006
Current
Admission rights	Ps.29,939,070	Ps.23,659,140
Lease advances (i)	24,605,928	19,710,934
Advance for the sale of Torres Rosario plot of land (ii)	2,510,520	2,365,800
Guarantee deposits	1,492,519	2,316,891
	Ps.58,548,037	Ps.48,052,765
Non-current
Admission rights	Ps.35,531,056	Ps.29,802,684
Lease advances (i)	30,194,393	11,679,327
Guarantee deposits	—	53,264
	Ps.65,725,449	Ps.41,535,275

(i) Lease advances include current and non-current balances of Ps. 1.2 million and Ps. 3.7 million as of June 30, 2007, respectively, and Ps. 1.2 million and Ps. 5.0 million as of June 30, 2006, respectively, related to advances received from Hoyts Cinemas (“Hoyts”) for the construction of the movie theater complexes at the Abasto and Alto Noa Shopping Centers. These advances accrue interest at the six-month LIBOR plus 2-2.25%. As of June 30, 2007 the six-month LIBOR was 5.38688%. Based on the agreement between the Company and Hoyts, the Company settles the advances by offsetting them against lease expense owed by Hoyts for the spaces it rents. As mentioned in Note 17, as of June 30, 2007 includes Ps. 16.3 million related to advances received from NAI International II, Inc. for the construction of a movie theater complex and a portion of parking facilities in the Cordoba Shopping.

F-28

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

4. Breakdown of the main captions (continued)

k. Customer advances (continued):

(ii) As of both June 30, 2007 and 2006, represents a payment received from Villa Hermosa S.A. in connection with a preliminary sale contract for a plot of land that is currently an integral part of the property located in Rosario (Torres de Rosario), on which the Company plans to build a residential building. The liability is disclosed net of expenses incurred by the Company on behalf of Villa Hermosa S.A.

l. Other liabilities:

	As of June 30,
	2007			2006
Current
Accrual for directors’ fees (Note 6)	Ps.	10,547,301		Ps.	8,117,840
Fees advanced to directors (Note 6)		(954,771	)		(315,134	)
Provision for donations committed (Note 6)		4,363,470			2,500,000
Contributed leasehold improvements (i)		525,525			525,525
Withholdings and guarantee deposits		220,264			237,161
Others		761,399			134,771
	Ps.	15,463,188		Ps.	11,200,163
Non-current
Contributed leasehold improvements (i)	Ps.	10,421,404		Ps.	10,946,931
Directors’ guarantee deposits (Note 6)		12,000			12,000
Others		99			100
	Ps.	10,433,503		Ps.	10,959,031

(i) Contributed leasehold improvements relate to improvements made by tenants in Abasto Shopping Center and Mendoza Plaza Shopping. The Company has recorded the improvements as fixed assets based on construction costs incurred with a corresponding deferred liability. Contributed leasehold improvements are amortized to income over the term of lease. Such amortization, net of the related depreciation of the leasehold improvement, was not significant for the years ended June 30, 2007 and 2006.

m. Provisions:

	As of June 30,
	2007		2006
Current
Provision for contingencies (i) (Note 20.d)	Ps.	733,400	Ps.	506,714
	Ps.	733,400	Ps.	506,714
Non-current
Provision for contingencies (i) (ii) (Note 20.d)	Ps.	12,441,286	Ps.	10,667,309
	Ps.	12,441,286	Ps.	10,667,309

(i) This reserve primarily relates to tax, labor and other miscellaneous matters. In addition, this balance includes Ps. 0.7 million for the claims related to Shopping Neuquén S.A. as further explained in (ii) below. In the opinion of management and based on consultation with external legal counsel, the Company has established provisions for amounts which are probable of adverse occurrence and which, according to estimates developed by the Company’s legal counsel, would meet all related contingencies and corresponding fees relating to these claims.

F-29

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

4. Breakdown of the main captions (continued)

m. Provisions (continued)

(ii) The Company’s subsidiary, Shopping Neuquén S.A.’s sole asset is a 50,000 square meter undeveloped parcel of land located in Neuquén, Argentina, where the Company intends to develop a commercial project including the construction of a shopping center, a hypermarket, a hotel and residential buildings. In June 2001, Shopping Neuquén requested the Neuquén Municipality the extension of original deadlines for the completion of the project and the authorization to sell to third parties certain parcels of the acquired plot. The Municipal Government of Neuquén had originally rejected the request and had declared that the purchase of the plot was void. Accordingly, in January 2003, Shopping Neuquén requested an injunction measure and submitted all pertinent documents sustaining the reasons underlying the delay of the project. Shopping Neuquén also requested permission to submit a new schedule considering the economic situation of the country after the 2002 crisis. Since this new request had also been rejected by the Municipal Government, Shopping Neuquén filed an action before the Supreme Court of Neuquén seeking to declare all municipal decrees and resolutions against the Company null and void. In December 2004, Shopping Neuquén was served notice by the Supreme Court of Neuquén of the rejection of the Company’s action against the Municipal Government. Accordingly, Shopping Neuquén filed a petition seeking the case be brought before the National Supreme Court. This petition has not been resolved yet.

In December 2006, Shopping Neuquén signed an agreement of understanding (the “Agreement”) with the Municipality of Neuquén and the Provincial Government pursuant to which the rescheduling of the project’s deadline as well as the sale of parcels to third parties was authorized and accepted. The Municipal Government of Neuquén enacted the ordinance on January 12, 2007. The Agreement provides for the submission of a new urban project and updated environmental studies within 120 days as from the date of the Agreement. The new project and studies were submitted by Shopping Neuquén on March 28, 2007. The Agreement establishes that Shopping Neuquén should submit all construction plans within a 150-day period after approval of the project plan by the Municipal Government. On May 10, 2007, the Municipal Government requested further explanations and delivered comments and recommendations on the project’s plan. On July 17, 2007, the Company answered the Municipal Government’s requests and is currently waiting for the Municipal Government’s decision over the feasibility of the project. When the construction plans are approved and registered with the Municipal Government, construction has to begin within a 90-day as from the registration date. The first stage of the project should comprise the construction of 21,000 square meter of the shopping center plus 10,000 square meter of the hypermarket, both to be completed within 22 months as from the commencement of construction. Should the Company default on the Agreement’s obligations, the Agreement is declared null and void regardless of any potential actions brought against the Company by the Municipal and Provincial Governments.

Pursuant to the Agreement, on December 13, 2006, Shopping Neuquén subscribed a pre-purchase agreement with an unrelated party, P.Y.E. S.A., to sell 4,332 square meter parcel of land of the plot, for US$ 0.2 million. The sale is conditioned to the purchaser to construct a hotel building on the land. The transaction is also subject to suspensive clauses, such as the municipal approval of the entire project as described in the preceding paragraph.

F-30

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

5. Shareholders’ equity

a. Common stock

As of June 30, 2007, the Company had 782.1 million authorized and outstanding shares of common stock, having a par value of Ps. 0.10 per share. Holders of the common stock are entitled to one vote for each share held of record on all matters submitted to a vote of shareholders. During fiscal years 2005, 2006 and 2007, certain holders of the Convertible Notes exercised their conversion rights and, as a result, the Company issued 52.7 million, 1.5 million and 0.1 million shares of common stock, respectively.

b. Inflation adjustment of common stock

As discussed in Note 2.d., the Company’s consolidated financial statements were prepared on the basis of general price-level accounting which reflects changes in the purchase price of the peso in the historical financial statements through February 28, 2003. The inflation adjustment related to common stock was appropriated to an inflation adjustment reserve that forms part of shareholders’ equity. According to CNV Rules, the balance of the inflation adjustment reserve may be applied only towards the issuance of common stock to shareholders of the Company.

c. Restrictions on distribution of profits (Legal reserve)

In accordance with the Argentine Corporations Law and the Company’s by-laws, 5% of the net and realized profit for the year calculated in accordance with Argentine GAAP plus (less) prior year adjustments must be appropriated by resolution of shareholders to a legal reserve until such reserve equals 20% of the Company’s outstanding capital. This legal reserve may be used only to absorb losses.

d. Reserve for new developments

Pursuant to a resolution of the Inspección General de Justicia, companies should indicate the intended use of the accumulated retained earnings balance of the year. Accordingly, a special reserve labeled as “Reserve for New Developments” is created. The accumulated retained earnings balance is transferred to this equity account. This reclassification has no impact on the total shareholders equity of the Company.

F-31

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

6. Balances and transactions with related parties

The following is a summary of the balances and transactions with related parties:

Company	Relation	Description of Transaction / caption	(Expense) income included in the statement of income for the year ended June 30,									Balance receivable (payable) as of June 30,
			2007			2006			2005			2007			2006
	SHAREHOLDERS
IRSA Inversiones y Representaciones Sociedad Anónima	Shareholder	Other current receivables	Ps.	—		Ps.	—		Ps.	—		Ps.	2,849,470		Ps. 479,243
IRSA Inversiones y Representaciones Sociedad Anónima	Shareholder	Interest and exchange differences with related parties		(10,024,582	)		(15,972,539	)		(6,909,676	)		—		—
IRSA Inversiones y Representaciones Sociedad Anónima	Shareholder	Current payable with related parties		—			—			—			(1,391,606	)	(267,760	)
IRSA Inversiones y Representaciones Sociedad Anónima	Shareholder	Short-term debt (i)		—			—			—			(4,356,976	)	(4,427,618	)
IRSA Inversiones y Representaciones Sociedad Anónima	Shareholder	Long-term debt (i)		—			—			—			(98,166,444	)	(97,944,277	)
IRSA Inversiones y Representaciones Sociedad Anónima	Shareholder	Shared services - Salaries and bonuses		1,544,955			305,997			89,517			—		—
IRSA Inversiones y Representaciones Sociedad Anónima.	Shareholder	Shared services - Salaries and bonuses		(504,769	)		(26,143	)		(69,219	)		—		—
IRSA Inversiones y Representaciones Sociedad Anónima.	Shareholder	Interest income from related parties		—			—			2,774			—		—
Parque Arauco S.A.	Shareholder	Short-term debt		—			—			—			(2,124,029	)	(2,158,468	)
Parque Arauco S.A.	Shareholder	Long-term debt		—			—			—			(47,856,232	)	(47,747,925	)
Parque Arauco S.A.	Shareholder	Interest and exchange differences with related parties		(4,887,002	)		(7,786,627	)		(4,035,186	)		—		—
Other shareholders	Shareholder	Other expenses, net - Tax on personal assets of shareholders		(556,587	)		(572,263	)		(1,663,051	)		—		—
	SUBSIDIARIES AND EQUITY INVESTEES
E-Commerce Latina S.A.	Subsidiary of Alto Palermo S.A. (APSA) since 01.01.07	Other current receivables		—			—			—			—		24,666
E-Commerce Latina S.A.	Subsidiary of Alto Palermo S.A. (APSA) since 01.01.07	Administration fees		3,000			6,000			6,000			—		—
E-Commerce Latina S.A.	Subsidiary of Alto Palermo S.A. (APSA) since 01.01.07	Equity loss from related companies		(678,569	)		(678,881	)		(626,684	)		—		—
E-Commerce Latina S.A.	Subsidiary of Alto Palermo S.A. (APSA) since 01.01.07	Equity Investment		—			—			—			—		129,474
Empalme	Subsidiary of Alto Palermo S.A. (APSA) since 12.27.06	Interest income from related parties		47,860			—			—			—		—
Comercializadora Los Altos S.A. (Altocity.com S.A.’s continuing company)	Subsidiary of E-Commerce Latina S.A.	Other current receivables and prepaid expenses		—			—			—			—		596,240
Comercializadora Los Altos S.A. (Altocity.com S.A.’s continuing company)	Subsidiary of E-Commerce Latina S.A.	Current payable with related parties		—			—			—			—		(470,511	)
Comercializadora Los Altos S.A. (Altocity.com S.A.’s continuing company)	Subsidiary of E-Commerce Latina S.A.	Administration fees		10,500			42,000			42,000			—		—
Comercializadora Los Altos S.A. (Altocity.com S.A.’s continuing company)	Subsidiary of E-Commerce Latina S.A.	Interest income from related parties		61,916			15,185			—			—		—
Mendoza Plaza Shopping S.A.	Equity investee until September 2004	Related parties results		—			—			(79,935	)		—		—
	OTHER RELATED PARTIES
Inversora Bolívar S.A.	Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima	Other current receivables		—			—			—			2,717		40
Inversora Bolívar S.A.	Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima	Current payable with related parties		—			—			—			(160,014	)	(132,254	)
Inversora Bolívar S.A.	Subsidiaries of IRSA Inversiones y Representaciones Sociedad Anónima	Leases		(576,987	)		(407,533	)		(394,538	)		—		—
Dalor S.A.	Related company of a minority shareholder of Tarshop	Current payable with related parties		—			—			—			—		(100,137	)
Dalor S.A.	Related company of a minority shareholder of Tarshop	Accrued interest		—			—			(36,655	)		—		—
Leon Halac	Tarshop Sshareholder (minority interest)	Current payable with related parties		—			—			—			—		(771,212	)
Cresud S.A.C.I.F. y A.	Shareholder of IRSA Inversiones y Representaciones Sociedad Anónima	Other current receivables and prepaid expenses		—			—			—			1,883,805		827,692
Cresud S.A.C.I.F. y A.	Shareholder of IRSA Inversiones y Representaciones Sociedad Anónima	Current payable with related parties		—			—			—			(918,967	)	(1,377,090	)
Cresud S.A.C.I.F. y A	Shareholder of IRSA Inversiones y Representaciones Sociedad Anónima	Shared services - Salaries and bonuses		2,120,752			607,262			222,871			—		—
Cresud S.A.C.I.F. y A.	Shareholder of IRSA Inversiones y Representaciones Sociedad Anónima	Shared services – Salaries and bonuses		(242,764	)		—			—			—		—
Nuevas Fronteras S.A	Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima	Current payable with related parties		—			—			—			(3,123	)	(291	)
Nuevas Fronteras S.A	Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima	Other current receivables and prepaid expenses		—			—			—			3,106		—
Estudio Zang, Bergel y Viñes (legal advisor)	Shareholders of law firm are directors and/or shareholders of the Company	Current payable with related parties		—			—			—			(208,530	)	(179,284	)
Estudio Zang, Bergel y Viñes (legal advisor)	Shareholders of law firm are directors and/or shareholders of the Company	Fees for legal services		(1,586,494	)		(724,271	)		(503,034	)		—		—
Metroshop S.A.	Equity investee of Tarshop	Other current receivables and prepaid expenses		—			—			—			8,320,183		4,057,462
Metroshop S.A.	Equity investee of Tarshop	Current payable with related parties		—			—			—			(2,226,369	)	(1,241,926	)
Metronec S.A.	Metroshop S.A. shareholder	Current payable with related parties		—			—			—			(728,906	)	(854,543	)
Loans to personnel	Employees	Other current receivables and prepaid expenses		—			—			—			768,765		556,552
Personnel	Employees	Interest income from related parties		48,065			—			—			—		—
Personnel	Employees	Interest and exchange differences with related parties		(4	)		—			—			—		—
Personnel	Employees	Current payable with related parties		—			—			—			(4,609	)	—
Falabella S.A.	Mendoza Plaza Shopping S.A. Shareholder (minority interest)	Other current receivables		—			—			—			268,174		164,175
Falabella S.A.	Mendoza Plaza Shopping S.A. Shareholder (minority interest)	Current payable with related parties		—			—			—			(959,196	)	(988,660	)

F-32

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

6. Balances and transactions with related parties (continued)

Company	Relation	Description of Transaction / caption	(Expense) income included in the statement of income for the year ended June 30,						Balance receivable (payable) as of June 30,
			2007		2006		2005		2007		2006
Falabella S.A.	Mendoza Plaza Shopping S.A. Shareholder (minority interest)	Non current payable with related parties	—		—		—		—		(925,800	)
Falabella S.A.	Mendoza Plaza Shopping S.A. Shareholder (minority interest)	Interest and exchange differences with related parties	(79,910	)	(305,026	)	(78,837	)	—		—
Falabella S.A.	Mendoza Plaza Shopping S.A. Shareholder (minority interest)	Leases and services	1,587,692		1,333,433		1,114,617		—		—
Directors	Directors	Short-term debt	—		—		—		(1,373	)	(1,010	)
Directors	Directors	Long-term debt	—		—		—		(30,930	)	(41,031	)
Directors	Directors	Interest and exchange differences with related parties	(3,159	)	(6,692	)	(15,870	)	—		—
Directors and management	Directors and management	Other current receivables	—		—		—		5,450		820
Directors	Directors	Other current liabilities	—		—		—		(9,592,530	)	(7,802,706	)
Directors	Directors	Other non current liabilities	—		—		—		(12,000	)	(12,000	)
Directors	Directors	Directors’ fees	(11,751,793	)	(8,883,474	)	(8,950,771	)	—		—
Fundación IRSA	Related to IRSA Inversiones y Representaciones Sociedad Anónima	Other current liabilities - Donations payable	—		—		—		(2,300,000	)	(2,500,000	)
Fundación IRSA	Related to IRSA Inversiones y Representaciones Sociedad Anónima	Other current receivables	—		—		—		3,951		—
Fundación IRSA	Related to IRSA Inversiones y Representaciones Sociedad Anónima	Other expenses, net - Donations	(2,300,000	)	(2,549,506	)	(4,012,457	)	—		—
Abril S.A.	Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima	Other current receivables and prepaid expenses	—		—		—		—		16
Banco Hipotecario S.A.	Equity investee of IRSA Inversiones y Representaciones Sociedad Anónima	Current investments	—		—		—		1,661,969		2,170,258
Banco Hipotecario S.A.	Equity investee of IRSA Inversiones y Representaciones Sociedad Anónima	Other current receivables and prepaid expenses	—		—		—		102,522		—
Banco Hipotecario S.A.	Equity investee of IRSA Inversiones y Representaciones Sociedad Anónima	Current payable with related parties	—		—		—		(55,800	)	—
Museo de los niños	Related to IRSA Inversiones y Representaciones Sociedad Anónima	Other current receivables and prepaid expenses	—		—		—		57,138		5,816
Banco Hipotecario S.A. Directors	Equity investee of IRSA Inversiones y Representaciones Sociedad Anónima	Short-term debt	—		—		—		(995	)	(1,855	)
Banco Hipotecario S.A. Directors	Equity investee of IRSA Inversiones y Representaciones Sociedad Anónima	Long-term debt	—		—		—		(22,394	)	(22,343	)
Banco Hipotecario S.A. Directors	Equity investee of IRSA Inversiones y Representaciones Sociedad Anónima	Interest and exchange differences with related parties	(2,274	)	(3,642	)	(1,815	)	—		—
Owners Consortium of Libertador 498	Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima	Other current receivables	—		—		—		1,408		—
Consultores Assets Management S.A.	Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima	Other current receivables	—		—		—		3,422		—
Cactus S.A.	Subsidiary of Cresud S.A.	Other current receivables	—		—		—		5,301		—
Cactus S.A	Subsidiary of Cresud S.A.	Current payable with related parties	—		—		—		(64	)	—
Futuros y Opciones.com S.A.	Subsidiary of Cresud S.A.	Other current receivables	—		—		—		1,059		—
Ritelco S.A.	Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima	Current payable with related parties	—		—		—		(366	)	—
Ritelco S.A.	Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima	Interest income from related parties	—		—		2,554		—		—
Canteras Natal Crespo	Related to IRSA Inversiones y Representaciones Sociedad Anónima	Other current receivables	—		—		—		952		4,168

(i) As discussed in Note 15, in August 2002 the Company issued US$ 50 million of Convertible Notes, of which US$ 30 million were purchased by IRSA, the principal shareholder of the Company. In addition, during the years ended June 30, 2004 and 2005 IRSA acquired US$ 1 million and US$ 2 million of Convertible Notes, respectively. Also, during the year ended June 30, 2005 IRSA exercised its conversion rights and converted US$ 1.3 million of Convertible Notes. As a result, at June 30, 2007 and 2006 IRSA holds US$ 31.7 million of the Company’s Convertible Notes, respectively. For details of the issuance, see Note 15.

F-33

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

6. Balances and transactions with related parties (continued)

The following is a summary of the expenses and services recovered with related parties:

Company	Relation	Description of transaction	Sale of goods and/or services for the year ended June 30,			Purchase of goods and/or services for the year ended June 30,
			2007	2006	2005	2007	2006	2005
IRSA Inversiones y representaciones Sociedad Anónima	Shareholder	Expenses and Services recovery	3,126,034	1,915,596	506,571	1,986,058	696,044	1,355,687
IRSA Inversiones y representaciones Sociedad Anónima	Shareholder	Interest	—	—	2,774	—	—	385,437
Ritelco S.A.	Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima	Expenses recovery	497	—	141	—	—	—
		Interest	—	—	2,554	—	—	—
Canteras Natal Crespo SA	Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima	Expenses recovery	2,189	996	—	—	—	—
Futuros y Opciones S.A.	Subsidiary of Cresud S.A.	Expenses recovery	789	4,246	—	—	—	—
Cactus S.A.	Subsidiary of Cresud S.A.	Expenses recovery	4,573	250	16	—	—	—
Consultores Asset Management S.A	Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima	Expenses recovery	3,860	1,998	200	—	—	—
Consorcio de Propietarios Libertador 498	Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima	Expenses recovery	1,164	—	—	—	—	—
Cresud S.A.	Shareholder of IRSA Inversiones y Representaciones Sociedad Anónima	Expenses and Services recovery	3,276,365	1,782,707	519,555	1,096,466	497,717	294,905
Tarshop S.A.	Subsidiary	Expenses and Services recovery	—	—	—	1,092,939	471,366	197,059
E-Commerce Latina S.A.	Subsidiary	Expenses and Services recovery	36,631	6,000	6,000	—	—	—
Empalme S.A.I.C.F.A. Y G.	Subsidiary	Interest	47,860	—	—	—	—	—
Empalme S.A.I.C.F.A. Y G.	Subsidiary	Expenses recovery	70,660	—	—	—	—	—
Comercializadora Los Altos S.A. (continuadora de Altocity.com S.A.)	Subsidiary of E-Commerce Latina S.A.	Expenses and Services recovery	221,509	60,534	77,693	20,435	31,726	49,530
Comercializadora Los Altos S.A. (continuadora de Altocity.com S.A.)	Subsidiary of E-Commerce Latina S.A.	Interest income from related parties	107,114	18,885	—	—	—	—
Inversora Bolivar S.A.	Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima	Expenses recovery	1,706	874	127	—	—	—

F-34

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

Company	Relation	Description of transaction	Sale of goods and/or services for the year ended June 30,			Purchase of goods and/or services for the year ended June 30,
			2007	2006	2005	2007	2006	2005
León Halac	Tarshop S.A. shareholder (minority interest)	Expenses recovery	—	83	—	—	—	—
Nuevas Fronteras S.A.	Subsidiary of IRSA Inversiones y Representaciones Sociedad Anónima	Expenses recovery	15,567	—	—	—	—	—
Estudio Zang, Bergel y Viñes	Related to the Board of Directors	Expenses recovery	—	578	—	—	—	—
Falabella S.A.	Mendoza Plaza Shopping S.A. Shareholder (minority interest)	Expenses and Services recovery	2,570,335	2,343,184	666,306	—	—	—
Falabella S.A.	Mendoza Plaza Shopping S.A. Shareholder (minority interest)	Interest income from related parties	114,551	537	—	—	—	—
Fundación IRSA	Related to IRSA Inversiones y Representaciones Sociedad Anónima	Expenses recovery	1,021	—	—	—	—	—
Banco Hipotecario S.A.	Equity investee of IRSA Inversiones y Representaciones Sociedad Anónima	Expenses and Services recovery	271,208	—	—	—	—	—
Banco Hipotecario S.A.	Equity investee of IRSA Inversiones y Representaciones Sociedad Anónima	Interest income from related parties	201	—	—	—	—	—
Museo de los niños	Related to IRSA Inversiones y Representaciones Sociedad Anónima	Expenses and Services recovery	418,906	240,721	197,079	—	—	—
Loans to personnel	Employees	Interest	25,281	23,412	2,108	—	—	—
Directors	Directors	Expenses recovery	12,000	4,623	45	—	—	—

F-35

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

7. Financial results, net

	Years ended June 30,
	2007			2006			2005
Generated by assets:
Impairment losses		—			(395,599	)		—
Reversal of impairment losses	Ps.	2,273,181		Ps.	9,894,355		Ps.	13,093,117
Interest income		14,752,631			6,802,699			4,776,876
Exchange differences and holding losses		(3,787,803	)		1,251,757			350,766
Interest income from related parties (Note 6)		157,841			15,185			5,328
	Ps.	13,395,850		Ps.	17,568,397		Ps.	18,226,087
Generated by liabilities:
Interest expense	Ps.	(15,937,666	)	Ps.	(7,336,013	)	Ps.	(12,366,004	)
Gain from settlement of swap agreement (Note 12)		—			—			5,222,271
Gain on repurchase of debt		—			—			1,991,629
Exchange differences		(1,927,664	)		(1,791,724	)		378,601
Interest and exchange differences with related parties (Note 6)		(14,996,931	)		(24,074,526	)		(11,041,384	)
	Ps.	(32,862,261	)	Ps.	(33,202,263	)	Ps.	(15,814,887	)
	Ps.	(19,466,411	)	Ps.	(15,633,866	)	Ps.	2,411,200

8. Other expenses, net

	Years ended June 30,
	2007			2006			2005
Donations (Note 6)	Ps.	(4,444,411	)	Ps.	(2,549,506	)	Ps.	(4,012,457	)
Easement income (i)		—			2,427,718			—
Recovery (loss) on fire damages (net of insurance recoveries)		1,773,131			(5,787,577	)		—
Unreimbursed expenses (ii)		(298,491	)		(1,743,141	)		—
Charges for contingencies, net		(3,016,544	)		(236,945	)		(1,356,740	)
Tax on personal assets of shareholders (Note 6)		(556,587	)		(572,263	)		(1,663,051	)
Gain on cancellation of liabilities		3,126,935			—			—
Other taxes		—			(872,467	)		—
Others		68,501			(427,587	)		(349,712	)
	Ps.	(3,347,466	)	Ps.	(9,761,768	)	Ps.	(7,381,960	)

(i) As of June 30, 2006, the charge relates to the termination of the easement agreement with Riocruz S.C.S. On February 2, 1999, Mendoza Plaza Shopping had entered into an easement agreement with one anchor tenant, C&A, for an aggregate purchase price of US$ 2.9 million. Easement revenue was amortized to income under the straight-line method over the term of the agreement. In September 2005, Mendoza Plaza Shopping acquired from Riocruz the retail space where the C&A store was located, and consequently, the easement agreement was terminated.

(ii) As of both June 30, 2007 and 2006, mainly belongs to expenses incurred by the Company when constructing Alto Rosario Shopping. Certain expenses were going to be borned by Coto (a hypermarket beside the shopping center). Coto rejected the expenses and the Company deemed them as not recoverable.

F-36

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

9. Segment information

General information

The Company is required to disclose segment information in accordance with Technical Resolution No. 18 (“RT 18”) “Specific Considerations for the Preparation of Financial Statements”. RT 18 establishes standards for reporting information about operating segments in annual financial statements and requires reporting of selected information about operating segments in interim financial reports issued to shareholders. Operating segments are components of a company about which separate financial information is available that is regularly evaluated by the chief operating decision maker(s) in deciding how to allocate resources and assess performance. The statement also establishes standards for related disclosures about a company’s products and services, geographical areas and major customers. The Company has determined that its reportable segments are those that are based on the Company’s method of internal reporting. The Company has three reportable segments. These segments are “Leases and Services”, “Credit Card Operations” and “Others”. Others primarily include sales and development of properties.

A general description of each segment follows:

• Leases and Services

This segment includes the operating results of the Company’s shopping centers principally comprised of lease and service revenues from tenants.

• Credit Card Operations

This segment includes revenues derived from credit card transactions that consist of commissions, financing income, results from securitized receivables operations and life and disability insurance charges to cardholders.

• Others

This segment includes the operating results of the Company’s construction and sale of residential properties. As discussed in Note 2.h, the Company had a 50% ownership interest in E-commerce Latina S.A., through which the Company offered its products via internet on the altocity.com website. Effective March 1, 2007, the website was deactivated. However, E-commerce Latina S.A. started new business activities (see Note 2.h for details). On January, 2007, the Company acquired the remaining 50% in E-commerce Latina S.A. (See Note 2.h for details). The Company gained control of E-commerce Latina S.A. through this acquisition and accordingly the results of operations of E-commerce Latina S.A. were fully consolidated as from the date.

The Company’s primary operations are located in Argentina. All revenues and long-lived assets are attributable to the Company’s country of domicile.

The Company measures its reportable segments based on net income. Inter-segment transactions are accounted for at current market prices. The Company evaluates performance of its segments and allocates resources to them based on net income. The Company is not dependent on any single customer.

The accounting policies of the segments are the same as those described in Note 3. The column titled eliminations includes the eliminations of inter-segment activities.

F-37

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

9. Segment information (continued)

As of and for the year ended June 30, 2007:

	Leases and services		Credit card Operations		Others		Total reportable segments		Eliminations		Total as of and for the year ended June 30, 2007
Revenues	Ps.	271,248,380	Ps.	212,965,332	Ps.	395,507	Ps.	484,609,219	Ps	(i) (1,378,065)	Ps.	483,231,154
Costs		(90,644,235)		(77,417,344)		(1,411,386)		(169,472,965)		(i) (ii) 1,166,397		(168,306,568)
Gross profit (loss)	Ps.	180,604,145	Ps.	135,547,988	Ps.	(1,015,879)	Ps.	315,136,254	Ps.	(211,668)	Ps.	314,924,586
Selling expenses		(20,003,558)		(61,966,341)		(2,342,096)		(84,311,995)		—		(84,311,995)
Administrative expenses		(33,548,025)		(46,234,062)		(378,785)		(80,160,872)		(i) 288,000		(79,872,872)
Net income from retained interest in securitized receivables		—		3,253,789		—		3,253,789		—		3,253,789
Gain from recognition of inventories at net realizable value		—		—		545,400		545,400		—		545,400
Operating income (loss)	Ps.	127,052,562	Ps.	30,601,374	Ps.	(3,191,360)	Ps.	154,462,576	Ps.	76,332	Ps.	154,538,908
Equity loss from related companies		—		—		(678,569)		(678,569)		—		(678,569)
Amortization of goodwill		(4,366,356)		—		—		(4,366,356)		—		(4,366,356)
Financial results, net		(19,458,713)		825,313		(756,679)		(19,390,079)		(ii) (76,332)		(19.466.411)
Other (expense) income, net		(6,738,157)		3,034,256		356,435		(3,347,466)		—		(3,347,466)
Income before taxes and minority interest	Ps.	96,489,336	Ps.	34,460,943	Ps.	(4,270,173)	Ps.	126,680,106	Ps.	—	Ps.	126,680,106
Income tax (expense) income		(45,243,616)		(15,454,533)		4,445,217		(56,252,932)		—		(56,252,932)
Minority interest		(2,569,327)		(3,801,283)		—		(6,370,610)		—		(6,370,610)
Net income	Ps.	48,676,393	Ps.	15,205,127	Ps.	175,044	Ps.	64,056,564	Ps.	—	Ps.	64,056,564
Depreciation and amortization		71,130,983		2,841,691		634,971		74,607,645		—		74,607,645
Acquisitions of fixed assets		88,375,632		7,380,884		—		95,756,516		—		95,756,516
Operating assets		1,289,959,675		139,656,913		21,189,223		1,450,805,811		—		1,450,805,811
Non operating assets		524,291,349		118,598,921		14,469		642,904,739		—		642,904,739
Total Assets	Ps.	1,814,251,024	Ps.	258,255,834	Ps.	21,203,692	Ps.	2,093,710,550	Ps.	—	Ps.	2,093,710,550

(i) Represents inter-segment lease revenues and expenses.

(ii) Represents interest expense generated by inter-segment loan used to fund the credit card activity.

F-38

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

9. Segment information (continued)

As of and for the year ended June 30, 2006:

	Leases and services		Credit card Operations		Others		Total reportable segments		Eliminations		Total as of and for the year ended June 30, 2006
Revenues	Ps.	215,894,651	Ps.	122,968,616	Ps.	23,384,250	Ps.	362,247,517	Ps	(i) (891,604)	Ps.	361,355,913
Costs		(76,634,274)		(45,532,952)		(18,497,882)		(140,665,108)		(i) (ii) 1,599,732		(139,065,376)
Gross profit	Ps.	139,260,377	Ps.	77,435,664	Ps.	4,886,368	Ps.	221,582,409	Ps.	708,128	Ps.	222,290,537
Selling expenses		(15,296,283)		(30,900,024)		(709,021)		(46,905,328)		—		(46,905,328)
Administrative expenses		(26,415,282)		(26,349,116)		(8,672)		(52,773,070)		—		(52,773,070)
Net income from retained interest in securitized receivables		—		2,625,001		—		2,625,001		—		2,625,001
Gain from recognition of inventories at net realizable value		—		—		3,497,632		3,497,632		—		3,497,632
Operating income	Ps.	97,548,812	Ps.	22,811,525	Ps.	7,666,307	Ps.	128,026,644	Ps.	708,128	Ps.	128,734,772
Equity loss from related companies		—		—		(678,881)		(678,881)		—		(678,881)
Amortization of goodwill		(4,516,101)		(223,574)		—		(4,739,675)		—		(4,739,675)
Financial results, net		(16,477,323)		106,367		1,445,218		(14,925,738)		(ii) (708,128)		(15,633,866)
Other expenses, net		(9,634,483)		(124,863)		(2,422)		(9,761,768)		—		(9,761,768)
Income before taxes and minority interest	Ps.	66,920,905	Ps.	22,569,455	Ps.	8,430,222	Ps.	97,920,582	Ps.	—	Ps.	97,920,582
Income tax expense		(34,284,744)		(8,238,421)		(5,933,972)		(48,457,137)		—		(48,457,137)
Minority interest		(1,873,491)		(2,910,922)		—		(4,784,413)		—		(4,784,413)
Net income	Ps.	30,762,670	Ps.	11,420,112	Ps.	2,496,250	Ps.	44,679,032	Ps.	—	Ps.	44,679,032
Depreciation and amortization		66,692,169		1,881,710		—		68,573,879		—		68,573,879
Acquisitions of fixed assets		26,675,136		3,586,262		—		30,261,398		—		30,261,398
Investment in equity method investee		—		—		129,474		129,474		—		129,474
Operating assets		890,806,541		74,147,989		25,838,333		990,792,863		—		990,792,863
Non operating assets		272,448,684		65,933,904		29,352,085		367,734,673		(iii) (3,482,048)		364,252,625
Total Assets	Ps.	1,163,255,225	Ps.	140,081,893	Ps.	55,190,418	Ps.	1,358,527,536	Ps.	(3,482,048)	Ps.	1,355,045,488

(i) Represents inter-segment lease revenues and expenses.

(ii) Represents interest expense generated by inter-segment loan used to fund the credit card activity.

(iii) Represents other inter-segment receivables eliminated in consolidation.

F-39

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

9. Segment information (continued)

As of and for the year ended June 30, 2005:

	Leases and services		Credit card Operations		Others		Total reportable segments		Eliminations		Total as of and for the year ended June 30, 2005
Revenues	Ps.	165,824,082	Ps.	64,557,977	Ps.	121,430	Ps.	230,503,489	Ps	(i) (346,168)	Ps.	230,157,321
Costs		(69,203,912)		(24,474,324)		(204,586)		(93,882,822)		(i) (ii) 1,372,456		(92,510,366)
Gross profit (loss)	Ps.	96,620,170	Ps.	40,083,653	Ps.	(83,156)	Ps.	136,620,667	Ps.	1,026,288	Ps.	137,646,955
Selling expenses		(11,027,272)		(13,496,245)		(250,839)		(24,774,356)		—		(24,774,356)
Administrative expenses		(16,948,434)		(14,890,490)		(36,376)		(31,875,300)		—		(31,875,300)
Net income from retained interest in securitized receivables		—		423,508		—		423,508		—		423,508
Operating income (loss)	Ps.	68,644,464	Ps.	12,120,426	Ps.	(370,371)	Ps.	80,394,519	Ps.	1,026,288	Ps.	81,420,807
Equity loss from related companies		(79,935)		—		(626,684)		(706,619)		—		(706,619)
Amortization of goodwill		(4,584,543)		(242,255)		—		(4,826,798)		—		(4,826,798)
Financial results, net		1,525,233		96,316		1,815,939		3,437,488		(ii) (1,026,288)		2,411,200
Other expenses (income), net		(7,383,867)		55,526		(53,619)		(7,381,960)		—		(7,381,960)
Income before taxes and minority interest	Ps.	58,121,352	Ps.	12,030,013	Ps.	765,265	Ps.	70,916,630	Ps.	—	Ps.	70,916,630
Income tax expense		(28,874,276)		(4,864,295)		122,697		(33,615,874)		—		(33,615,874)
Minority interest		(2,563,762)		(1,481,594)		—		(4,045,356)		—		(4,045,356)
Net income	Ps.	26,683,314	Ps.	5,684,124	Ps.	887,962	Ps.	33,255,400	Ps.	—	Ps.	33,255,400
Depreciation and amortization		62,260,039		1,173,502		—		63,433,541		—		63,433,541
Acquisitions of fixed assets		49,070,871		2,462,705		—		51,533,576		—		51,533,576
Investment in equity method investee		—		—		808,355		808,355		—		808,355
Operating assets		959,338,889		31,537,807		51,255,612		1,042,132,308		—		1,042,132,308
Non operating assets		167,880,436		42,889,870		1,382,121		212,152,427		(iii) (6,389,917)		205,762,510
Total Assets	Ps.	1,127,219,325	Ps.	74,427,677	Ps.	52,637,733	Ps.	1,254,284,735	Ps.	(6,389,917)	Ps.	1,247,894,818

(i) Represents inter-segment lease revenues and expenses.

(ii) Represents interest expense generated by inter-segment loan used to fund the credit card activity.

(iii) Represents other inter-segment receivables eliminated in consolidation

F-40

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

10. Additional information on assets and liabilities

The aging of main assets and liabilities as of June 30, 2007 is as follows:

	To mature in 3 months		To mature between 4 and 6 months		To mature between 7 and 9 months		To mature between 10 and 12 months		To mature in greater than 1 year			Past due			No fixed term		Total
Assets
Other Investments (1)	Ps.	460,831,464	Ps.	5,961,625	Ps.	3,721,380	Ps.	8,701,881	Ps.	55,682,995		Ps.	—		Ps.	6,192,250	Ps.	541,091,595
Accounts receivable, net		60,103,116		16,151,890		16,865,076		12,081,214		41,967,948			45,757,096			140,344		193,066,684
Other receivables and prepaid expenses, net		30,217,332		10,286,006		3,070,866		5,345,091		20,771,865			2,621,530			12,033,974		84,346,664
	Ps.	551,151,912	Ps.	32,399,521	Ps.	23,657,322	Ps.	26,128,186	Ps.	118,422,808		Ps.	48,378,626		Ps.	18,366,568	Ps.	818,504,943
Liabilities
Trade accounts payable	Ps.	162,592,732	Ps.	11,662,067	Ps.	1,685,945	Ps.	2,226,020	Ps.	20,804		Ps.	1,322,641		Ps.	—	Ps.	179,510,209
Customer advances		21,262,774		10,759,873		10,756,265		10,755,779		65,725,449			4,956,896			56,450		124,273,486
Short-term and long-term debt		52,113,877		14,815,523		1,635,100		8,554,776		678,751,885			—			90,778		755,961,939
Related parties		6,615,700		13,950		13,950		13,950		—			—			—		6,657,550
Other liabilities (2)		36,294,554		36,534,357		3,258,398		4,615,924		11,904,545			—			39,364,499		131,972,277
	Ps.	278,879,637	Ps.	73,785,770	Ps.	17,349,658	Ps.	26,166,449	Ps.	756,402,683		Ps.	6,279,537		Ps.	39,511,727	Ps.	1,198,375,461
	Accruing interest at a fixed rate				Accruing interest at a variable rate				Not accruing interest
	Current		Non-Current		Current		Non-Current		Current			Non-Current			Total
Assets
Investments (1)	Ps.	461,924,450	Ps.	—	Ps.	23,484,150	Ps.	55,682,995	Ps.	—		Ps.	—		Ps.	541,091,595
Accounts receivable, net		—		—		6,475,761		413,658		144,622,975			41,554,290			193,066,684
Other receivables and prepaid expenses, net		780,998		—		—		—		51,434,743			32,130,923			84,346,664
	Ps.	462,705,448	Ps.	—	Ps.	29,959,911	Ps.	56,096,653	Ps.	196,057,718		Ps.	73,685,213		Ps.	818,504,943
Liabilities
Trade accounts payable	Ps.	—	Ps.	—	Ps.	1,009,975	Ps.	—	Ps.	178,479,430		Ps.	20,804		Ps.	179,510,209
Customer advances		—		—		1,220,000		3,685,684		57,328,037			62,039,765			124,273,486
Short-term and long-term debt		65,754,496		677,389,379		12,472,057		6,186,000		(1,016,499	)		(4,823,494	)		755,961,939
Related parties		947,562		—		—		—		5,709,988			—			6,657,550
Other liabilities (2)		181,761		1,483,142		—		—		81,254,873			49,052,501			131,972,277
	Ps.	66,883,819	Ps.	678,872,521	Ps.	14,702,032	Ps.	9,871,684	Ps.	321,755,829		Ps.	106,289,576		Ps.	1,198,375,461

(1) Represents mutual funds, time deposits, government bonds, mortgage bonds, trust debt securities, retained interest in transferred credit card receivables and others.

(2) Represents salaries and social security payable, taxes payable, dividends payable, other liabilities and provisions.

11. Tarshop credit card receivables securitization

The Company has ongoing revolving year securitization programs through which Tarshop, a majority-owned subsidiary of the Company, transfers a portion of its customer credit card receivable balances to master trusts that issue certificates to public and private investors.

Under the securitization programs, the trusts may issue two types of certificates representing undivided interests in the Trust – Títulos de Deuda Fiduciaria (“TDF”) and Certificados de Participación (“CP”), which represent debt, and equity certificates, respectively. Interest and principal services are paid periodically to the TDF holders throughout the life of the security. CPs are subordinated securities which entitle the CP holders to share pro rata in the cash flows of the securitized credit card receivables, after principal and interest on the TDFs and other fees and expenses have been paid. During the revolving period no payments are made to TDF and CP holders. Principal collections of the underlying financial assets are used by the Trust to acquire additional credit card receivables throughout the revolving period. Once the revolving period ends, a period of liquidation occurs during which: (i) no further assets are purchased and (ii) all cash collections are used to fulfill the TDF service requirements and (iii) the remaining proceeds are used to fulfill the CPs service requirements.

At the time of the securitization, Tarshop transfers credit card receivables to the trust in exchange for cash and retained interests in the trust (CPs). Part of the proceeds is retained by the trustee and maintained as a cash reserve to serve as collateral for the payment of amounts due on the TDFs. Cash reserves flow back to Tarshop on a monthly basis according to a schedule until all TDFs are fully paid. Cash reserves are stated at cost and are classified as “guarantee deposits” within the caption “Other receivables and prepaid expenses” in the accompanying consolidated balance sheets. CPs are carried at

F-41

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

11. Tarshop credit card receivables securitization (continued)

their equity value based on financial statements issued by the trusts and classified as investments in the accompanying consolidated balance sheets. Gain or losses on CPs are reported as a component of net income in credit card trust. Tarshop recognizes a result on the sale of receivables when the carrying value of transferred credit card receivables differs from the amount of cash and CPs received. Results recognized on the sale of receivables are reported as a component of “Net income from retained interest in securitized receivables” in the accompanying statements of income. Expenses related to the securitization of receivables are expensed as incurred.

At June 30, 2007 the Company has twenty securitization programs outstanding, pursuant to which Tarshop has sold an aggregate amount of Ps. 751.7 million of its customer credit card receivable balances to Trusts in exchange for Ps. 642.0 million in cash proceeds, Ps. 43.3 million variable rate interest TDFs, and Ps. 66.4 million nominal value subordinated CPs. Under the securitization programs, the Trusts issued Ps. 27.5 million 10.25% fixed-rate interest TDFs, Ps. 18.2 million 11.50% fixed-rate interest TDFs, Ps. 60.5 million 12.00% fixed-rate interest TDFs, Ps. 253.4 million 12.50% fixed-rate interest TDFs and Ps. 282.4 million 13.00% fixed-rate interest TDFs. Except for certain TDFs acquired by Tarshop as mentioned above, the TDFs were sold to other investors through a public offering in Argentina. As mentioned above, as a credit protection for investors, the trusts has established cash reserves for losses amounting to Ps. 11.9 million.

12. Derivative financial instruments

The Company did not have any derivative activity for the years ended June 30, 2007 and 2006. In March 2001, the Company entered into an interest rate swap agreement, with a notional amount of Ps. 85 million for a four-year term, effectively converting a portion of the outstanding peso-denominated fixed-rate debt to a variable rate. Following the Argentine crisis in 2001, the swap agreement was revised for a notional amount of US$ 69.1 million. The Company deposited US$ 50 million as with the counterparty as collateral for the agreement. The Company settled the swap agreement during the year ended June 30, 2005 recognizing a net gain of Ps. 5.2 million.

F-42

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

13. Earnings per share

The following tables set forth the computation of basic and diluted net income per share under Argentine GAAP for all periods presented:

	Year ended June 30,
	2007			2006			2005
Numerator:
Net income available to common shareholders	Ps.	64,056,564		Ps.	44,679,032		Ps.	33,255,400
Plus (less): income (loss) impact of assumed conversions:
Interest expense on Convertible Notes		14,586,496			14,360,936			12,217,475
Foreign currency exchange loss (gain) on convertible debt		330,596			9,408,565			(2,999,252	)
Income tax effects		(5,220,982	)		(8,319,325	)		(3,226,378	)
Net income available to common shareholders plus assumed conversions	Ps.	73,752,674		Ps.	60,129,208		Ps.	39,247,245
	Year ended June 30,
	2007			2006			2005
Denominator:
Weighted-average number of shares outstanding	Ps.	782,056,978		Ps.	780,432,065		Ps.	777,017,782
Plus: incremental shares of assumed conversions:
Convertible Notes		1,457,454,043			1,363,565,610			1,365,009,110
Adjusted weighted-average number of shares	Ps.	2,239,511,021		Ps.	2,143,997,675		Ps.	2,142,026,892
Basic and diluted EPS:
Basic net income per common share	Ps.	0.08		Ps.	0.06		Ps.	0.04
Diluted net income per common share	Ps.	0.03		Ps.	0.03		Ps.	0.02

F-43

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

14. Income taxes

The Company accounts for income taxes using the liability method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax based assets and liabilities and are measured using the enacted tax rates.

Income tax expense for the years ended June 30, 2007, 2006 and 2005 consisted of the following:

	2007			2006		2005
Current income tax expense	Ps.	60,845,043		Ps.	41,564,638	Ps.	34,678,072
Deferred income tax expense (benefit)		(4,592,111	)		6,892,499		(1,062,198	)
Income tax expense	Ps.	56,252,932		Ps.	48,457,137	Ps.	33,615,874

The tax effects of temporary differences that give rise to the Company’s deferred tax assets and liabilities at June 30, 2007 and 2006 are presented below:

	Balances as of June 30, 2006			Changes for the year (ii)			Balances as of June 30, 2007
Deferred tax assets (liabilities):
Accounts receivable	Ps.	5,937,648		Ps.	3,820,705		Ps.	9,758,353
Other receivables and prepaid expenses		(564,231	)		1,687,949			1,123,718
Inventory		(5,752,440	)		3,552,189			(2,200,251	)
Undeveloped parcels of land		(431,961	)		431,961			—
Investments		(93,740	)		(3,001,837	)		(3,095,577	)
Fixed assets		(9,568,455	)		(16,476,803	)		(26,045,258	)
Intangible assets		(583,069	)		436,415			(146,654	)
Salaries and social security payable		100,905			117,025			217,930
Short-term and long-term debt		—			(2,043,997	)		(2,043,997	)
Trade accounts payable		400,092			(260,092	)		140,000
Other liabilities		1,220,941			1,117,531			2,338,472
Provisions		1,332,646			771,998			2,104,644
Tax loss carryforwards (i)		2,402,208			1,697,671			4,099,879
Valuation allowance		(173,097	)		(1,525,471	)		(1,698,568	)
Net deferred income tax liability	Ps.	(5,772,553	)	Ps.	(9,674,756	)	Ps.	(15,447,309	)

(i) As of June 30, 2007 the Company and its subsidiaries had accumulated tax loss carryforwards of approximately Ps. 11.7 million, which expire at various dates through 2013.

(ii) Includes the effect of deferred taxes of the acquisition of Empalme and the PAMSA transaction, which do not impact earnings of the year.

Income tax expense for the years ended June 30, 2007, 2006 and 2005 differed from the amounts computed by applying the Company’s statutory income tax rate to pre-tax income as a result of the following:

	2007			2006			2005
Income tax expense at statutory tax rate on pretax income	Ps.	44,338,036		Ps.	34,272,204		Ps.	24,820,821
Non-deductible expenses		5,438,821			2,192,646			2,310,072
Loss on equity investees		236,305			237,608			247,317
Change in valuation allowance		(3,566,244	)		(1,390,120	)		(3,221,633	)
Inflation adjustment		9,092,978			12,338,654			8,002,704
Others, net		713,036			806,145			1,456,593
Income tax expense	Ps.	56,252,932		Ps.	48,457,137		Ps.	33,615,874

F-44

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

15. Issuance of Convertible and Non-Convertible Notes

In May 2007, the Company issued an aggregate amount of US$ 170.0 million of non-convertible notes (the Non-Convertible Notes ) under the Global Program for up to US$ 200 million authorized by the CNV on April 19, 2007. The Non-Convertible Notes were issued at par in two series. Out of the total amount, US$ 120.0 million were issued as Series I of Non-Convertible Notes due May 11, 2017 and Ps. 154.0 million (equivalent to US$ 50.0 million) were issued as Series II of Non-Convertible Notes due June 11, 2012. Series I bear interest at a fixed rate of 7.875% per annum and Series II bear interest at a fixed rate of 11.0% per annum. Series I of Non-Convertible Notes pay interest in cash semi-annually in arrears on May 11 and November 11 of each year, beginning on November 11, 2007. Series II of Non-Convertible Notes pay interest in cash semi-annually in arrears on June 11 and December 11 of each year, beginning on December 11, 2007. Principal on the Series I Non-Convertible Notes is fully paid at maturity while principal on the Series II Non-Convertible Notes is paid semi-annually in seven equal and consecutive installments beginning on June 11, 2009.

On August 20, 2002, the Company issued an aggregate amount of US$ 50 million of uncollateralized convertible notes (the “Convertible Notes”) in exchange for cash and the settlement of certain liabilities. The issuance was approved by the meeting of shareholders on December 4, 2001 and subsequently by the CNV on March 15, 2002. The issuance was authorized for listing on the Buenos Aires Stock Exchange on July 8, 2002. Proceeds from the issuance were used to repay certain short-term debt aggregating Ps. 27.3 million and the redemption of previously issued Senior Notes for a principal amount of Ps. 52.8 million. The Convertible Notes accrue interest at a fixed annual interest rate of 10%, are convertible at any time at the option of the holder into common shares of Ps. 0.10 par value per share and originally matured on July 19, 2006. A meeting of noteholders resolved to extend the maturity date of the Convertible Notes through July 19, 2014 although the remaining terms and conditions were left unchanged. Argentine GAAP requires that an exchange of debt instruments with substantially different terms be considered a debt extinguishment and that the old instrument be derecognized. Argentine GAAP clarifies that from a debtor’s perspective, an exchange of debt instruments between, or a modification of a debt instrument by, a debtor and a creditor shall be deemed to have been accomplished with debt instruments that are substantially different if the present value of the cash flows under the terms of the new debt instrument is at least 10 percent different from the present value of the remaining cash flows under the terms of the original instrument. The new debt instrument should be initially recorded at fair value and that amount should be used to determine the debt extinguishment gain or loss to be recognized. Fair value should be determined by the present value of the future cash flows to be paid under the terms of the new debt instrument discounted at a rate commensurate with the risks of the debt instrument and time value of money. If it is determined that the original and new debt instruments are not substantially different, then a new effective interest rate is to be determined based on the carrying amount of the original debt instrument and the revised cash flows. Based on the analysis performed, the Company concluded that the instruments were not substantially different and accordingly, the old instrument was not derecognized. The outstanding balance was classified as non-current in these consolidated financial statements.

During fiscal years 2007, 2006 and 2005, holders of approximately US$ 0.01 million, US$ 0.05 million and US$ 1.7 million Convertible Notes exercised their conversion rights and, as a result, the Company issued 101,580, 1,539,000 and 52,741,380 common shares, respectively. At June 30, 2007 the outstanding balance of Convertible Notes amounted to US$ 47.2 million.

F-45

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

16. Damages in Alto Avellaneda

On March 5, 2006, one of the shopping centers of the Company, Alto Avellaneda Shopping Mall was affected by a fire caused by an electrical failure in one of the stores. The fire produced no injuries to persons, or casualties, but caused significant damages to the property. The total area damaged by the fire represented 36 stores or 15.7% of the square meters built. The area was reopened for normal business between June and August 2006. The Company carries insurance coverage which covers fire damage. Days after June 30, 2007 part of the liquidation process related with the reconstruction work has been finished. The final indemnification amount obtained for this item amounts to Ps. 6.8 million. As of the issuance date of the financial statements, the final liquidation process is pending because of other items in the policies mentioned above, and the amount of Ps. 0.3 million has been collected as early payment.

17. Financing and Occupation Agreement with Nai Internacional II, Inc.

As discussed in Note 2.h, the Company acquired Empalme in December, 2006. Prior to the Company’s acquisition, back in August 1996, Empalme had entered into a Financing and Occupancy Agreement with NAI INTERNACIONAL II, INC. (“NAI”) (the “NAI Agreement”) pursuant to which NAI financed the construction of a movie theatre complex and a portion of parking facilities in the Cordoba Shopping for up to US$ 8.2 million. The financing accrued interest at LIBOR plus 1.5%. As part of the NAI Agreement, NAI had the right to occupy a portion of the building for a period of 10 years as from the commencement of NAI operations in October 1997, renewable for four additional periods of 5 years each. Interest payments under the NAI Agreement were to be offset against the lease payments to be received from NAI. The NAI Agreement originally established that in the event that any outstanding loan balance remained unpaid after the total lease period (together with renewals and extensions), the NAI Agreement would be further extended for the lower of a 10-year period or the period necessary to settle the loan. Any unpaid outstanding balance after that extension was to be forgiven by NAI. In July 2002, following the Argentine crisis, the NAI Agreement was amended to, among other matters, (i) pesify the payments, (ii) establish a CER-adjustment indexing clause, and (iii) impose restrictions to Empalme and/or third parties on the use of the space occupied by NAI.

18. Subsequent events

Call option exercised

During August 2007, the Company exercised a call option for the acquisition of the 75% of the capital stock and votes of a company primarily dedicated to the development of a cultural and recreational property in the Palermo neighborhood in the City of Buenos Aires.

Said option is subject to the accomplishment of certain basic conditions as the approvement of the project by the respective authorities and the acquisition transaction by the Argentine Antitrust Authority, among others, which are pending as of the date of issuance of these financial statements.

The call option price was set in the amount of US$ 0.6 million, which was fully offset as of the date of issuance of these financial statements. Should the conditions above-mentioned timely and properly complied with, the Company will make a total investment of US$ 24.4 million to be performed not before than year 2008.

Neuquén Project

On September 20, 2007 the Municipality of Neuquén decreed the feasibility of the urban project and environmental impact study. As from such date Shopping Neuquén S.A. has a 150 days term to submit the work plans.

Patio Olmos Building

On September 25, 2007 the Company signed the transfer deed with the Government of the Province of Córdoba for the real estate in which the Patio Olmos commercial center is currently operating for a total price of Ps. 32.5 million. The transfer of the related concession contract was also signed. The balance of the price agreed amounting to Ps. 22.7 million was cancelled on the same date.

F-46

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

18. Subsequent events (continued)

Torres Rosario, City of Rosario

The Company own a plot of land spanning a surface of approximately 50,000 square meters in the City of Rosario in the same place where our local Shopping Center, Alto Rosario, is located.

On October 11, 2007, the Company subscribed with Condominios del Alto S.A. a barter agreement whereby Condominios del Alto S.A. proposed to acquire plot G, located in the City of Rosario, Province of Santa Fe, Argentina, belonging to the Company, for the construction at its own expense and under its own responsibility of a housing building. As consideration for the barter over the plot, Condominios de Alto S.A. agreed to deliver: (i) fifteen (15) housing units, with an own constructed surface of 1,504.45 square meters, which represent and will further represent jointly 14.85% of the own covered square meters of housing units of the real estate that Condominios del Alto S.A. will build in Plot G, and (ii) fifteen (15) garages, which represent and will further represent jointly 15% of the own covered square meters of garage units in the same building.

As a complementary consideration in favor of the Company, Condominios del Alto S.A. will pay us US$ 15,300. Also and in guarantee for the obligations assumed: (i) Condominios del Alto S.A. charged a first degree mortgage and degree of privilege in our favor on Plot G in the amount of US$ 1,100,000; (ii) established a security insurance of which the Company will be assigner of the insured amount of US$ 1,600,000, and (iii) the shareholders of Condominios del Alto S.A. are the guarantors of the obligations of the latter up to the amount of US$ 800,000.

Finally, the Company granted to Condominios del Alto S.A. an option of acquisition through barter on Plot 2h, close to the transferred plot.

Meeting of Shareholders held on October 25, 2007

On October 25, 2007 the Annual Meeting of Shareholders by majority resolved the following items:

• Approval of the financial statements for the fiscal year ended June 30, 2007.

• Appropriation of a cash dividend of Ps. 55,721,393 prior to deducting 5% from the results for legal reserve and the remnant to be allocated to the “Reserve for New Projects” account.

• Fees payable to the Board of Directors for Ps. 8,200,000 for the year ended June 30, 2007.

• The reform of sections 12 (adjust the regulation referred to guarantee to Directors) and 15 (make possible that the Board of Directors meeting be held at a distance).

F-47

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP

The Company’s consolidated financial statements have been prepared in accordance with Argentine GAAP and the regulations of the CNV, which differ in certain significant respects from US GAAP. Such differences involve methods of measuring the amounts shown in the consolidated financial statements, as well as additional disclosures required by US GAAP and Regulation S-X of the SEC.

As discussed in Note 2.d., in order to comply with regulations of the CNV, the Company discontinued inflation accounting as from February 28, 2003. The application of these CNV regulations represented a departure from Argentine GAAP. However, such departure has not had a material effect on the accompanying consolidated financial statements.

I. Difference in measurement methods

The following reconciliation to US GAAP does not include the reversal of the adjustments to the financial statements for the effects of inflation through February 28, 2003, because the application of this standard represents a comprehensive measure of the effects of price level changes in the Argentine economy.

The principal differences, other than inflation accounting, between Argentine GAAP and US GAAP are described below, together with an explanation, where appropriate, of the method used in the determination of the necessary adjustments.

	Year ended June 30,
	2007			2006			2005
Reconciliation of net income:
Net income as reported under Argentine GAAP	Ps.	64,056,564		Ps.	44,679,032		Ps.	33,255,400
US GAAP adjustments:
- Pre-operating expenses
Original value (Note 19.I.b)		—			93,649			(4,281,731	)
Amortization (Note 19.I.b)		1,454,578			1,018,954			880,289
- Software developed or obtained for internal use (Note 19.I.c)		5,477			(100,831	)		(48,282	)
- Purchase accounting amortization and depreciation expenses (Note 19.I.e)		4,401,825			4,269,276			4,548,659
- Effect of US GAAP adjustments on equity investees (Note 19.I.f)		—			—			17,485
- Accounting for increasing rate debt (Note 19.I.g)		203,482			(9,510	)		(193,972	)
- Reversal of the result from recognition of inventories at net realizable value (Note 19.I.h)		987,112			(3,497,632	)		—
- Securitization accounting (Note 19.I.j)		581,731			(8,338,782	)		2,154,801
- Available-for-sale securities (Note 19.I.k)		(3,661,442	)		(48,034	)		(85,060	)
- Debtor’s accounting for a modification of convertible debt instruments (Note 19.I.l)		(354,765	)		(46,056	)		—
- Amortization of fees related to the Senior Notes (Note 19.I.m)		—			—			401,670
- Present-value accounting (Note 19.I.n)		246,290			5,656			(602,796	)
- Reversal of previously recognized impairment losses (Note 19.I.o)		2,683,426			(5,157,096	)		(10,424,685	)
- Deferred revenues – insurance & fees (Note 19.I.p)		(5,330,042	)		(8,219,285	)		—
- Reversal of capitalized exchange differences (Note 19.I.s)		(431,616	)		—			—
- Revenue recognition – deferred commissions (Note 19.I.u)		(2,131,670	)		—			—
- Revenue recognition – scheduled rent increases (Note 19.I.u)		2,765,979			—			—
- Deferred income tax (Note 19.I.q)		9,394,102			20,221,740			11,121,422
- Minority interest (Note 19.I.r)		871,027			2,136,735			(574,231	)
- Net income under US GAAP	Ps.	75,742,058		Ps.	47,007,816		Ps.	36,168,969
Earnings per share under US GAAP (Note 19.II.i):
Basic net income per common share	Ps.	0.10		Ps.	0.06		Ps.	0.05
Diluted net income per common share	Ps.	0.04		Ps.	0.03		Ps.	0.02

F-48

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

I. Difference in measurement methods

	As of June 30,
	2007			2006
Reconciliation of shareholders’ equity:
Total shareholders’ equity under Argentine GAAP	Ps.	823,907,227		Ps.	806,840,505
US GAAP adjustments:
- Appraisal revaluation of fixed assets (Note 19.I.a)		(3,952,571	)		(3,952,571	)
- Pre-operating expenses
Original value (Note 19.I.b)		(9,488,442	)		(15,558,214	)
Accumulated amortization (Note 19.I.b)		6,992,732			11,607,926
- Software developed or obtained for internal use (Note 19.I.c)		(173,039	)		(178,516	)
- Differences in basis relating to purchase accounting
Original value (Note 19.I.d)		23,856,024			23,856,024
Accumulated amortization and depreciation (Note 19.I.e)		18,139,633			13,737,808
- Accounting for increasing rate debt (Note 19.I.g)		—			(203,482	)
- Reversal of the result from recognition of inventories at net realizable value (Note 19.I.h)		(2,510,520	)		(3,497,632	)
- Securitization accounting (Note 19.I.j)		2,635,248			53,803
- Debtor’s accounting for a modification of convertible debt instruments (Note 19.I.l)		2,478,606			2,833,371
- Present-value accounting (Note 19.I.n)		307,790			61,500
- Reversal of previously recognized impairment losses (Note 19.I.o)		(53,524,986	)		(56,208,412	)
- Deferred revenues—insurance & fees (Note 19.I.p)		(13,549,327	)		(8,219,285	)
- Reversal of capitalized exchange differences (Note 19 I.s)		(431,616	)		—
- Cumulative effect of initial application of SAB No. 108 (Note 19 I.t)		(7,814,316	)		—
- Revenue recognition – deferred commissions (Note 19.I.u)		(2,131,670	)		—
- Revenue recognition – scheduled rent increases (Note 19.I.u)		2,765,979
- Deferred income tax (Note 19.I.q)		(124,689,971	)		(132,102,668	)
- Minority interest (Note 19.I.r)		5,257,679			4,776,875
- Shareholders’ equity under US GAAP	Ps.	668,074,460		Ps.	643,847,032
Description of changes in shareholders’ equity under US GAAP:
	Year ended June 30,
	2007			2006
- Shareholders’ equity as of the beginning of the year	Ps.	643,847,032		Ps.	619,975,784
- Cash dividends		(47,000,000	)		(29,000,000	)
- Conversion of debt into common stock		10,158			153,900
- Additional Paid in Capital		—			2,879,427
- Other comprehensive income (See Note 19.II.o)		3,289,528			2,830,105
- Cumulative effect of initial application of SAB 108 (Note 19.I.t.)		(7,814,316	)		—
- Net income under US GAAP		75,742,058			47,007,816
- Shareholders’ equity as of the end of the year	Ps.	668,074,460		Ps.	643,847,032

F-49

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

I. Difference in measurement methods

a) Appraisal revaluation of fixed assets

As discussed in Note 3.f., under Argentine GAAP, the Company recognized a parcel of land acquired prior to June 30, 1986 at its appraised value as of such date. This appraisal increased the carrying value of the land by approximately Ps. 4.0 million, which was recorded against an appraisal revaluation reserve account in the shareholders’ equity. Under Argentine GAAP, this appraisal revaluation reserve will be amortized to income once the land is disposed of or its value becomes impaired. Under US GAAP, this parcel of land was recorded at original cost and therefore, this reserve has been reversed.

b) Pre-operating expenses

Under Argentine GAAP, the Company capitalizes certain costs related to pre-opening activities of the Company’s shopping centers. These costs are generally amortized under the straight-line basis over 3 years. Under US GAAP, these costs are expensed as incurred.

c) Software developed or obtained for internal use

During the year ended June 30, 2006, under Argentine GAAP, the Company capitalized certain costs amounting to Ps. 0.1 million, which would be expensed under US GAAP pursuant to the provisions of Statement of Position 98-1 “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use” (SOP 98-1). The US GAAP adjustment for the year 2006 represents the net effect of (i) expense such costs and (ii) reversal of depreciation charges for 2006 and previously capitalized costs under Argentine GAAP and expensed under US GAAP.

d) Differences in basis relating to purchase accounting

The reconciling item of PS. 23.9 million relates to various adjustments related to purchase accounting for business combinations which occurred prior to 2001. These adjustments resulted in a difference between the amount of goodwill recorded under Argentine GAAP and US GAAP.

In addition, as discussed in Note 3.i., under Argentine GAAP, the Company followed the guidance in RT No. 18 in accounting for the acquisition of Empalme. The purchase price was allocated based on the relative fair value of each component. A portion of the purchase price was allocated to tangible assets considering the value of the property as if it were vacant. In addition, a portion of the purchase price was allocated to below-market leases and in-place leases. No customer relationships were identified as part of the in-place leases. The sum of the individual fair values of the identifiable tangible and intangible assets exceeded the purchase price paid. Under Argentine GAAP, the amount of negative goodwill was fully allocated to reduce the value of intangible assets acquired to zero. The remaining amount of negative goodwill is amortized under the straight-line method over a seventeen year term. Under US GAAP, upon acquisitions of real estate, the Company also assesses the fair value of acquired assets and acquired liabilities in accordance with Statement of Financial Accounting Standards (SFAS) No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets, and allocates purchase price based on these assessments. There is no difference between US GAAP and Argentine GAAP in the purchase price allocation process. However, under US GAAP, when negative goodwill exists, eligible assets (tangible and intangible) are subject to pro rata reduction. Accordingly, under US GAAP, a liability for below-market leases and intangible assets for in-place leases amounting to Ps. 2.4 million and Ps. 7.3 million, respectively, were recognized. The fair value of below market leases is recorded as deferred income and amortized as additional lease revenue over the remaining contractual lease period and any renewal option periods included in the valuation analysis. Intangible assets associated with at-market in-place leases are amortized as additional expense over the remaining contractual lease term. There is no US GAAP adjustment to equity for this item. The US GAAP adjustment to net income as described in Note 19.I.e. represents the net effect of (i) reversing the amortization of the negative goodwill recorded under Argentine GAAP; (ii) lower depreciation charges on fixed assets under US GAAP and (iii) amortization charges for intangible assets recognized under US GAAP.

F-50

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

I. Difference in measurement methods

d) Differences in basis relating to purchase accounting (continued)

For disclosure purposes, under US GAAP the estimated fair values of assets acquired and liabilities assumed are summarized as follows (in millions):

Working capital deficiency	Ps.	(17.7	)
Fixed assets		57.6
Below market leases		(2.4	)
In-place leases		7.3
Deferred income tax		(4.0	)
Fair value of net assets acquired	Ps.	40.8

Also, in May 2006, the Company acquired an additional 2.7% in ERSA. Under Argentine GAAP, the unallocated portion of negative goodwill is amortized over the average remaining useful lives of tangible assets acquired, mainly the shopping center property. Under US GAAP, a pro rata reduction was performed following the guidance in SFAS No. 141. This reduction resulted in lower depreciation charges under US GAAP. Since the amortization of negative goodwill under Argentine GAAP equals the lower depreciation charge of the assets acquired under US GAAP (after pro rata reduction), there is no effect in the US GAAP reconciliation.

Since the sum of the individual fair values of the identifiable tangible and intangible assets exceed the purchase price, a pro rata reduction of the allocated amounts was performed in accordance with paragraph 44 of FAS 141.

e) Purchase accounting - Amortization and depreciation expense

This reconciling item includes adjustments related to purchase accounting for business combinations which occurred prior to 2001. These adjustments resulted in a difference between the amount of goodwill recorded under Argentine GAAP and US GAAP. Therefore, the differences in the carrying amount of goodwill between Argentine GAAP and US GAAP of Ps. 23.9 million gave rise to differences in amortization expense until June 30, 2002. Annual amortization expense recorded in this connection totaled Ps. 5.4 million. Effective July 1, 2002, the Company adopted SFAS No. 142, “Goodwill and Other Intangible Assets” and, as such, discontinued amortization of goodwill as from that date. Consequently, amortization expense recorded under Argentine GAAP was reversed under US GAAP in the amount of Ps. 5.4 million for all of the years presented.

In addition, the differences in the carrying amount of fixed assets and intangible assets acquired between Argentine GAAP and US GAAP and the reversing of the amortization of the negative goodwill recorded under Argentine GAAP for the Empalme acquisition gave rise to (i) higher amortization charges, (ii) lower depreciation charges and (iii) the reversal of the negative goodwill amortization recorded under Argentine GAAP amounting to a net higher expense of Ps. 1.0 million and Ps. 0.5 million during fiscal years 2007 and 2006, respectively.

F-51

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

I. Difference in measurement methods

f) Effect of US GAAP adjustments on equity investees

Under Argentine GAAP, investments in companies in which the Company exercises significant influence, but not control, are accounted for by the equity method. For purposes of this reconciliation, the Company has assessed the impact of US GAAP adjustments on the Argentine GAAP financial statements of its equity investees. As of June 30, 2005 the adjustment relates to a difference in Mendoza Plaza Shopping.

g) Accounting for increasing rate debt

The syndicated loan discussed in Note 4.h accrued interest at a fixed rate of 7.875% per annum during the first year and “Encuesta” variable rate plus 3% thereafter. The outstanding balance of the syndicated loan was fully paid in April 2007. Under Argentine GAAP, interest was recognized based on the interest rate applicable to each interest period. Under US GAAP, the Company followed the guidance in EITF 86-15 “Increasing Rate Debt”. In EITF 86-15, the Task Force reached a consensus that the borrower’s periodic interest cost should be determined using the interest method based on the estimated outstanding term of the debt.

h) Reversal of the result from recognition of inventories at net realizable value

As discussed in Note 4.k.(ii), during fiscal year 2006 the Company entered into an agreement to sell a plot of land. This sale transaction was consummated as of June 30, 2007. Under Argentine GAAP, however, since the Company received a down payment which fixed the sale price and the terms and conditions of the transaction, the Company valued this plot of land at its estimated net realizable value. As a result, the Company recognized a loss of Ps. 1.0 million and a gain of Ps. 3.5 million, respectively, during the years ended June 30, 2007 and 2006.

Under US GAAP, inventories are valued at cost. As such, the US GAAP adjustment represents the reversal of the result recognized under Argentine GAAP.

i) Stock option agreement with CIM

E-Commerce Latina entered into a stock option agreement with Consultores Internet Managers Ltd. (“CIM”), pursuant to which options were granted, to purchase class B shares of Altocity.Com, representing 15% of its common stock. CIM is a special-purpose Cayman Islands’ corporation created to act on behalf of the Company’s management and is represented by an independent attorney-in-fact. Pursuant to the terms of the agreement, options were granted for a period up to eight years and at an exercise price to be determined by the quotient of (i) the original value of class B shares at the time of the contribution to Altocity.Com by the holding company, plus interest accrued at an annual fixed interest rate of 14% through the exercise date of the option over (ii) the total number of class B shares owned by the holding company at the exercise date of the option. CIM has a vested interest in 50% of the underlying shares within 30 days after the grant date and the remaining 50% will vest upon the third anniversary of the grant date. The option was granted to CIM to be allocated by it among the management of Altocity.com as an incentive compensation for their services. Upon exercise of the option, CIM’s sole asset will be its 15% interest in Altocity.Com. As of the date of these financial statements, the options were not individually allocated. As such, there was no grant date established.

In December 2004, the FASB issued SFAS No. 123R (Share-Based Payment). SFAS No. 123R revises SFAS No. 123 and requires entities to recognize compensation expense for all share-based payment transactions in an amount equal to the fair value of share-based payments granted to employees. SFAS No. 123R requires a company to record compensation expense for all awards granted after the date of adoption of SFAS No. 123R and for the unvested portion of previously granted awards that remain outstanding at the date of adoption. The revised statement generally requires that an entity account for those transactions using the fair-value-based method, and eliminates the intrinsic value method of accounting in APB 25, which was permitted under SFAS No. 123, as originally issued. The Company will apply the provisions of SFAS No. 123R as from the grant date of the options which will be established when they will be allocated to management on an individual basis.

F-52

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

I. Difference in measurement methods

j) Securitization Accounting

As discussed in Note 11, the Company enters into two-year revolving-period securitization programs, through which Tarshop, a majority-owned subsidiary of the Company, transfers credit card receivables to the trust in exchange for cash and retained interests in the trust (CPs). Part of the proceeds is retained by the trustee and maintained as a cash reserve to serve as collateral for the payment of amounts due on the TDFs. Cash reserves flow back to Tarshop on a monthly basis according to a schedule until all TDFs are fully paid.

Under Argentine GAAP, the Company recognizes a gain or loss on the sale of receivables when the carrying value of transferred credit card receivables differs from the amount of cash and CPs received. Results recognized on the sale of receivables are reported as a component of “Net income from retained interest in securitized receivables” in the accompanying statements of income. Cash reserves are stated at cost and are classified as “receivables from trust guarantee funds” within the caption “Other receivables and prepaid expenses” in the accompanying consolidated balance sheets. CPs are carried at their equity value based on financial statements issued by the trusts and classified as investments in the accompanying consolidated balance sheets. Certain expenses associated with the securitization of credit card receivables are capitalized and amortized over the term of the agreements.

Under US GAAP, the Company adopted Statement of Financial Accounting Standards No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities” (“SFAS No. 140”). SFAS No. 140 was issued in September 2000 and replaced, in its entirety, SFAS No. 125. The Company was required to adopt the provisions of SFAS No. 140 prospectively for transactions beginning after March 31, 2001. Although SFAS No. 140 has changed many of the rules regarding securitizations under SFAS No. 125, it continues to require an entity to recognize the financial and servicing assets it controls and the liabilities it has incurred and to derecognize financial assets when control has been surrendered. The proceeds of securitized financial assets are allocated to the assets sold, the servicing asset or liability and retained interest, based on their relative estimated fair values at the transfer date in determining the gain on the securitization transaction. SFAS No. 140 and SFAS No. 125 also require an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service financial assets that have been securitized and amortize it over the period of estimated net servicing income or loss. The Company has not recognized any servicing asset or liability since the estimated fair value of the servicing right was de minimus. In determining the estimated fair value, the Company considered the fees received as adequate compensation for its servicing responsibilities (i.e. the fees received as compensation for the services rendered are similar to those that would be paid to a substitute servicer, should one be required, according to estimated market values).

The retained interests in securitized credit card receivables are treated as a debt security classified as available-for-sale in accordance with Statement of Financial Accounting Standards No. 115 (“SFAS No. 115”), “Accounting for Certain Investments in Debt and Equity Securities”, and are carried at fair value. At the time of securitization, the retained interest is initially recorded at the basis allocated in accordance with SFAS No. 140. This original cost basis is periodically adjusted to fair value, which is based on the discounted anticipated future cash flows on a “cash out” basis. The cash out method projects cash collections to be received only after all amounts owed to investors have been paid. Adjustments to fair value (net of related deferred income taxes) are recorded as a component of other comprehensive income. SFAS No. 115 also states that for individual securities classified as available-for-sale an enterprise shall determine whether a decline in fair value below the amortized cost basis is other than temporary. In such event, accumulated unrealized losses included in other comprehensive income shall be reclassified into the statement of income. Cash reserves are considered retained interests and as such they are considered in calculating the gain or loss on the sale of receivables under US GAAP.

Provided below is an analysis of the securitization accounting adjustments, including a description of each significant component, where appropriate.

F-53

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

I. Difference in measurement methods

j) Securitization Accounting (continued)

The shareholders’ equity adjustments represent the difference in the valuation of the Company’s retained interests in the trusts related to securitization programs that qualified for sale treatment under US GAAP. Under Argentine GAAP, retained interests in the trusts are carried at their equity value. Under US GAAP those retained interests are considered available-for-sale securities in accordance with SFAS 115 and, as a result, are carried at their estimated fair market value. The US GAAP adjustments affecting shareholders’ equity at June 30, 2007 and 2006 are as follows:

	2007			2006
Equity value as reported under Argentine GAAP	Ps.	73,352,618		Ps.	47,228,091
Less: retained interests related to securitization programs that did not qualify as a sale under US GAAP		(14,379,230	)		(20,009,994	)
Equity value reported under Argentine GAAP of retained interests related to securitization programs that qualified as a sale under US GAAP	Ps.	58,973,388		Ps.	27,218,097
Estimated fair market value of retained interests related to securitization programs that qualified as a sale under US GAAP		61,608,636			27,271,900
US GAAP adjustment	Ps.	2,635,248		Ps.	53,803

- The US GAAP adjustments affecting net income as reported under Argentine GAAP for the years ended June 30, 2007, 2006 and 2005 are as follows:

	2007			2006			2005
Reversal of results recognized under Argentine GAAP (1)	Ps.	1,875,478		Ps.	(450,274)		Ps.	641,103
Recognition of results under US GAAP (2)		(1,293,747	)		(7,888,508	)		1,513,698
US GAAP adjustment	Ps.	581,731		Ps.	(8,338,782)		Ps.	2,154,801

(1) Includes the reversal of results reported in “Net income from retained interest in securitized receivables” in the Company’s consolidated statements of income as well as the reversal of inflation accounting results reported within “Financial results, net” in the Company’s consolidated statements of income.

(2) Primarily includes the gain or loss recorded on the sale of receivables plus unrealized losses on retained interests considered other-than-temporary.

Regarding receivables transferred in connection with the Company’s securitization programs that qualified for sale treatment under US GAAP, neither the Company nor the trustee have responsibility over any shortfall or failure in collecting the receivables which are the source of cash payment for the TDF holders. Furthermore, the agreements relating to the securitization stipulate that the rights of the beneficiaries (TDF holders) will not be affected by any financial or liquidity failure of either the trustee or the Company. The agreements also state that the transfer qualifies as a non-recourse transfer of receivables since if receivables are not collected in full, neither the trustee nor the Company is obligated to use its own cash flows to cover any potential shortfall or collection failure.

F-54

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

I. Difference in measurement methods

j) Securitization Accounting (continued)

The following summarizes the changes in the balance of the Company’s retained interests for the years ended June 30, 2007, 2006 and 2005:

	Cost			Estimated unrealized gain (loss)		Fair value
Balance at June 30, 2004	Ps.	7,880,081		Ps.	1,999,979	Ps.	9,880,060
Increase in retained interest		12,909,592			—		12,909,592
Liquidation of retained interests		(1,976,942	)		—		(1,976,942	)
Change in unrealized gain		—			2,187,057		2,187,057
Balance at June 30, 2005	Ps.	18,812,731		Ps.	4,187,036	Ps.	22,999,767
Increase in retained interest		10,833,191			—		10,833,191
Liquidation of retained interests		(11,999,233	)		—		(11,999,233	)
Change in unrealized gain		—			5,438,175		5,438,175
Balance at June 30, 2006	Ps.	17,646,689		Ps.	9,625,211	Ps.	27,271,900
Increase in retained interest		39,062,135			—		39,062,135
Liquidation of retained interests		(6,725,113	)		—		(6,725,113	)
Change in unrealized gain		—			1,999,714		1,999,714
Balance at June 30, 2007	Ps.	49,983,711		Ps.	11,624,925	Ps.	61,608,636

(i) Unrealized gains for the years ended June 30, 2004, 2005, 2006 and 2007 were included as a component of “Accumulated Other Comprehensive Income” in shareholders’ equity.

The key economic assumptions used in measuring the fair value of retained interests at the time of and subsequent to a securitization are the estimated cash flows and the discount rate. The estimated cash flows have been discounted at rates that include charges for losses. The following represents the sensitivity of the current fair value of retained interest in securitizations at June 30, 2007 to changes to key assumptions:

	Impact on fair value of a
	5% interest rate increase		10% interest rate increase
Rates including charges for losses	Ps.	(4,376,266)	Ps.	(8,480,915)

The above sensitivities are hypothetical and should be used with caution. As the amounts indicate, changes in fair value based on variations in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of a variation in a particular assumption on the fair value of the retained interest is calculated without changing any other assumption. In reality, changes in one factor may result in changes in another, which might magnify or counteract the sensitivities.

The Company’s managed credit card receivables consist of retained interest in credit card receivable securitizations and investor’s share of securitizations sold to unrelated parties without recourse. The Company records its retained interest in credit card receivable securitizations on the balance sheet.

F-55

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

I. Difference in measurement methods

k) Available-for-sale securities

Under Argentine GAAP, investments in mutual funds and government and mortgage bonds are carried at market value, with unrealized gains and losses recorded in income. Under US GAAP, pursuant to SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities”, these investments are classified as available-for-sale securities, and accordingly unrealized gains and losses are excluded from income and reported as a separate component of shareholders’ equity.

l) Debtor’s accounting for a modification of convertible debt instruments

As indicated in Note 15, in August 2002 the Company issued US$ 50 million of Convertible Notes. Under US GAAP, the Company applied APB 14, “Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants”, which requires that no portion of the proceeds be allocated to the conversion feature if the convertible debt securities are convertible into common stock of the issuer at a specified price at the option of the holder and are sold at a price or have a value at issuance not significantly in excess of the face amount. In considering the accounting treatment of the Convertible Notes under US GAAP the Company took account of the guidance provided in EITF 98-5. EITF 98-5 requires that embedded beneficial conversion features present in convertible securities be valued separately at issuance when the non-detachable conversion feature is “in-the-money” at the commitment date. The embedded beneficial conversion feature should be recognized and measured by allocating to additional paid-in capital a portion of the proceeds equal to the intrinsic value of that feature. That amount is calculated at the commitment date as the difference between the conversion price and the fair value of the common stock or other securities into which the security is convertible, multiplied by the number of shares into which the security is convertible (intrinsic value). As a result of the analysis the Company performed, no proceeds were allocated to the embedded conversion feature since it was “out-the-money” at the commitment date (i.e. the intrinsic value at the commitment date was zero).

The terms of the convertible debt instrument were modified to extend the maturity date through July 19, 2014. Argentine GAAP requires that an exchange of debt instruments with substantially different terms be considered a debt extinguishment and that the old debt instrument be derecognized. Argentine GAAP clarifies that from a debtor’s perspective, an exchange of debt instruments between, or a modification of a debt instrument by, a debtor and a creditor shall be deemed to have been accomplished with debt instruments that are substantially different if the present value of the cash flows under the terms of the new debt instrument is at least 10 percent different from the present value of the remaining cash flows under the terms of the original instrument. The new debt instrument should be initially recorded at fair value and that amount should be used to determine the debt extinguishment gain or loss to be recognized. Fair value should be determined by the present value of the future cash flows to be paid under the terms of the new debt instrument discounted at a rate commensurate with the risks of the debt instrument and time value of money. If it is determined that the original and new debt instruments are not substantially different, then a new effective interest rate is to be determined based on the carrying amount of the original debt instrument and the revised cash flows. Based on the analysis performed, the Company concluded that the instruments were not substantially different and accordingly the old instrument was not derecognized. The outstanding balance was reclassified to non-current in these consolidated financial statements.

Under US GAAP, in November 2006, the EITF reached a final consensus in EITF Issue 06-6 “Debtor’s Accounting for a Modification (or Exchange) of Convertible Debt Instruments”. EITF 06-6 reconsidered the original consensus in Issue 05-7 “Accounting for Modification to Conversion Options Embedded in Debt Instruments and Related Issues” that the change in fair value of an embedded conversion option should be included in the cash flow analysis under EITF Issue 96-19, “Debtor’s Accounting for a Modification or Exchange of Debt Instruments,” in determining whether a debt instrument has been modified or extinguished. This Issue considers the accounting for a modification of debt terms (or exchange in debt instruments) when a change in the fair value of an embedded conversion option has occurred or an embedded conversion option has been added or eliminated from the debt instrument. This Issue also amended the guidance in EITF Issue 96-19.

F-56

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

I. Difference in measurement methods

l) Debtor’s accounting for a modification of convertible debt instruments (continued)

The consensus stipulates that, in evaluating whether a convertible debt instrument has been modified or extinguished, three aspects of the modification (or exchange of debt instruments) must be considered.

1. Change in cash flows: If the change in cash flows as prescribed by the analysis under Issue 96-19 is greater than 10% of the carrying value of the original debt instrument, the modification (or exchange of debt instruments) should be accounted for as an extinguishment. This test would not include any changes in fair value to the embedded conversion option.

2. Change in fair value of the embedded conversion option: If the change in the fair value of the embedded conversion option is greater than 10% of the carrying value of the original debt instrument immediately before the change (or exchange of debt instruments), the modification (or exchange) should be accounted for as an extinguishment.

3. Addition or removal of an embedded conversion option: The addition or removal of a substantive conversion option would automatically result in extinguishment accounting. Whether an embedded conversion option is substantive would be assessed as of the modification date and would be based on the definition of substantive in EITF Issue 05-1, “Accounting for the Conversion of an Instrument That Becomes Convertible upon the Issuer’s Exercise of a Call Option.”

Any one of the three criteria needs to be met to account for the modification of the debt instrument (or exchange of debt instruments) as an extinguishment. When the result of the three-pronged evaluation above results in a conclusion that a convertible debt instrument has been modified (and not extinguished), the Task Force affirmed as a final consensus that any increase in the fair value of the embedded conversion option should reduce the carrying value of the debt instrument (with a corresponding increase to additional paid-in capital), but any decrease in the fair value of the embedded conversion option is ignored.

Based on the analysis performed, neither of criteria 1, 2 or 3 above are met. Accordingly, the change of the debt instrument has not been accounted for as an extinguishment. Thus, the increase in the fair value of the conversion option reduced the carrying value of the debt instrument with a corresponding increase to additional paid-in-capital. This resulted in an increase in interest expense prospectively.

m) Amortization of fees related to the Senior Notes

For the year ended June 30, 2005, under Argentine GAAP, fees and expenses relating to the Senior Notes were amortized on a straight-line method over the term of the agreement. Under US GAAP, such costs were amortized over the same period but using the effective interest method of amortization. The Senior Notes were paid in January and April, 2005.

n) Present-value accounting

As indicated in Note 3.x., under Argentine GAAP, certain tax credits are present-valued as of year-end. Under US GAAP, present valuing or discounting of these assets is precluded.

F-57

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

I. Difference in measurement methods

o) Reversal of previously recognized impairment losses

As a result of increases in the fair market value of property and equipment and inventories, and as required by Argentine GAAP, during 2005, 2006 and 2007 the Company partially reversed impairment losses recognized in 2002. Amounts reversed in 2005, 2006 and 2007 amounted to Ps. 13.1 million, Ps. 9.9 million and Ps. 2.3 million, respectively, giving rise to higher depreciation charges under Argentine GAAP. Under US GAAP, reversal of a previously recognized impairment loss is prohibited. When an impairment loss is recognized, the adjusted carrying amount of the asset becomes the new cost basis, which is depreciated over the remaining useful life of the asset. Depreciation expense reversed under US GAAP for the years ended June 30, 2005, 2006 and 2007 amounted to Ps. 2.7 million, Ps. 4.7 million and Ps. 4.9 million, respectively, and are shown netted against the reversal of impairment losses under Argentine GAAP.

p) Deferred revenues - insurance & fees

Under Argentine GAAP, the Company, through its subsidiary Tarshop, accounts for revenues from life and disability insurance and origination fees, on an up-front basis.

Under US GAAP, said revenues from life and disability insurance and origination fees are recognized to income on an straight-line basis over the term of the respective financial receivable.

q) Deferred income tax

The Company accounts for income taxes using the liability method under both Argentine GAAP and US GAAP. Argentine GAAP is similar to the guidance in SFAS No. 109 “Accounting for Income Taxes”. However, as discussed in Note 2.e, following CNV Resolutions N° 485 and N° 487, the Company elected to continue treating the differences between book basis and inflation-adjusted basis of non-monetary balance sheet items as permanent for deferred income tax calculation purposes.

Under US GAAP, the Company applies EITF 93-9, “Application of FASB Statement No.109 in Foreign Financial Statements Restated for General Price-Level Changes”, which requires such differences to be treated as temporary.

In addition, the US GAAP adjustment includes the effect on deferred income taxes of the reconciling items, as appropriate.

r) Minority interest

This adjustment represents the effect on minority interest of the reconciling items, as appropriate.

s) Reversal of capitalized exchange differences

Under Argentine GAAP, the Company capitalized financial costs comprising of interest and foreign exchange differences for the year ended June 30, 2007. The capitalization related to the PAMSA project. The Company did not capitalize any financial costs for the year ended June 30, 2006. Under US GAAP, the Company applied the provisions of Statement of Financial Accounting Standards No. 34, “Capitalization of Interest Cost” (SFAS No. 34), which requires interest capitalization on assets which have a period of time to get them ready for their intended use. Capitalization of foreign exchange differences is not allowed under SFAS No. 34. The US GAAP reconciling item represents the effect of reversing the foreign exchange differences capitalized under Argentine GAAP related to the acquisition of PAMSA for an amount of Ps. 0.4 million.

F-58

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

I. Difference in measurement methods

t) Cumulative effect of the initial application of SAB No. 108

In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108 (SAB No. 108), Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, which provides guidance on quantifying financial statement misstatements. SAB No. 108 was issued in order to eliminate the diversity of practice surrounding how public companies quantify financial statement misstatements. SAB No. 108 is effective for annual financial statements covering the first fiscal year ending after November 15, 2006.

Traditionally, there have been two widely recognized methods for quantifying the effects of financial statement misstatements: the roll-over method and the iron curtain method. The roll-over method focuses primarily on the impact of a misstatement on the income statement, including the reversing effect of prior year misstatements, but its use can lead to the accumulation of misstatements in the balance sheet. The iron-curtain method, on the other hand, focuses primarily on the effect of correcting the period-end balance sheet with less emphasis on the reversing effects of prior year errors on the income statement. Prior to the Company’s application of the guidance in SAB No. 108, the Company’s management used the roll-over method for quantifying financial statement misstatements both for Argentine GAAP and US GAAP purposes.

In SAB No. 108, the SEC staff established an approach that requires quantification of financial statement misstatements based on the effects of the misstatements on each of the company’s financial statements and the related financial statement disclosures. This model is commonly referred to as a dual approach because it requires quantification of errors under both the iron curtain and the roll-over methods.

SAB No. 108 permits existing public companies to initially apply its provisions either by (i) restating prior financial statements as if the dual approach had always been applied or (ii) recording the cumulative effect of initially applying the dual approach as adjustments to the carrying values of assets and liabilities with an offsetting adjustment recorded to the opening balance of retained earnings. Under US GAAP, the Company elected to record the effects of applying SAB No. 108 using the cumulative effect transition method. The misstatements that have been corrected are described below.

As discussed in Note 3.a., the Company primarily derives its revenues from leases and services. Tenants are generally charged a rent, which consists of the higher of: (i) a monthly base rent (the “Base Rent”) and (ii) a specified percentage of the tenant’s monthly gross retail sales (the “Percentage Rent”) (which generally ranges between 4% and 8% of tenant’s gross sales). Furthermore, pursuant to the rent escalation clause in most leases, a tenant’s Base Rent generally increases between 4% and 7% each year during the term of the lease. Under US GAAP, prior to the application of SAB No. 108, rental revenue was recognized when the escalated rental payment was due rather than recognizing the effects of scheduled rent increases on a straight-line basis over the lease term in accordance with SFAS No. 13 and FTB 85-3. This accounting treatment results in an understatement of rental revenue at a given month-end. However, due to occupancy rates and sales volumes in all of the Company’s properties, the majority of the tenants were charged the percentage rent for all of the periods presented. In those cases, percentage rents charged were higher than amounts derived from straight-line recognition of scheduled rent increases. Hence, the understatement of rental revenue only affects those property rentals where the Base Rent is higher than the Percentage Rent. The Company’s management previously quantified these errors under the roll-over method and concluded that they were immaterial. In its initial application of SAB No. 108, the Company corrected the errors by increasing the balance of accounts receivable against retained earnings in the amount of Ps. 1.5 million. The correction also required adjustment for deferred income taxes and minority interest.

F-59

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

I. Difference in measurement methods

t) Cumulative effect of initial application of SAB No. 108 (continued)

Additionally, as discussed in Note 3.a., the Company derives revenues from brokerage commissions paid by tenants calculated as a percentage of the final rental income value for both the lessee and the Company. Under US GAAP, prior to the application of SAB 108, brokerage commissions were recognized at the time that the transaction was successfully concluded, rather than defer and amortize them over the term of the lease. A transaction is considered successfully concluded when both parties have signed the related lease contract. This accounting treatment resulted in an overstatement of rental revenue. The Company’s management previously quantified these errors under the roll-over method and concluded that they were immaterial. In its initial application of SAB No. 108, the Company corrected the errors by increasing deferred revenues against retained earnings in the amount of Ps. 12.4 million. The correction also required adjustment for deferred income taxes and minority interest.

In addition, as further explained in Note 3.a., the Company, through its subsidiary Tarshop, derives revenues from life and disability insurance and origination fees. Under US GAAP, prior to the application of SAB 108, revenues from life and disability insurance and origination fees related to securitized receivables which did not qualify as a sale under US GAAP, were recognized up-front, rather than deferred and recognized in income over the term of the financial receivable. This accounting treatment resulted in an overstatement of revenues. The Company’s management previously quantified this error under the roll-over method and concluded that it was immaterial. In its initial application of SAB No. 108, the Company corrected the error by increasing deferred revenues against retained earnings in the amount of Ps. 1,5 million. The correction also required adjustment for deferred income taxes and minority interest. Effective July 1, 2006, the Company defers said revenues from life and disability insurance and origination fees over the term of the respective securitized receivables.

These correcting entries and the balance sheet line items that were affected and the respective amounts before tax effects are summarized in the following table:

Adjustment	Adjustment recorded as of July 1, 2006
Revenue Recognition – Deferred commissions	Ps.	(12,435,399)
Revenue Recognition – Scheduled rent increases		1,517,044
Deferred Revenues – insurance & fees		(1,479,706	)
Minority interest		376,035
Deferred income tax		4,207,710
Cumulative effect of initial application of SAB No. 108		(7,814,316	)

u) Revenue recognition

As discussed in Note 3.a., pursuant to rent escalation clauses in most leases, a tenant’s Base Rent generally increases between 4% and 7% each year during the term of the lease. Under Argentine GAAP, rental revenue pursuant to rent escalation clauses is recognized when the escalated payment is due rather than recognizing the effects of the scheduled rent increases under the straight-line method over the lease term. Under US GAAP, effective July 1, 2006, the Company applied the provisions of SFAS No. 13 and FTB 85-3 and accordingly, recognized escalated rental revenue under the straight-line method over the term of the leases.

As discussed in Note 3.a., under Argentine GAAP, brokerage commissions earned are recognized at the time a transaction is successfully completed. Under US GAAP, brokerage commissions are deferred and amortized to income over the term of the respective leases.

F-60

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

II. Additional disclosure requirements

a) Disclosure of maturities of long-term debt

Scheduled maturities of the long-term debt for the next years (excluding current portion), as of June 30, 2007, are as follows:

2009	Ps.	32,929,314
2010		45,398,636
2011		44,005,714
2012		44,005,714
2015		146,076,000
2017		371,160,000
	Ps.	(1) 683,575,378

(1) Not including deferred debt issuance costs in the amount of Ps. 4,823,493.

b) Disclosure of operating lease information

The Company enters into cancelable commercial leases with its tenants for terms ranging from three to ten years, with most leases having terms of no more than five years. Tenants are generally charged a rent, which consists of the higher of (i) the base rent and (ii) the percentage rent (which generally ranges between 4% and 8% of the tenants sales). Furthermore, pursuant to the rent escalation clause in most leases, a tenant’s base rent generally increases between 4% and 7% each year during the term of the lease.

Included in lease revenues for the years ended June 30, 2007, 2006 and 2005 were contingent rentals of Ps. 51.9 million, Ps. 40.9 million and Ps. 29.4 million, respectively.

c) Disclosure of related parties transactions

The following additional disclosures of transactions with related parties are required under US GAAP:

Donations: For the years ended June 30, 2007, 2006 and 2005, the Company made unconditional promises to give money to Fundación IRSA amounting to Ps. 2.3 million, Ps. 2.5 million and Ps. 4.0 million, respectively. Unconditional promises are paid in the subsequent year.

Fundación IRSA is a charitable, non-profit organization whose Chairman is Eduardo S. Elsztain and whose Secretary, is Mariana Carmona de Elsztain, Mr. Elsztain’s wife. The Company’s Chairman Eduardo S. Elsztain is also the Chairman of IRSA, shareholder of the Company. In addition, the Company granted Fundación Museo de los Niños a 30-year free right to use a determined area of its Abasto and Rosario shopping centers to host an interactive learning center for children and adults.

F-61

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

II. Additional disclosure requirements

c) Disclosure of related parties transactions (continued)

Loans from Major Shareholders: As of June, 2007 IRSA and Parque Arauco owned US$31.7 million and US$ 15.5 million, respectively, of the Company’s Convertible Notes. As of June 30, 2007, IRSA owned 62.5% of the common shares. Assuming IRSA exercises its conversion rights of all of its Convertible Notes and no exercise of such rights by any of the other bondholders, IRSA would own 83.3% of the common shares. In the case all shareholders exercise their conversion rights and IRSA exercises them as well, IRSA would own 65.6% of the common stock.

The Convertible Notes originally matured on July 19, 2006. A meeting of noteholders resolved to extend the maturity date of the Convertible Notes through July 19, 2014 although the remaining terms and conditions were left unchanged. The Convertible Notes accrue interest (payable semiannually) at a fixed annual rate of 10% and are convertible, at any time at the option of the holder, into common shares of Ps.0.10 par value per share. The conversion rate per U.S. dollar is the lesser of 30.8642 and the result obtained from dividing the exchange rate in effect at the conversion date by the par value of the common shares.

Conversion of the Convertible Notes by the Company’s Major Shareholders: During November and December 2003, Eduardo Elsztain exercised his option to convert 0.03 million aggregate of principal amount of the Convertible Notes. As a result of this conversion, Eduardo Elsztain received 0.3 million of the common shares. In March 2004, Parque Arauco exercised its option to convert 0.8 million aggregate of principal amount of the Convertible Notes. As a result of this conversion, Parque Arauco has received 7.8 million of the common shares. Furthermore in July 2004, Parque Arauco exercised its option to convert 1.4 million aggregate of principal amount of the Convertible Notes, receiving 14.3 million of the common shares. During July 2004, IRSA exercised its option to convert 3.7 million aggregate of principal amount of Convertible Notes. As a result of this conversion, IRSA have received 37.4 million of the common shares.

Lease of office property:

The Company leases its headquarters and parking spaces from Inversora Bolivar, a subsidiary of IRSA, shareholder of the Company, The Company’s headquarters is located in the Intercontinental Plaza Building. Persuant to two agreements signed in December 2003 and January 2005, the Company pay monthly rental expenses of U$S 5,958 and U$S 5,386, respectively. The agreements have an initial duration of 60 months and 46 months, respectively, and renewable for an additional period of 36 months.

Lease of the Chairman’s offices: The Company leases Mr. Eduardo S. Elsztain’s offices, Chairman of the Company, from Isaac Elsztain e Hijos S.C.A., a company controlled by relatives of Eduardo S. Elsztain, and also from Hamonet S.A., a company controlled by Fernando A. Elsztain (Director) and certain of his relatives under a 120—month operating lease agreement expiring in March 2014. Monthly rent expense amounts to Ps.8,490. The Company, IRSA and Cresud each pay one-third of such rent in amount of Ps. 2,830 each.

Corporate services: In order to reduce administrative expenses and to achieve a more efficient allocation of corporate resources, a program for partial operating integration was implemented on June 30, 2003 by the Company, Cresud and IRSA (the “Parties”). The areas now involved are Shared Corporate Services, Human Resources, Finance, Institutional Relations, Administration, Systems, Insurance, Purchasing, Contracts, Operations and Internal Audit, among others. This program was implemented to reduce operating costs by optimizing the individual administrative efficiencies of each Party.

F-62

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

II. Additional disclosure requirements

c) Disclosure of related parties transactions (continued)

On the basis of this program, the Parties entered into the Exchange of Operating Services Agreement on June 30, 2004, a two-year agreement (being renewed for an equal period of time unless any of the Parties decides to terminate it) by which tasks are performed by one or more Parties for the benefit of one or more other Parties in exchange for a fee to be paid primarily through the provision of services in other areas. Through this agreement, each party continues to maintain its strategic and commercial independence while increasing operating efficiency.

In the ordinary course of business, the Company shares corporate services (finance, human resources, procurement, internal audit, systems, administration, etc.) with IRSA and Cresud under an Exchange of Operating Services Agreement entered into by all three companies in 2004. The Company pays a fee, primarily through the provision of services to the other parties.

Options to Purchase Shares of Comercializadora Los Altos S.A. (Altocity.com S.A.’s continuing company): see Note 19.I.i. for details.

In January 2000, E-Commerce Latina S.A., granted Consultores Internet Managers Ltd. an option to purchase certain of its class B shares of Altocity.com. Consultores Internet Managers Ltd. is a special-purpose Cayman Islands’ corporation created to act on behalf of its management and is represented by an independent attorney-in-fact. The option granted to Consultores Internet Managers represents 15% of the capital stock of Altocity and was granted for a period of eight years.

Pursuant to the terms of the agreement, the exercise price is equal to the quotient of (i) the original value of class B shares at the time of the contribution to Altocity.com by E-Commerce Latina S.A., plus interest accrued at an annual fixed interest rate of 14% through the exercise date of the option, over (ii) the total number of class B shares owned by E-Commerce Latina S.A. at the exercise date of the option.

The option was granted to Consultores Internet Managers Ltd. to be allocated by it among the management of Comercializadora Los Altos S.A. (Altocity.com S.A.’s continuing company) as an incentive compensation for their services, but as of today, no individual awards have been determined for participating employees under this option. Upon exercise of the option, Consultores Internet Managers Ltd.’s sole asset will be its 15% interest in Altocity.com.

Agreement with Inversiones Falabella Argentina S.A.: The Company has entered into an agreement with Inversiones Falabella Argentina S.A. (“Falabella”), the minority shareholder of Mendoza Plaza Shopping, pursuant to which, among other things, Falabella has the irrevocable right to sell to the Company (put option) its ownership interest in Mendoza Plaza Shopping for a total consideration of U$S 3 million. The put option can be exercised until the last business day of October 2008. At the date of issuance of these financial statements, Falabella has no exercised the put option.

Legal Services: During the years ended June 30, 2005, 2006 and 2007, the Company and the subsidiaries were charged by the law firm Zang, Bergel & Viñes an aggregate amount of approximately Ps.0.5 million, Ps.0.7 million, and Ps. 1.6 million, respectively as fees for legal services.

The Company’s Vice-Chairman Saúl Zang; the alternate Directors Juan M. Quintana, Salvador D. Bergel, and Pablo D.Vergara del Carril; the Syndic Ángel. D. Vergara del Carril and the alternate Syndic Armando F. Ricci are members of the law firm Zang, Bergel & Viñes.

F-63

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

II. Additional disclosure requirements

d) Disclosure about fair value of financial instruments

Under Argentine GAAP, there are no specific rules regarding disclosure of fair value of financial instruments.

Under US GAAP, SFAS No. 105 requires reporting entities to disclose certain information about financial instruments with off-balance sheet risk of accounting loss. SFAS No. 107, “Disclosures About Fair Value of Financial Instruments”, requires disclosure of fair value information about financial instruments whether or not recognized in the balance sheet, for which it is practicable to estimate fair value. Financial instruments include such items as cash and cash equivalents and accounts receivable and other instruments. SFAS No. 107 excludes from its disclosure requirements lease contracts and various significant assets and liabilities that are not considered to be financial instruments. SFAS No. 119 requires reporting entities to disclose certain information for derivative financial instruments. SFAS No. 133 superseded SFAS No. 105 and SFAS No. 119 and amended SFAS No. 107 to include in SFAS No. 107 the disclosure requirements of credit risk concentrations from SFAS No. 105. See Note 19.II.e) for details of concentration of credit risk.

Fair value estimates are made as of a specific point in time based on the characteristics of the financial instruments and the relevant market information. Where available, quoted market prices are used. In other cases, fair values are based on estimates using other valuation techniques, such as discounting estimated future cash flows using a rate commensurate with the risks involved or other acceptable methods. These techniques involve uncertainties and are significantly affected by the assumptions used and the judgments made regarding risk characteristics of various financial instruments, prepayments, discount rates, estimates of future cash flows, future expected loss experience, and other factors. Changes in assumptions could significantly affect these estimates. Derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in an immediate sale of the instrument. Also, because of differences in methodologies and assumptions used to estimate fair value, the Company’s fair values should not be compared to those of other companies.

Under this statement, fair value estimates are based on existing financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.

Accordingly, the aggregate fair value amount presented does not represent the underlying value of the Company. For certain assets and liabilities, the information required under this statement is supplemental with additional information relevant to an understanding of the fair value.

The methods and assumptions used to estimate the fair values of each class of financial instruments as of June 30, 2007 and 2006 are as follows:

F-64

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

II. Additional disclosure requirements

d) Disclosure about fair value of financial instruments (continued)

Cash and cash equivalents

The Company considers all highly liquid investments with original maturities of three months or less, consisting of mutual funds and time deposits, to be cash and cash equivalents. The carrying amount reported in the consolidated balance sheet approximates their fair value.

Mortgages and leases receivable, net

The carrying amount of mortgages and leases receivables reported in the consolidated balance sheet approximates their fair value.

Accounts and notes receivable, net

Carrying amounts are considered to approximate fair value. All amounts that are assumed to be uncollectible within a reasonable time are written off and/or reserved.

Retained interests in transferred credit card receivables

Fair value is estimated by discounting anticipated future cash flows using a discount rate based on specific factors. The anticipated future cash flows are projected on a “cash out” basis to reflect the restriction of cash flows until the investors have been fully paid. As of June 30, 2007 and 2006, the fair value of retained interests in transferred credit card receivables amounted to Ps. 61.6 million and Ps. 27.3 million, respectively.

Accounts and notes payable

The carrying amount of accounts and notes payable reported in the consolidated balance sheet approximates their fair value.

Short-term debt

The carrying amount of short-term debt reported in the consolidated balance sheet approximates fair value due to its short-term nature.

Long-term debt

As of June 30, 2007 and 2006, except for the Company’s Convertible Notes as discussed below, the carrying amount of long-term debt reported in the consolidated balance sheet approximates their fair value.

The fair value of the Company’s Convertible Notes was Ps. 2,118.1 million and Ps. 976.6 million as of June 30, 2007 and 2006, respectively. Such fair value was determined based on the market price of the shares assuming full conversion of the notes at year-end.

Other receivables and other liabilities

The carrying amount of other receivables and other liabilities reported in the consolidated balance sheet approximates fair value due to their short-term nature.

F-65

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

II. Additional disclosure requirements

e) Credit risk

Financial instruments that potentially subject the Company to a concentration of credit risk primarily consist of cash and current investments. The Company places its cash and current investments in high quality financial institutions that are located in Argentina and in the United States of America.

The Company’s policy is to limit the exposure with any one institution. As of June 30, 2006, cash and banks and short-term investments amounted to Ps. 52.3 million held in more than 38 financial institutions. As of June 30, 2007, cash and banks and short-term investments amounted to Ps. 483.7 million. The Company continues with this policy and maintains most of its current financial needs with several financial institutions. However, as discussed in Note 15, most of the net proceeds of the Company’s Non-Convertible Notes are held with one high-quality financial institution, Citibank. The Company expects to use these available funds in the near term and does not believe that there is a risk of default by the counterparty.

Credit card receivables arise primarily under open-end revolving credit accounts used to finance purchases of goods and services offered by the Company’s shopping centers, hypermarkets and street stores, and financing and lending activities. These accounts have various billing and payment structures, including varying minimum payment levels and finance charge rates. Credit card receivables are shown net of an allowance for uncollectible accounts. The Company provides an allowance for uncollectible accounts based on impaired accounts, historical charge-off patterns and management judgment.

As of June 30, 2007 the Company has sold credit card receivables of Ps. 751.7 million through securitization programs outstanding, for which the Company’s credit risk exposure is contractually limited to the subordinated CPs held by the Company representing Ps. 77.8 million (equity value) and a Ps. 11.9 million escrow reserves for losses.

f) Recently issued accounting standards

In February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments”, which resolves issues addressed in FASB SFAS No. 133 Implementation Issue No. D1, “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets”. Among other things, it permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation. This statement is effective for all instruments acquired, issued, or subject to a remeasurement event occurring after the beginning of an entity’s first fiscal year that begins after September 15, 2006. This standard will be effective for the Company’s fiscal year ended June 30, 2008. As of the date of these financial statements, the Company has not analyzed the impact, if any, that this standard will have on its financial position and results of operations.

In March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial Assets”, which permits an entity to choose either the amortization method or fair value method for each class of separately recognized servicing assets and servicing liabilities. This statement is effective for an entity’s first fiscal year that begins after September 15, 2006. This standard will be effective for the Company’s fiscal year ended June 30, 2008. As of the date of these financial statements, the Company has not analyzed the impact, if any, that this standard will have on its financial position and results of operations.

In July 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 prescribes detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes” (“SFAS No. 109”). Tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized upon the adoption of FIN 48 and in subsequent periods. FIN 48 will be effective for fiscal years beginning after December 15, 2006 and the provisions of FIN 48 will be applied to all tax positions accounted for under SFAS No. 109 upon initial adoption. The standard will be effective for the Company’s fiscal year ended June 30, 2008. The cumulative effect of applying the provisions of FIN 48 will be reported as an adjustment to the opening balance of retained earnings for that fiscal year. The Company is currently in the process of evaluating the provisions of FIN 48 and its impact, if any, on its consolidated financial statements.

F-66

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

II. Additional disclosure requirements

f) Recently issued accounting standards (continued)

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurement”, which provides a single definition of fair value, together with a framework for measuring it, and requires additional disclosures about the use of fair value to measure assets and liabilities. This statement emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and sets about a fair value hierarchy with the highest priority being quoted prices in active markets. Under the Statement, fair value measurements are disclosed by level within the hierarchy. While the statement does not add any new fair value measurements, it does change current practice. Changes to practice include (a) a requirement for an entity to include its own credit standing in the measurement of its liabilities, (b) a modification of the transaction price presumption, (c) a prohibition on the use of block discounts when valuing large blocks of securities for broker-dealers and investment companies, (d) a requirement to adjust the value of restricted stock for the effect of the restriction even if the restriction lapses within one year. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007. This standard will be effective for the Company’s fiscal year ended June 30, 2009. As of the date of these financial statements, the Company has not analyzed the impact, if any, that this standard will have on its financial position and results of operations.

In September 2006, the EITF issued EITF 06-07 “Issuers Accounting for a Previously Bifurcated Conversion Option in a Convertible Debt Instrument When the Conversion Option No Longer Meets the Bifurcation Criteria in FASB Statement No. 133” which states that an issuer should account for a previously bifurcated conversion option in a convertible debt instrument if the embedded conversion option no longer meets the bifurcation criteria in Statement 133 by reclassifying the carrying value of the liability for the conversion option to shareholders’ equity. Any debt discount recorded at the issuance of the convertible debt should continue to be amortized. The guidance in this Issue should be applied to all previously bifurcated conversion options in convertible debt instruments that no longer meet the bifurcation criteria in Statement 133 in the interim or annual periods beginning after December 15, 2006 irrespective of whether the debt instrument was entered into prior or subsequent to the effective date of this Issue.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities -including an amendment of FASB Statement No. 115”. This Statement permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected to expand the use of fair value measurement, which is consistent with the Board’s long-term measurement objectives for accounting for financial instruments, and will be effective for the Company as from July 1, 2008. This standard will be effective for the Company’s fiscal year ended June 30, 2009. As of the date of these financial statements, the Company has not analyzed the impact, if any, that this standard will have on its financial position and results of operations. As of the issuance date of these financial statements, the Company is evaluating the impact of the adoption of such standard.

F-67

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

II. Additional disclosure requirements

g) Risks and uncertainties

The Company’s operations are subject to risks and uncertainties with respect to:

Risks associated with Argentine operations. All Company’s operations and properties are located in Argentina. As a result, the Company financial condition and results of operations depend to a significant extent on macroeconomic and political conditions prevailing in Argentina.

Shopping center operating risks: The development, administration and profitability of shopping centers are impacted by various factors including: the accessibility and the attractiveness of the area where the shopping center is located, the intrinsic attractiveness of the shopping center, the flow of people and the level of sales of each shopping center rental unit within the Company’s shopping centers, the amount of rent collected from each shopping center rental unit and the fluctuations in occupancy levels in the shopping centers. In the event that there is an increase in operational costs, caused by inflation or other factors, it could have a material adverse effect on the Company if its tenants are unable to pay their higher rent obligations due to the increase in expenses.

Since May 28, 1997, Law No. 24,808 provides that tenants may rescind commercial lease agreements after the initial six months upon not less than sixty days written notice, subject to penalties of only one-and-a-half months rent if the tenant rescinds during the first year of the lease, and one-month rent if the tenant rescinds after the first year of the lease. The exercise of such rescission rights could materially and adversely affect the Company.

Real estate market operating risks: The Company’s property is currently and will continue to be subject to risks incident to the ownership and operation of commercial real estate and residential development properties. The Company’s lease sales from its real estate operations may be adversely affected by (i) local or national economic conditions in the areas in which the properties are located; (ii) oversupply of retail space or a reduction in demand for retail space; (iii) increased competition from other real estate operators; (iv) changes in the ability of the Company or the tenants to provide for adequate maintenance and/or insurance; (v) increases in operating expenses; and/or (vi) adverse changes in the regional or national economy. Other risks include the inability to collect rent due to bankruptcy or insolvency of tenants or otherwise, the need to periodically renovate, repair and release space and the costs thereof and the ability of a tenant to provide adequate maintenance and insurance. In addition, the failure to sell the property to be constructed (General Paz Project, Caballito Project, Coto Residential Project and Rosario Project), could have a material adverse effect on the Company.

An economic downturn in the areas in which the shopping centers are located might adversely affect the Company’s sales (through bankruptcy of tenants and reduction in the shopping center sales due to lower variable income). Increases in operating costs due to inflation and other factors may result in some tenants being unable or unwilling to pay rent or expense increases. In addition, the Company has several tenants occupying space in more than one shopping center and, as a result, if any of such tenants should experience financial difficulties and cease paying rent, the Company’s operating results could be adversely affected. Furthermore, as leases on properties expire, the Company may be unable to find new tenants or tenants may enter into new leases on terms that are less favorable to the Company. The failure to lease such properties could have a material adverse effect on the Company.

Credit card operating risks: Credit card operations are subject to federal legislation and regulation. From time to time, such legislation, as well as competitive conditions, may affect, among other things, credit card finance charges. While the Company cannot predict the effect of future competitive conditions and legislation or the measures the Company might take in response thereto, a significant reduction in the finance charges imposed by Tarshop would have an adverse effect on the Company. In addition, changes in general Argentine economic conditions, including, but not limited to, higher interest rates and increases in delinquencies, charge-offs and personal bankruptcies could have an adverse effect on the Company.

F-68

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

II. Additional disclosure requirements

h) Statement of cash flows classification differences

The statements of cash flows presented in the primary financial statements are prepared based on Argentine GAAP amounts.

Following SFAS No. 95 provisions, the total amounts of cash and cash equivalents at the beginning and end of the years shown in the statement of cash flows are required to be the same amounts as similarly titled line items shown in the balance sheets as of those dates.

	As of June 30,
	2007		2006		2005
Cash and banks	31,829,851		38,222,036		24,961,116
Current investments	485,408,600		32,250,484		41,712,702
Total cash and banks and current investments as per balance sheet	517,238,451		70,472,520		66,673,818
Less: Items not considered cash and cash equivalents
- Retained interests in transferred credit card receivables	(22,103,730	)	(10,318,797	)	(10,411,456	)
- Mortgage bonds issued by Banco Hipotecario S.A.	(1,661,969	)	(2,170,258	)	(2,841,985	)
- Government bonds	(6,595,953	)	(1,254,485	)	(3,483,037	)
- Trust debt securities	—		(324,325	)	—
- Others	(1,380,420	)	—		(222,860	)
Cash and cash equivalents as shown in the statement of cash flows	485,496,379		56,404,655		49,714,480

Under Argentine GAAP, the Company considers all short-term, highly liquid investments that are readily convertible to known amounts of cash and with original maturities of three months or less to be cash equivalents. Under Argentine GAAP, mutual funds are considered to be cash equivalents since original maturity is determined by reference to the frequency with which liquidity is available according to current Argentine GAAP guidance and practice. However, under SFAS No. 95 “Statement of Cash Flows”, the original maturity is determined by reference to the stated term of the security or the timeframe for exercising any put features to the issuer, not by reference to the frequency with which liquidity may be available through an auction, a put feature to a third party, or otherwise.

Therefore, for US GAAP purposes, certain mutual funds are not considered to be cash equivalents. As a result, differences exist between the total amount of the increase or decrease in cash and cash equivalents reported in the primary financial statements and the same totals that would be reported in a statement of cash flows prepared following SFAS 95 provisions.

	As of June 30,
	2007		2006		2005
Cash and banks	31,829,851		38,222,036		24,961,116
Current investments	485,408,600		32,250,484		41,712,702
Total cash and banks and current investments as per balance sheet	517,238,451		70,472,520		66,673,818
Less: Items not considered cash and cash equivalents
- Mutual Funds	(438,106,629	)	—		—
- Retained interests in transferred credit card receivables	(22,103,730	)	(10,318,797	)	(10,411,456	)
- Mortgage bonds issued by Banco Hipotecario S.A.	(1,661,969	)	(2,170,258	)	(2,841,985	)
- Government bonds	(6,595,953	)	(1,254,485	)	(3,483,037	)
- Trust debt securities	—		(324,325	)	—
- Others	(1,380,420	)	—		(222,860	)
Cash and cash equivalents as shown in the statement of cash flows	47,389,750		56,404,655		49,714,480

F-69

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

II. Additional disclosure requirements

h) Statements of cash flows classification differences (continued)

The following tables set forth the amounts of cash and cash equivalents at the beginning and end of each year and corresponding increases and/or decreases that would be reported in a statement of cash flows following SFAS 95 provisions:

	As of June 30,
	2007		2006	2005
Cash and cash equivalents under US GAAP as of the beginning of the year	56,404,655		49,714,480	68,296,467
Cash and cash equivalents under US GAAP as of year-end	47,389,750		56,404,655	49,714,480
Net (decrease) increase in cash and cash equivalents under US GAAP	(9,014,905	)	6,690,175	(18,581,987	)

Differences exist between cash flows from operating, investing and financing activities reported in the primary financial statements and the cash flows from operating, investing and financing activities that would be reported under SFAS No. 95. Due to the difference in the definition of cash and cash equivalents, cash flows from purchasing and selling of mutual funds would be reported as cash flows from investing activities following SFAS 95 provisions.

In addition, under Argentine GAAP the effect of exchange rate changes on cash and cash equivalents were not disclosed by presenting a fourth cash flow statement category as required by US GAAP.

The following tables set forth the condensed statements of cash flows prepared in accordance with US GAAP:

	Year ended June 30,
	2007			2006			2005
Net cash provided by operating activities	Ps.	178,981,849		Ps.	169,521,946		Ps.	95,239,538
Net cash used in investing activities		(622,289,237	)		(124,023,513	)		(61,390,153	)
Net cash provided by (used in) financing activities		433,562,814			(39,952,398	)		(52,205,675	)
Effect of exchange rate changes on cash and cash equivalents		729,669			1,144,140			(225,697	)

Additionally, under Argentine GAAP, the Company consolidates the accounts of Metroshop S.A. on a pro rata basis. Under US GAAP, proportionate consolidation is not appropriate since the Company does not exercise control over this investment. As a result, differences exist between the amount of cash and cash equivalents reported in the primary financial statements and the amount of cash and cash equivalents that would be reported in a statement of cash flows prepared under US GAAP using Argentine GAAP numbers. For this reason, cash flows from operating, investing and financing activities would be different in a statement of cash flows prepared under US GAAP using Argentine GAAP since each line item would exclude the pro rata equity interest of the accounts of Metroshop S.A.

F-70

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

II. Additional disclosure requirements

i) Earnings per share

Under Argentine GAAP the Company is required to disclose earnings per share information in accordance with RT 18 for all periods presented. Note 13 to the consolidated financial statements disclose the computation of basic and diluted net income per common share under Argentine GAAP. Guidance set forth in RT 18 is similar to the basic principles set forth in SFAS No. 128 “Earnings per Share” (SFAS No.128). See Note 3.z., for details.

Under US GAAP, basic and diluted earnings per share are presented in conformity with SFAS No. 128.

The following tables set forth the computation of basic and diluted net income per common share under US GAAP for all periods presented:

	Year ended June 30,
	2007			2006			2005
Numerator:
Net income available to common shareholders	Ps.	75,742,058		Ps.	47,007,816		Ps.	36,168,969
Plus (less): income (loss) impact of assumed conversions:
Interest expense on convertible debt		14,941,261			14,406,991			12,217,475
Foreign currency exchange loss (gain) on convertible debt		330,596			9,408,565			(2,999,252	)
Income tax effects		(5,220,982	)		(8,319,325	)		(3,226,378	)
Net income available to common shareholders plus assumed conversions	Ps.	85,792,933		Ps.	62,504,047		Ps.	42,160,814
Denominator:
Weighted-average number of shares outstanding		782,056,978			780,432,065			777,017,782
Plus: incremental shares of assumed conversions:
Convertible debt		1,457,454,043			1,363,565,610			1,365,009,110
Adjusted weighted-average number of shares	Ps.	2,239,511,021		Ps.	2,143,997,675			2,142,026,892
Basic and diluted EPS:
Basic net income per common share	Ps.	0.10		Ps.	0.06		Ps.	0.05
Diluted net income per common share		0.04			0.03			0.02

F-71

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

II. Additional disclosure requirements

j) Severance indemnities

Under Argentine law and labor agreements, the Company is required to make minimum severance payments to its dismissed employees without cause and employees leaving its employment in certain other circumstances. Under Argentine GAAP, severance payments are expensed as incurred. Under US GAAP, the Company follows the guidelines established by SFAS No. 112, “Employers’ Accounting for Post-employment Benefits”, and SFAS No. 43, “Accounting for Compensated Absences”, which requires the accrual of severance costs if they relate to services already rendered, are related to rights that accumulate or vest, are probable of payment and are reasonably estimable. While the Company expects to make severance payments in the future, it is impossible to estimate the number of employees that will be dismissed without proper cause in the future, if any, and accordingly the Company has not recorded such liability.

k) Balance sheet classification differences

Under Argentine GAAP, assets and liabilities are classified either as current or non-current, principally depending on the expected settlement dates. Under US GAAP, real estate companies generally do not present a classified balance sheet.

Under Argentine GAAP, the net deferred tax position by company has been classified as a non-current other receivable or as a non-current tax payable. Under US GAAP, the classification of deferred taxes is determined by the classification of the current/non-current asset or liability for financial reporting to which the temporary difference is related. A temporary difference is related to an asset or liability if reduction of the asset or liability causes the temporary difference to reverse. For deferred tax balances not related to an asset or liability for financial reporting (e.g. tax loss carryforwards), the classification is based on the expected realization date. As of June 30, 2007 and 2006, Ps. 13.6 million and Ps. 7.7 million, respectively, would have been classified as current assets; Ps. 6.2 million and Ps. 3.7 million, respectively, would have been classified as non-current assets; and Ps. 30.2 million and Ps. 16.5 million, respectively, would have been classified as non-current liabilities. As of June 30, 2007 and 2006, Ps. 5.0 million and Ps.0.7 million would have been classified as current liabilities, respectively.

Under Argentine GAAP, deferred debt costs related to the issuance of the Senior Notes were amortized under the straight-line method over the term of the agreement. Under US GAAP, these costs were deferred and amortized over the same period using the effective interest method. The Senior Notes were fully settled as of June 30, 2005.

Under Argentine GAAP, deferred debt costs are shown as a deduction of the corresponding liability. Under US GAAP, in accordance with APB Opinion No. 21 “Interest on Receivables and Payables”, issue costs should be reported as deferred charges in the balance sheet.

F-72

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

II. Additional disclosure requirements

l) Statement of income classification differences

Should a US GAAP income statement be presented, certain items shown in some line items of the income statement under Argentine GAAP would have to be reclassified to affect other line items. The following reclassifications are intended to present Argentine GAAP numbers using a different criterion of classification under US GAAP. The numbers included below are not US GAAP numbers.

Gross vs. net presentation

As part of the lease agreements, tenants are required to pay their proportionate share of common area maintenance expenses. The Company does not charge any mark up on reimbursable costs. These expenses are incurred and paid by the Company and then passed through to tenants as reimbursable costs.

Under Argentine GAAP, pass-through expenses, such as these reimbursable costs, are accounted for on a net basis and, as such, excluded from revenues and expenses in the consolidated financial statements. However, Note 4.d. shows the total amount of expenses passed through to tenants by expense category with the corresponding offsetting amount therefore having no impact in the consolidated costs of the Company. No amount is shown as revenues.

Under US GAAP, the Company accounts for pass-through revenue and expenses in accordance with Emerging Issues Task Force, or EITF, Issue 01-14, “Income Statement Characterization of Reimbursements Received for Out of Pocket Expenses Incurred,” and include these costs incurred as a component of revenue and as a component of operating expenses in the statement of income. These costs, which are pass-through expenses to tenants included in both revenues and expenses were Ps. 116.4 million, Ps. 87.9 million and Ps. 64.8 million for the years ended June 30, 2007, 2006 and 2005, respectively. As these expenses are fully reimbursed, without mark-up, by the tenants, there is no impact on operating income, net income, EPS, cash flows or the balance sheet.

Should the EITF 01-14 be applied to the Argentine GAAP income statement, net revenues under Argentine GAAP would have been Ps. 599.6 million, Ps. 449.3 million and Ps. 295.0 million for the years ended June 30, 2007, 2006 and 2005, respectively.

Operating income

Certain expense and/or income items included within “Other expenses, net” and “Financial results, net” of the Argentine GAAP income statement would have been included in the determination of operating income under US GAAP. In addition, under Argentine GAAP, the recovery of certain allowances and provisions has been included within “Other expenses, net”. Under US GAAP, such items would have been classified as a reversal to the amounts in the line items, which were originally recorded.

Should certain other expenses, financial results and the recovery of allowances and provisions be reclassified into/out of operating income, as applicable, operating income under Argentine GAAP would have been Ps. 155.4 million, Ps. 126.9 million and Ps. 95.5 million for the years ended June 30, 2007, 2006 and 2005, respectively.

F-73

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

II. Additional disclosure requirements

m) Condensed balance sheet information on equity investees

The Company used the equity method of accounting for its investments over which the Company exercises significant influence. As such, these investments were recorded at the amount of the underlying equity in their net assets and adjusted to recognize the Company’s share of the undistributed earnings or losses. The Company had a 50% ownership interest in E-commerce Latina S.A as of June 30, 2006 and 2005. In January 2007, the Company acquired the remaining 50% in E-commerce Latina S.A. (See Note 2 for details). The Company gained control of E-commerce Latina S.A. through this acquisition and accordingly the results of operations of E-commerce Latina S.A. were fully consolidated as from the date. The Company’s share of the losses of this company was Ps. 0.7 million and Ps. 0.6 million during the years ended June 30, 2006 and 2005, respectively, and its investment in this company totaled 0.1 million at June 30, 2006. Summarized financial information of this affiliate (on a 100% basis) was as follows:

E-Commerce Latina	As of June 30, 2006
Current assets	Ps.	1,547,667
Non-current assets		1,675,012
Total assets		3,222,679
Current liabilities		2,963,222
Non-current liabilities		500
Total liabilities		2,963,722
Minority interest		5
Shareholders’ equity	Ps.	258,952

	For the year ended June 30,
	2006			2005
Revenues	Ps.	5,593,472		Ps.	2,636,028
Operating loss		(1,298,919	)		(1,287,525	)
Net loss	Ps.	(1,357,755)		Ps.	(1,253,367	)

As of June 30, 2006 and 2005 accumulated losses of E-Commerce Latina totaled Ps. 1.4 million and Ps. 42.4 million, respectively. On February 6, 2006 the Extraordinary Shareholders’ Meeting approved a capital increase for the amount of Ps. 22,010,575 through the capitalization of additional paid-in-capital. The Company issued 22,010,575 nominative common stock of Ps. 1 nominal value each and 1 vote per share. As a result, the capital stock increased to Ps. 22,034,275.

F-74

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

II. Additional disclosure requirements

n) Investments in debt and equity securities

In accordance with SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities”, the Company has classified its investments in mutual funds as well as its investments in government and mortgage bonds outstanding at June 30, 2007, 2006 and 2005 as available-for-sale securities. The following are additional disclosure requirements in accordance with SFAS No. 115:

Available-for-sale securities

The amortized cost, gross unrealized holding gains or losses and fair value of the available-for-sale securities by major security type at June 30, 2007 and 2006 were as follows:

	2007			2006
Instrument	Cost	Unrealized gain	Fair value	Cost	Unrealized gain		Fair value
Mutual funds	445,233,742	3,408,555	448,642,297	13,736,601	244,200		13,980,801
Mortgage bonds	1,659,846	2,123	1,661,969	2,181,322	(11,064	)	2,170,258
Government bonds	6,311,077	284,876	6,595,953	1,221,091	33,394		1,254,485
Garantizar S.G.R.	1,247,081	133,339	1,380,420	—	—		—

Proceeds from sales of investment securities available-for-sale during the years ended June 30, 2007 and 2006 were Ps. 428.4 million and Ps. 245.6 million, respectively. Gross gains of Ps. 5.8 million and Ps. 1.9 million for the years ended June 30, 2007 and 2006, respectively, were realized on those sales.

F-75

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

II. Additional disclosure requirements

o) Comprehensive income (loss)

On July 1, 1998, the Company adopted SFAS No. 130, “Reporting Comprehensive Income”. SFAS No. 130 establishes guidelines for the reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) in a full set of general purpose financial statements. SFAS No. 130 requires that all items that are required to be recognized under accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. Accumulated other comprehensive income is presented below, net of income tax benefit/expense:

	Year ended June 30,
	2007		2006		2005
Net income under US GAAP	Ps.	75,742,058	Ps.	47,007,816	Ps.	36,168,969
Other comprehensive income:
Net change in unrealized holding gain on available-for-sale securities (net of minority interest and income taxes of Ps. 130,260 and Ps. 1,281,505, respectively, for 2007, Ps. 29,449 and Ps. 16,812, respectively, for 2006; and Ps. (5,055) and Ps. 29,771, respectively, for 2005)		2,249,677		1,773		60,344
Net change in unrealized holding gain on retained interests in transferred credit card receivables (net of income taxes and minority interest of Ps. 699,900 and Ps. 259,963 respectively, for 2007, Ps. 1,903,361 and Ps. 706,483 respectively, for 2006; and Ps. 765,471 and Ps. 284,317, respectively, for 2005)		1,039,851		2,828,331		1,137,269
Comprehensive income	Ps.	79,031,586	Ps.	49,837,920	Ps.	37,366,582
	As of June 30,
	2007		2006		2005
Unrealized holding gains on available-for-sale securities		2,388,510		138,833		137,060
Unrealized holding gains on retained interests in transferred credit card receivables		6,045,440		5,005,589		2,177,258
Accumulated other comprehensive income	Ps.	8,433,950	Ps.	5,144,422	Ps.	2,314,318

p) Pro-rata consolidation of Metroshop S.A.

As discussed in Note 2.c. under Argentine GAAP the Company consolidates the accounts of Metroshop S.A. on a pro-rata basis. Under US GAAP consolidation is not appropriate since the Company does not exercise control over the subsidiary.

Presented below is the consolidated condensed information of the Company at June 30, 2007 and 2006 considering Metroshop S.A. as an equity investee:

F-76

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

II. Additional disclosure requirements

p) Pro-rata consolidation of Metroshop S.A. (continued)

	As of and for the year ended June 30, 2007
	As reported	Elimination of Metroshop S.A. accounts		Inclusion of Metroshop S.A. as an equity investee	As adjusted
Current assets	727,845,115	2,001,416		—	729,846,531
Non-current assets	1,365,865,435	(6,413,116	)	3,100,889	1,362,553,208
Total assets	2,093,710,550	(4,411,700	)	3,100,889	2,092,399,739
Current liabilities	403,341,680	(1,310,811	)	—	402,030,869
Non-current liabilities	795,033,781	—		—	795,033,781
Total liabilities	1,198,375,461	(1,310,811	)	—	1,197,064,650
Minority interest	71,427,862	—		—	71,427,862
Shareholders’ equity	823,907,227	—		—	823,907,227
Revenues	483,231,154	(5,520,783	)	—	477,710,371
Gross profit	314,924,586	(3,507,403	)	—	311,417,183
Net income	64,056,564	—		—	64,056,564

	As of and for the year ended June 30, 2006
	As reported	Elimination of Metroshop S.A. accounts		Inclusion of Metroshop S.A. as an equity investee	As adjusted
Current assets	213,703,570	1,223,554		—	214,927,124
Non-current assets	1,141,341,918	(1,357,625	)	—	1,139,984,293
Total assets	1,355,045,488	(134,071	)	—	1,354,911,417
Current liabilities	293,556,844	(211,947	)	—	293,344,897
Non-current liabilities	224,658,434	—		77,876	224,736,310
Total liabilities	518,215,278	(211,947	)	77,876	518,081,207
Minority interest	29,989,705	—		—	29,989,705
Shareholders’ equity	806,840,505	—		—	806,840,505
Revenues	361,355,913	(1,684,494	)	—	359,671,419
Gross profit	222,290,537	(926,859	)	—	221,363,678
Net income	44,679,032	—		—	44,679,032

F-77

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

II. Additional disclosure requirements

q) Investments in real estate and accumulated depreciation

The following is a summary of the Company’s investments in real estate as of June 30, 2007 prepared in accordance with SEC S-X 12-28.

Description	Encumbrances	Land		Buildings and improvement		Transfers			Improvements / Additions		Total buildings and improvements		Total		Accumulated depreciation			Date of construction	Date acquired	Life on which depreciation in latest statements of income is computed
Shopping centers:
-Abasto		Ps.	9,752,107	Ps.	242,398,568	Ps.	41,173		Ps.	730,995	Ps.	243,170,736	Ps.	252,922,843	Ps.	(71,663,613	)	November, 1998	—	31
- Alto Palermo			8,693,768		398,126,817		76,688			379,750		398,583,255		407,277,023		(231,759,828	)	October, 1990	November, 1997 and March, 1998	26
- Alto Avellaneda			18,089,159		147,847,607		400,923			11,652,172		159,900,702		177,989,861		(88,325,783	)	October, 1995	November and December, 1997	19
- Paseo Alcorta			8,066,295		97,904,672		7,714			6,169,139		104,081,525		112,147,820		(47,716,189	)	June, 1992	June, 1997	22
- Alto Noa			356,752		42,857,786		—			93,420		42,951,206		43,307,958		(16,267,694	)	September, 1994	March, 1995, September, 1996 and January, 2000	22
- Patio Bullrich			8,418,811		151,834,699		(11,038	)		508,577		152,332,238		160,751,049		(57,614,534	)	September, 1988	October, 1998	23
- Buenos Aires Design			—		48,984,751		(38,413	)		73,711		49,020,049		49,020,049		(32,938,536	)	Between November and December, 1993	November, 1997	20
- Alto Rosario			25,686,165		63,560,471		1,222,672			1,065,566		65,848,709		91,534,874		(5,808,959	)	November 2004	—	29
- Mendoza Plaza Shopping			10,820,546		101,697,509		(543,516	)		4,410,188		105,564,181		116,384,727		(27,380,450	)	June, 1994	December, 2004	22
- PAMSA			123,567,640		—		—			44,038,768		44,038,768		167,606,408		—		Under construction	November, 2006	—
-Empalme.	Antichresis		5,009,058		—		—			88,388,364		88,388,364		93,397,422		(17,889,212	)	March, 1990	December, 2006	34
Neuquén	Mortgage		3,313,623		8,852,279		15,268			120,630		8,988,177		12,301,800		—		Under construction	September, 1999	—
Other			965,445		8,804,643		—			—		8,804,643		9,770,088		(910,208	)	—	—	—
Total		Ps.	222,739,369		1,312,869,802		1,171,471			157,631,280		Ps.1,471,672,553	Ps.	1,694,411,922	Ps.	(598,275,006	)

F-78

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

II. Additional disclosure requirements

q) Investments in real estate and accumulated depreciation (continued)

	Year ended June 30,
	2007			2006
Balance, beginning of the year	Ps.	1,407,406,658		Ps.	1,399,133,239
Additions during the year:
Improvements		283,975,975			19,569,420
Transfers from other fixed assets		1,171,471			—
Amortization of impairment		—			120,999
Recovery of impairment (1) (2)		2,153,984			3,311,966
	Ps.	1,694,708,088		Ps.	1,422,135,624
Deductions during the year:
Deductions		(296,166	)		—
Damage in Alto Avellaneda Shopping		—			(13,438,300	)
Sale of real estate		—			(1,076,013	)
Transfers from other receivables		—			(64,790	)
Transfers to work-in-progress leasehold improvements		—			(6,722	)
Transfers to facilities		—			(143,141	)
	Ps.	(296,166	)	Ps.	(14,728,966	)
Balance, end of the year	Ps.	1,694,411,922		Ps.	1,407,406,658

(1) As of June 30, 2006 includes Ps. 24,832 related to Neuquén and Ps. 3,287,134 related to Alto Rosario.

(2) As of June 30, 2007 related to Neuquén.

F-79

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

II. Additional disclosure requirements

r) Mortgage receivable on real estate

The following is a summary of the Company’s mortgage receivable on real estate as of June 30, 2007 prepared in accordance with SEC S-X 12-29.

	Col. B.		Col. C.	Col. D.	Col. E.	Col. F.		Col. G.		Col. H.
Description	Interest Rate		Final maturity date	Periodic payment term	Prior liens	Face amount of mortgages		Carrying amount of mortgages		Principal amount of receivables subject to delinquent principal or interest
Customer A	14	%	June 2014	Monthly	None		127,676		73,445	None
Customer B	14	%	May 2014	Monthly	None		77,163		128,542	None
Customer C	12	%	September 2009	Monthly	None		76,000		27,884	None
Customer D	12	%	April 2015	Monthly	None		72,801		57,107	None
Customer E	14	%	June 2014	Monthly	None		70,165		148,550	None
Customer F	14	%	July 2009	Monthly	None		60,368		140,838	None
Customer G	14	%	April 2014	Monthly	None		57,802		41,731	None
Customer H	16	%	February 2010	Monthly	None		57,539		29,580	None
Customer I	12	%	April 2015	Monthly	None		53,173		41,829	None
Customer J	14	%	February 2014	Monthly	None		49,908		76,109	None
Customer K	16	%	September 2009	Monthly	None		20,000		43,608	None
Mortgages Receivables Ps.30,000-Ps.49,999	14-17	%	September 2007-September 2009 -January 2011	Monthly	None		76,130		30,546	None
Mortgages Receivables Ps. 50,000-Ps. 69,999	14-15	%	May 2009 - July 2014	Monthly	None		111,200		39,004	None
Mortgages receivables Ps.70,000-Ps.89,999	14-16	%	June 2009 - December 2014	Monthly	None		234,710		1,992	None
						Ps.	1,144,635	Ps.	880,765

F-80

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

19. Differences between Argentine GAAP and US GAAP (continued)

II. Additional disclosure requirements

r) Mortgage receivable on real estate (continued)

The summary of activity in mortgage receivable is as follows:

	Years ended June 30,
	2007			2006
Balance, beginning of the year	Ps.	958,645		Ps.	1,122,500
Deductions during the year:
Collections of principal		(77,880	)		(163,855	)
Balance, end of year	Ps.	880,765		Ps.	958,645

s) Acquisition of Empalme

The following schedule presents supplemental unaudited pro forma information as if the acquisition of Empalme had occurred on July 1, 2005. The unaudited pro forma statement of income information is presented based on information available, is intended for informational purposes only and is not necessarily indicative of and does not purport to represent what the Company’s future financial condition or operating results will be after giving effect to the Empalme transaction and does not reflect actions that may be undertaken by management in integrating this business.

	Pro Forma Year ended June 30,
	2007 Ps.		2006 Ps.
Revenues	487,130,852		368,096,444
Costs	(169,773,933	)	(141,960,511	)
Gross profit	317,356,919		226,135,933
Selling expenses	(84,512,497	)	(47,680,834	)
Administrative expenses	(80,232,145	)	(54,239,713	)
Net income from retained interest in securitized receivables	3,253,789		2,625,001
Gain from recognition of inventories at net realizable value	545,400		3,497,632
Operating income	156,411,466		130,338,019
Loss in equity investee	(678,569	)	(678,881	)
Amortization of goodwill	(4,366,356	)	(4,739,675	)
Financial results, net	(20,753,533	)	(13,206,601	)
Other expenses, net	(3,341,648	)	(9,745,891	)
Income before taxes	127,271,360		101,966,971
Income tax expense	(56,777,797	)	(48,715,790	)
Minority interest	(6,370,610	)	(4,784,413	)
Net income	64,122,953		48,466,768

F-81

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

(In Argentine Pesos, except as otherwise indicated)

20. Other financial statement information

The following tables present additional consolidated financial statement disclosures required under Argentine GAAP:

a. Fixed assets, net

b. Intangible assets, net

c. Goodwill, net

d. Allowances and provisions

e. Cost of leases and services, credit card operations and others

f. Foreign currency assets and liabilities

g. Other expenses

F-82

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

20. Other financial statement information (continued)

a. Fixed assets, net

	Original value
Principal account	Value as of beginning of year		Additions		Deductions			Transfers			Value as of end of year
Properties:
Shopping Centers:
-Abasto	Ps.	252,177,964	Ps.	370,202	Ps.	—		Ps.	41,173		Ps.	252,589,339
-Alto Palermo		406,821,358		379,750		(773	)		76,688			407,277,023
-Alto Avellaneda		165,936,766		7,172,934		—			400,923			173,510,623
-Paseo Alcorta		105,970,967		592,550		—			7,714			106,571,231
-Alto Noa		43,218,304		93,420		(3,766	)		—			43,307,958
-Buenos Aires Design		48,986,135		30,210		(1,385	)		(43,178	)		48,971,782
-Patio Bullrich		160,058,090		59,099		(13,018	)		(11,038	)		160,093,133
-Alto Rosario		86,479,033		960,379		—			4,054,930			91,494,342
-Mendoza Plaza Shopping		112,524,945		4,410,188		(6,890	)		(543,516	)		116,384,727
-Neuquén		10,321,414		—		67			—			10,321,481
-Rosario plots of land		—		—		—			—			—
-Caballito plots of land		—		—		—			—			—
-PAMSA		—		89,154,469		—			59,912,260			149,066,729
-Empalme		—		93,385,972		—			—			93,385,972
Other		10,013,202		—		(243,114	)		—			9,770,088
Leasehold improvements		8,450,898		737,654		(19,463	)		—			9,169,089
Facilities		37,107,083		4,167,566		—			1,092,076			42,366,725
Furniture and fixtures		18,271,076		3,481,433		(30,757	)		275,707			21,997,459
Vehicles		205,933		52,760		—			—			258,693
Computer equipment		22,633,186		5,626,418		(51,451	)		(1,893	)		28,206,260
Software		7,906,893		6,314,515		(5,663	)		2,057			14,217,802
-Suppliers advances-Rosario		1,222,672		37,133,870		(42,121	)		(1,432,439	)		36,881,982
Work-in-progress:
-Rosario		2,767,603		105,187		—			(2,832,258	)		40,532
-Abasto		—		360,793		(27,289	)		—			333,504
-Avellaneda		—		4,479,238		—			—			4,479,238
-SAPSA		—		133		—			(133	)		—
-Caballito		—		—		—			—			—
-Neuquén		1,844,421		120,630		—			15,268			1,980,319
-Buenos Aires Design		—		43,501		—			4,766			48,267
-Leasehold improvements		1,009,330		695,991		—			(1,106,847	)		598,474
-Patio Bullrich		208,438		449,478		—			—			657,916
-Paseo Alcorta		—		5,576,589		—			—			5,576,589
-Tarshop		—		41,938		—			—			41,938
-Mendoza Plaza Shopping S.A.		—		—		—			—			—
-Empalme		—		11,450		—			—			11,450
-PAMSA		—		18,539,679		—			—			18,539,679
Other		1,572		—		(1,572	)		—			—
Total as of June 30, 2007	Ps.	1,504,137,283	Ps.	(7) 284,547,996	Ps.	(447,195	)	Ps.	(6) 59,912,260		Ps.	1,848,150,344
Total as of June 30, 2006	Ps.	1,488,632,610	Ps.	30,261,398	Ps.	(14,693,730	)	Ps.	(1) (62,995	)	Ps.	1,504,137,283

	Depreciation											Net carrying value as of June 30
			Current year
Principal account	Accumulated as of beginning of year		Deductions			Additions		Amount		Accumulated as of end of year		Impairment		2007		2006
Properties:
Shopping Centers:
-Abasto	Ps.	63,818,261	Ps.	—		Ps.	—	Ps.	7,845,352	Ps.	71,663,613	Ps.	—	Ps.	180,925,726	Ps.	188,359,703
-Alto Palermo		213,308,549		(537	)		100		18,451,716		231,759,828		—		175,517,195		193,512,809
-Alto Avellaneda		79,648,106		—			—		8,677,677		88,325,783		—		85,184,840		86,288,660
-Paseo Alcorta		43,711,088		—			—		4,005,101		47,716,189		—		58,855,042		62,259,879
-Alto Noa		14,201,824		(3,766	)		—		2,069,636		16,267,694		—		27,040,264		29,016,480
-Buenos Aires Design		30,469,490		—			—		2,469,046		32,938,536		—		16,033,246		18,516,645
-Patio Bullrich		50,857,430		—			—		6,757,104		57,614,534		—		102,478,599		109,200,660
-Alto Rosario		3,307,709		—			—		2,501,250		5,808,959		—		85,685,383		83,171,324
-Mendoza Plaza Shopping		23,924,146		—			—		3,456,304		27,380,450		—		89,004,277		88,600,799
-Neuquén		—		—			—		—		—		—		10,321,481		8,167,430
-Rosario plots of land		—		—			—		—		—		—		—		—
-Caballito plots of land		—		—			—		—		—		—		—		—
-PAMSA		—		—			—		—		—		—		149,066,729		—
-Empalme		—		—			15,708,071		2,181,141		17,889,212		—		75,496,760		—
Other		711,611		(243,114	)		—		441,714		910,211		—		8,859,877		9,301,591
Leasehold improvements		5,442,370		(19,393	)		65		1,043,693		6,466,735		—		2,702,354		3,008,528
Facilities		22,937,699		—			1,261,493		2,427,473		26,626,665		—		15,740,060		14,169,384
Furniture and fixtures		13,128,409		(28,560	)		690,536		1,624,480		15,414,865		—		6,582,594		5,142,667
Vehicles		130,211		—			52,760		25,241		208,212		—		50,481		75,722
Computer equipment		18,370,273		(41,078	)		1,329,768		2,896,120		22,555,083		—		5,651,177		4,262,913
Software		5,219,411		(3,146	)		3,537,830		1,224,599		9,978,694		—		4,239,108		2,687,482
-Suppliers advances-Rosario		—		—			—		—		—		—		36,881,982		1,222,672
Work-in-progress:
-Rosario		—		—			—		—		—		—		40,532		2,767,603
-Abasto		—		—			—		—		—		—		333,504		—
-Avellaneda		—		—			—		—		—		—		4,479,238		—
-SAPSA		—		—			—		—		—		—		—		—
-Caballito		—		—			—		—		—		—		—		—
-Neuquén		—		—			—		—		—		—		1,980,319		1,844,421
-Buenos Aires Design		—		—			—		—		—		—		48,267		—
-Leasehold improvements		—		—			597,562		322		597,884		—		590		1,009,330
-Patio Bullrich		—		—			—		—		—		—		657,916		208,438
-Paseo Alcorta		—		—			—		—		—		—		5,576,589		—
-Tarshop		—		—			—		—		—		—		41,938		—
-Mendoza Plaza Shopping S.A.		—		—			—		—		—		—		—		—
-Empalme		—		—			—		—		—		—		11,450		—
-PAMSA		—		—			—		—		—		—		18,539,679		—
Other		1,572		(1,572	)		—		—		—		—		—		—
Total as of June 30, 2007	Ps.	589,188,159	Ps.	(341,166	)	Ps.	23,178,185	Ps.	(3) 68,097,969	Ps.	680,123,147	Ps.	(5)—	Ps.	1,168,027,197	Ps.	—
Total as of June 30, 2006	Ps.	533,908,551	Ps.	(7,276,753	)	Ps.	—	Ps.	(2) 62,556,361	Ps.	589,188,159	Ps.	(4) 2,153,984	Ps.	—	Ps.	912,795,140

(1) Includes Ps. (71,092) reclassified to Other receivables and Ps. 8,097 reclassified from Other investments.

(2) The allocation of annual depreciation charges in the statements of income is included in “Other expenses”, except for Ps. 301,312 passed-through to tenants (See Note 20.g.).

(3) The allocation of annual depreciation charges in the statements of income is included in “Other expenses”, except for Ps. 316,296 passed-through to tenants (See Note 20.g.).

(4) Net of the depreciation of the year of Ps. 120,999.

(5) During fiscal year 2007, the Company recovered impairment of Ps. 2,153,984. See Note 7—Financial results, net.

(6) Corresponds to the transfer of General Paz plot of land from Other investments, net. See Note 4.b.

(7) Includes additions related to the commencement of the consolidation of Empalme, E-Commerce Latina S.A. and PAMSA of Ps. 188,791,480.

F-83

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

20. Other financial statement information (continued)

b. Intangible assets, net

	Original value												Amortization									Net carrying value as of June 30,
															Current year
Principal account	Value as of beginning of year		Additions		Deductions			Transfers			Value as of end of year		Accumulated as of beginning of year		Increase (Decrease)			Amount (1)		Accumulated as of end of year		Impairment		2007		2006
Trademarks	Ps.	586,002	Ps.	—	Ps.	—		Ps	—		Ps.	586,002	Ps.	409,149	Ps.	—		Ps.	53,853	Ps.	463,002	Ps.	280	Ps.	122,720	Ps.	176,491
Preoperating expenses.		14,653,711		—		(6,069,772	)		—			8,583,939		11,607,926		(6,069,772	)		1,454,578		6,992,732		—		1,591,207		3,045,785
Total as of June 30, 2007	Ps.	15,239,713	Ps.	—	Ps.	(6,069,772	)	Ps.	—		Ps.	9,169,941	Ps.	12,017,075	Ps.	(6,069,772	)	Ps.	1,508,431	Ps.	7,455,734	Ps.	(4) 280	Ps.	1,713,927	Ps.	—
Total as of June 30, 2006	Ps.	15,206,346	Ps.	50,000	Ps.	(4,833	)	Ps.	(2)(11,800	)	Ps.	15,239,713	Ps.	10,466,070	Ps.	—		Ps.	1,551,005	Ps.	12,017,075	Ps.	(3) 362	Ps.	—	Ps.	3,222,276

(1) The allocation of annual amortization charges in the statements of income is included in “Other expenses” (Note 20.g).

(2) Reclassified to Other receivables.

(3) Net of the amortization of the year of Ps. 152,163.

(4) Net of the amortization of the year of Ps. 82. See Note 20.d.

F-84

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

20. Other financial statement information (continued)

c. Goodwill, net

	Original value									Amortization									Net carrying value as of June 30,
Principal account	Value as of beginning of year			Additions			Value as of end of year			Accumulated as of beginning of year			Amount			Accumulated as of end of year			2007			2006
- Old Alto Palermo	Ps.	24,628,438		Ps.	—		Ps.	24,628,438		Ps.	21,549,884		Ps.	2,462,834		Ps.	24,012,718		Ps.	615,720		Ps.	3,078,554
- Tarshop		2,422,536			—			2,422,536			1,938,029			242,264			2,180,293			242,243			484,507
- Fibesa		21,217,024			—			21,217,024			12,661,770			2,053,238			14,715,008			6,502,016			8,555,254
- Ersa		(579,074	)		—			(579,074	)		(18,680	)		(74,719	)		(93,399	)		(485,675	)		(560,394	)
- E-Commerce Latina S.A.		—			634,971			634,971			—			634,971			634,971			—			—
- Empalme		—			(10,670,507	)		(10,670,507	)		—			(317,261	)		(317,261	)		(10,353,246	)		—
Total as of June 30, 2007	Ps.	47,688,924		Ps.	(10,035,536	)	Ps.	37,653,388		Ps.	36,131,003		Ps.	(1) 5,001,327		Ps.	41,132,330		Ps.	(3,478,942	)	Ps.	—
Total as of June 30, 2006	Ps.	48,267,998		Ps.	(579,074	)	Ps.	47,688,924		Ps.	31,391,328		Ps.	4,739,675		Ps.	36,131,003		Ps.	—		Ps.	11,557,921

(1) The allocation of annual amortization charges in the statements of income is included in “Amortization of goodwill”, except for Ps. 634,971 shown in Note 8 (Other expenses, net - Others).

F-85

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

20. Other financial statement information (continued)

d. Allowances and provisions

									Carrying value as of June 30,
Item	Balances as of beginning of year		Transfers		Additions		Deductions		2007		2006		2005
Deducted from current assets:
Allowance for doubtful accounts	Ps.	43,435,193	Ps.	—	Ps.	(1) 33,887,501	Ps.	(6) (23,908,011)	Ps.	53,414,683	Ps.	43,435,193	Ps.	37,367,227
Impairment of inventory		205,599		—		—		(4) (101,197)		104,402		205,599		—
Total as of June 30, 2007	Ps.	43,640,792	Ps.	—	Ps.	33,887,501	Ps.	(24,009,208)	Ps.	53,519,085	Ps.	—	Ps.	—
Total as of June 30, 2006	Ps.	37,367,227	Ps.	—	Ps.	13,378,925	Ps.	(7,105,360)	Ps.	—	Ps.	43,640,792	Ps.	—
Total as of June 30, 2005	Ps.	34,061,561	Ps.	4,478,645	Ps.	6,590,250	Ps.	(7,763,229)	Ps.	—	Ps.	—	Ps.	37,367,227
Deducted from non-current assets:
Allowance for doubtful accounts	Ps.	1,332,818	Ps.	—	Ps.	(1) 621,727	Ps.	—	Ps.	1,954,545	Ps.	1,332,818	Ps.	969,219
Allowance for doubtful mortgage receivable		2,208,275		—		—		—		2,208,275		2,208,275		2,208,275
Impairment of fixed assets		2,153,984		—		—		(4) (2,153,984)		—		2,153,984		5,586,949
Impairment of intangible assets		362		—		—		(5) (82)		280		362		355,047
Impairment of non-current investments		190,000		—		—		(4) (18,000)		172,000		190,000		7,983,469
Total as of June 30, 2007	Ps.	5,885,439	Ps.	—	Ps.	621,727	Ps.	(2,172,066)	Ps.	4,335,100	Ps.	—	Ps.	—
Total as of June 30, 2006	Ps.	17,102,959	Ps.	—	Ps.	553,961	Ps.	(11,771,481)	Ps.	—	Ps.	5,885,439	Ps.	—
Total as of June 30, 2005	Ps.	29,975,755	Ps.	—	Ps.	924,256	Ps.	(13,797,052)	Ps.	—	Ps.	—	Ps.	17,102,959
Included in current liabilities:
Provision for contingencies	Ps.	506,714	Ps.	—	Ps.	(2) 226,686	Ps.	—	Ps.	733,400	Ps.	506,714	Ps.	2,032,500
Total as of June 30, 2007	Ps.	506,714	Ps.	—	Ps.	226,686	Ps.	—	Ps.	733,400	Ps.	—	Ps.	—
Total as of June 30, 2006	Ps.	2,032,500	Ps.	—	Ps.	506,714	Ps.	(2,032,500)	Ps.	—	Ps.	506,714	Ps.	—
Total as of June 30, 2005	Ps.	—	Ps.	2,032,500	Ps.	—	Ps.	—	Ps.	—	Ps.	—	Ps.	2,032,500
Included in non-current liabilities:
Provision for contingencies	Ps.	10,667,309	Ps.	—	Ps.	(2) 5,148,304	Ps.	(3) (3,374,327)	Ps.	12,441,286	Ps.	10,667,309	Ps.	10,606,121
Total as of June 30, 2007	Ps.	10,667,309	Ps.	—	Ps.	5,148,304	Ps.	(3,374,327)	Ps.	12,441,286	Ps.	—	Ps.	—
Total as of June 30, 2006	Ps.	10,606,121	Ps.	—	Ps.	791,469	Ps.	(730,281)	Ps.	—	Ps.	10,667,309	Ps.	—
Total as of June 30, 2005	Ps.	5,995,698	Ps.	(2,032,500)	Ps.	6,879,052	Ps.	(236,129)	Ps.	—	Ps.	—	Ps.	10,606,121

(1) Includes Ps. 28,331,790 allocated in “Selling expenses”, Ps. 1,041,066 related to the consolidation of E-commerce Latina S.A. and Empalme, and Ps. 5,136,372 related to the allowance of the cancelled trusts in the period.

(2) Includes Ps. 3,369,430 shown in Note 8 - Other expenses, net, Ps. 324,300 shown in Note 20.g. (Other expenses - Cost of leases and services - Contingencies), Ps. 226,686 shown in Note 20.g. (Other expenses - Cost of credit card operations - Salaries, bonuses and social security contributions) and Ps. 1,454,574 related to the consolidation of E-Commerce Latina S.A. and Empalme.

(3) Includes utilization of the year of Ps. 3,020,030, recovery of provision of Ps. 352,886 shown in Note 8 - Other expenses, net and Ps. 1,411 shown in Note 20.g. (Other expenses - Cost of others - Contingencies).

(4) Related to recovery of impairment. See Note 7 - Financial results, net.

(5) Corresponds to the amortization of the year.

(6) Includes Ps. 4,325,247 related to recovery of allowance and Ps. 19,582,764 related to off set of the year.

F-86

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

20. Other financial statement information (continued)

e. Cost of leases and services, credit card operations and others

	Year ended June 30,
	2007			2006			2005
I. Cost of leases and services
Expenses (Note 20.g)		90,718,723			76,634,274			69,203,912
Cost of leases and services	Ps.	90,718,723		Ps.	76,634,274		Ps.	69,203,912
II. Cost of credit card operations
Expenses (Note 20.g)		76,250,947			43,933,220			23,101,868
Cost of credit card operations	Ps.	76,250,947		Ps.	43,933,220		Ps.	23,101,868
III. Cost of others
Inventory as of the beginning of the years	Ps.	7,989,246		Ps.	18,936,565		Ps.	18,325,323
Plus:
Purchases of the years		2,138,623			1,497,876			1,536,418
Expenses (Note 20.g)		1,331,794			449,350			127,510
Recovery / (Increase) of impairment of inventory (Note 20.d)		101,197			(205,599	)		500,134
Write offs due to obsolescence		(1,598,755	)		—			—
Transfers (1)		(1,878,420	)		2,311,304			(1,348,234	)
Gain from valuation of inventories at net realizable value		545,400			3,497,632			—
Less:
Inventory as of the end of the years		(7,292,187	)		(7,989,246	)		(18,936,565	)
Cost of others	Ps.	1,336,898		Ps.	18,497,882		Ps.	204,586
Total cost	Ps.	168,306,568		Ps.	139,065,376		Ps.	92,510,366

(1) For the year ended June 30, 2007, corresponds to transfers of the cost of marketing merchandise shown in Note 4.d. For the year ended June 30, 2006, includes Ps. (1,516,129) related to transfers of the cost of marketing merchandise shown in Note 4.d. and Ps. 3,827,433 reclassified to other investments. For the year ended June 30, 2005, corresponds to transfers of the cost of marketing merchandise.

F-87

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

20. Other financial statement information (continued)

f. Foreign currency assets and liabilities

				Total as of June 30,
Captions	Currency	Amount of foreign currency	Current exchange rate	2007		2006
Assets
Current assets
Cash and banks	US$	3,704,170	3.0530	Ps.	11,308,831	Ps.	27,294,672
Cash and banks	EURO	307,560	4.1298		1,270,161		1,181,616
Other investments, net	US$	(1) 95,929,753	3.0530		292,769,901		41,850
Accounts receivable, net	US$	2,124,706	3.0530		6,486,727		6,387,462
Other receivables and prepaid expenses, net	US$	—	3.0530		—		9,183,690
Total current assets		102,066,189		Ps.	311,835,620	Ps.	44,089,290
Non current assets
Accounts receivable, net	US$	93,917	3.0530	Ps.	286,729	Ps.	12,161,380
Other receivables and prepaid expenses, net	US$	44,949	3.0530		137,229		—
Other investments	US$	363,000	3.0530		1,108,239		—
Total non-current assets.		501,866			1,532,197		12,161,380
Total assets as of June 30, 2007		102,568,055		Ps.	313,367,817	Ps.	—
Total assets as of June 30, 2006		18,414,028		Ps.	—	Ps.	56,250,670
Liabilities
Current liabilities
Trade accounts payable	US$	326,536	3.0930	Ps.	1,009,976	Ps.	1,023,961
Customer advances	EURO	600,000	4.1842		2,510,520		2,365,800
Short-term debt	US$	7,411,644	3.0930		22,924,215		21,632,224
Related parties	US$	310,118	3.0930		959,195		988,660
Other Liabilities	US$	199,950	3.0930		618,445		—
Total current liabilities		8,848,248		Ps.	28,022,351	Ps.	26,010,645
Non current liabilities
Trade accounts payable	US$	6,726	3.0930	Ps.	20,804	Ps.	1,010,150
Long-term debt	US$	169,227,934	3.0930		523,422,000		145,852,155
Related parties	US$	—	3.0930		—		925,800
Other Liabilities	US$	173,302	3.0930		536,023		—
Total non-current liabilities		169,407,962		Ps.	523,978,827	Ps.	147,788,105
Total liabilities as of June 30, 2007		178,256,210		Ps.	552,001,178	Ps.	—
Total liabilities as of June 30, 2006		56,151,830		Ps.	—	Ps.	173,798,750

(1) Includes US$ 45,000 valuated al fair market value (Ps. 35,750).

F-88

Alto Palermo S.A. (APSA)

Notes to the Consolidated Financial Statements (continued)

20. Other financial statement information (continued)

g. Other expenses

	Expenses
Items	Cost of others			Cost of credit card operations		Cost of leases and services		Cost of pass- through expenses			Cost of collective promotion fund			Cost of expenses recovery			Subtotal cost		Administrative		Selling		Total as of June 30, 2007		Total as of June 30, 2006		Total as of June 30, 2005
Depreciation and amortization	Ps.	—		Ps.	1,302,361	Ps.	66,677,064	Ps.	299,448		Ps.	16,848		Ps.	(316,296	)	Ps.	67,979,425	Ps.	1,310,597	Ps.	—	Ps.	69,290,022	Ps.	63,532,892	Ps.	58,367,673
Salaries, bonuses and social security contributions		9,631			24,869,891		—		38,865,059			5,103,741			(43,968,800	)		24,879,522		28,816,861		5,208,641		58,905,024		34,749,462		19,936,107
Taxes, rates, contributions and services		44,840			14,191,681		39,096		14,420,910			1,583,064			(16,003,974	)		14,275,617		10,130,141		24,784,172		49,189,930		31,359,068		18,839,950
Advertising		—			—		—		72,937			29,157,469			(29,230,406	)		—		—		27,833,164		27,833,164		16,507,341		9,193,235
Fees for directors		—			—		—		—			—			—			—		11,751,793		—		11,751,793		8,883,474		8,950,771
Common area maintenance expenses		—			—		12,135,362		415,529			—			(415,529	)		12,135,362		—		—		12,135,362		9,786,049		7,156,728
Fees and payments for services		1,249,715			8,335,243		—		5,024,982			63,009			(5,087,991	)		9,584,958		17,931,281		205,901		27,722,140		17,364,094		5,786,237
Commissions		—			21,915,572		—		—			—			—			21,915,572		—		157,500		22,073,072		10,743,807		5,191,555
Parking		—			—		4,218,640		—			—			—			4,218,640		—		—		4,218,640		3,738,333		3,260,781
Allowance for doubtful accounts		—			—		—		—			—			—			—		—		24,006,543		24,006,543		10,897,356		2,883,259
Rental		—			1,362,491		—		894,229			46,002			(940,231	)		1,362,491		2,975,961		—		4,338,452		3,596,502		2,293,814
Maintenance, repairs, cleaning and security		28,765			468,898		7,082,243		24,542,794			86,462			(24,629,256	)		7,579,906		586,647		—		8,166,553		1,544,708		1,131,586
Insurance		—			1,252,157		—		568,986			16,544			(585,530	)		1,252,157		1,673,708		—		2,925,865		1,597,308		962,008
Stationery		—			1,136,238		—		1,100,190			33,186			(1,133,376	)		1,136,238		1,419,191		—		2,555,429		1,654,961		908,597
Personnel		—			1,385,283		—		2,495,709			432,597			(2,928,306	)		1,385,283		2,006,795		—		3,392,078		1,094,036		753,069
Freight and transportation		—			—		—		435,865			61,935			(497,800	)		—		86,648		—		86,648		90,743		297,579
Regulatory Authority expenses		—			—		—		—			—			—			—		211,076		—		211,076		137,145		152,031
Bank charges		—			—		—		2,140			373			(2,513	)		—		499,592		—		499,592		366,426		133,470
Courses to tenants		—			—		—		—			—			—			—		—		—		—		—		127,510
Contingencies		(1,411	)		—		324,300		—			—			—			322,889		—		—		322,889		964,514		665,764
Training expenses		—			—		—		—			—			—			—		—		—		—		304,401		131,397
Other services		—			—		242,018		362,122			75			(362,197	)		242,018		—		404,190		646,208		242,361		242,019
Indemnity		—			—		—		—			—			—			—		—		370,995		370,995		212,406		—
Other		254			31,132		—		288,802			49,253			(338,055	)		31,386		472,581		1,340,889		1,844,856		1,327,855		1,717,806
Expenses recovery		—			—		—		(89,789,702	)		(36,650,558	)		126,440,260			—		—		—		—		—		—
Total as of June 30, 2007	Ps.	1,331,794		Ps.	76,250,947		Ps.90,718,723	Ps.	—		Ps.	—		Ps.	—			Ps.168,301,464	Ps.	79,872,872		Ps.84,311,995	Ps.	332,486,331	Ps.	—	Ps.	—
Total as of June 30, 2006	Ps.	449,350		Ps.	43,933,220	Ps.	76,634,274	Ps.	—		Ps.	—		Ps.	—		Ps.	121,016,844	Ps.	52,773,070	Ps.	46,905,328	Ps.	—	Ps.	220,695,242	Ps.	—
Total as of June 30, 2005	Ps.	127,510			Ps23,101,868	Ps.	69,203,912	Ps.	—		Ps.	—		Ps.	—		Ps.	92,433,290	Ps.	31,875,300	Ps.	24,774,356	Ps.	—	Ps.	—	Ps.	149,082,946

F-89

EX-1.2

EXHIBIT 1.2

TRADUCCIÓN PÚBLICA

SWORN TRANSLATION

[On the top margin of the face of each page there appears the following: 1) the logo of the Association of Notaries Public of the City of Buenos Aires. 2) NOTARIAL RECORD. ACT 404. 3) the Argentine Emblem. There follows a signature and seal of ESTELA B. GARCÍA LIÑEIRO. NOTARY PUBLIC. REGISTRATION NUMBER 4255. On the right margin there appears a consecutive numbering from N008705171 to N008705174. On the bottom margin of the face of each page there appear the signature and seal of Claudia L. Busacca, Notary Public, Registration No. 4445. On the top margin of the reverse side of each page there appear the Argentine Emblem and the Logo of the Association of Notaries Public of the City of Buenos Aires].

FIRST COPY.- PAGE 2125.- INCORPORATION AND TRANSCRIPTION OF MINUTES – AMENDMENT TO THE BY-LAWS.- ALTO PALERMO S.A. (APSA)

DEED NUMBER SIX HUNDRED AND SEVENTY FIVE. In the City of Buenos Aires, Capital of the Republic of Argentina, on DECEMBER SIX TWO THOUSAND AND SEVEN there appear before me, Authorizing Notary Public, Estela B. García Liñeiro, with Book of Notarial Records 1614 under my custody: Gastón Armando LERNOUD, Argentinean, married, Identity Document number 20,383,988 and José Luis RINALDINI, Argentinean, married, Identity Document number 16,570,275, both of them being of age and having their legal domicile set up at Moreno 877, 21st Floor of this City. They evidence their identity in accordance with the provisions of section 1002, subsection a) of the Civil Code, as both of them are known unto me. They state that they appear hereat in the name and on behalf of the company known as “ALTO PALERMO S.A. (APSA)” and in their capacity as Attorneys-in-Fact thereof, the registered offices of which are located at Moreno 877, 21st floor of this city, which former corporate name was registered with the Public Registry of Commerce on February 27, 1976 under number 323, page 6 of Book 85, Volume A of Corporate By-laws and which new name has been registered with the Superintendency of Corporations on September 2, 1998 under number 8856, Book 2 of Stock Companies. The capacity invoked by the appearing parties is evidenced by a General Power-of-Attorney with sufficient authorities to appear hereat which was granted by the Company pursuant to deed dated December 28, 2005 executed before me on page 1327 of this Notarial Record 1614 under my custody, to which I refer, which power of attorney grants sufficient authorities and with the appearing parties assuring it to be in full force and effects on account of the fact that their powers and authorities have not been limited or revoked. AND THE APPEARING PARTIES STATE AS FOLLOWS: That their principal has passed the resolutions stated hereinbelow pursuant to the Minutes of the General Ordinary and Extraordinary Shareholders’ Meeting dated October 25, 2007 and General Ordinary and Extraordinary Shareholders’ Meeting dated October 25, 2007, respectively, for which purpose I have the following evidence before me: 1) Share Deposit Book and Record of Shareholders’ Meeting Attendance No. 2, as stamped by the Superintendency of Corporations on June 24, 2002 under number 30741-02, with the Attendance to the Shareholders’ Meeting being registered on pages 18 and 19 thereof and which states as follows: General Shareholders’ Meeting. Order Number—date—Year 2007—Month—Day—SHAREHOLDER—Full Name—Identity Document—Address—REPRESENTATIVE—Full Name—Identity Document—Address—NUMBER OF SHARES OR CERTIFICATES—CERTIFICATE OR SHARE NUMBER—Capital Stock—NUMBER OF VOTES—SIGNATURES. 1.- 10/19.- IRSA Inversiones y Representaciones Sociedad Anónima—Superintendency of Corporations: 2.21.94—No. 1373—Book 114—Volume A of Corporations. Bolivar 108, 1st Floor—Autonomous City of Buenos Aires (Registered Offices).- Lucila Huidobro (attorney-in-fact)—IDENTITY DOCUMENT 25,257,215—Florida 537—18th Floor—Autonomous City of Buenos Aires—Special Domicile.- 378,886,940.- 000132.- 37,888,694.- 378,886,940.- There follows an illegible signature.- 2.- 10/19.- IRSA Inversiones y Representaciones Sociedad Anónima—Superintendency of Corporations: 2.21.94—No. 1373—Book 114—Volume A of Corporations. Bolivar 108, 1st Floor—Autonomous City of Buenos Aires (Registered Offices).- Lucila Huidobro (attorney-in-fact)—IDENTITY DOCUMENT 25,257,215—Florida 537—18th Floor—Autonomous City of Buenos Aires—Special Domicile.- 10,208.- 56019.- 1,020.80.- 102,080.- There follows an illegible signature.- 3.- 10/19.- IRSA Inversiones y Representaciones Sociedad Anónima—Superintendency of Corporations: 2.21.94—No. 1373—Book 114—Volume A of Corporations. Bolivar 108, 1st Floor—Autonomous City of Buenos Aires (Registered Offices).- Lucila Huidobro (attorney-in-fact)—IDENTITY DOCUMENT 25,257,215—Florida 537—18th Floor—Autonomous City of Buenos Aires—Special Domicile.- 332,594.- 56033.- 33,259.40.- 332,594.- There follows an illegible signature.- 4. 10/19.- IRSA Inversiones y Representaciones Sociedad Anónima —Superintendency of Corporations: 2.21.94—No. 1373—Book 114—Volume A of Corporations. Bolívar 108, 1st Floor—Autonomous City of Buenos Aires (Registered Offices).- Lucila Huidobro (attorney-in-fact)—IDENTITY

1

DOCUMENT 25,257,215—Florida 537—18th Floor—Autonomous City of Buenos Aires—Special Domicile.-66,737,647.- 56035.- 6,673,747.70.- 66,737,647.- There follows an illegible signature.- 5.- 10/19.- IRSA Inversiones y Representaciones Sociedad Anónima —Superintendency of Corporations: 2.21.94—No. 1373—Book 114—Volume A of Corporations. Bolívar 108, 1st Floor—Autonomous City of Buenos Aires (Registered Offices).- Lucila Huidobro (attorney-in-fact)—IDENTITY DOCUMENT 25,257,215—Florida 537—18th Floor—Autonomous City of Buenos Aires—Special Domicile.- 84,811.- 56026.- 8,481.10.- 84,811.- There follows an illegible signature.- 6.- 10/19.- IRSA Inversiones y Representaciones Sociedad Anónima —Superintendency of Corporations: 2.21.94—No. 1373—Book 114—Volume A of Corporations. Bolívar 108, 1st Floor—Autonomous City of Buenos Aires (Registered Offices).- Lucila Huidobro (attorney-in-fact)—IDENTITY DOCUMENT 25,257,215—Florida 537—18th Floor—Autonomous City of Buenos Aires—Special Domicile.- 37,000.- 56036.- 3,700.- 37,000.- There follows an illegible signature.- 7.- 10/19 Alejandro Gustavo Elsztain—Bolívar 108—1st Floor Autonomous City of Buenos Aires—Special Domicile—IDENTITY DOCUMENT 17,737,414.- Mariana Berger (attorney-in-fact)—IDENTITY DOCUMENT 26,550,625—Florida 537—18th Floor—Autonomous City of Buenos Aires—Special Domicile.- 1,325,768.- 56034.- 132,576.80.- 1,325,768.- There follows an illegible signature.- 8. 10/19.- Parque Arauco Argentina S.A.—M. T. de Alvear 684—2nd Floor—Autonomous City of Buenos Aires—Special Domicile—Superintendency of Corporations: No. 3260—Book 13—Volume A of Corporations.- Pedro Nozer (attorney-in-fact)—IDENTITY DOCUMENT 23,174,159.- 137,159,919.- 55926.- 13,715,991.90.- 137,159,919.- There follows an illegible signature.- 9.- 10/19.- Parque Arauco Argentina S.A.—M. T. de Alvear 684—2nd Floor—Autonomous City of Buenos Aires—Special Domicile—Superintendency of Corporations: No. 3260—Book 13—Volume A of Corporations.- Pedro Nozer (attorney-in-fact)—IDENTITY DOCUMENT 23,174,159.-15,429,781.- 55932.- 1,542,978.10.- 15,429,781.- There follows an illegible signature.- 10.- 10/19 Parque Arauco Argentina S.A.—M. T. de Alvear 684—2nd Floor—Autonomous City of Buenos Aires—Special Domicile—Superintendency of Corporations: No. 3260—Book 13—Volume A of Corporations.- Blas Bellolio Roth (attorney-in-fact)—Chilean Passport 12,404,377-8.- 57,338,554.- 55925.- 5,733,855.40.- 57,338,554.- There follows an illegible signature.- 11. 10/19. Soc. Inv. Int. Parque Arauco S.A.—M. T. de Alvear 684—2nd Floor—Autonomous City of Buenos Aires—Special Domicile—Superintendency of Corporations: Registration No. 856—Book 57—Volume B of Foreign By-Laws.- Blas Bellolio Roth (attorney-in-fact)—Chilean Passport 12,404,377-8.- 6,555,858.- 55933.- 655,585.80.- 6,555,858. There follows an illegible signature.- 12. 10/19.- The Bank of New York ADR’s—Barclay Street 101—New York—USA—Organized under the laws of New York. Fernando Ledesma Padilla.- IDENTITY DOCUMENT 18,255,086 (Attorney-in-fact)—Bme. Mitre 480—5th Floor—Autonomous City of Buenos Aires—Special Domicile.- 25,000,000.- 55978.- 2,500,000.- 25,000,000. There follows an illegible signature. 13.- 10/19.- The Bank of New York ADR’s—Barclay Street 101—New York—USA—Organized under the laws of New York. Fernando Ledesma Padilla.- IDENTITY DOCUMENT 18,255,086 (Attorney-in-fact)—Bme. Mitre 480—5th Floor—Autonomous City of Buenos Aires—Special Domicile.- 50,000,000.- 000131.- 5,000,000.- 50,000,000. There follows an illegible signature.- 14.- 10/19.- Galassi Antonio and/or Potere Ana Marta—Av. Monteverde 20—F. Varela—Province of Buenos Aires (Special Domicile).- Absent.- 50,000.- 56043.- 5,000.- 50,000.- Absent.- 15.- 10/19.- MET AFJP SA Negotiable Fund—Tte Gral Perón 646—6th Floor 01—Autonomous City of Buenos Aires (special domicile).- Absent.- 736,820.- 56052.- 73,682.- 736,820.- Absent.- 16.- 10/19—The Northern Trust Company—65 East Ssth Street—24 Floor – New York— USA Organized under the laws of the State of Illinois.- Diego Daniel Sauro (attorney-in-fact)—IDENTITY DOCUMENT 24,272,378—Bme Mitre 530—Special domicile.- 6,628,430.- 56063.- 662843.- 6,628,430.- There follows an illegible signature.- 17. 10/19.- Previsol AFJP Negotiable Securities Fund—Alsina 633—Autonomous City of Buenos Aires (special domicile) Superintendency of Corporations: 2.25.94—No. 1633—Book 114 Volume A of Corporations,. Absent.- 504,968.- 56,071.- 50,496.80 504968.- Absent.- 746,819,298.- 74,681,929.80.- 746,819,298.- Buenos Aires, October 19, 2007: The deposit of certificates for the shareholders’ meeting called for October 25, 2007 is closed at 6:00 p.m. with the deposit and registration of 17 certificates issued by Caja de Valores S.A.- There follows an illegible signature.- Buenos Aires, October 25, 2007. At 4:50 p.m. this shareholders’ meeting is called to order with the attendance of 7 Shareholders, all of them represented by proxy, amounting to an aggregate capital stock of 74,552,751 representative of 95.325% thereof and entitled to 745,527,510 votes.- There follows an illegible signature.- It is the true copy of its original, I attest. 2) Shareholders’ Meeting’s Minutes Book number 5 as stamped by the Superintendency of Corporations on April 20, 1999 under number 28838-99, with the Minutes of the General Ordinary and Extraordinary Shareholders’ Meeting dated October 25, 2007 being recorded on pages 217, 218, 219 and 220 thereof, the relevant portions of which state as follows: In the city of Buenos Aires, on October 25, 2007 at 4:40 p.m., a general ordinary and extraordinary Shareholders’ Meeting is held outside the registered offices at Bolivar 108, 1st Floor, Autonomous City of Buenos Aires by the Shareholders of ALTO PALERMO S.A. (APSA) holding common book-entry shares of this Company of a par value of $ 0.10 each, and who are registered on pages 18 and 19 of the Record of General Shareholders’ Meeting Attendance. The Shareholders’ Meeting is attended by Directors Saúl Zang, Gabriel Adolfo Gregorio

2

Reznik, Abraham Perelman and Leonardo Fernández and it is presided over by Mr. Eduardo Sergio Elsztain. The representatives of the Surveillance Committee, Dr. Jose Daniel Abelovich, and Dr. Guillermo Matta y Trejo are also present thereat. Further, the attendance of the representative of the Buenos Aires Stock Exchange, Dr. Nora Lavorante, and the non-attendance of the representative of the Argentine Securities Commission (“CNV”) is also recorded. In such respect and without any objections having been raised, the Chairman declares the shareholders’ meeting open with the attendance of 7 depositing shareholders, all of them represented by proxy and who in aggregate hold 745,527,510 common book-entry shares of a par value of 0.10 each and entitled to 745,527,510 votes, equivalent to a capital stock of $ 74,552,751, representative of 95.328% thereof. Further, he states that this Shareholders’ Meeting shall qualify as an Ordinary Shareholders’ Meeting and that for purposes of the consideration of items 11) and 12) the Shareholders’ Meeting shall qualify as an Extraordinary Shareholders’ Meeting, to which effect the presence of shareholders representing sixty per cent (60%) of voting shares is required at the first call, which condition has been duly satisfied. Further, and in order to have a more orderly vote counting, the representative of Bank of New York (BONY), which represents the ADR holding, is requested to express the vote intention of each Agenda item for purposes of the correct computation thereof by the secretary. … ITEM TWELVE: CONSIDERATION OF THE AMENDMENT TO THE FOLLOWING SECTIONS OF THE BY-LAWS: (I) SECTION TWELVE (12) IN ORDER TO ADAPT THE PERFORMANCE BONDS GRANTED BY DIRECTORS TO CURRENT RULES AND REGULATIONS, AND (II) SECTION FIFTEEN (15) IN ORDER TO INCORPORATE THE POSSIBILITY OF HOLDING REMOTE BOARD MEETINGS IN CONFORMITY WITH THE PROVISIONS UNDER SECTION 65 OF DECREE 677/01. The Chairman keeps the floor and informs attendants that in order to adapt the wording of the corporate bylaws to the current laws and regulations, the Board of Directors proposes to the shareholders’ meeting, in the manner in which such drafts have been made available to shareholders and incorporated to the AIF (Digitally-Signed Financial Information), the amended texts of sections 12 and 15, which amendment and expansion, respectively, aim, on the one hand, at updating the provision relating to directors’ performance bond and on the other hand at enabling the possibility of holding remote board meeting, as the wording presently in force was drafted before the enactment of such regulation. The representative of IRSA motions to acknowledge the amended texts as reproduced as part of this shareholders’ meeting, to omit reading thereof and to approve the texts proposed by the board of directors, with such body being delegated registration and notification powers pursuant to the legislation in force.—Further, and as regards the performance bonds granted by directors, he motions to empower the Board of Directors to keep their amount at all times at current values. The motion was approved by a majority of 713,835,270 votes, with 31,691,040 abstentions by the BONY and 1,200 negative votes by the BONY being recorded.—There being no further issues to transact the meeting is adjourned at 5:30 p.m.- EXHIBIT: Section 12: By way of guarantee of their performance, regular directors shall deposit at least Pesos ten thousand ($ 10,000) or its equivalent in government securities or, if the case may be, by means of any modality admitted by the governing laws”. Section 15: “The Company’s Board of Directors may hold meetings either with the members being present thereat or else communicated among themselves by any present or future means of simultaneous transmission of sound or image and sound in accordance with the regulations in force. The surveillance committee shall record the regularity of the decisions passed. In any event, the board minutes shall reflect the modality of participation of such members who attend the meeting on a remote basis.— It is a true copy of the relevant portions of the minutes, I attest. -I hereby inform the grantors of the legal scopes of this act and their capacity to read this deed by themselves. UPON IT BEING READ AND RATIFIED, the appearing parties sign it before me to evidence conformity therewith, I attest.- There follows the signature of: Gastón Armando LERNOUD and José Luis RINALDINI. There appears my seal.— Before me.—Estela B. García Liñeiro. IN AGREEMENT with its original which was executed on page 2125 of Notarial Record 1614 under my custody. I hereby issue a FIRST COPY for the Company which consists of four pages of Notarial Record consecutively numbered from N008705171 to this page, which I seal and sign at the place and on the date of the granting thereof.

There follows the seal and signature of Notary Public Estela B. García Liñeiro, as aforesaid.

On the top right margin of the reverse side of the page there appears a half of the seal of Notary Public Claudia L. Busacca. Registration No. 4445.

There appears a seal reading: “Certification of copies in Notarial Record No. T007069832”, followed by the seal and signature of Notary Public Claudia L. Busacca.

3

On the next page there appears the following:

1) The other half of the seal of Notary Public Claudia L. Busacca. 2) the Logo of the Association of Notaries Public of the City of Buenos Aires. 3) Certification of Reproductions. Act 404. 4) The Argentine Emblem.

T 007069832

Buenos Aires, December 10, 2007.

In my capacity as Alternate Notary Public with Notarial Record No. 1614 of the City of Buenos Aires under my custody I DO HEREBY CERTIFY that the attached reproduction, issued in four pages, which I seal and sign, is the TRUE COPY of its original, which I have before me, I attest. Upon request of the Company and for purposes of its filing with whom it may concern, a copy of Deed 675 dated December 6, 2007, included on page 2125 of Notarial Record 1614 is hereby certified.

There follows the seal and signature of Notary Public Claudia L. Busacca.

THIS DOCUMENT CONSISTING OF 4 (FOUR) PAGES IS THE FULL, TRUE AND COMPLETE TRANSLATION from the Spanish language into the English language of the notarized document which I have had before me and to which I refer in the City of Buenos Aires on December 13, 2007.

ESTE DOCUMENTO, COMPUESTO DE 4 (CUATRO) PÁGINAS, ES TRADUCCIÓN FIEL al inglés del documento certificado por escribano público redactado en idioma español que he tenido a la vista y al que me remito en Buenos Aires a los 13 días de diciembre de 2007.

4

EX-2.5

EXHIBIT 2.5

EXECUTION VERSION

Alto Palermo S.A. (APSA)

as Issuer,

The Bank of New York

as Trustee, Co-Registrar,

Principal Paying Agent and Transfer Agent,

and

Banco Santander Río S.A.

as Registrar, Paying Agent, Transfer Agent and

Representative of the Trustee in Argentina

INDENTURE

Dated as of May 11, 2007

US$200,000,000 Global Note Program

For Notes Due No Less Than 30 Days

From Date of Original Issue

Certain Sections of this Indenture relating to Sections 310

through 318, inclusive, of the U.S. Trust Indenture Act of 1939:

U.S. Trust Indenture Act Section	Indenture Section
§ 310(a)(1)	5.9
(a)(2)	5.9
(a)(3)	Not Applicable
(a)(4)	Not Applicable
(b)	5.4
	5.10
§ 311(a)	5.7
(b)	5.7
§ 312(a)	6.7
	6.8
(b)	6.8
(c)	6.8
§ 313(a)	6.9
(a)(4)	6.9
	6.9
(b)	6.9
§ 313(a)	6.10
(a)(4)	1.1
	3.13
(b)	Not Applicable

U.S. Trust Indenture Act Section	Indenture Section
(c)(1)	12.6
(c)(2)	12.6
(c)(3)	Not Applicable
(d)	Not Applicable
(e)	12.6
§ 315(a)	5.1
(b)	5.13
(c)	5.1
(d)	5.1
(e)	4.10
§ 316(a)	1.1
(a)(1)(A)	4.1
	4.9
(a)(1)(B)	4.10
(a)(2)	Not Applicable
(b)	4.7
(c)	6.2
§ 317(a)(1)	4.2
	4.3
(a)(2)	4.4
(b)	3.4
§ 318(a)	12.1

3

Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture. This reconciliation and tie shall only apply subsequent to qualification of this Indenture under the U.S. Trust Indenture Act of 1939.

4

Table of Contents

		Page
ARTICLE I General		2
	Section   1.1. Definitions	2
	Section   1.2. Agents	20
ARTICLE II Securities		21
	Section   2.1. Forms	21
	Section   2.2. Form of Trustee’s Certificate of Authentication	24
	Section   2.3. Maximum Aggregate Principal Amount of Securities; Terms of Securities	24
	Section   2.4. Authentication and Delivery of Securities	26
	Section   2.5. Execution of Securities	27
	Section   2.6. Certificate of Authentication	28
	Section   2.7. Global Securities	28
	Section   2.8. Denomination and Date of Securities	29
	Section   2.9. Payments of Principal and Interest	29
	Section   2.10. Registration, Transfer and Exchange of Securities	31
	Section   2.11. Mutilated, Defaced, Destroyed, Stolen and Lost Securities; Cancellation and Destruction of Securities	37
	Section   2.12. Purchase and Cancellation	38
ARTICLE III Covenants of APSA		38
	Section   3.1. Payment of Principal and Interest	38
	Section   3.2. Offices for Payments, etc	38
	Section   3.3. Appointment to Fill a Vacancy in Office of Trustee	39
	Section   3.4. Payments and Paying Agents	39
	Section   3.5. Taxation	41
	Section   3.6. Maintenance of Books and Records	42
	Section   3.7. Status and Ranking	42
	Section   3.8. Listing	42
	Section   3.9. Maintenance of Corporate Existence; Properties	43
	Section   3.10. Compliance with Law	43
	Section   3.11. Reports to Holders	43
	Section   3.12. Other Information	45
	Section   3.13. Notice of Default	45
	Section   3.14. Further Actions	45
	Section   3.15. Suspension of Covenants	45
	Section   3.16. Limitation on Incurrence of Additional Indebtedness	46
	Section   3.17. Limitation on Liens	48
	Section   3.18. Limitation on Transactions with Affiliates	48
	Section   3.19. Conduct of Business	48
	Section   3.20. Change of Control	48

Table of Contents

(Continued)

		Page
ARTICLE IV Defaults and Remedies of the Trustee and Securityholders on Event of Default		50
	Section   4.1. Events of Default	50
	Section   4.2. Collection of Indebtedness by Trustee	52
	Section   4.3. Application of Proceeds	53
	Section   4.4. Suits for Enforcement	54
	Section   4.5. Restoration of Rights on Abandonment of Proceedings	54
	Section   4.6. Limitations on Suits by Securityholders	55
	Section   4.7. Unconditional Right of Securityholders to Institute Certain Suits	55
	Section   4.8. Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default	55
	Section   4.9. Control by Securityholders	56
	Section   4.10. Waiver of Past Defaults	56
	Section   4.11. Payments after a Default	56
	Section   4.12. Notice of Events of Default	56
ARTICLE V Concerning the Trustee
	Section   5.1. Duties and Responsibilities of the Trustee	57
	Section   5.2. Certain Rights of the Trustee	58
	Section   5.3. Trustee Not Responsible for Recitals, Disposition of Securities or Application of Proceeds Thereof	59
	Section   5.4. Trustee and Agents May Hold Securities; Collections, etc.	59
	Section   5.5. Moneys Held By Trustee	59
	Section   5.6. Compensation and Indemnification of Trustee and Its Prior Claim	59
	Section   5.7. Preferential Collection of Claims Against APSA	60
	Section   5.8. Right of Trustee to Rely on Officers’ Certificate, etc.	60
	Section   5.9. Persons Eligible for Appointment as Trustee	60
	Section   5.10. Resignation and Removal; Appointment of Successor Trustee	61
	Section   5.11. Acceptance of Appointment by Successor Trustee	62
	Section   5.12. Merger, Conversion, Consolidation or Succession to Business of Trustee	62
	Section   5.13. Representative of the Trustee in Argentina	63
	Section   5.14. Application to Agents and to the Representative of the Trustee in Argentina	63
ARTICLE VI Concerning the Securityholders		64
	Section   6.1. Evidence of Action Taken by Securityholders	64
	Section   6.2. Proof of Execution of Instruments and of Holding of Securities; Record Date	64
	Section   6.3. Holders to Be Treated as Owners	64
	Section   6.4. Securities Owned by APSA Deemed Not Outstanding	65
	Section   6.5. Right of Revocation of Action Taken	65
	Section   6.6. Securityholders’ Meetings	65
	Section   6.7. APSA to Furnish the Trustee Names and Addresses of Holders	68
	Section   6.8. Preservation of Information; Communications to Holders	68

ii

Table of Contents

(Continued)

		Page
	Section   6.9. Reports by the Trustee	69
	Section   6.10. Reports by APSA	69
ARTICLE VII Supplemental Indentures		69
	Section   7.1. Supplemental Indentures Without Consent of Securityholders	69
	Section   7.2. Supplemental Indentures With Consent of Securityholders	71
	Section   7.3. Effect of Supplemental Indenture	72
	Section   7.4. Conformity with Trust Indenture Act	72
	Section   7.5. Documents to Be Given to the Trustee	72
	Section   7.6. Notation on Securities in Respect of Supplemental Indentures	72
	Section   7.7. Conformity with Negotiable Obligations Law	72
ARTICLE VIII Merger, Consolidation, Sale or Conveyance		73
	Section   8.1. APSA May Consolidate, etc, on Certain Terms	73
	Section   8.2. Surviving Entity Substituted	73
	Section   8.3. Documents to Trustee	74
ARTICLE IX Satisfaction and discharge of indenture; Unclaimed Moneys		74
	Section   9.1. Satisfaction and Discharge of Indenture	74
	Section   9.2. Application by Trustee of Funds Deposited for Payment of Securities	75
	Section   9.3. Repayment of Moneys Held by Paying Agent	75
	Section   9.4. Return of Moneys Held by Trustee and Paying Agent Unclaimed for Two Years	75
ARTICLE X Redemption and Repurchase of Securities		76
	Section 10.1. Notice of Redemption; Partial Redemptions	76
	Section 10.2. Payment of Securities Called for Redemption	77
	Section 10.3. Exclusion of Certain Securities from Eligibility for Selection for Redemption	78
	Section 10.4. Redemption at the Option of APSA for Taxation Reasons	78
	Section 10.5. Redemption at the Option of Holders	79
ARTICLE XI Defeasance		79
	Section 11.1. APSA’s Option to Effect Total Defeasance or Partial Defeasance	79
	Section 11.2. Total Defeasance	79
	Section 11.3. Partial Defeasance	80
	Section 11.4. Conditions to Total Defeasance and Partial Defeasance	80
	Section 11.5. Deposit in Trust; Miscellaneous	83
	Section 11.6. Reinstatement	83
ARTICLE XII Miscellaneous		84

iii

Table of Contents

(Continued)

	Page
Section 12.1. Conflict with Trust Indenture Act	84
Section 12.2. Shareholders, Officers and Directors of APSA Exempt from Individual Liability	84
Section 12.3. Provisions of Indenture for the Sole Benefit of Parties and Securityholders	84
Section 12.4. Successors and Assigns of APSA Bound by Indenture	84
Section 12.5. Notices and Demands on APSA, Trustee and Securityholders	84
Section 12.6. Officers’ Certificates and Opinions of Counsel; Statements to Be Contained Therein	86
Section 12.7. Payments Due on Non-Business Days	87
Section 12.8. Governing Law; Consent to Jurisdiction; Waiver of Immunity; Currency Indemnity	87
Section 12.9. Waiver of Jury Trial	88
Section 12.10. Severability	89
Section 12.11. Counterparts	89
Section 12.12. Effect of Headings	89

EXHIBITS
Exhibit A	—	Form of Global Security
Exhibit B	—	Form of Certificate Security
Exhibit C	—	Form of Reverse of Securities — Terms and Conditions
Exhibit D	—	Form of Certificate for Exchange or Transfer from Rule 144A Global
		Security to Regulation S Global Security during the Restricted Period
Exhibit E	—	Form of Certificate for Exchange or Transfer from Rule 144A Global
		Security to Regulation S Global Security after the Restricted Period
Exhibit F	—	Form of Certificate for Exchange or Transfer from Regulation S
		Global Security to Rule 144A Global Security

iv

THIS INDENTURE, dated as of May 11, 2007 (this “Indenture”), among Alto Palermo S.A. (APSA), a sociedad anónima organized under the laws of the Republic of Argentina (“Argentina”) and domiciled at Moreno 877, 22nd Floor, (C1091AAQ) City of Buenos Aires, Argentina (“APSA”), incorporated, organized and registered with the Public Registry of Commerce of the City of Buenos Aires (IGJ) on August 29, 1889, under Number 323, Page 6, Book 85 of the Stock Corporations Volume, with a term of duration which expires on August 28, 2087, The Bank of New York, a corporation organized under the laws of the State of New York authorized to conduct a banking business, as trustee (in such capacity, the “Trustee”), co-registrar (in such capacity, the “Co-Registrar”), principal paying agent (in such capacity, the “Principal Paying Agent”, and together with the Luxembourg Paying Agent (as defined below) and any other paying agents appointed by APSA in their respective capacities as such, the “Paying Agents”) and transfer agent (in such capacity, a “Transfer Agent”, and together with any other transfer agents appointed by APSA in their respective capacities as such, the “Transfer Agents”), and Banco Santander Río S.A., a bank duly incorporated and existing under the laws of Argentina, as registrar (in such capacity, the “Registrar”), Paying Agent, Transfer Agent and representative of the Trustee in Argentina (in such capacity, the “Representative of the Trustee in Argentina”).

WITNESSETH :

WHEREAS, APSA has duly authorized, by resolution of its shareholders at a meeting held on October 31, 2006 and resolution of its Board of Directors at a meeting held on March 19, 2007, its Global Note Program (the “Program”) for the issuance from time to time of up to an aggregate principal amount outstanding at any one time of US$200,000,000 (or its equivalent in other currencies) of notes (the “Securities”) in one or more series as may be determined by APSA from time to time;

WHEREAS, the Program has been authorized by the Argentine Comisión Nacional de Valores (“CNV”) by its Resolution No. 15,614 dated April 19, 2007;

WHEREAS, the Securities will qualify as “obligaciones negociables” under Argentine Law No. 23,576, as amended (the “Negotiable Obligations Law”), and Joint Resolution No. 470-1738/2004, as amended (the “Joint Resolution 470-1738/2004”) issued by the CNV and the Argentine Administración Federal de Ingresos Públicos (the “AFIP”);

WHEREAS, the main corporate purpose of APSA is to engage in the ownership, acquisition, development, leasing, management and operation of shopping centers in Argentina. Furthermore, APSA has the corporate power and authority to establish the Program, execute and deliver this Indenture and issue from time to time Securities hereunder;

WHEREAS, the capital stock and the shareholders’ equity of APSA, as of December 31, 2006, was Ps.78,296,421 and Ps.800,050,699, respectively, in accordance with the generally accepted accounting principles in Argentina (“Argentine GAAP”);

WHEREAS APSA issued on August 20, 2002, unsecured convertible notes in the amount of US$50,000,000, bearing interest (payable semiannually) at a fixed annual rate of 10%, convertible, at any time, at the option of the holder of such notes, into APSA’s commons shares, and, as of May 8, 2007, the outstanding balance of such convertible notes was US$47,227,934;

WHEREAS APSA (i) entered into on July 7, 2006 a stock purchase agreement for the purchase of all the shareholding of Empalme S.A.I.C.F.A. y G. (“Empalme”), for a purchase price equal to the sum of US$12,000,000 and Ps.4,000,000, of which US$8,000,000 was outstanding as of December 31, 2006 and bears interest (payable annually) at a rate of 6% and (ii) as collateral to secure the payment of the purchase price, pledged 100% of its shares in Empalme, granted a mortgage over Córdoba Shopping Villa Cabrera and assigned to a collateral trust its right to receive rents in respect of such shopping center, in each case to the sellers of Empalme;

WHEREAS, APSA has duly authorized the execution and delivery of this Indenture to provide, among other things, for the authentication, delivery and administration of Securities issued on and after the date hereof;

WHEREAS, the Trustee has agreed to act as Trustee under this Indenture on the following terms and conditions;

WHEREAS, the Trustee has reviewed the English translation of the resolutions of the shareholders and the Board of Directors of APSA mentioned above authorizing the Program, and hereby confirms that the terms and conditions of the Securities reflect the terms of said resolutions; and

WHEREAS, all things necessary to make this Indenture a valid indenture and agreement according to its terms have been done.

NOW, THEREFORE, in consideration of the premises and the purchases of the Securities by the Holders (as defined below) thereof, APSA and the Trustee mutually covenant and agree for the equal and proportionate benefit of the Holders from time to time of the Securities as follows:

ARTICLE I

General

Section 1.1. Definitions. The following terms (except as otherwise expressly provided or unless the context otherwise clearly requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section. References to the schedules and exhibits shall be construed to refer to the schedules and exhibits to this Indenture. The words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. The terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular. All other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein.

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“Acquired Indebtedness” means Indebtedness of a Person existing at the time such Person merges or consolidates with APSA or is assumed by APSA in connection with the acquisition of assets from such Person. Such Indebtedness will be deemed to have been Incurred at the time such Person merges or consolidates with APSA or at the time such Indebtedness is assumed by APSA in connection with the acquisition of assets from such Person.

“Additional Amounts” has the meaning set forth in Section 3.5.

“Additional Securities” means, with respect to a Series of Securities, additional Securities that APSA may create and issue from time to time without the consent of the Holders of the Securities; provided, that: (i) the creation and issuance of such Additional Securities is provided in the relevant Pricing Supplement; (ii) such Additional Securities have the same terms and conditions as the Securities of the relevant Series (except for the date of issue, the issue price, the applicable legends and, if applicable, the first payment of interest); and (iii) such Additional Securities shall form a single Series with the previously outstanding Series of

Securities.

“Affiliate” means, with respect to any specified Person, any other Person who directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person. The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” have correlative meanings.

“AFIP” has the meaning set forth in the third recital to this Indenture.

“Agent” or “Agents” has the meaning set forth in Section 1.2.

“Amortized Face Amount” means, with respect to the optional redemption of an original issue discount Security, an amount equal to the sum of (i) the issue price of such Security (as set forth therein) and (ii) the product of the accrual yield specified in the resolutions of the Board of Directors or indenture supplemental hereto related to the Series of such Security (compounded annually) and the Issue Price from (and including) the issue date to (but excluding) the Optional Redemption Date (or, in the case of an early redemption for taxation reasons, the date fixed for redemption) and computed in accordance with generally accepted United States bond yield computation principles, but in no event will the Amortized Face Amount exceed the principal amount of such Security due at Stated Maturity thereof, together with any accrued but unpaid interest and any Additional Amounts to the date fixed for redemption (which date may be required to be an Interest Payment Date if so specified in the terms of such Securities).

“APSA” has the meaning set forth in the preamble to this Indenture.

“Argentina” means the Republic of Argentina.

“Argentine Companies Law” means the Argentine Law No. 19,550, as amended (Ley de Sociedades Comerciales).

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“Argentine GAAP” has the meaning set forth in the fifth recital to this Indenture.

“Argentine Taxes” has the meaning set forth in Section 3.5.

“Argentine Discount Bonds” means U.S. dollar-denominated Discount Bonds, issued by the Republic of Argentina and due on December 31, 2038.

“Argentine Par Bonds” means U.S. dollar-denominated Par Bonds, issued by the Republic of Argentina and due on December 31, 2033.

“Asset Acquisition” means:

(1) an investment by APSA or any Subsidiary in any other Person pursuant to which such Person will become a Subsidiary, or will be merged with or into APSA or any Subsidiary; or

(2) the acquisition by APSA or any Subsidiary of the assets of any Person (other than a Subsidiary of APSA) which constitute all or substantially all of the assets of such Person or comprises any division or line of business of such Person or any other properties or assets of such Person other than in the ordinary course of business.

“Asset Sale” means any direct or indirect sale, disposition, issuance, conveyance, transfer, lease, assignment or other transfer, including a sale and leaseback transaction (each, a “disposition”) by APSA or any Subsidiary of:

(a) any Capital Stock of any Subsidiary (but not Capital Stock of APSA); or

(b) any property or assets (other than cash or cash equivalents or Capital Stock) of APSA or any Subsidiary;

Notwithstanding the preceding, the following items will not be deemed to be Asset Sales:

(1) the disposition of all or substantially all of the assets of APSA and its Subsidiaries as permitted under Article VIII;

(2) sales, leases, conveyances or other dispositions, including, without limitation, exchanges or swaps of real estate (including properties under development for sale and completed properties for sale) in the ordinary course of business;

(3) a disposition to APSA or a Subsidiary, including a Person that is or will become a Subsidiary immediately after the disposition;

(4) any transaction that involves assets or Capital Stock of a Subsidiary having a Fair Market Value of less than US$2.0 million (or the then equivalent thereof in another currency at the time of determination);

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(5) an issuance or sale of Capital Stock by a Subsidiary of APSA that is offered on a pro rata basis to APSA and its Subsidiaries, on the one hand, and minority holders of Capital Stock of a Subsidiary, on the other hand (or on less than a pro rata basis to any minority holder);

(6) any sale or other disposition of damaged, worn-out, obsolete or no longer useful assets or properties in the ordinary course of business;

(7) any sale or other disposition of assets received by APSA or any of its Subsidiaries upon the foreclosure on a Lien in the ordinary course of business;

(8) any transfer, assignment or other disposition deemed to occur in connection with creating or granting any Permitted Lien;

(9) a disposition of accounts receivable in connection with a Receivables Transaction; and

(10) the good faith surrender or waiver of contract rights, tort claims or statutory rights in connection with a settlement.

“Asset Sale Transaction” means any Asset Sale and, whether or not constituting an Asset Sale, (1) any sale or other disposition of Capital Stock and (2) any sale or other disposition of property or assets excluded from the definition of Asset Sale by clause (2) of that definition.

“Authorized Person” means (i) in the case of the execution of any Security on behalf of APSA, a member of the Board of Directors, a member of the Supervisory Committee of APSA, its President or Chief Financial Officer, and (ii) in the case of any other action to be taken by or on behalf of APSA pursuant hereto, any officer of APSA duly authorized in writing to take actions under this Indenture on behalf of APSA and notified to the Trustee in writing.

“BASE” means the Bolsa de Comercio de Buenos Aires.

“Board of Directors” means, as to any Person, the board of directors, management committee or similar governing body of such Person or any duly authorized committee thereof.

“Business Day” means, with respect to any Security, unless otherwise specified in the resolutions of the Board of Directors or indenture supplemental hereto related to the Series of such Security, any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which commercial banks are authorized or required by law, regulation or executive order to close in New York City or the City of Buenos Aires; provided that, with respect to Securities denominated in a Specified Currency other than U.S. dollars, “Business Day” shall also not be a day on which commercial banks are authorized or required by law, regulation or executive order to close in the principal financial center of the country issuing the Specified Currency (or, if the Specified Currency is the Euro, such day is also a day on which the Trans-European Automated Real Time Gross Settlement Express Transfer (TARGET) System is open, a “TARGET Settlement Date”); provided further, that, with respect to a LIBOR Note (as defined in the applicable Security), “Business Day” shall also be a London Banking Day.

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“Calculation Agent” means, with respect to any applicable Securities, unless otherwise specified in the resolutions of the Board of Directors or indenture supplemental hereto for the Series of such Securities, the Trustee.

“Capitalized Lease Obligations” means, as to any Person, the obligations of such Person under a lease that are required to be classified and accounted for as capital lease obligations under Argentine GAAP. For purposes of this definition, the amount of such obligations at any date will be the capitalized amount of such obligations at such date, determined in accordance with Argentine GAAP.

“Capital Stock” means:

(1) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, including each class of Common Stock and Preferred Stock of such Person;

(2) with respect to any Person that is not a corporation, any and all partnership or other equity or ownership interests of such Person; and

(3) any warrants, rights or options to purchase any of the instruments or interests referred to in clause (1) or (2) above.

“Certificated Security” means a Security issued in certificated form, substantially in the form of Exhibit B hereto.

“Change of Control” shall be deemed to occur if any Person or Group other than one or more of the Permitted Holders is or becomes the Beneficial Owner (as defined below), directly or indirectly, in the aggregate of more than 50% of the total voting power of the Voting Stock of APSA and such other Person or Group is entitled to elect a majority of the Board of Directors of APSA (including a Surviving Entity, if applicable).

For purposes of this definition:

(a) “Beneficial Owner” will have the meaning specified in Rules 13d-3 and 13d-5 under the Exchange Act.

(b) “Person” will have the meaning for “person” as used in Sections 13(d) and 14(d) of the Exchange Act; and

(c) the Permitted Holders or any other Person or Group will be deemed to beneficially own any Voting Stock of a corporation held by any other corporation (the “parent corporation”) so long as the Permitted Holders or such other Person or Group, as the case may be, beneficially own, directly or indirectly, in the aggregate at least 50% of the voting power of the Voting Stock of the parent corporation.

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“Change of Control Payment” has the meaning set forth under “Change of Control.”

“Change of Control Payment Date” has the meaning set forth under “Change of Control.”

“Change of Control Triggering Event” means the occurrence of both a Change of

Control and a Rating Decline.

“Clearstream” means Clearstream Banking, société anonyme.

“CNV” has the meaning set forth in the second recital to this Indenture.

“Commodity Agreement” means any commodity or raw material futures contract, commodity or raw materials option, or any other agreement designed to protect against or manage exposure to fluctuations in commodity or raw materials prices.

“Common Depositary” means a bank or a bank branch outside of the United States as designated by Euroclear and Clearstream to serve as common depositary of any Euroclear/Clearstream Global Security.

“Common Stock” of any Person means any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or non- voting) of such Person’s common equity interests, whether outstanding on the Issue Date or issued after the Issue Date, and includes, without limitation, all series and classes of such common equity interests.

“Company Order” has the meaning set forth in Section 2.4.

“Consolidated EBITDA” of any Person means, on any date of determination, on a consolidated basis, the sum of the following, without duplication:

(1) Consolidated operating income of such Person for the twelve (12) month period ending on the fiscal quarter immediately preceding such date of determination, plus;

(2) Depreciation and amortization and any other Consolidated Non-cash Charges of such Person (to the extent deducted in determining operating income) for such period,

(3) all as determined in accordance with Argentine GAAP.

“Consolidated Interest Coverage Ratio” means, for any Person as of any date of determination, the ratio of the aggregate amount of Consolidated EBITDA of such Person for the four most recent full fiscal quarters for which financial statements are available ending prior to

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the date of such determination (the “Four Quarter Period”) to Consolidated Interest Expense for such Person for such Four Quarter Period. For purposes of this definition, “Consolidated EBITDA” and “Consolidated Interest Expense” will be calculated after giving effect on a pro forma basis in accordance with Regulation S-X under the Securities Act for the period of such calculation to:

(1) the Incurrence or repayment or redemption of any Indebtedness (including Acquired Indebtedness) of such Person or any of its Subsidiaries, and the application of the proceeds thereof, including the Incurrence of any Indebtedness (including Acquired Indebtedness), and the application of the proceeds thereof, giving rise to the need to make such determination, occurring during such Four Quarter Period or at any time subsequent to the last day of such Four Quarter Period and on or prior to such date of determination, to the extent, in the case of an Incurrence, such Indebtedness is outstanding on the date of determination, as if such Incurrence and the application of the proceeds thereof, repayment or redemption occurred on the first day of such Four Quarter Period; and

(2) any Asset Sale Transaction or Asset Acquisition by such Person or any of its Subsidiaries, including any Asset Sale Transaction or Asset Acquisition giving rise to the need to make such determination occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to such date of determination, as if such Asset Sale Transaction or Asset Acquisition occurred on the first day of the Four Quarter Period.

Furthermore, in calculating “Consolidated Interest Expense” for purposes of determining the denominator (but not the numerator) of this “Consolidated Interest Coverage Ratio,”

(a) interest on outstanding Indebtedness determined on a fluctuating basis as of the date of determination and which will continue to be so determined thereafter will be deemed to have accrued at a fixed rate per annum equal to the rate of interest on such Indebtedness in effect on such date of determination;

(b) if interest on any Indebtedness actually Incurred on such date of determination may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rates, then the interest rate in effect on such date of determination will be deemed to have been in effect during the Four Quarter Period;

(c) notwithstanding clause (a) above, interest on Indebtedness determined on a fluctuating basis, to the extent such interest is covered by Hedging Obligations, will be deemed to accrue at the rate per annum resulting after giving effect to the operation of such agreements;

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(d) interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer of APSA to be the rate of interest implicit in such Capital Lease Obligation in accordance with Argentine GAAP; and

(e) for purposes of making the computation referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period.

“Consolidated Interest Expense” means, for any Person for any period, the cash and non-cash interest expense of such Person and its Subsidiaries for such period, determined on a consolidated basis in accordance with Argentine GAAP.

“Consolidated Non-cash Charges” means, for any Person for any period, the aggregate depreciation, amortization and other non-cash expenses or losses of such Person and its Subsidiaries for such period, determined on a consolidated basis in accordance with Argentine GAAP.

“Consolidated Tangible Assets” means, for any Person at any time, the total consolidated assets of such Person and its Subsidiaries as set forth on the balance sheet as of the most recent fiscal quarter of such Person, prepared in accordance with Argentine GAAP, less Intangible Assets.

“Control” of any Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ability to exercise voting power, by contract or otherwise.

“Co-Registrar” has the meaning set forth in the preamble to this Indenture and any successors and assigns thereto.

“Corporate Trust Office” means in the case of the Trustee or the Registrar, the office of the Trustee or the Registrar at which the corporate trust business of the Trustee or Registrar, as the case may be, shall, at any particular time, be principally administered, which office is located on the date hereof at 101 Barclay Street, 4E, New York, New York 10286, Attention: Corporate Trust Department, and means, in the case of the Registrar, the office or agency of the Registrar at which at any particular time the corporate trust business of the Registrar shall be principally administered, which office, at the date of this Indenture is located at Bartolomé Mitre 480, 11th Floor, City of Buenos Aires, Argentina, or such other location as the Trustee or the Co-Registrar may advise APSA in writing.

“Currency Agreement” means, in respect of any Person, any foreign exchange contract, currency swap agreement or other similar agreement as to which such Person is a party designed to hedge foreign currency risk of such Person.

“Dealer” means any dealer, underwriter, selling or placement agent or similar entity named in any program, underwriting, subscription, distribution, syndicated trade or similar

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agreement executed in connection with any issuance and sale of Securities. Unless the context otherwise requires, the term “Dealer” shall be deemed to include any purchaser of a Security of any Series which is not otherwise a Dealer and purchases such Security directly from APSA.

“Defeasance Trustee” has the meaning set forth in Section 11.4.

“Default” means an event or condition the occurrence of which is, or with the lapse of time or the giving of notice or both would be, an Event of Default.

“Dollar Equivalent” with respect to any currency other than U.S. dollars means the amount of U.S. dollars obtained by converting such other currency into U.S. dollars at the Exchange Rate for the applicable Payment Date or the date for which such amount is otherwise required to be determined.

“DTC” means The Depository Trust Company (or its successors).

“DTC Global Security” means a Global Security deposited with a custodian for, and registered in the name of a nominee of, DTC.

“Empalme” has the meaning set forth in the seventh recital to this Indenture.

“Euroclear” means Euroclear Bank S.A./N.V., as operator of the Euroclear System, and its successors.

“Euroclear/Clearstream Global Security” means a Global Security deposited with a Common Depositary for, and registered in the name of a nominee of, Euroclear and/or Clearstream.

“EuroMTF” has the meaning set forth in Section 3.2.

“Event of Default” means any event or condition specified as such in Section 4.1.

“Exchange Act” means the United States Securities Exchange Act of 1934 (or any successor statute), as amended and the rules and regulations of the SEC promulgated thereunder.

“Exchange Rate” has the meaning set forth in Section 2.3.

“Exchange Rate Agent” means, with respect to Securities denominated in a Specified Currency other than U.S. dollars, unless otherwise specified in the resolutions of the Board of Directors or indenture supplemental hereto related to the Series of such Securities, the Trustee and any successors and assigns thereto.

“Fair Market Value” means, with respect to any asset, the price (after deducting any liabilities relating to such assets) which could be negotiated in an arm’s-length free market transaction, for cash, between an informed and willing seller and an informed and willing buyer, neither of which is under any compulsion to complete the transaction; provided that the Fair Market Value of any such asset or assets will be determined conclusively by the Board of Directors of APSA acting in good faith and provided further that with respect to any asset having

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a price less than US$10,000,000 (or the then equivalent thereof in another currency at the time of determination), only the good faith determination of APSA’s senior management shall be required.

“Fitch” means Fitch Ratings Ltd. and its successors and assigns.

“Global Security” means a Rule 144A Global Security, Regulation S Global Security or Unrestricted Global Security substantially in the form of Exhibit A hereto (whether such Security is a DTC Global Security or an Euroclear/Clearstream Global Security), as such Exhibit may be amended from time to time, which is exchangeable for a Certificated Security

only in the limited circumstances described herein.

“Government Agency” means any public legal entity or public agency, created by federal, state or local government, or any other legal entity now existing or hereafter created, or now or hereafter owned or controlled, directly or indirectly, by any public legal entity or public agency, including any central bank.

“Group” means two (2) or more Persons that act together as a partnership, limited partnership, syndicate or other group for the purpose of acquiring, holding, voting or disposing of Capital Stock of another Person.

“Hedging Obligations” means the obligations of any Person pursuant to any Interest Rate Agreement, Currency Agreement or Commodity Agreement.

“Holder”, “Holder of Securities”, “Securityholder” or other similar terms mean, with respect to any Security, the Person in whose name at the time such Security is registered in the Register.

“Incur” means, with respect to any Indebtedness or other obligation of any Person, to create, issue, incur (including by conversion, exchange or otherwise), assume, guarantee or otherwise become liable in respect of such Indebtedness or other obligation on the balance sheet of such Person (and “Incurrence,” “Incurred” and “Incurring” will have meanings correlative to the preceding).

“Indebtedness” means, with respect to any Person, without duplication: (a) all obligations of such Person for borrowed money; (b) all obligations of such Person evidenced by bonds, debentures, Securities or other similar instruments; (c) all obligations of such Person under any lease that are required to be classified and accounted for as capital lease obligations under Argentine GAAP; (d) all obligations of such Person issued or assumed as the deferred purchase price of property or services, all conditional sale obligations and all obligations under any title retention agreement (but excluding trade accounts payable and other accrued liabilities arising in the ordinary course of business); (e) all obligations due and payable under letters of credit, banker’s acceptances or similar credit transactions, including reimbursement obligations in respect thereof; (f) guarantees of such Person in respect of Indebtedness referred to in clauses (a) through (e) above and clause (g) below and (g) all Indebtedness of any other Person of the type referred to in clauses (a) through (f) which is secured by any Lien on any property or asset of such Person; provided that notwithstanding the foregoing, Indebtedness shall not at any time include any principal or other amounts payable in respect of the 10% convertible notes due 2014 of APSA.

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“Indenture” means this instrument as originally executed and delivered or, if amended or supplemented as herein provided, as so amended or supplemented or both, and such term shall include the provisions of the Trust Indenture Act that are deemed to be a part of and govern this instrument and any such amendment or supplement as well as the forms and terms of particular Securities established as contemplated hereunder.

“Independent Financial Advisor” means an accounting firm, appraisal firm, investment banking firm or consultant of recognized standing that is, in the judgment of APSA’s Board of Directors, qualified to perform the task for which it has been engaged and which is independent in connection with the relevant transaction.

“Intangible Assets” means with respect to any Person, all unamortized debt discount and expense, unamortized deferred charges, goodwill, patents, trademarks, service marks, trade names, copyrights and all other items which would be treated as intangibles on the consolidated balance sheet of such Person prepared in accordance with Argentine GAAP.

“Interest Payment Date” means, with respect to each Series of Securities, any date designated for the payment of interest on such Securities.

“Interest Rate Agreement” of any Person means any interest rate protection agreement (including, without limitation, interest rate swaps, caps, floors, collars, derivative instruments and similar agreements) and/or other types of hedging agreements designed to hedge interest rate risk of such Person.

“Investment Grade Rating” means a rating equal to or higher than (i) Baa3 (or the equivalent) by Moody’s, and its successors and assigns or (ii) BBB – (or the equivalent) by S&P or Fitch, and their successors and assigns; in each case at international level.

“Issue Date” means the first date of issuance of Securities under this Indenture.

“Joint Resolution 470-1738/2004” has the meaning set forth in the third recital to this Indenture.

“Lien” means any lien, mortgage, pledge, security interest or similar encumbrance.

“London Banking Day” means any day on which dealings in deposits in U.S.

dollars are transacted in the London interbank market.

“Luxembourg Paying Agent” has the meaning set forth in Section 3.2.

“MAE” means the Mercado Abierto Electrónico S.A.

“Moody’s” means Moody’s Investors Service, Inc. and its successors and assigns.

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“Negotiable Obligations Law” has the meaning set forth in the third recital to this Indenture.

“Offering Memorandum” means (i) the Offering Memorandum dated May     , 2007 and (ii) the Prospecto dated May     , 2007 and prepared by APSA in connection with the Program, as the same may be amended or supplemented from time to time.

“Officer” means, when used in connection with any action to be taken by APSA, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Financial Officer, any Vice President, the Treasurer, the Controller or the Secretary of APSA.

“Officers’ Certificate” means, when used in connection with any action to be taken by APSA, a certificate signed by an Officer of APSA and delivered to the Trustee.

“Opinion of Counsel” means an opinion in writing signed by legal counsel who may be an employee of or counsel to APSA, and who shall be reasonably acceptable to the Trustee.

“Optional Redemption Date” has the meaning set forth in Section 10.1.

“Original Issue Date” of any Security (or portion thereof) means the earlier of (a) the date of such Security or (b) the date of any Security (or portion thereof) for which such Security was issued (directly or indirectly) on registration of transfer or exchange or in substitution.

“Outstanding” when used with reference to Securities, subject to the provisions of Section 6.4, shall mean, as of any particular time, all Securities authenticated and delivered by the Trustee under this Indenture, except:

(1) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;

(2) Securities or portions thereof that have been called for redemption in accordance with their terms or which have become due and payable at maturity or otherwise and with respect to which monies sufficient to pay the principal thereof and any premium, interest, Additional Amounts or other amount thereon shall have been therefor deposited with the Trustee; provided that if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; or

(3) Securities in lieu of or in substitution for which other Securities shall have been authenticated and delivered pursuant to Section 2.11.

“Paying Agents” has the meaning set forth in the preamble to this Indenture and any successors and assigns thereto.

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“Payment Date” means, with respect to each Series, the date on which payment of principal, interest or any other amount is due or any date fixed for redemption of the Securities of such Series.

“Permitted Business” means any business related, ancillary or complementary to the businesses of APSA and its Subsidiaries on the Issue Date including, without limitation, any such activities outside of Argentina.

“Permitted Holders” means any one or more of (i) IRSA Inversiones y Representaciones Sociedad Anónima, (ii) Eduardo S. Elsztain, Saul Zang and Alejandro Elsztain and their respective parents, brothers, sisters, children and any of the descendants, heirs, legatees and successors and any spouses or former spouses of any of the foregoing, (iii) any estate, guardian, custodian and other legal representative of any of the foregoing and (iv) any Affiliates of any of the foregoing or any other Persons (including any trust, partnership or other entity) controlled by or for the benefit of any of the foregoing.

“Permitted Indebtedness” has the meaning set forth under clause (2) of Sect ion 3.16.

“Permitted Lien” means: (a) any Lien existing on the Issue Date; (b) any landlord’s, workmen’s, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other Liens arising in the ordinary course of business (excluding, for the avoidance of doubt, Liens in connection with any Indebtedness); (c) any Lien securing Indebtedness incurred or assumed for the purpose of financing all or any part of the cost of constructing, acquiring or improving any asset, which Lien attaches to such asset or to other assets of APSA or any of its Subsidiaries concurrently with or within 180 days after the acquisition or the completion of the construction or improvement thereof; provided that if such Lien attaches to an asset or assets other than the asset or assets constructed, acquired or improved, such other asset or assets have at such time a Fair Market Value not exceeding the Fair Market Value of the asset or assets constructed, acquired or improved and provided further that for purposes of the immediately preceding proviso, if at the time such Lien attaches to such other asset or assets, the book value thereof (as set forth in APSA’s consolidated balance sheet at the end of its most recent fiscal quarter) exceeds the amount of US$20,000,000 (or the then equivalent thereof in another currency at the time of determination), the Fair Market Value thereof shall be determined by an Independent Financial Advisor; (d) any Lien in favor of APSA or any of its Subsidiaries; (e) any Lien on any property existing thereon at the time of acquisition of such property and not created in connection with such acquisition; (f) any Lien securing an extension, renewal or refunding of Indebtedness secured by an Lien referred to in (a), (c), (d) or (e) above; provided that such new Lien is limited to the property which was subject to the prior Lien immediately before such extension, renewal or refunding and provided further that the principal amount of Indebtedness secured by the prior Lien immediately before such extension, renewal or refunding is not increased; (g) (i) any inchoate Lien for taxes, assessments or governmental charges or levies not yet due (including any relevant extensions), (ii) any Lien arising or incurred in connection with judgments or assessments under circumstances not constituting an Event of Default or (iii) any Lien in the form of a tax or other statutory Lien or any other Lien arising by operation of law; provided that any such Lien will be discharged within 90 days after the date it is created or arises (unless contested in good faith); (h) Liens arising in connection with Receivables Transactions;

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or (i) any other Lien on the assets of APSA; provided that on the date of the creation or assumption of such Lien, the Indebtedness secured by such Lien, together with all of APSA’s Indebtedness secured by any Lien under this clause, will have an aggregate principal amount outstanding of no greater than 15% of APSA’s total consolidated assets as set forth in the consolidated financial statements for its most recent fiscal quarter.

“Person” means an individual, partnership, limited partnership, corporation, company, limited liability company, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof.

“Ps.” and “Pesos” means the currency of Argentina.

“Preferred Stock” of any Person means any Capital Stock of such Person that has preferential rights over any other Capital Stock of such Person with respect to dividends, distributions or redemptions or upon liquidation.

“Pricing Supplement” means a pricing supplement to the Offering Memorandum setting forth details of the terms of the Securities to be issued, which may be in (i) the form annexed to the Offering Memorandum or (ii) such other form as may be agreed between APSA and the relevant Dealers (and, to the extent that their respective duties or obligations are affected thereby, the Trustee and Agents).

“Principal” whenever used with reference to the Securities or any Security or any portion thereof, shall be deemed to include premium, if any, and redemption amount, if any, and in the case of original issue discount Securities, the Amortized Face Amount or other amount payable in respect thereof.

“Principal Paying Agent” has the meaning set forth in the preamble to this Indenture and any successors and assigns thereto.

“Process Agent” has the meaning set forth in Section 12.8.

“Program” has the meaning set forth in the first recital of this Indenture.

“Purchase Money Indebtedness” means Indebtedness Incurred for the purpose of financing all or any part of the purchase price, or other cost of construction or improvement of any property; provided that the aggregate principal amount of such Indebtedness does not exceed the lesser of the Fair Market Value of such property or such purchase price or cost, including any Refinancing of such Indebtedness that does not increase the aggregate principal amount (or accreted amount, if less) thereof as of the date of Refinancing.

“Qualified Institutional Buyer” means a qualified institutional buyer within the meaning of Rule 144A.

“Qualified Merger Jurisdiction” means any of (i) Argentina; (ii) the United States, any State thereof or the District of Columbia; (iii) any member state of the European Union; or (iv) any other nation that has an Investment Grade Rating on its sovereign debt rating from two (2) or more Rating Agencies.

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“Rating Agency” means any one of Moody’s, S&P or Fitch.

“Rating Decline” shall be deemed to have occurred if within ninety (90) days of a rating date, one of the Rating Agencies assigns a rating to the Securities that is lower than the applicable rating of the Securities (domestically or internationally) immediately preceding the rating date; provided that such Rating Decline is in whole or in part in connection with a Change in Control.

“Receivables Entity” means a Person in which APSA or any Subsidiary makes an investment and:

(1) to which APSA or any Subsidiary transfers receivables and related assets in connection with a Receivables Transaction;

(2) which engages in no activities other than in connection with the Receivables Transaction;

(3) no portion of the Indebtedness or any other obligations (contingent or otherwise) of which:

(1) is guaranteed by APSA or any Subsidiary (excluding guarantees of Obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings);

(2) is recourse to or obligates APSA or any Subsidiary in any way other than pursuant to Standard Securitization Undertakings; or

(3) subjects any property or asset of APSA or any Subsidiary, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings;

(4) with which neither APSA nor any Subsidiary has any material contract, agreement, arrangement or understanding (except in connection with a Receivables Transaction) other than on terms no less favorable to APSA or such Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of APSA, other than fees payable in the ordinary course of business in connection with servicing receivables; and

(5) to which neither APSA nor any Subsidiary has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results.

“Receivables Transaction” means any Securitization, factoring, discounting or similar financing transaction or series of transactions that may be entered into by APSA or any of its Subsidiaries in the ordinary course of business pursuant to which APSA or any of its Subsidiaries may sell, convey or otherwise transfer to any Person (including a Receivables Entity), or may grant a security interest in, any receivables (whether now existing or arising in the future) of APSA or any of its Subsidiaries, and any assets related thereto, including all

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collateral securing such receivables, all contracts and all guarantees or other obligations in respect of such receivables, the proceeds of such receivables and other assets which are customarily transferred, or in respect of which security interests are customarily granted, in connection with securitization, factoring or discounting involving receivables.

“Refinance” means, in respect of any Indebtedness, to issue any Indebtedness in exchange for or to refinance, replace, defease or refund such Indebtedness in whole or in part. “Refinanced” and “Refinancing” will have correlative meanings.

“Refinancing Indebtedness” means Indebtedness of APSA or any Subsidiary issued to Refinance any other Indebtedness of APSA or a Subsidiary so long as:

(1) the aggregate principal amount (or initial accreted value, if applicable) of such new Indebtedness as of the date of such proposed Refinancing does not exceed the aggregate principal amount (or initial accreted value, if applicable) of the Indebtedness being Refinanced (plus the amount of any premium required to be paid under the terms of the instrument governing such Indebtedness and the reasonable fees, expenses, defeasance costs and accrued but unpaid interest payable by APSA in connection with such Refinancing);

(2) such new Indebtedness has:

(1) a Weighted Average Life to Maturity that is equal to or greater than the Weighted Average Life to Maturity of the Indebtedness being Refinanced, and

(2) a final maturity that is equal to or later than the final maturity of the Indebtedness being Refinanced; and

(3) if the Indebtedness being Refinanced is Subordinated Indebtedness, then such Refinancing Indebtedness shall be subordinate to the Securities, if applicable, at least to the same extent and in the same manner as the Indebtedness being Refinanced.

“Register” has the meaning set forth in Section 2.10.

“Registrar” has the meaning set forth in the preamble to this Indenture and any successors and assigns thereto.

“Regular Record Date” means, with respect to each Series of Securities, each date designated in the Securities for the determination of the Holders to whom interest shall be payable on the subsequent Interest Payment Date, and, if no such date is so designated, as defined in Section 2.9.

“Regulation S” means Regulation S under the Securities Act.

“Regulation S Global Security” means a Global Security initially sold in reliance on Regulation S, deposited (a) in the case of a DTC Global Security, with the Trustee, as

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custodian for DTC, and registered in the name of Cede & Co., as nominee of DTC and (b) in the case of an Euroclear/Clearstream Global Security, with the specified Common Depositary of Euroclear and Clearstream, and registered in the name of Euroclear, Clearstream or their nominee, and in each case bearing the applicable Restrictive Legend.

“Representative of the Trustee in Argentina” has the meaning set forth in the preamble to this Indenture.

“Responsible Officer” when used with respect to the Trustee, means any vice president, any assistant vice president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, any trust officer or assistant trust officer, assigned to the Trustee’s Corporate Trust Office or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.

“Restricted Period” means, with respect to any Security, the period of forty (40) days after the completion of the distribution of all Securities of the same Series.

“Restrictive Legend” has the meaning set forth in Section 2.10 hereof.

“Rule 144” means Rule 144 under the Securities Act.

“Rule 144A” means Rule 144A under the Securities Act.

“Rule 144A Global Security” means a Global Security initially sold in the United States in reliance on Rule 144A, deposited with the Trustee, as custodian for DTC, and registered in the name of Cede & Co., as nominee of DTC, and bearing the applicable Restrictive Legend.

“S&P” means Standard & Poor’s Ratings Services and its successors and assigns.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the United States Securities Act of 1933 (or any successor statute), as amended and the rules and regulations of the SEC promulgated thereunder.

“Security” or “Securities” has the meaning stated in the first recital of this Indenture, or, as the context may require, means Securities that have been authenticated and delivered under this Indenture. Unless the context otherwise requires, all references to “Security” or “Securities” shall include any Exchange Securities.

“Series” has the meaning set forth in Section 2.3.

“Significant Subsidiary” means, at any relevant time, any Subsidiary of APSA which would be a “significant subsidiary” of APSA within the meaning of Rule 102 under Regulation S-X promulgated by the SEC.

“Specified Currency” has the meaning set forth in Section 2.3.

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“Standard Securitization Undertakings” means representations, warranties, covenants and indemnities entered into by APSA or any Subsidiary which are reasonably customary in securitization of receivables transactions.

“Stated Maturity” means the date, shown on the face of a Security, on which the principal of such Security and the other Securities of the same Series is payable or, if the principal of such Security is payable in installments, on which the last installment of principal of such Security and the other Securities of the same Series is payable, falling no less than thirty (30) days from the Original Issue Date of such Security, as specified in the resolutions of the Board of Directors or indenture supplemental hereto related to the Series of such Securities.

“Subordinated Indebtedness” means, with respect to APSA, any Indebtedness of APSA which is expressly subordinated in right of payment to the Securities, as the case may be.

“Subsidiary” means, with respect to any Person, any other Person of which such Person owns, directly or indirectly, more than 50% of the voting power of the other Person’s outstanding Voting Stock.

“Supervisory Committee” means the Comisión Fiscalizadora of APSA.

“Surviving Entity” has the meaning set forth under Section 8.1.

“Transfer Agents” has the meaning set forth in the preamble to this Indenture and any successors and assigns thereto.

“Trust Indenture Act” means the U.S. Trust Indenture Act of 1939 (including any successor act thereto), as it may be amended from time to time, and (unless the context otherwise requires) includes the rules and regulations of the SEC thereunder.

“Trustee” means the Person identified as the “Trustee” in the preamble to this Indenture and, subject to the provisions of Article V, shall also include any successor trustee.

“Unrestricted Global Security” means a Global Security representing Securities that do not bear the Restrictive Legend.

“U.S. GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time.

“US$” and “U.S. dollars” means the currency of the United States of America which at the relevant time is legal tender for the payment of public or private debts.

“Voting Stock” with respect to any Person, means securities of any class of Capital Stock of such Person entitling the holders thereof (whether at all times or only so long as no senior class of stock has voting power by reason of any contingency) to vote in the election of members of the Board of Directors (or equivalent governing body) of such Person.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years (calculated to the nearest one-twelfth) obtained by dividing:

(1) the then outstanding aggregate principal amount or liquidation preference, as the case may be, of such Indebtedness into

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(2) the sum of the products obtained by multiplying:

(a) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal or liquidation preference, as the case may be, including payment at final maturity, in respect thereof, by

(b) the number of years (calculated to the nearest one-twelfth) which will elapse between such date and the making of such payment.

Section 1.2. Agents. APSA hereby appoints each of the Registrar, the Co- Registrar, the Exchange Rate Agent, the Calculation Agent, the Transfer Agents and the Paying Agents (collectively, the “Agents” and individually, an “Agent”) as its agent in relation to the Securities for the purposes specified in this Indenture and in the terms of the Securities applicable thereto and all matters incidental thereto. Each of the Agents shall have the powers and authority granted to and conferred upon it herein and in the Securities, and such further powers and authority to act on behalf of APSA as APSA and such Agent may hereafter agree in writing. By execution of this Indenture, each of the Agents accepts its appointment as agent of APSA in relation to the Securities and shall comply with the provisions of this Indenture and the Securities applicable thereto.

Subject to Section 3.2, APSA may terminate the appointment of any Agent at any time and from time to time upon giving at least thirty (30) days written notice to such Agent and to the Trustee. Each Agent may at any time resign by giving no less than thirty (30) days written notice to APSA of such intention on its part, specifying the date on which its desired resignation shall become effective. In the event that APSA fails to appoint a new Agent to succeed the resigning Agent within thirty (30) days after receiving notice of such resignation, the resigning Agent shall have the power to appoint a successor Agent.

In acting under this Indenture and in connection with the Securities, the Agents are each acting solely as an agent of APSA and do not assume any responsibility for the correctness of the recitals in the Securities or this Indenture, or the offering materials related thereto or any obligation or relationship of agency for or with any of the Holders of the Securities.

Each of the Agents shall be protected and shall incur no liability for or in respect of any action taken or thing suffered by it in reliance upon any Security, notice, direction, consent, certificate, affidavit, statement or other document to the extent that such communication conforms to the provisions set forth herein, and is believed by it, in good faith, to be genuine and to have been passed or signed by the proper parties.

Each of the Agents may become the owner of, or acquire any interest in, any Securities, with the same rights that it would have if it were not acting in such capacity, and may engage or be interested in any financial or other transaction with APSA.

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APSA agrees to indemnify, hold harmless and defend each of the Agents against any loss, liability, cost, claim, action, demand or expense (including reasonable fees and expenses of legal counsel) arising out of or in connection with its appointment, or the exercise of its powers and rights and performance of its duties hereunder, or performance of any other duties pursuant to the terms and conditions hereof, except such as may result from its negligence or willful misconduct or that of its officers or employees. The indemnity set forth in this paragraph shall survive the payment of the Securities, the resignation or removal of any Agent and/or the termination of this Indenture.

None of the Agents shall be liable for any action taken or omitted by it without negligence or willful misconduct.

Each Agent may execute any of its powers or perform any of its duties hereunder either directly or by or through agents or attorneys not regularly in its employ and such Agent shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care by it hereunder.

APSA covenants and agrees to pay to each Agent from time to time, and each Agent shall be entitled to, such compensation as shall be agreed upon in writing by APSA and such Agent for all services rendered by it hereunder. APSA covenants and agrees promptly to pay all such compensation and to reimburse each of the Agents for reasonable and documented out-of-pocket expenses (including the reasonable fees and expenses of its counsel) incurred by it in connection with the services rendered by it hereunder, including, without limitation, any payments made in connection with taxes or other charges.

None of the provisions contained in this Indenture shall require any of the Agents to expend, advance or risk its own funds or otherwise incur any personal financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

The duties and obligations of each Agent with respect to the Securities and this Indenture shall be determined solely by the express provisions of this Indenture, and each Agent shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against each such Agent. The duties and obligations of each Agent are several and not joint.

ARTICLE II

Securities

Section 2.1. Forms. (a) Generally. The form of any Security to be authenticated hereunder shall be designated by APSA. A Company Order in respect thereof shall be delivered by APSA to the Trustee pursuant to Section 2.4, and the Trustee shall have no liability for APSA’s designation so made notwithstanding the provisions of this Section 2.1. The Securities shall be issued as registered Securities without interest coupons ; provided that if

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permitted by applicable law, the Securities may be issued as bearer Securities if in connection with the issuance thereof APSA and the Trustee shall have entered into an indenture supplemental hereto providing for the issuance of bearer Securities. APSA shall ensure that such supplemental indenture shall provide for compliance by APSA with United States, Argentine and any other laws applicable to bearer Securities, and the Trustee shall have no duty whatsoever, express or implied, to ensure compliance of such supplemental indenture with the laws of any jurisdiction. The Securities may be issued in the form of one or more Global Securities in an aggregate principal amount equal to the principal amount of the Securities of a Series, which shall be exchangeable for Certificated Securities only in the limited circumstances set forth in Section 2.10, or Securities may be issued in the form of Certificated Securities, which shall be exchangeable for beneficial interests in a Global Security only in the limited circumstances set forth in Section 2.10. The Securities initially sold within the United States to U.S. Persons that are Qualified Institutional Buyers will be issued in the form of one or more Rule 144A Global Securities. The Securities initially sold outside the United States in reliance on Regulation S under the Securities Act will be issued in the form of one or more Regulation S Global Securities. Any Securities exchanged pursuant to an Exchange Offer will be issued in the form of one or more Unrestricted Global Securities. In each case, Securities may be issued in such other form (not inconsistent with this Indenture) as shall be established by or pursuant to resolutions of the Board of Directors, and, if necessary or desirable pursuant to the terms of this Indenture, or one or more indentures supplemental hereto, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture and may have imprinted or otherwise reproduced thereon such legend or legends, not inconsistent with the provisions of this Indenture, as may be required to comply with any law or with any rules or regulations pursuant thereto, or with any rules of any securities exchange or to conform to general usage, all as may be determined by the Authorized Persons executing such Securities, as evidenced by their execution of such Securities, and all of which shall not affect the rights, duties or obligations of the Trustee or the Agents. The Securities shall be numbered, lettered, or otherwise distinguished in such manner or in accordance with such plan as the Authorized Persons executing the same may determine with the approval of the Trustee as evidenced by the execution and authentication thereof.

The Certificated Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange on which the Securities may be listed and subject to the prior approval of the CNV where applicable, all as determined by the Authorized Persons executing such Securities as evidenced by their execution of such Securities.

APSA agrees to cause the Securities to comply with Article 7 of the Negotiable Obligations Law.

(b) DTC Global Securities. The Trustee shall hold on deposit each DTC Global Security executed and authenticated as provided herein as custodian for DTC, acting as the depositary for such DTC Global Security, for credit on the date of settlement (i) in the case of any Regulation S Global Security, to the account of the relevant Dealer or Dealers at Euroclear or Clearstream or such other accounts as they may direct and (ii) in the case of any Rule 144A Global Security, to the account of the relevant Dealer or Dealers at DTC or such other accounts as they may direct, in each case against payment in immediately available funds. Each DTC Global Security to be deposited with DTC shall be registered in the name of Cede & Co, as DTC’s nominee, and shall bear legends substantially to the following effect:

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“UNLESS (1) THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (“DTC”) TO ALTO PALERMO SA (APSA) OR ITS DEALER FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, (2) ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC AND (3) ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL BECAUSE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE, AND TRANSFERS OF INTERESTS IN THIS NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO HEREIN.”

Upon the issuance of any DTC Global Security, the Trustee or its respective duly appointed agent shall record Cede & Co., as DTC’s nominee, as the registered Holder of such DTC Global Security.

(c) Euroclear/Clearstream Global Securities. The Common Depositary specified by Euroclear and Clearstream shall hold on deposit each Euroclear/Clearstream Global Security executed and authenticated as provided herein as custodian for Euroclear and Clearstream for credit on the date of settlement to the account of the relevant Dealer or Dealers at Euroclear or Clearstream or such other accounts as they may direct against payment in immediately available funds. Any Euroclear/Clearstream Global Security shall be a Regulation S Global Security. Each Euroclear/Clearstream Global Security to be deposited with the specified Common Depositary of Euroclear and Clearstream shall be registered in the name of the Common Depositary or a nominee specified by Euroclear and/or Clearstream. Upon the issuance of any Euroclear/Clearstream Global Security, the Registrar or Co-Registrar shall record such nominee as the registered Holder of such Euroclear/Clearstream Global Security.

(d) Certificated Securities. The Trustee shall deliver or make available each Certificated Security executed and authenticated as provided herein to the relevant Dealer or Dealers or its or their designee, for the benefit of the purchaser of such Security, against delivery by such Dealer or Dealers of a receipt therefor, or, if so instructed and upon confirmation from APSA that proper payment by the purchaser has been made, the Trustee shall deliver the Securities directly to APSA or its designee for the benefit of the purchaser of such Securities against delivery of a receipt therefor. On the Original Issue Date, the relevant Dealer or Dealers, if any, will deliver payment for Securities delivered to it or them, if any, in immediately

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available funds to the Trustee, for credit to APSA’s account, or directly to APSA’s account with the Trustee, in an amount equal to the issue price of the Securities less the applicable Dealer’s or Dealers’ commission. Notwithstanding the foregoing, if the Trustee is so instructed by APSA, delivery of the Securities may be made before actual receipt of payment in accordance with the custom prevailing in the market. Once the Trustee has delivered Securities to the relevant Dealer or Dealers or its or their designee, the Trustee shall not be responsible for any failure by such Dealer or Dealers or such designee either to remit payment for the Securities or to return the Securities to the Trustee. If the Trustee has delivered Securities directly to APSA or its consignee pursuant to written instructions from APSA, the Trustee shall not be responsible for any failures by the purchaser either to remit payment for the Securities or to return the Securities to the Trustee. Upon the issuance of any Certificated Security, the Registrar or Co-Registrar shall record the Person who is designated by the Dealer or Dealers or APSA, as the case may be, as the registered Holder of such Certificated Security.

Section 2.2. Form of Trustee’s Certificate of Authentication. The Trustee’s certificate of authentication on all Securities shall be in substantially the following form:

This is one of the Securities referred to in the within- mentioned Indenture.

The Bank of New York,

as Trustee

By:

Name:

Title:

Section 2.3. Maximum Aggregate Principal Amount of Securities; Terms of Securities. (i) The maximum aggregate principal amount of Securities of all Series (as defined below) that may be Outstanding at any one time under this Indenture is US$200,000,000 (which will include, in the case of Securities not denominated in U.S. dollars, the Dollar Equivalent of such Securities as determined on the respective Original Issue Date thereof). For purposes of the foregoing limitation, the Dollar Equivalent of any Securities denominated in a Specified Currency other than U.S. dollars will be determined (i) in the case of interest payments, on the basis of the Exchange Rate Agent’s bid (U.S. dollar offer) quotation for such Specified Currency, and, in the case of principal payments, on the basis of Exchange Rate Agent’s offer (U.S. dollar bid) quotation for such Specified Currency, in each case at or prior to 11:00 a.m. New York City time, on the second (2nd) Business Day next preceding the applicable Payment Date or date for which the Dollar Equivalent is required to be determined or (ii) if no such rate is quoted for any reason, the rate determined by the Exchange Rate Agent based on an average of quotations given to the Exchange Rate Agent by commercial banks which conduct foreign exchange operations or based on such other method as the Exchange Rate Agent may reasonably determine to calculate a market exchange rate on the second (2nd) Business Day next preceding the applicable Payment Date or date for which the Dollar Equivalent is required to be determined (the rate determined in accordance with clause (i) or (ii) above, the “Exchange Rate”) (or, if such

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Exchange Rate is not then available, the Exchange Rate most recently available prior thereto). The Exchange Rate Agent shall not be liable for any determination, bid or offer made or omitted by it hereunder in the absence of manifest error on its part.

(ii) Securities may be issued from time to time hereunder by APSA. All Securities having the same maturity, interest rate and other terms shall constitute a single Series of Securities (each, a “Series”). If specified in the resolutions of the Board of Directors or indenture supplemental hereto relating to a Series of Securities, APSA may from time to time, without the consent of Holders of Securities Outstanding, create and issue additional Securities of such Series; provided that such additional Securities have the same terms and conditions as the Securities of such Series (except for the Original Issue Date, the issue price, the applicable legends and, if applicable, the first payment of interest), and the additional Securities shall form a single Series with the previously outstanding Series of Securities.

(iii) There shall be established (i) in or pursuant to resolutions of the Board of Directors and a Company Order or (ii) in one or more indentures supplemental hereto, prior to the issuance of any Series of Securities, the following terms of the Securities of such Series:

(1) the coin or currency (including composite currencies) in which the Securities of such Series shall be denominated (the “Specified Currency”), and, if other than the Specified Currency of denomination, the Specified Currency or Currencies in which the principal and any interest in respect of the Securities of such Series is payable;

(2) the Stated Maturity of the Securities of such Series, which will be no less than thirty (30) days from the Original Issue Date, and, if applicable, the method by which such Stated Maturity shall be determined;

(3) the rate or rates, if any, at which the Securities of such Series shall bear interest, or the method by which such rate shall be determined (including, where applicable, the Interest Rate Basis, the Calculation Agent, the Index Maturity, the Spread or Spread Multiplier, the Maximum Rate, the Minimum Rate, Calculation Dates, Interest Determination Dates, the Interest Reset Period and Interest Reset Dates (as defined in the applicable Security)), the date or dates from which such interest shall accrue, the date or dates on which such interest shall be payable, the record dates for the determination of the Holders to whom interest shall be payable and the basis upon which interest shall be calculated if other than a 360-day year of twelve (12) 30-day months;

(4) if the amount of payments of principal of and interest on the Securities of such Series may be determined with reference to an index, formula or otherwise, the manner in which such amounts shall be determined;

(5) the place or places where the principal of and any interest on the Securities of such Series shall be payable (if other than as provided in Section 3.2);

(6) the price or prices at which, the period or periods within which and the terms and conditions upon which the Securities of such Series may be redeemed, in whole or in part, at the option of APSA, pursuant to any sinking fund or otherwise;

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(7) the right or obligation, if any, of APSA to redeem, repurchase or repay the Securities of such Series at the option of the Holder thereof and the price or prices at which, the period or periods within which and the terms and conditions upon which the Securities of such Series shall be redeemed, repurchased or repaid, in whole or in part, pursuant to such right or obligation;

(8) the denomination or denominations in which the Securities of such Series shall be issuable;

(9) the applicability, non-applicability, or variation, of Article XI with respect to the Securities of such Series;

(10) any deletions from, modifications of or additions to the Events of Default or covenants, financial or otherwise, of APSA with respect to the Securities of such Series;

(11) any trustees, authenticating or paying agents, transfer agents or registrars or any other agents with respect to the Securities of such Series (if other than as provided in Section 3.2);

(12) the form of the Securities of such Series; provided that if (as permitted by applicable law) bearer Securities are to be issued, APSA and the Trustee shall have entered into an indenture supplemental hereto providing for the issuance of bearer Securities; and provided further that APSA shall ensure that such supplemental indenture shall provide for compliance by APSA with United States, Argentine and any other laws applicable to bearer Securities, and the Trustee shall have no duty whatsoever, express or implied, to ensure compliance of such supplemental indenture with the laws of any jurisdiction;

(13) the terms and conditions, if any, upon which such Securities may be exchanged for or converted into other securities issued by APSA or any other Person; and

(14) any other terms and conditions of the Securities of such Series.

Section 2.4. Authentication and Delivery of Securities. At any time and from time to time after the execution and delivery of this Indenture, APSA may deliver one or more Securities executed by APSA to the Trustee for authentication together with the applicable documents referred to below in this Section, and the Trustee shall thereafter authenticate and deliver such Securities to or upon the order of APSA (contained in the Company Order referred to below in this Section 2.4) or pursuant to such procedures as may be specified from time to time by a Company Order. Such Company Order may be transmitted via facsimile (with the original to be delivered by mail) and may provide written instructions or provide for further instructions from APSA as to the form and terms of such Securities. In authenticating such Securities and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive and shall be fully protected in relying upon:

(1) a Company Order requesting such authentication setting forth instructions as to delivery (if the Securities are not to be delivered to APSA) and completion of any terms not set forth in such Securities as executed by APSA or setting forth procedures as to such completion and delivery (a “Company Order”);

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(2) any resolutions of the Board of Directors and a Company Order, or, if applicable, an executed supplemental indenture referred to in Sections 2.1 and 2.3 by or pursuant to which the forms and terms of such Securities were established;

(3) to the extent the forms and terms of such Securities are determined pursuant to (and are not set forth in) resolutions or supplemental indentures pursuant to Sections 2.1 and 2.3, an Officers’ Certificate, prepared in accordance with Section 12.6, either setting forth the form or forms and terms of the Securities; and

(4) an Opinion of Counsel, prepared in accordance with Section 12.6, which shall also state (a) that the form or forms and terms of such Securities have been or will, when established in compliance with procedures therein described, be duly authorized in conformity with the provisions of this Indenture; (b) that such Securities, when authenticated and delivered by the Trustee and issued by APSA in the manner and subject to any conditions specified in such Opinion of Counsel, will have been duly executed and delivered and will constitute valid and binding obligations of APSA, enforceable against APSA in accordance with and subject to such matters as counsel may therein specify; and (c) such other matters as the Trustee may reasonably request.

The Trustee shall have the right to decline to authenticate and deliver any Securities under this Section if the Trustee, (x) being advised by counsel, and after having consulted with counsel to APSA, determines that such action may not lawfully be taken, (y) acting in good faith through its board of directors or board of trustees, executive committee, or a trust committee of directors or trustees or Responsible Officers shall determine that such action would expose the Trustee to personal liability to existing Holders or (z) determines that such action will affect its rights, duties, obligations or immunities hereunder in a manner not reasonably acceptable to it.

Section 2.5. Execution of Securities. The Securities shall be executed on behalf of APSA by each of (a) a member of its Board of Directors and (b) a member of its Supervisory Committee. Such signatures, in accordance with applicable laws and regulations, may be the manual or facsimile signatures of the present or any future such Authorized Persons. Typographical and other minor errors or defects in any such signature shall not affect the validity or enforceability of any Security that has been duly authenticated and delivered by the Trustee.

In case any Authorized Person of APSA who shall have signed any of the Securities shall cease to be such Authorized Person before the Security so signed shall be authenticated and delivered by the Trustee or disposed of by or on behalf of APSA, such Security nevertheless may be authenticated and delivered or disposed of as though the Person who signed such Security had not ceased to be such Authorized Person of APSA; and any Security may be signed on behalf of APSA by such Persons as, at the actual date of the execution of such Security, shall be proper Authorized Persons of APSA, although at the date of the execution and delivery of this Indenture any such Person was not such an Authorized Person.

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Section 2.6. Certificate of Authentication. Only such Securities as shall bear thereon a certificate of authentication substantially in the form herein before recited, executed by the Trustee by the manual signature of one of its authorized signatories, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. Such certificate by the Trustee upon any Security executed by or on behalf of APSA shall be conclusive evidence that the Security so authenticated has been duly authenticated and delivered hereunder and that the Holder is entitled to the benefits of this Indenture. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by APSA, and APSA shall deliver such Security to the Trustee for cancellation together with a written statement of an Authorized Person (which need not comply with Section 12.6 and need not be accompanied by an Opinion of Counsel) stating that such Security has never been issued and sold by APSA, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.

Section 2.7. Global Securities. Global Securities shall be subject to the following terms:

(a) Interests in a Global Security deposited with DTC or Euroclear and/or Clearstream pursuant to this Section 2.7 hereof shall be exchanged for Certificated Securities only if such exchange complies with Section 2.10 hereof and (i) in the case of a DTC Global Security, DTC notifies APSA and the Trustee that it is unwilling or unable to continue as depositary for such Global Security or if at any time DTC ceases to be a clearing agency registered under the Exchange Act, and a successor depositary so registered is not appointed by APSA within ninety (90) days of such notice, (ii) in the case of a Euroclear/Clearstream Global Security, if the clearing system(s) through which it is cleared and settled is closed for business for a continuous period of fourteen (14) days (other than by reason of holidays, statutory or otherwise) or announces an intention to cease business permanently or does in fact do so, (iii) an Event of Default has occurred and is continuing or (iv) APSA in its sole discretion notifies the Trustee in writing that Certificated Securities shall be delivered in exchange for such Global Security.

(b) If interests in any Global Security are to be exchanged for Securities in the form of Certificated Securities pursuant to Section 2.10, such Global Security shall be surrendered by the relevant clearing system to the Trustee to be so exchanged, without charge, and the Trustee shall authenticate and deliver, upon such exchange of interests in such Global Security, an equal aggregate principal amount of Certificated Securities. The Certificated Securities exchanged pursuant to this Section 2.7 shall be registered by the Registrar in such names as the relevant clearing system shall direct in writing in accordance with its records. Any Certificated Security delivered in exchange for any interest in any Rule 144A Global Security shall, except as provided by Section 2.10, bear the legends as set forth on the face of the form of the Certificated Securities set forth in Exhibit B hereto.

(c) Until exchanged in full, a Global Security of a Series shall in all respects be entitled to the same benefits under this Indenture as Certificated Securities of such Series authenticated and delivered hereunder. If, after any presentation thereof to the Trustee,

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the principal amount of Securities represented by any Global Security of a Series is reduced to zero, such Global Security shall be immediately cancelled and destroyed by the Trustee in accordance with Section 2.11.

Section 2.8. Denomination and Date of Securities. Subject to applicable laws and regulations, Securities shall be issued in such denominations as are set forth in the terms of such Securities established pursuant to Section 2.3 and in a Company Order relating to such Securities.

Each Security shall be dated the date of its authentication.

Section 2.9. Payments of Principal and Interest. Interest (and principal, if any, payable other than at Stated Maturity or upon acceleration or redemption) shall be paid in immediately available funds to the Person in whose name a Security is registered at the close of business on the Regular Record Date next preceding each Interest Payment Date notwithstanding the cancellation of such Securities upon any transfer or exchange thereof subsequent to such Regular Record Date and prior to such Interest Payment Date; provided that interest payable at Stated Maturity or upon acceleration or redemption shall be paid to the Person to whom principal will be payable; provided further, that if and to the extent APSA defaults in the payment of the interest, including any Additional Amounts, due on such Interest Payment Date, such defaulted interest, including any Additional Amounts, shall be paid to the Person in whose names such Securities are registered at the end of a subsequent record date established by APSA by notice given by mail by or on behalf of APSA to the Holders of the Securities not less than fifteen (15) days preceding such subsequent record date, such record date to be not less than fifteen (15) days preceding the date of payment in respect of such defaulted interest. Unless otherwise specified in the resolutions of the Board of Directors or indenture supplemental hereto related to the Series of such Securities, the first payment of interest on any Security originally issued between a Regular Record Date and an Interest Payment Date shall be made on the Interest Payment Date following the next succeeding Regular Record Date to the registered owner at the close of business on such next succeeding Regular Record Date. Unless otherwise specified in the resolutions of the Board of Directors or in an indenture supplemental hereto related to the Series of such Securities, the “Regular Record Date” with respect to any Security will be the date fifteen (15) calendar days prior to each Interest Payment Date, whether or not such date is a Business Day.

Payments of the principal of and any premium, interest, Additional Amounts and other amounts on or in respect of any Security at Stated Maturity or upon acceleration or redemption shall be made to the registered Holder on such date in immediately available funds upon surrender of such Security at the Corporate Trust Office or at the specified office of any other Paying Agent; provided that the Security is presented to the Paying Agent in time for the Paying Agent to make such payments in such funds in accordance with its normal procedures. Payments of the principal of and any premium, interest, Additional Amounts and other amounts on or in respect of Securities to be made other than at Stated Maturity or upon redemption shall be made by check mailed on or before the due date for such payments to the address of the Person entitled thereto as it appears in the Register; provided that (a) DTC and the Common Depositary, as Holders of the Global Securities, shall be entitled to receive payments of interest by wire transfer of immediately available funds, (b) a Holder of U.S. $1,000,000 (or the

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approximate equivalent thereof in a Specified Currency other than U.S. dollars) in aggregate principal or face amount of Securities of the same Series shall be entitled to receive payments of interest by wire transfer of immediately available funds to an account maintained by such Holder at a bank located in the United States as may have been appropriately designated by such Holder to the Trustee in writing no later than fifteen (15) days prior to the date such payment is due and (c) to the extent that the Holder of a Security issued and denominated in a Specified Currency other than U.S. dollars elects to receive payment of the principal of and any premiums, interest, Additional Amounts and other amounts on or in respect of such Security at Stated Maturity or upon redemption in such Specified Currency, such payment, except in circumstances described in the resolutions of the Board of Directors or in an indenture supplemental hereto related to the relevant Series, shall be made by wire transfer of immediately available funds to an account specified in writing not less than fifteen (15) days prior to the date such payment is due by the Holder to the Trustee. Unless such designation is revoked, any such designation made by such Holder with respect to such Securities shall remain in effect with respect to any future payments with respect to such Securities payable to such Holder.

If the principal of or any premium, interest, Additional Amounts or other amounts on any Security is payable in a Specified Currency other than U.S. dollars and such Specified Currency is not available due to the imposition of exchange controls or other circumstances beyond APSA’s control, or is no longer used by the government of the country issuing such currency or for settlement of transactions by public institutions of or within the international banking community, then APSA, until such currency is again available or so used, will be entitled, to the extent permitted by Argentine law, to satisfy its obligations to the Holder of such Securities by making such payment in U.S. dollars at the Exchange Rate for such Specified Currency on the Payment Date. The making of any payment in respect of any Security in U.S. dollars under the foregoing circumstances will not constitute an Event of Default under such Security.

If so specified in the resolutions of the Board of Directors or indenture supplemental hereto related to a Series of Securities denominated in a Specified Currency other than U.S. dollars, payments of principal, interest, Additional Amounts or other amounts on or in respect of any such Security shall, to the extent permitted by applicable law, be made in U.S. dollars, calculated at the Exchange Rate for the Payment Date, if the Holder of such Security on the relevant Regular Record Date or at Stated Maturity, as the case may be, has transmitted a written request for such payment in U.S. dollars to the Trustee and the applicable Paying Agent on or prior to such Regular Record Date or the date that is fifteen (15) days prior to the Stated Maturity, as the case may be. Such request may be in writing (mailed or hand delivered) or by facsimile transmission. Any such request made with respect to any Security by a Holder will remain in effect with respect to any further payments of principal, interest, Additional Amounts or other amounts on or in respect of such Security payable to such Holder, unless such request is revoked on or prior to the relevant Regular Record Date or the date that is fifteen (15) days prior to the Stated Maturity, as the case may be.

The U.S. dollar amount to be received by a Holder of a Security denominated in a Specified Currency other than U.S. dollars who elects to receive payment in U.S. dollars will be based on the Exchange Rate, on the second (2nd) Business Day next preceding the applicable Payment Date. If Exchange Rate quotations are not available on the second (2nd) Business Day

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preceding the applicable Payment Date, such payment will be made in the Specified Currency. All currency exchange costs associated with any payment in U.S. dollars on any Security denominated in a Specified Currency other that U.S. dollars will be borne by the Holder thereof by deductions from payment of the currency exchange being effected on behalf of the Holder by the Exchange Rate Agent.

Unless otherwise specified in the terms of a Series of Securities, Securities denominated in a Specified Currency other than U.S. dollars will provide that, in the event of an official redenomination of the currency, the obligations of APSA with respect to payments on such Securities shall, in all cases, be deemed immediately following such redenomination to provide for payment of that amount of the redenominated currency representing the amount of such obligations immediately before such redenomination.

Section 2.10. Registration, Transfer and Exchange of Securities. (a) The Registrar will keep a register (the “Register”) at its office in the City of Buenos Aires, Argentina located at Bartolomé Mitre 480, 11th Floor, City of Buenos Aires, Argentina, for the registration of ownership, exchange and transfer of Securities. In the case of the replacement of any of the Securities, the Register will include notations of the Security so replaced, and the Security issued in replacement thereof. In the case of the cancellation of any of the Securities, the Register will include notations of the Security so cancelled and the date on which such Security was cancelled. The Co Registrar shall also maintain a record of all registrations of ownership, exchange and transfer of Securities at its office in New York City. The Co Registrar shall give prompt notice to the Registrar and the Registrar shall likewise give prompt notice to the Co Registrar of any registration of ownership, exchange or transfer of Securities. The Register will show the amount of the Securities, the date of issue, all subsequent transfers and changes of ownership in respect thereof and the names, tax identification numbers (if relevant to a specific Holder) and addresses of the Holders of the Securities and any payment instructions with respect thereto (if different from a Holder’s registered address). The Registrar and the Co Registrar shall at all reasonable times during office hours make the Register available to APSA or any Person authorized by APSA in writing for inspection and for taking copies thereof or extracts therefrom, and at the expense and written direction of APSA, the Registrar and the Co Registrar shall deliver to such Persons all lists of Holders of Securities, their addresses and amounts of such holdings as APSA may request.

The Registrar shall maintain the Register in written or electronic form in the Spanish language, and the Co-Registrar shall maintain duplicates thereof in the English language.

(i) Subject to Section 2.10(b)(ii) and such reasonable and customary regulations as APSA may from time to time prescribe, transfers of any Certificated Security in whole or in part pursuant to this Section 2.10(b) must be made at the relevant office of the Registrar or Co- Registrar or at the office of any other Transfer Agent that may be appointed by APSA, by delivery of such Certificated Security with the form of transfer thereon duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to APSA and the Registrar or Co-Registrar or any other Transfer Agent, as the case may be, duly executed by the registered Holder thereof or such registered Holder’s attorney in fact duly authorized in writing. In exchange for any Certificated Security properly presented for transfer, the Trustee shall promptly

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authenticate and deliver or cause to be authenticated and delivered at the Corporate Trust Office or at the office of the Registrar or Co-Registrar or at the office of any Transfer Agent, as the case may be, to the transferee or send by mail (at the risk of the transferee) to such address as the transferee may request, a Certificated Security or Securities in the name of such transferee and for the same aggregate principal amount as shall have been transferred. Subject to the minimum denomination requirements, if any, set forth in the resolutions of the Board of Directors or indenture supplemental hereto related to a particular Series, in the case of the transfer of any Certificated Security in part, the Trustee shall also promptly authenticate and deliver or cause to be authenticated and delivered at the Corporate Trust Office or at the office of the Registrar or Co-Registrar or at the office of any Transfer Agent, as the case may be, to the transferor or send by mail (at the risk of the transferor) to such address as the transferor may request, a Certificated Security or Securities registered in the name of the transferor and for the aggregate principal amount that was not transferred. Certificated Securities may also be exchanged for other Certificated Securities of the same Series in any authorized denominations and of equal aggregate principal amount of Securities of such Series, subject to, if any, the minimum denomination requirements set forth in the applicable resolution of the Board of Directors or indenture supplemental hereto. Unless otherwise specified in the applicable resolution of the Board of Directors or indenture supplemental hereto, Certificated Securities held by Qualified Institutional Buyers may be exchanged for beneficial interests in a Rule 144A Global Security representing Securities of the same Series. In exchange for any such Certificated Security, the Trustee will increase the amount of the relevant Rule 144A Global Security by the amount of such Certificated Security and will cause the Registrar or Co-Registrar to make the appropriate entries in the Register indicating a transfer of a beneficial interest to such Qualified Institutional Buyer or to a participant in the relevant clearing system specified by such Qualified Institutional Buyer. Except as specified in this paragraph and in Section 2.13 hereof, Certificated Securities will not be exchangeable for interests in Global Securities.

(ii) In the case of any Certificated Securities issued in reliance on the exemption from registration afforded by Rule 144A, issued upon transfer or exchange of any such Security (other than in accordance with clause 2 of this Section 2.10(b)(ii)) or issued upon exchange of a Rule 144A Global Security pursuant to Section 2.7 hereof, prior to the date which is two (2) years after the Original Issue Date of any such Security (or of such Rule 144A Global Security, as the case may be) (provided that APSA or any affiliate thereof has not acquired such Security during such two (2) year period) or in the case of any other “restricted security” (as defined in Rule 144), the Registrar and Co-Registrar, as Transfer Agents, shall not register the transfer or exchange of such Security (other than pursuant to Section 2.13 hereof) unless:

(1) either (A) the registered Holder presenting such Security for transfer, or its attorney- in- fact, shall have advised the Registrar or Co-Registrar in writing that such registered Holder intends to rely or is relying on the exemption from the registration requirements of the Securities Act provided by Rule 144A thereunder in making such transfer or (B) the Person presenting such Security for transfer (if other than the registered Holder or its attorney in fact), or its attorney in fact, shall have advised the Registrar or Co-Registrar in writing that the Person in whose name the Security is to be registered in the Register upon transfer (and each beneficial owner of such Security) is a Qualified Institutional Buyer and that such Person or Persons have been advised that the Security has been sold or transferred to it in reliance upon Rule 144A; or

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(2) either (A) the registered Holder presenting such Security for transfer, or its attorney in fact, shall have advised the Registrar or Co-Registrar in writing that the registered Holder intends to rely or is relying on the exemption from the registration requirements of the Securities Act provided by Regulation S or (B) the Person presenting such Security for transfer (if other than the registered Holder or its attorney in fact), or its attorney in- fact, shall have advised the Registrar or Co-Registrar in writing that the Security has been sold or transferred to it in reliance upon the exemption from the registration requirements of the Securities Act provided by Regulation S; or

(3) such Security is to be registered in the Register upon transfer in the name of a Dealer, its nominee or APSA; or

(4) the Person presenting the Security for transfer, or its attorney- in- fact, shall have advised the Trustee in writing that another exemption from the registration requirements of the Securities Act is available, including the exemption provided by Rule 144, which is confirmed in an opinion of counsel, and the Registrar or Co-Registrar has received the written consent of APSA to the registration of such transfer, in which event the Registrar or Co-Registrar shall register such transfer only in accordance with the conditions of such consent.

For purposes of this Section 2.10(b)(ii), any such advice to the Trustee in writing may be in the form of a letter, notice or other written document, including, with respect to clauses 1, 2 and 3 above, by appropriate notation on the transfer notice set forth on such Security.

Neither the Registrar or Co-Registrar nor any Transfer Agent shall register the transfer of or exchange of Certificated Securities for a period of fifteen (15) days preceding the due date for any payment of interest on the Security or during the period of thirty (30) days ending on the due date for any payment of principal on the Security. Neither the Registrar or Co-Registrar nor any Transfer Agent shall register the transfer of or exchange any Securities previously called for redemption.

(b) (i) DTC Global Securities — DTC Book Entry Provisions. Interests in DTC Global Securities will be transferable in accordance with the rules and procedures from time to time of DTC. Members of, or participants in, DTC shall have no rights under this Indenture with respect to any DTC Global Security held on their behalf by DTC, and DTC or its nominee may be treated by APSA, any Agent or any other agent hereunder as the absolute owner of such DTC Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent APSA, any Agent or any other agent hereunder from giving effect to any written certification, proxy or other authorization furnished by DTC or impair, as between DTC and its agent members, the operation of customary practices governing the exercise of the rights of a Holder of any Security.

(ii) Global Securities — Euroclear and Clearstream Book Entry Provisions. Insofar as interests in any Global Security are held by the agent members of Euroclear or Clearstream, the provisions of the “Operating Procedures of the Euroclear System” and the “Terms and Conditions Governing Use of Participants” of Euroclear and Clearstream, respectively, shall be applicable to such Global Security. Notwithstanding the foregoing,

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nothing herein shall prevent APSA, any Agent or any other agent hereunder from giving effect to any written certification, proxy or other authorization furnished by Euroclear or Clearstream (in the case of any Regulation S Global Security) or DTC (in the case of any DTC Global Security, whether such Security is an Unrestricted Global Security, a Regulation S Global Security or a Rule 144A Global Security) or impair, as between Euroclear or Clearstream or DTC, as the case may be, and their respective agent members, the operation of customary practices governing the exercise of the rights of a Holder of any Security.

(iii) Transfers of Global Securities in Whole. Subject to the provisions of Section 2.10(d), transfers of a Global Security shall be limited to (i) transfers of a DTC Global Security in whole, but not in part, to DTC, nominees of DTC or to a successor of DTC or such successor’s nominee (including, without limitation, pursuant to Section 2.10(d)(iv), or (ii) transfers of a Euroclear/Clearstream Global Security in whole, but not in part, to Euroclear, Clearstream, nominees of Euroclear and Clearstream or to a successor to Euroclear or Clearstream or such successor’s nominee (including, without limitation, pursuant to Section 2.10(d)(v)).

(iv) Transfer of DTC Global Security to Euroclear and/or Clearstream. If the Securities of any Series are at any time represented by both a DTC Global Security and an Euroclear/Clearstream Global Security and an authorized representative of DTC presents the DTC Global Security to the Trustee or any Transfer Agent, accompanied by a written instrument of transfer in form satisfactory to such Agent, executed by DTC or by DTC’s attorney thereunto duly authorized in writing, for the purpose of registration of transfer of all or any portion of such DTC’s interest in such DTC Global Security to Euroclear and/or Clearstream, such DTC Global Security or the relevant interest therein shall be transferred upon the Register, and the Trustee shall endorse the DTC Global Security to reflect the reduction of its principal amount by the aggregate principal amount so transferred, and the appropriate Euroclear/Clearstream Global Security shall be endorsed by the Trustee to reflect the increase of its principal amount by the aggregate principal amount so transferred. The Trustee is hereby authorized on behalf of APSA (A) to endorse or to arrange for the endorsement of the relevant DTC Global Security to reflect the reduction in the principal amount represented thereby by the amount so transferred and to endorse the appropriate Euroclear/Clearstream Global Security to reflect the increase in the principal amount represented thereby by the amount so transferred and, in either case, to sign in the relevant space on the relevant Security recording such reduction or increase and (B) in the case of a total exchange, to cancel or arrange for the cancellation of the DTC Global Security.

(v) Transfer of Euroclear/Clearstream Global Security to DTC. If the Securities of any Series are for the time being represented by both a DTC Global Security and a Euroclear/Clearstream Global Security and an authorized representative of Euroclear or Clearstream presents the Euroclear/Clearstream Global Security to the Trustee or any Transfer Agent, accompanied by a written instrument of transfer in form satisfactory to the Trustee or such Transfer Agent, executed by Euroclear or Clearstream, as the case may be, or by Euroclear’s or Clearstream’s attorney thereunto duly authorized in writing, for the purpose of registration of transfer of all or any portion of Euroclear’s or Clearstream’s interest in such Euroclear/Clearstream Global Security to DTC, such Euroclear/Clearstream Global Security or the relevant interest therein shall be transferred upon the Register, and the Trustee shall endorse the Euroclear/Clearstream Global Security to reflect the reduction of its principal amount by the

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aggregate principal amount so transferred, and the appropriate DTC Global Security shall be endorsed by the Trustee to reflect the increase of its principal amount by the aggregate principal amount so transferred. The Trustee is hereby authorized on behalf of APSA (i) to endorse or to arrange for the endorsement of the relevant Euroclear/Clearstream Global Security to reflect the reduction in the principal amount represented thereby by the amount so transferred and to endorse the appropriate DTC Global Security to reflect the increase in the principal amount represented thereby by the amount so transferred, and in either case, to sign in the relevant space on the relevant Security recording such reduction or increase and (ii) in the case of a total exchange, to cancel or arrange for the cancellation of the Euroclear/Clearstream Global Security.

(c) Notwithstanding any provision to the contrary herein, so long as Global Securities of a Series remain outstanding and are held by or on behalf of DTC or Euroclear and Clearstream, transfers or exchanges of interests between Global Securities of a Series, in whole or in part, shall only be made in accordance with this Section 2.10(d) or Section 2.13.

(i) Transfers From Rule 144A Global Security to Regulation S Global Security. If Securities of a Series are issued in the form of a Regulation S Global Security and a Rule 144A Global Security, and if a holder of a beneficial interest in the Rule 144A Global Security deposited with the relevant clearing system or its custodian wishes at any time to exchange its interest in such Rule 144A Global Security for an interest in the Regulation S Global Security of the same Series, or to transfer its interest in such Rule 144A Global Security to a Person who wishes to take delivery thereof in the form of an interest in the Regulation S Global Security, such holder may, subject to the rules and procedures of DTC and, to the extent applicable, Euroclear and Clearstream, exchange or cause the exchange or transfer or cause the transfer of such interest for an equivalent beneficial interest in the Regulation S Global Security of the same Series. Upon receipt by the Trustee, of (1) written instructions given in accordance with procedures of DTC and/or, to the extent applicable, Euroclear and Clearstream from a participant, directing the Trustee to credit or cause to be credited a beneficial interest in the Regulation S Global Security of the same Series in an amount equal to the beneficial interest in the Rule 144A Global Security to be exchanged or transferred, (2) an order given by the holder of such beneficial interest given in accordance with procedures of DTC and/or, to the extent applicable, Euroclear and Clearstream, containing information regarding the participant account of DTC or, to the extent applicable, Euroclear or Clearstream, to be credited with such increase and (3) a certificate which:

(i) for exchanges made during the Restricted Period, is in the form of Exhibit D hereto given by the holder of such beneficial interest stating that the exchange or transfer of such interest has been made in compliance with the transfer restrictions applicable to the Securities and pursuant to, and in accordance with, Regulation S; or

(ii) for exchanges made after the expiration of the Restricted Period, is in the form of Exhibit E hereto given by the holder of such beneficial interest stating that the exchange or transfer of such interest has been made in compliance with the transfer restrictions applicable to the Securities and (A) that such transfer or exchange has been made pursuant to, and in accordance with, Regulation S or (B) that such transfer or exchange has been made in a transaction permitted by Rule 144.

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The Trustee or Transfer Agents shall instruct DTC to reduce the Rule 144A Global Security by the aggregate principal amount of the beneficial interest to be so exchanged or transferred, and the Trustee shall instruct DTC or, to the extent applicable, Euroclear or Clearstream, concurrently with such reduction, to increase the principal amount of the Regulation S Global Security of the same Series by the aggregate principal amount of the beneficial interest in the Rule 144A Global Security to be so exchanged or transferred, and to credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Regulation S Global Security equal to the reduction in the principal amount of the Rule 144A Global Security of the same Series.

(ii) Transfers From Regulation S Global Security to Rule 144A Global Security. If Securities of any Series are issued in the form of a Regulation S Global Security and a Rule 144A Global Security, and if a holder of a beneficial interest in the Regulation S Global Security deposited with the relevant clearing system or its custodian wishes at any time to exchange its interest in such Security for an interest in the Rule 144A Global Security of the same Series, or to transfer its interest in such Regulation S Global Security to a Person who wishes to take delivery thereof in the form of an interest in the Rule 144A Global Security of the same Series, such holder may, subject to the rules and procedures of DTC or, to the extent applicable, Euroclear and Clearstream, exchange or transfer such interest for an equivalent beneficial interest in the Rule 144A Global Security of the same Series. Upon receipt by the Trustee of (1) written instructions from a participant in DTC or Euroclear or Clearstream, as the case may be, directing the Trustee to credit a beneficial interest in the Rule 144A Global Security equal to the beneficial interest in the Regulation S Global Security of the same Series to be exchanged or transferred, such instructions to contain information regarding the participant’s account with DTC to be credited with such increase, and information regarding the participant’s account with DTC or, to the extent applicable, Euroclear or Clearstream, to be debited with such decrease, and (2) with respect to an exchange or transfer of an interest in the Regulation S Global Security during the Restricted Period for an interest in the Rule 144A Global Security of the same Series, a certificate in the form of Exhibit F hereto given by the holder of such beneficial interest and stating that the Person transferring such interest in the Regulation S Global Security reasonably believes that the Person acquiring such interest in the Rule 144A Global Security of the same Series is a Qualified Institutional Buyer and is obtaining such beneficial interest in a transaction meeting the requirements of Rule 144A, the Trustee shall instruct DTC or, to the extent applicable, Euroclear or Clearstream, to reduce the Regulation S Global Security by the aggregate principal amount of the beneficial interest in such Security, and the Trustee shall instruct DTC, concurrently with such reduction, to increase the principal amount of the Rule 144A Global Security of the same Series by the aggregate principal amount of the beneficial interest in the Regulation S Global Security to be so exchanged or transferred, and to credit the account of the Person specified in such instructions a beneficial interest in the Rule 144A Global Security equal to the reduction in the principal amount of the Regulation S Global Security of the same Series.

(d) If Securities are issued upon the transfer, exchange or replacement of Securities not bearing the restrictive legends set forth in the respective applicable form of Security attached hereto (collectively, a “Restrictive Legend”), the Securities so issued shall not bear a Restrictive Legend. If Securities are issued upon the transfer, exchange or replacement of Securities bearing a Restrictive Legend, or if a request is made to remove a Restrictive Legend of

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a Security, the Securities so issued shall bear a Restrictive Legend as set forth on the applicable form of Security attached hereto, or the Restrictive Legend shall not be removed, as the case may be, (other than pursuant to Section 2.13 hereof) unless:

(i) in the case of Certificated Securities issued pursuant to Section 2.10(b)(ii), the provisions of clause 2 thereof shall have been satisfied; or

(ii) in any other case there is delivered to APSA and the Trustee such satisfactory evidence, which may include an opinion of New York counsel, as may be reasonably required by APSA (at the Holder’s expense) that neither the Restrictive Legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereof comply, as the case may be, with the provisions of Rule 144A, Rule 144 or Regulation S or that such Securities are not “restricted securities” within the meaning of Rule 144.

In the case of either clause (i) or (ii), the Trustee, at the written direction of APSA, shall authenticate and deliver a Security that does not bear the Restrictive Legend. If the Legend is removed from the face of a Security and such Security is subsequently held by APSA or an Affiliate of APSA and the Trustee subsequently obtains actual knowledge that such Security is a “restricted security” within the meaning of Rule 144, the Restrictive Legend shall be reinstated.

(e) Prior to satisfaction of the applicable requirements in this Section 2.10 for registration of transfer, APSA, the Trustee and each Paying Agent, if any, may deem and treat the registered Holder as appears in the Register of any Security as the absolute owner of such Security, in each case for the purpose of receiving payment of the principal and any interest in respect of such Security and for all other purposes whatsoever.

(f) Transfer, registration and exchange of any Security or Securities shall be permitted and executed as provided in this Section 2.10 without any charge to the Holder of any such Security or Securities, other than any taxes or governmental charges payable on transfers or any expenses of delivery (other than delivery by regular mail), including, without limitation, insurance, postage and transportation.

Section 2.11. Mutilated, Defaced, Destroyed, Stolen and Lost Securities; Cancellation and Destruction of Securities. APSA shall execute and deliver to the Trustee Certificated Securities in such amounts and at such times as to enable the Trustee to fulfill its responsibilities under this Indenture and the Securities.

(a) The Trustee shall, in accordance with any terms and conditions set forth in the Securities, and upon provision of evidence satisfactory to the Trustee and to APSA that any Security was mutilated, defaced, destroyed, stolen or lost, together with such indemnity as the Trustee and APSA may require to hold each of them harmless, authenticate and deliver from time to time such Securities in exchange for or in lieu of such Securities that become mutilated, defaced, destroyed, stolen or lost. Each Security delivered in exchange for or in lieu of any other Security shall carry all the rights to interest (including rights to accrued and unpaid interest and Additional Amounts) that were carried by such other Security.

(b) All Securities surrendered for payment, transfer or exchange shall be delivered to the Trustee. The Trustee shall cancel and destroy all such Securities surrendered for payment, transfer or exchange, in accordance with its security destruction policy, and shall, upon written request, deliver a certificate of destruction to APSA

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(c) Upon the issuance of any substitute Security, the Holder of such Security, if so requested by APSA, will pay a sum sufficient to cover any stamp duty, tax or other governmental charge that may be imposed in relation thereto and any other expense (including the fees and expenses of the Trustee, its counsel and its agents) in connection with the preparation and issuance of the substitute Security.

(d) All Securities issued upon any transfer or exchange of Securities shall be valid obligations of APSA, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange.

Section 2.12. Purchase and Cancellation. APSA and its Subsidiaries may at any time purchase or otherwise acquire any Security in the open market or otherwise at any price and may resell or otherwise dispose of such Security at any time; provided that in determining at any time whether the Holders of the requisite principal amount of the Securities Outstanding have given any request, demand, authorization, direction, notice, consent or waiver under this Indenture, Securities then owned by APSA or any Subsidiary of APSA and kno wn by a Responsible Officer of the Trustee’s corporate trust department to be so owned, shall be disregarded and deemed not Outstanding.

ARTICLE III

Covenants of APSA

Section 3.1. Payment of Principal and Interest. APSA covenants and agrees for the benefit of the Holders of the Securities that it will duly and punctually pay or cause to be paid the principal of and interest on each of the Securities (including Additional Amounts), and any other payments to be made by APSA under the Securities and this Indenture, at the place or places, at the respective times and in the manner provided in such Securities and this Indenture.

Section 3.2. Offices for Payments, etc. So long as any of the Securities remain Outstanding, APSA will maintain in New York City the following: an office or agency (a) where the Securities may be presented for payment, (b) where the Securities may be presented for exchange, transfer or registration of transfer as in this Indenture provided and (c) where notices and demands to or upon APSA in respect of the Securities or of this Indenture may be served. Unless otherwise specified in accordance with Section 2.3, APSA hereby initially appoints the Trustee at its office or agency for each such purpose and designates the Corporate Trust Office as the office to be maintained by it for each such purpose. In case APSA shall fail to so designate or maintain any such office or agency or shall fail to give such notice of the location or of any change in the location thereof, presentations and demands may be made and notices may be served at all times at the Corporate Trust Office and APSA hereby appoints the Trustee as its agent to receive all such presentations, demands and notices. If and for so long as any Series of Securities are listed on the Luxembourg Stock Exchange for trading on the EuroMTF, the alternative market of the Luxembourg Stock Exchange (the “EuroMTF”), and the Luxembourg Stock Exchange so requires, APSA will maintain a Paying Agent and a Transfer Agent in

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Luxembourg. The Bank of New York (Luxembourg) S.A., à Luxembourg, société anonyme, at its office at Aerogolf Center, 1A Hoehenhof, L-1736 Senningerberg, Luxembourg, will initially act as such Paying Agent and Transfer Agent in Luxembourg (the “Luxembourg Paying Agent”). As required by Argentine law and by the CNV, APSA will maintain a Registrar, a Paying Agent and a Transfer Agent in Argentina. Banco Santander Río S.A. at its office at Bartolomé Mitre 480, 11th Floor, City of Buenos Aires, Argentina, will initially act as such Registrar, Paying Agent and Transfer Agent in Argentina, as well as the Representative of the Trustee in Argentina. The Registrar, the Co-Registrar, each of the Paying Agents and each of the Transfer Agents may change their respective specified offices set forth herein to some other specified offices in the same city. APSA will promptly give to the Trustee and the Holders (and, if so required, the CNV, the Luxembourg Stock Exchange, the BASE or such other securities exchange on which a Series of Securities may be listed) written notice of any change of location of specified offices, or of any resignation, termination or appointment of the Registrar, Co- Registrar, any Paying Agent or any Transfer Agent.

Section 3.3. Appointment to Fill a Vacancy in Office of Trustee. APSA, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 5.10, a Trustee, so that there shall at all times be a Trustee with respect to the Securities.

Section 3.4. Payments and Paying Agents. (a) APSA will, on or before 10:00 AM (New York City time) at least one (1) Business Day prior to each due date of the principal or premium or interest on any Securities (including Additional Amounts), deposit with the Trustee a sum sufficient to pay such principal, premium or interest (including Additional Amounts) so becoming due. APSA shall request that the bank through which any such payment is to be made agree to supply to the Trustee two (2) Business Days prior to the due date for any such payment an irrevocable confirmation (by tested telex or authenticated SWIFT) of its intention to make such payment.

(b) At least five (5) Business Days prior to the first Payment Date of interest or principal and, if there has been any change with respect to the matters set forth in the below- mentioned certificate, at least five (5) Business Days prior to each Payment Date of interest or principal thereafter, APSA shall furnish the Trustee with a certificate signed by any two Authorized Persons instructing the Trustee as to any circumstances in which payments of principal of or interest on any Securities (including Additional Amounts) due on such date shall be subject to deduction or withholding for or on account of any taxes and the rate of any such deduction or withholding. If any such deduction or withholding shall be required and if APSA therefore becomes liable to pay Additional Amounts pursuant to the terms of such Securities, then at least five (5) Business Days prior to each Payment Date of interest or principal, APSA will furnish the Trustee with a certificate that specifies the amount required to be withheld on such Payment Date to Holders of such Securities and the Additional Amounts due to Holders of such Securities and that APSA shall pay in a timely manner such amount to be withheld to the appropriate governmental authority, and APSA will pay to the Trustee such Additional Amounts as shall be required to be paid to such Holders. APSA agrees to indemnify the Trustee and each Paying Agent for, and to hold each harmless against, any loss, liability or expense reasonably incurred by them without negligence or willful misconduct on their respective parts, arising out of or in connection with actions taken or omitted by them in reliance on any certificate furnished

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pursuant to this Section 3.4(b) or the failure to furnish any such certificate. The obligations of APSA under the preceding sentence shall survive the payment of the Securities, the resignation or removal of the Trustee or any Paying Agent and/or the termination of this Indenture.

(c) Each of the Paying Agents hereby agrees (and whenever APSA shall appoint a Paying Agent with respect to the Securities other than those specified in Section 3.2, it will cause such Paying Agent to execute and deliver to the Trustee an instrument in which such Agent shall agree), subject to the provisions of this Section:

(i) that it will hold all sums received by it as such agent for the payment of the principal of or interest on any Securities (whether such sums have been paid to it by or on behalf of APSA or by any other obligor on the Securities) in trust for the benefit of the Holders of such Securities or of the Trustee,

(ii) (that it will give the Trustee written notice of any failure by APSA (or by any other obligor on the Securities) to make any payme nt of the principal of or interest on any Securities (including Additional Amounts) and any other payments to be made by or on behalf of APSA under this Indenture or such Securities when the same shall be due and payable, and

(iii) that it will pay any such sums so held in trust by it to the Trustee upon the Trustee’s written request at any time during the continuance of the failure referred to in clause (ii) above.

APSA shall give, at its expense, notice of the appointment of any Paying Agents (other than those specified in Section 3.2) to the Holders as specified in Section 12.5, and to the CNV if required under Argentine law.

The Trustee, in its capacity as the Principal Paying Agent, shall arrange with all such Paying Agents for the payment, from funds furnished by APSA to the Trustee pursuant to this Indenture, of the principal of and interest on the Securities (including Additional Amounts).

If APSA shall act as its own paying agent with respect to any Securities, it will, on or before each due date of the principal of or interest on such Securities, set aside, segregate and hold in trust for the benefit of the Holders of such Securities a sum sufficient to pay such principal or interest (including Additional Amounts) so becoming due. APSA will promptly notify the Trustee in writing of any failure to take such action.

Anything in this Section to the contrary notwithstanding, APSA may at any time, for the purpose of obtaining a satisfaction and discharge with respect to any Securities hereunder, or for any other reason, pay or cause to be paid to the Trustee all sums held in trust for such Securities by APSA or any Paying Agent hereunder, as required by this Section, such sums to be held by the Trustee upon the trusts herein contained.

Anything in this Section to the contrary notwithstanding, the agreements to hold sums in trust as provided in this Section are subject to the provisions of Sections 9.3 and 9.4.

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Section 3.5. Taxation. (a) All payments of principal, premium or interest by APSA in respect of each Security shall be made without deduction or withholding for or on account of any present or future taxes, penalties, fines, duties, assessments or other governmental charges of whatsoever nature imposed or levied by or on behalf of Argentina or by or within any political subdivision thereof or any authority therein having power to tax (“Argentine Taxes”), unless APSA is compelled by law to so deduct or withhold such Argentine Taxes. In any such event, APSA shall pay such additional amounts (“Additional Amounts”) in respect of Argentine Taxes as may be necessary to ensure that the amounts received by the Holders of such Securities after such withholding or deduction shall equal the respective amounts that would have been receivable in respect of such Securities in the absence of such withholding or deduction, except that no such Additional Amounts shall be payable:

(i) to or on behalf of a Holder or beneficial owner of a Security that is liable for Argentine Taxes in respect of such Security by reason of having a present or former connection with Argentina other than merely the holding or owning of such Security or the enforcement of rights with respect to such Security or the receipt of income or any payments in respect thereof;

(ii) to or on behalf of a Holder or beneficial owner of a Security in respect of Argentine Taxes that would not have been imposed but for the failure of the Holder or beneficial owner of a Security to comply with any certification, identification, information, documentation or other reporting requirement (within thirty (30) calendar days following a written request from APSA to the Holder for compliance) if such compliance is required by applicable law, regulation, administrative practice or an applicable treaty as a precondition to exemption from, or reduction in the rate of deduction or withholding of, Argentine Taxes;

(iii) to or on behalf of a Holder or beneficial owner of a Security in respect of any estate, inheritance, gift, sales, transfer, personal assets or similar tax, assessment or other governmental charge;

(iv) to or on behalf of a Holder or beneficial owner of a Security in respect of Argentine Taxes payable otherwise than by withholding from payment of principal of, premium, if any, or interest on the Securities;

(v) to or on behalf of a Holder or beneficial owner of a Security in respect of Argentine Taxes that would not have been imposed but for the fact that the Holder presented such Security for payment (where presentation is required) more than thirty (30) days after the later of (x) the date on which such payment became due and (y) if the full amount payable has not been received by the Trustee on or prior to such due date, the date on which, the full amount having been so received, notice to that effect shall have been given to the Securityholders by the Trustee; or

(vi) for any combination of items (i) through (v) above;

nor shall Additional Amounts be paid with respect to any payment of the principal of, or any premium or interest on, any Securities to any Holder or beneficial owner of a Security who is a

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fiduciary or partnership or limited liability company or other than the sole beneficial owner of such payment to the extent such payment would be required by the laws of Argentina to be included in the income for tax purposes of a beneficiary or settlor with respect to such fiduciary or a member of such partnership, limited liability company or beneficial owner who would not have been entitled to such Additional Amounts had it been the Holder of such Securities.

All references in this Indenture to principal, premium or interest payable hereunder shall be deemed to include references to any Additional Amounts payable under this Section with respect to such principal, premium or interest. APSA will provide the Trustee with documentation reasonably satisfactory to the Trustee evidencing the payment of any amounts deducted or withheld in accordance with this Section promptly upon APSA’s payment thereof, and copies of such documentation will be made available by the Trustee to Holders upon written request to the Trustee.

(b) APSA will pay promptly when due any present or future stamp, court or documentary taxes or any excise or property taxes, charges or similar levies that arise in any jurisdiction from the execution, delivery or registration of each Security or any other document or instrument referred to herein or therein, excluding any such taxes, charges or similar levies imposed by any jurisdiction outside Argentina except those resulting from, or required to be paid in connection with, the enforcement of such Security after the occurrence and during the continuance of any Event of Default with respect to the Security in default.

Section 3.6. Maintenance of Books and Records. APSA will maintain books, accounts and records in accordance with Argentine GAAP.

Section 3.7. Status and Ranking. (a) APSA will ensure that its obligations under each Security will at all times rank at least pari passu in right of payment with all other existing and future unsecured and unsubordinated indebtedness of APSA (other than obligations preferred by statute or by operation of law, including, without limitation, tax and labor related claims).

(b) APSA will ensure that each Security will at all times qualify as “obligaciones negociables” under the Negotiable Obligations Law and Joint Resolution No. 470-1738/2004, as amended, be entitled to the benefits set forth therein and subject to the procedural requirements thereof.

Section 3.8. Listing. APSA will ensure that the Securities (that are “restricted securities” under Rule 144A(d)(3)) meet the eligibility requirements of Rule 144A(d)(3) under the Securities Act. APSA will use all reasonable efforts to assist the relevant Dealers in arranging to cause the Securities to be eligible for settlement through the facilities of DTC, Euroclear and Clearstream, as applicable, and, if so specified in the resolutions of the Board of Directors or the indenture supplemental hereto relating to a Series of Securities, to be accepted for trading in the PORTAL Market and the MAE, as applicable. In connection with any Series of Securities to be listed on the Luxembourg Stock Exchange for trading on the EuroMTF, the BASE or on another securities exchange or securities exchanges, APSA will use all reasonable efforts to have such Series of Securities accepted for listing and/or trading on such securities exchange or securities exchanges no later than the date on which the Securities of such Series are

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to be issued and sold (or as soon thereafter as possible in accordance with the requirements of such securities exchange or securities exchanges); and APSA will use all reasonable efforts to cause such listing to be continued for so long as any of the Securities of such Series are Outstanding and to furnish to each specified securities exchange all documents, information and undertakings that may be reasonably necessary in order to effect or continue such listing; provided that if, as a result of the European Union regulated market amended Directive 2001/34/EC (the “Transparency Directive”) or any legislation implementing the Transparency Directive or other directives or legislation, APSA could be required to publish financial information either more regularly than it otherwise would be required to or according to accounting principles which are materially different from the accounting principles which APSA would otherwise use to prepare its published financial information, APSA may delist the Securities from trading on the EuroMTF in accordance with the rules of the Luxembourg Stock Exchange and seek an alternative admission to listing, trading and/or quotation for the Securities on a different market of the Luxembourg Stock Exchange or by such other listing authority, securities exchange and/or quotation system inside or outside the European Union as the Board of Directors of APSA may decide.

Section 3.9. Maintenance of Corporate Existence; Properties. APSA will, and will cause each of its Subsidiaries to, (a) maintain in effect its corporate existence and all registrations necessary therefore (except for transactions not otherwise prohibited by Article VIII), (b) take all actions to maintain all rights, privileges, titles to property or franchises necessary in the normal conduct of its business and (c) keep all its property used or useful in the conduct of its business in good working order and condition; provided that this covenant shall not require APSA to maintain any such right, privilege, title to property or franchises, or to preserve the corporate existence of any Subsidiary, if in each case (i) the Board of Directors of APSA shall determine in good faith that the maintenance or preservation thereof is no longer necessary or desirable in the conduct of business of APSA or (ii) the failure to so comply would not have a material adverse effect on the business, assets, operations or financial condition of APSA and its Subsidiaries taken as a whole.

Section 3.10. Compliance with Law. APSA will, and will cause each of its Subsidiaries to, comply with all applicable laws, rules, regulations, orders and resolutions of each Government Agency having jurisdiction over it or its business except where the failure to so comply would not have a material adverse effect on the business, assets, operations or financial condition of APSA and its Subsidiaries taken as a whole.

Section 3.11. Reports to Holders. For so long as the Securities remain outstanding, APSA will:

(1) Provide the Trustee with the following reports:

(a) within 135 days after the end of each fiscal year of APSA (or, if later, the date on which APSA is required to deliver to the CNV financial statements for the relevant fiscal period), a copy of the audited consolidated balance sheet of APSA and its Subsidiaries as of the end of such year and the related consolidated statements of income and statements of shareholders’ equity and statements of cash flows for such fiscal year, prepared in accordance with Argentine GAAP applied consistently throughout the

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periods reflected therein (except as otherwise expressly noted therein), delivered in both the English and Spanish languages, together with a “management’s discussion and analysis” or other report of management providing an overview in reasonable detail of the results of operations and financial condition of APSA and its Subsidiaries for the periods presented;

(b) within sixty (60) days after the end of the first three fiscal quarters of each fiscal year of APSA (or, if later, the date on which APSA is required to deliver to the CNV financial statements for the relevant fiscal period), a copy of the unaudited consolidated balance sheet of APSA and its Subsidiaries as of the end of each such quarter and the related unaudited consolidated statements of income and statements of shareholders’ equity and statements of cash flows for such quarter, prepared in accordance with Argentine GAAP applied consistently throughout the periods reflected therein (except as otherwise expressly noted therein), delivered in both the English and Spanish languages, together with a “management’s discussion and analysis” or other report of management providing an overview in reasonable detail of the results of operations and financial condition of APSA and its Subsidiaries for the periods presented; and

(c) within 195 days after the end of each fiscal year of APSA, an English language version of APSA’s annual audited consolidated financial statements prepared in accordance with U.S. GAAP (or, if APSA is not preparing consolidated financial statements in accordance with U.S. GAAP, a reconciliation of APSA’s financial statements described in clause (a) above to U.S. GAAP), together with a “management’s discussion and analysis” thereof, in form and substance to the effect generally required of foreign private issuers subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; provided that, in the event APSA is no longer required to submit reports to the SEC, APSA shall not be required to provide a reconciliation of its financial statements to U.S. GAAP.

(2) Provide the Trustee with copies (including English translations of documents prepared in a language other than English) of certain material public filings made with any securities exchange or securities regulatory agency or authority promptly after such filing; provided that APSA will not be required to provide such copies of public filings which may be obtained from the Commission via the EDGAR System or its successor.

So long as the Securities are listed on Euro MTF, the alternative market of the Luxembourg Stock Exchange, APSA will make available the information specified in clause (2) above at the specified office of the Luxembourg Paying Agent for the Securities.

Delivery of the above reports and the information described in Section 3.12 to the Trustee is for informational purposes only and the Trustee’s receipt of such reports shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including APSA’s or any Subsidiary’s compliance with any of the covenants in this Indenture (as to which the Trustee is entitled to rely exclusively on an Officer’s Certificate).

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Section 3.12. Other Information. For so long as any of the Securities remain Outstanding and are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, APSA will, during any period in which it is neither subject to Section 13 or 15(d) under the Exchange Act nor exempt from reporting under the Exchange Act pursuant to Rule 12g3-2(b) thereunder, make available to any Holder or any owner of a beneficial interest in a Global Security, to a prospective purchaser of a Security or beneficia l interest therein who is a Qualified Institutional Buyer, or to the Trustee for delivery, at APSA’s expense, to such Holder or beneficial owner or prospective purchaser, as the case may be, in connection with any sale thereof, in each case at the Holder’s written request to APSA, the information specified in, and meeting the requirements of, Rule 144A(d)(4) under the Securities Act.

Section 3.13. Notice of Default. APSA will notify the Trustee in writing promptly after APSA becomes aware of the occurrence and continua nce of any Event of Default. Each notice pursuant to this Section shall state that it constitutes a “notice of default” hereunder and shall be accompanied by an Officers’ Certificate signed by the Chief Executive Officer or the Chief Financial Officer of APSA setting forth the details of such Event of Default and stating what action APSA proposes to take with respect thereto.

Section 3.14. Further Actions. APSA will use its reasonable efforts to take any action, satisfy any condition or do anything (including the obtaining or effecting of any necessary consent, approval, authorization, exemption, filing, license, order, recording or registration) at any time required in accordance with the applicable laws and regulations to be taken, fulfilled or done in order (a) to enable it lawfully to enter into, exercise its rights and perform and comply with its payment obligations under the Securities and this Indenture, as the case may be, (b) to ensure that those obligations are legally binding and enforceable and (c) to make the Securities and this Indenture admissible in evidence in the courts of Argentina.

Section 3.15. Suspension of Covenants. During any period of time that (i) the Securities of any series have Investment Grade Ratings from at least two (2) of the three (3) Rating Agenc ies and (ii) no Default or Event of Default has occurred and is continuing (the occurrence of the events described in the foregoing clauses (i) and (ii) being collectively referred to as a “Covenant Suspension Event”), with respect to such series, APSA will not be subject to the provisions described under Sections 3.16 and 3.18 (collectively, the “Suspended Covenants”).

In the event that APSA is not subject to the Suspended Covenants for any period of time as a result of the foregoing, and on any subsequent date (the “Reversion Date”) one of the Rating Agencies withdraws its Investment Grade Rating or downgrades its rating assigned to the Securities of the affected series below an Investment Grade Rating, and as a result of such withdrawal or downgrade, the Securities of such series no longer have Investment Grade Ratings from at least two (2) of the three (3) Rating Agencies, then with respect to such series APSA will thereafter again be subject to the Suspended Covenants. The period of time between the Suspension Date and the Reversion Date is referred to as the “Suspension Period.” Notwithstanding that the Suspended Covenants may be reinstated, no Default or Event of Default under any series of Securities will be deemed to have occurred as a result of a failure to comply with the Suspended Covenants during the Suspension Period (or upon termination of the Suspension Period or after that time based solely on events that occurred during the Suspension Period).

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On the Reversion Date, all Indebtedness incurred during the Suspension Period will be classified to have been Incurred pursuant to the first (1st) paragraph of Section 3.16 (to the extent such Indebtedness would be permitted to be incurred thereunder as of the Reversion Date and after giving effect to Indebtedness incurred prior to the Suspension Period and outstanding on the Reversion Date). To the extent such Indebtedness would not be so permitted to be Incurred pursuant to the first (1st) paragraph of Section 3.16 such Indebtedness will be deemed to have been outstanding on the Issue Date, so that it is classified as permitted under clause (f) of the second (2nd) paragraph of Section 3.16.

Section 3.16. Limitation on Incurrence of Additional Indebtedness. (1) APSA will not Incur any Indebtedness, including Acquired Indebtedness, except that APSA may Incur Indebtedness, including Acquired Indebtedness, if, at the time of and immediately after giving pro forma effect to the Incurrence thereof and the application of the proceeds therefrom, the Consolidated Interest Coverage Ratio of APSA is greater than 1.75 to 1, calculated as of the end of the most recent fiscal quarter ending prior to the date of such Incurrence.

(2) Notwithstanding clause (1) above, APSA may Incur the following Indebtedness (“Permitted Indebtedness”):

(a) Indebtedness in respect of the Securities, excluding Additional Securities;

(b) Guarantees Incurred in accordance with this covenant;

(c) Hedging Obligations entered into in the ordinary course of business and not for speculative purposes, including, without limitation, Hedging Obligations in respect of the Securities;

(d) Indebtedness Incurred for the purpose of acquiring or financing all or any part of the purchase price or cost of construction or improvement of property or equipment used in a Permitted Business in an aggregate principal amount not to exceed 5% of total Consolidated Tangible Assets of APSA, calculated as of the end of the most recent fiscal quarter ending prior to the date of such Incurrence;

(e) Indebtedness Incurred between or among APSA, on the one hand, and any of its Subsidiaries, on the other hand;

(f) other Indebtedness outstanding on the Issue Date;

(g) Indebtedness in respect of any obligations under workers’ compensation claims, severance payment obligations, payment obligations in connection with health or other types of social security benefits, unemployment or other insurance or self-insurance obligations, reclamation, statutory obligations, bankers’ acceptances, performance, surety or similar bonds, letters of credit or completion or performance guarantees and factoring and other financing of payables or receivables or other similar obligations in the ordinary course of business;

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(h) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided that such Indebtedness is extinguished within five (5) Business Days of its Incurrence;

(i) Refinancing Indebtedness in respect of:

(1) Indebtedness (other than Indebtedness owed to any Subsidiary of APSA) Incurred pursuant to clause (1) of this covenant (it being understood that no Indebtedness outstanding on the Issue Date is Incurred pursuant to such clause (1)), or

(2) Indebtedness Incurred pursuant to clauses (2)(a), (e), (f) or (j) of this covenant;

(j) Acquired Indebtedness if the Consolidated Interest Coverage Ratio for APSA’s most recently completed four (4) fiscal quarters determined immediately after giving effect to such Incurrence and the related acquisition (including through a merger, consolidation or otherwise) is equal to or greater than the Consolidated Interest Coverage Ratio of APSA determined immediately before giving effect to such Incurrence and the related acquisition;

(k) Indebtedness arising from agreements providing for indemnification, adjustment of purchase price or similar obligations, in each case, Incurred in connection with the disposition of any business, assets or Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition; provided that the maximum aggregate liability in respect of all such Indebtedness will at no time exceed the gross proceeds actually received by APSA in connection with such disposition;

(l) Indebtedness represented by short-term working capital Indebtedness in an aggregate principal amount at any time not to exceed US$20,000,000 (or the then equivalent thereof in another currency at the time of determination); and

(m) additional Indebtedness in an aggregate principal amount not to exceed 15.0% of Consolidated Tangible Assets of APSA, calculated as of the end of the most recent fiscal quarter ending prior to the date of such Incurrence.

(3) For purposes of determining compliance with, and the outstanding principal amount of, any particular Indebtedness Incurred pursuant to and in compliance with this covenant, the amount of Indebtedness issued at a price that is less than the principal amount thereof will be equal to the amount of the liability in respect thereof determined in accordance with Argentine GAAP. Accrual of interest, the accretion or amortization of original issue discount, the payment of regularly scheduled interest in the form of additional Indebtedness of the same instrument with the same terms will not be deemed to be an Incurrence of Indebtedness for purposes of this covenant; provided that any such outstanding additional Indebtedness Incurred pursuant to any provision of clause (2) of this covenant will be counted as Indebtedness outstanding thereunder for purposes of any future Incurrence under such provision. For purposes of determining compliance with this Section 3.16, in the event that an item of proposed

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Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (a) through (m) above, or is entitled to be incurred pursuant to paragraph (1) of this covenant, APSA will be permitted to classify such item of Indebtedness on the date of its incurrence and may, in its sole discretion, divide and classify an item of Indebtedness in one or more of the types of Indebtedness and may later re-divide or reclassify all or a portion of such item of Indebtedness in any manner that complies with this covenant. Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that APSA may incur pursuant to this covenant shall not be deemed to be exceeded as a result solely of fluctuations in exchange rates or currency values.

Section 3.17. Limitation on Liens. APSA will not Incur any Liens (except for Permitted Liens) against or upon any of its properties or assets, whether owned on the Issue Date or acquired after the Issue Date, or any proceeds therefrom, to secure any Indebtedness, without expressly providing that the Securities are secured equally and ratably with the obligations so secured for so long as such obligations are so secured.

Section 3.18. Limitation on Transactions with Affiliates.

(1) APSA will not enter into any transaction or series of related transactions (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with, or for the benefit of, any of its Affiliates (each an “Affiliate Transaction”), unless the terms of such Affiliate Transaction are not materially less favorable than those that could reasonably be expected to be obtained in a comparable transaction at such time on an arm’s-length basis from a Person that is not an Affiliate of APSA; provided that the foregoing limitation will not apply to:

(a) Affiliate Transactions with or among APSA and any of its Subsidiaries;

(b) fees and compensation paid to, and any indemnity provided on behalf of, officers, directors, employees, consultants or agents of APSA or any Subsidiary as determined in good faith by APSA’s Board of Directors;

(c) Affiliate Transactions undertaken pursuant to any contractual obligations or rights in existence on the Issue Date and any amendment, modification or replacement of such agreement (so long as such amendment, modification or replacement is not materially more disadvantageous to the Holders of the Securities, taken as a whole, than the original agreement as in effect on the Issue Date); and

(d) loans and advances to officers, directors and employees of APSA or any Subsidiary in the ordinary course of business in an aggregate principal amount not exceeding US$1,000,000 (or the then equivalent thereof in another currency at the time of determination) at any time.

Section 3.19. Conduct of Business. APSA and its Subsidiaries, taken as a whole, will remain primarily engaged in Permitted Businesses.

Section 3.20. Change of Control. Upon the occurrence of a Change of Control Triggering Event, each Holder will have the right to require that APSA purchase all or a portion

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(in integral multiples of US$1,000) of the Holder’s Securities at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest thereon through the date of purchase (the “Change of Control Payment”).

Within thirty (30) days following the date upon which the Change of Control Triggering Event occurred, APSA must send, by first-class mail, a notice to each Holder, with a copy to the Trustee, offering to purchase the Securities as described above (a “Change of Control Offer”). The Change of Control Offer shall state, among other things, the purchase date, which must be no earlier than thirty (30) days nor later than sixty (60) days from the date the notice is mailed, other than as may be required by law (the “Change of Control Payment Date”).

On the Change of Control Payment Date, APSA will, to the extent lawful:

(1) accept for payment all Securities or portions thereof properly tendered and not withdrawn pursuant to the Change of Control Offer;

(2) deposit with the Paying Agent funds in an amount equal to the Change of Control Payment in respect of all Securities or portions thereof so tendered and not withdrawn; and

(3) deliver or cause to be delivered to the Trustee the Securities so accepted together with an Officers’ Certificate stating the aggregate principal amount of Securities or portions thereof being purchased by APSA.

If only a portion of a Security is purchased pursuant to a Change of Control Offer, a new Security in a principal amount equal to the portion thereof not purchased will be issued in the name of the Holder thereof upon cancellation of the original Security (or appropriate adjustments to the amount and beneficial interests in a Global Note will be made, as appropriate). In all cases Holders of the Securities shall be treated on an equal basis.

APSA will not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by APSA and purchases all Securities properly tendered and not withdrawn under the Change of Control Offer, or (2) notice of redemption has been given pursuant to this Indenture as described above under Section 10.1 unless and until there is a default in payment of the applicable redemption price.

In the event that holders of not less than 95% of the aggregate principal amount of the outstanding Securities accept a Change of Control Offer and APSA or a third party purchases all of the Securities held by such holders, APSA will have the right, on not less than thirty (30) nor more than sixty (60) days’ prior notice, given not more than thirty (30) days following the purchase pursuant to the Change of Control Offer described above, to redeem all of the Securities that remain outstanding following such purchase at a purchase price equal to the Change of Control Payment plus, to the extent not included in the Change of Control Payment, accrued and unpaid interest, if any, on the Securities that remain outstanding, to the date of redemption (subject to the right of holders on the relevant record date to receive interest due on the relevant interest payment date).

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Holders, by acceptance of the Securities, are deemed to acknowledge that other existing and future Indebtedness of APSA may contain prohibitions on the occurrence of events that would constitute a Change of Control or require that Indebtedness to be repurchased upon a Change of Control. Moreover, the exercise by the Holders of their right to require APSA to repurchase the Securities upon a Change of Control may cause a default under such Indebtedness even if the Change of Control itself does not.

Holders, by acceptance of the Securities, are deemed to acknowledge that if a Change of Control Offer occurs, there can be no assurance that APSA will have available funds sufficient to make the Change of Control Payment for all the Securities that might be delivered by Holders seeking to accept the Change of Control Offer. In the event APSA is required to purchase outstanding Securities pursuant to a Change of Control Offer, APSA expects that it would seek third-party financing to the extent it does not have available funds to meet its purchase obligations. However, there can be no assurance that APSA would be able to obtain necessary financing.

Holders will not be entitled to require APSA to purchase their Securities in the event of a takeover, recapitalization, leveraged buyout or similar transaction which does not result in a Change of Control.

APSA will comply with the requirements of Rule 14e-l under the Exchange Act and any other applicable securities laws and regulations to the extent such laws and regulations are applicable in connection with a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with this Section 3.22, APSA will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Indenture by doing so.

Holders by acceptance of the Securities, are deemed to acknowledge that the definition of Change of Control includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of “all or substantially all” of the properties or assets of APSA and its Subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a Holder to require APSA to repurchase its Securities as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of APSA and its Subsidiaries taken as a whole to another Person or group may be uncertain.

ARTICLE IV

Defaults and Remedies of the Trustee and Securityholders on Event of Default

Section 4.1. Events of Default. In case one or more of the following events (each an “Event of Default”) shall have occurred and be continuing with respect to the Securities of any Series:

(a) APSA shall fail to pay any principal or interest (or Additional Amounts, if any) on the Securities of such Series on the date when it becomes due and payable in

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accordance with the terms thereof, and such failure shall continue for a period of seven days (in the case of principal) or fourteen days (in the case of interest or Additional Amounts, if any); or

(b) APSA shall fail duly to perform or observe any other covenant or obligation applicable to such Series under this Indenture or contained in such Securities, and such failure shall continue for a period of ninety (90) days after written notice to that effect is received by APSA or by APSA and the Trustee from the Holders of at least 25% in aggregate principal amount of the Outstanding Securities of such Series; or

(c) APSA shall fail to pay when due principal of or interest on its Indebtedness in an aggregate past due principal amount of at least US$20,000,000 (or the then equivalent thereof in another currency at the time of determination) and such failure shall continue after the grace period, if any, applicable thereto, or any other event of default shall occur under any agreement or instrument relating to any such Indebtedness in an aggregate principal amount of at least US$20,000,000 (or the then equivalent thereof in another currency at the time of determination), and in each case such failure to pay or other event of default shall result in the acceleration of the maturity thereof; or

(d) one or more final judgments or decrees for the payment of money in excess of US$20,000,000 (or the equivalent thereof in another currency) in the aggregate (to the extent not covered by insurance) are rendered against APSA and are not discharged and, in the case of each such judgment or decree, there is a period of ninety (90) days following such judgment during which such judgment or decree is not discharged, waived or the execution thereof stayed; or

(e) a court having jurisdiction enters a decree or order for (1) relief in respect of APSA or any of its Significant Subsidiaries in an involuntary case under the Argentine Law No. 24,522, as amended (the “Bankruptcy Law”), or any other applicable bankruptcy, insolvency or other similar law now or hereafter in effect or (2) appointment of an administrator, receiver, trustee or intervenor for APSA or any of its Significant Subsidiaries for all or substantially all of the property of APSA or any of its Significant Subsidiaries and, in each case, such decree or order shall remain unstayed and in effect for a period of ninety (90) consecutive days; or

(f) APSA or any of its Significant Subsidiaries (a) commences a voluntary case under any the Bankruptcy Law or any other applicable bankruptcy, insolvency or other similar law now or hereafter in effect, (b) consents to the appointment of or taking possession by an administrator, receiver, trustee or intervenor for APSA or any of its Significant Subsidiaries for all or substantially all of the property of APSA or any of its Significant Subsidiaries or (c) effects any general assignment for the benefit of creditors; or

(g) it becomes unlawful for APSA to perform or comply with its payment obligations under the Securities of such Series and such condition shall continue for a period of ninety (90) days after written notice to that effect is received by APSA or by APSA and the Trustee from the Holders of at least 25% in aggregate principal amount of the outstanding Securities of such Series;

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then the Trustee shall, upon the request of the Holders of not less than 25% in aggregate principal amount of the Securities of such Series, by written notice to APSA, declare all the Securities of such Series then Outstanding to be immediately due and payable. If an Event of Default set forth in Section 4.1(c) above has occurred and is continuing with respect to the Securities of any Series, such Event of Default shall be automatically rescinded and annulled once the event of default or payment default triggering such Event of Default pursuant to Section 4.1(c) shall be remedied or cured by APSA or waived by the holders of the relevant Indebtedness. No such rescission and annulment shall affect any subsequent Event of Default or impair any right consequent thereto. Upon any such declaration of acceleration, the principal of the Securities so accelerated and the interest accrued thereon and all other amounts payable with respect to such Securities shall become and be immediately due and payable. If the Event of Default or Events of Default giving rise to any such declaration of acceleration are cured following such declaration, such declaration may be rescinded by the holders of such Securities in the manner set forth herein.

At any time after a declaration of acceleration has been made with respect to the Securities of any Series and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in aggregate principal amount of the Outstanding Securities of such Series, by written notice to APSA and the Trustee, may rescind and annul such declaration and its consequences if (i) the rescission would not conflict with any judgment or decree; (ii) APSA has paid or deposited with the Trustee a sum sufficient to pay (A) all overdue installments of interest on the Securities of such Series, (B) the principal of (and premium, if any, on) any Securities of such Series which has become due otherwise than by such declaration of acceleration, and interest thereon at the rate or rates prescribed therefore by the terms of the Securities of such Series, to the extent that payment of such interest is lawful, (C) interest upon overdue installments of interest at the rate or rates prescribed therefore by the terms of the Securities of such Series, to the extent that payment of such interest is lawful and (D) all sums paid or advanced by the Trustee and the Agents hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, the Agents and their respective agents and counsel; and (iii) all Events of Default with respect to such Series of Securities, other than the nonpayment of the principal, premium or interest on the Securities of such Series that has become due solely because of such acceleration, have been cured or waived. No such rescission shall affect any subsequent Event of Default or impair any right consequent thereto.

Section 4.2. Collection of Indebtedness by Trustee. APSA covenants that (a) in case there shall be a default in the payment of any installment of interest (including Additional Amounts) on any of the Securities of any Series when such interest (including Additional Amounts) shall have become due and payable, and such default shall have continued for a period of fourteen (14) days or (b) in case there shall be a default in the payment of all or any part of the principal of any of the Securities of any Series when the same shall have become due and payable, whether upon maturity or by declaration or otherwise, and such default continues for a period of seven (7) days; then upon demand by the Trustee, APSA will pay to the Trustee for the benefit of the Holders of any such Security the whole amount that then shall have become due

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and payable on any such Security for principal or interest (including Additional Amounts), as the case may be (with interest to the date of such payment upon the overdue principal and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest at the rate or rates of interest specified in any such Security); and in addition thereto, APSA will pay such further amount as shall be sufficient to cover the reasonable costs and expenses of collection, including reasonable compensation to, and reimbursement of the expenses of, the Trustee and each predecessor Trustee, their respective agents, attorneys and counsel, and any expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee, as provided in Section 5.6, except as a result of its negligence or willful misconduct.

In case APSA shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against APSA or other obligor upon the Securities of such Series and collect in the manner provided by law out of the property of APSA or other obligor upon such Securities, wherever situated, the moneys adjudged or decreed to be payable.

All rights of action and of asserting claims under this Indenture or under the Securities of any Series may be enforced by the Trustee without the possession of any of the Securities of such Series or the production thereof on any trial or other proceedings relative thereto, and any such action or proceedings instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Trustee, each predecessor Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders of the Securities of the Series in respect of which such action was taken.

In any proceedings brought by the Trustee (and also any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party), the Trustee shall be held to represent all the Holders of the Securities of the Series in respect to which such action was taken, and it shall not be necessary to make any Holders of such Securities parties to any such proceedings.

Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities of any Series or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

Section 4.3. Application of Proceeds. Any moneys collected by the Trustee pursuant to this Article in respect of a Series of Securities shall be applied in the following order at the date or dates fixed by the Trustee and, in case of the distribution of such moneys on account of principal (including Additional Amounts), upon presentation of the Securities of such Series in respect of which moneys have been collected and stamping (or otherwise no ting) thereon the payment, or issuing Securities in reduced principal amounts in exchange for the presented Securities if only partially paid, or upon surrender thereof if fully paid:

FIRST: To the payment of all amounts due to the Trustee and/or any predecessor Trustee under Section 5.6; except for any such amounts that result from negligence or willful misconduct;

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SECOND: To the payment of all amounts due to the Agents under Section 1.2; THIRD: In case the principal of the Securities in respect of which moneys have been collected shall not have become and be then due and payable, to the payment of overdue interest (including Additional Amounts) on such Securities in default in the order of the maturity of the installments of such interest (including Additional Amounts), with interest upon the overdue installments of interest (including Additional Amounts) at the rate or rates of interest specified in such Securities, such payments to be made ratably to the Persons entitled thereto, without discrimination or preference;

FOURTH: In case the principal of the Securities of such Series in respect of which moneys have been collected shall have become and shall be then due and payable, to the payment of the whole amount then owing and unpaid upon all such Securities for principal and interest (including Additional Amounts), with interest upon the overdue principal, and upon overdue installments of interest (including Additional Amounts), at the rate or rates of interest specified in such Securities; and in case such moneys shall be insufficient to pay in full the whole amount so due and unpaid upon such Securities of such Series, then to the payment of such principal and interest (including Additional Amounts), without preference or priority of principal over interest (including Additional Amounts), or of interest over principal, or of any installment of interest over any other installment of interest, or of such Security over any other such Security, ratably to the aggregate of such principal and accrued and unpaid interest (including Additional Amounts); and

FIFTH: To the payment of the remainder, if any, to APSA or any other Person lawfully entitled thereto of which the Trustee has received written notice.

Section 4.4. Suits for Enforcement. In case an Event of Default has occurred, has not been waived and is continuing, the Trustee may in its discretion (but is not required to) proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law.

Section 4.5. Restoration of Rights on Abandonment of Proceedings. In case the Trustee shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, then and in every such case APSA, the Holders and the Trustee shall, subject to applicable law, be restored respectively to their former positions and rights hereunder, and all rights, remedies and powers of APSA, the Trustee and the Securityholders shall continue as though no such proceedings had been taken.

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Section 4.6. Limitations on Suits by Securityholders. Except as provided in Sectio n 4.7, no Holder of any Security of any Series shall have any right by virtue or by availing itself of any provision of this Indenture or of the Securities of such Series, to institute any action or proceeding at law or in equity or in bankruptcy or otherwise upon or under or with respect to this Indenture, or for the appointment of a trustee, receiver, liquidator, custodian or other similar official or for any other remedy hereunder, unless such Holder previously shall have given to the Trustee written notice of default and of the continuance thereof, and unless also the Holders of not less than 25% in aggregate principal amount of the Securities of such Series then Outstanding shall have made written request upon the Trustee to institute such action or proceedings in its own name as trustee hereunder and shall have offered to the Trustee such indemnity satisfactory to the Trustee as it may require against the costs, expenses and liabilities to be incurred therein or thereby and the Trustee for sixty (60) days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action or proceeding and no direction inconsistent with such written request shall have been given to the Trustee pursuant to Section 4.9; it being understood and intended that no one or more Holders of Securities of such Series shall have any right in any manner whatever by virtue or by availing itself of any provision of this Indenture to affect, disturb or prejudice the rights of any other Holder of Securities of such Series, or to obtain or seek to obtain priority over or preference to any other such Holder or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all Holders of Securities of such Series.

Section 4.7. Unconditional Right of Securityholders to Institute Certain Suits. Notwithstanding any other provision in this Indenture and any provision of any Security, the right of any Holder of any Security to receive payment of the principal of and interest on such Security (including Additional Amounts) on or after the respective due dates expressed in such Security, or to institute suit, including a summary judicial proceeding (acción ejecutiva individual) in Argentina pursuant to Article 29 of the Negotiable Obligations Law, for the enforcement of any such payment on or after such respective dates, shall not be impaired or adversely affected without the consent of such Holder.

Section 4.8. Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default. Except as provided in Section 4.6, no right or remedy herein conferred upon or reserved to the Trustee or to the Securityholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

No delay or omission of the Trustee or of any Securityholder to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein; and, subject to Section 4.6, every power and remedy given by this Indenture or by law to the Trustee or to the Securityholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Securityholders.

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Section 4.9. Control by Securityholders. Subject to Section 5.1(e) hereof, the Holders of a majority in aggregate principal amount of the Securities of any Series at the time Outstanding shall have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee with respect to the Securities of such Series by this Indenture; provided that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture and shall not expose the Trustee to personal liability and shall not be unduly prejudicial to the interests of Holders of the Securities of such Series not joining in the giving of said direction, it being understood that (subject to Section 5.1) the Trustee shall have no duty to ascertain whether or not such actions or forbearance are unduly prejudicial to such Holders.

Nothing in this Indenture shall impair the right of the Trustee in its discretion to take any action deemed proper by the Trustee and which is not inconsistent with such direction or directions by Securityholders.

Section 4.10. Waiver of Past Defaults. At a meeting duly convened at which a quorum is present as provided in Section 6.6, the Holders of a majority in aggregate principal amount of the Outstanding Securities of such Series represented and voting at such meeting may, on behalf of the Holders of all the Securities of such Series, waive any past or present default or Event of Default with respect to such Series and its consequences, except a default in respect of a covenant or provision hereof that cannot be modified or amended without the consent of each Holder of Securities of such Series affected as provided in Section 7.2. In the case of any such waiver, APSA, the Trustee and the Holders of the Securities of such Series shall be restored to their former positions and rights hereunder, respectively.

Upon any such waiver, such default shall cease to exist and be deemed to have been cured and not to have occurred with respect to such Series, and any Event of Default arising therefrom shall be deemed to have been cured, and not to have occurred with respect to such Series for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon or affect any other Series of Securities.

Section 4.11. Payments after a Default. Upon the occurrence of an Event of Default with respect to the Securities of a Series and the subsequent declaration by the Trustee that the principal amount of all the Securities of such Series is due and payable immediately, the Trustee may by notice in writing: (a) to APSA and any Paying Agent, require each Paying Agent to deliver all Securities of such Series and all moneys, documents and records held by it with respect to the Securities of such Series to the Trustee or as the Trustee otherwise directs in such notice; and (b) require any Paying Agent to act as agent of the Trustee under this Indenture and the Securities of such Series, and thereafter to hold all Securities of such Series and all moneys, documents and records held by it in respect to such Securities of such Series to the order of the Trustee; provided that the Trustee shall not thereby become obligated, or have any obligation, to compensate or indemnify such Paying Agent or to reimburse such Paying Agent for any expense.

Section 4.12. Notice of Events of Default. If an Event of Default occurs and is continuing and if it is known to a Responsible Officer of the Trustee, the Trustee shall mail to

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Holders a notice of the Event of Default within 90 days after it occurs unless such Event of Default shall have been cured or waived. Except in the case of a default in payment on any Security, the Trustee may withhold the notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of Holders.

ARTICLE V

Concerning the Trustee

Section 5.1. Duties and Responsibilities of the Trustee. (a) Except during the continuance of an Event of Default,

(1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and in the Trust Indenture Act, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(2) in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any statements, certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such statements, certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture;

(b) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and the Trust Indenture Act, and use the same degree of care and skill in its exercise, as a prudent man would exercise under the circumstances in the conduct of his own affairs.

(c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligence or willful misconduct, except that

(1) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section;

(2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;

(3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in aggregate principal amount of the Outstanding Securities of any Series relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture; and

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(4) none of the provisions contained in this Indenture shall require the Trustee to expend, advance or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that the repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

(d) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee is subject to this Section 5.1.

(e) The Trustee shall be under no obligation to exercise any of the trusts or powers vested in it by this Indenture at the request, order or direction of any of the Securityholders pursuant to the provisions of this Indenture unless such Securityholders shall have offered to the Trustee security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities that might be incurred thereby.

Section 5.2. Certain Rights of the Trustee. Subject to Section 5.1:

(a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, Officers’ Certificate or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, note, coupon, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

(b) any request, direction, order or demand of APSA mentioned herein shall be sufficiently evidenced by a Company Order (unless other evidence in respect thereof is herein specifically prescribed); and any resolution of the Board of Directors may be evidenced to the Trustee by a copy thereof certified by the secretary of the Board of Directors of APSA;

(c) the Trustee shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture;

(d) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, guarantee, note, coupon, security, or other paper or document unless requested in writing so to do by the Holders of not less than a majority in aggregate principal amount of the Securities then Outstanding; provided that if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not satisfactorily assured to the Trustee, the Trustee may require from the Securityholders indemnity satisfactory to the Trustee against such costs, expenses or liabilities as a condition to proceeding; the reasonable costs, expenses and liabilities of every such investigation shall be paid by APSA or, if paid by the Trustee or any predecessor trustee, shall be repaid by APSA promptly upon demand;

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(e) the Trustee may consult with counsel at APSA’s expense and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;

(f) the Trustee may execute any of its powers or perform any of its duties hereunder either directly or by or through agents or attorneys not regularly in its employ and the Trustee shall not be responsible for any negligence or willful misconduct on the part of any such agent or attorney appointed with due care by it hereunder; and

(g) the rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its rights to be indemnified, are extended to, and shall be enforceable by the Trustee in each of its capacities hereunder as Co-Registrar, Principal Paying Agent, Exchange Rate Agent, Calculation Agent and Transfer Agent.

Section 5.3. Trustee Not Responsible for Recitals, Disposition of Securities or Application of Proceeds Thereof. The recitals contained herein and in the Securities, except the Trustee’s certificates of authentication and the seventh and eight recitals to this Indenture, shall be taken as the statements of APSA, and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representation as to the validity or sufficiency of this Indenture, of any offering materials or of the Securities, except for the seventh and eight recitals to this Indenture. The Trustee shall not be accountable for the use or application by APSA of any of the Securities or of the proceeds thereof.

Section 5.4. Trustee and Agents May Hold Securities; Collections, etc. The Trustee or any agent of APSA or the Trustee, in its individual or any other capacity, may become the owner or pledgee of the Securities with the same rights it would have if it were not the Trustee or such agent and may otherwise deal with APSA and receive, collect, hold and retain collections from APSA with the same rights it would have if it were not the Trustee or such agent. If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture. To the extent permitted by the Trust Indenture Act, the Trustee shall not be deemed to have a conflicting interest by virtue of being a trustee under this Indenture with respect to Securities of more than one Series.

Section 5.5. Moneys Held By Trustee. Subject to the provisions of Section 9.4, all moneys received by the Trustee shall, until used or applied as herein provided, be held in trust as provided in the Trust Indenture Act for the purposes for which they were received, but need not be segregated from other funds except to the extent required by law. Neither the Trustee nor any agent of APSA or the Trustee shall be under any liability for interest on or investment of any moneys received by it hereunder.

Section 5.6. Compensation and Indemnification of Trustee and Its Prior Claim. APSA covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, (a) US$5,000 or such other amount as shall be agreed in writing by APSA and the Trustee (such compensation not to be limited by any provision of law in regards to the

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compensation of a trustee of an express trust) and (b) reimbursement of its reasonable, documented and invoiced out-of-pocket expenses, disbursements and advances (including the reasonable fees and expenses, disbursements and advances of its agents and counsel) incurred by it in connection with the services rendered by it hereunder.

APSA also covenants to indemnify and defend the Trustee for, and to hold it harmless against, any loss, liability or expense (including the reasonable compensation and the expenses and disbursements of its counsel) arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder and the performance of its duties and the exercise of its rights hereunder, including the reasonable costs and expenses of defending itself against or investigating any claim of liability in the premises, except to the extent such loss, liability or expense is due to its own negligence or willful misconduct. The obligations of APSA under this Section to compensate and indemnify the Trustee and each predecessor Trustee and to pay or reimburse the Trustee and each predecessor Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive payment of the Securities, the resignation or removal of such Trustee and/or the satisfaction and discharge of this Indenture. As security for the performance of APSA’s obligations under this Section, the Trustee shall have a lien prior to the Securities on all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of principal of (and premium, if any) or interest on particular Securities.

Section 5.7. Preferential Collection of Claims Against APSA. If and when the Trustee shall be or become a creditor of APSA (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against APSA (or any such other obligor).

Section 5.8. Right of Trustee to Rely on Officers’ Certificate, etc. Whenever in the administration of the trusts of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting any action hereunder, such matter (unless other evidence in respect thereof shall be herein specifically prescribed) may, in the absence of negligence or willful misconduct on the part of the Trustee, be deemed to be conclusively proved and established by an Officers’ Certificate delivered to the Trustee, and such certificate, in the absence of negligence or willful misconduct on the part of the Trustee, shall be full warranty to the Trustee for any action taken, suffered or omitted by it under the provisions of this Indenture upon the faith thereof.

Section 5.9. Persons Eligible for Appointment as Trustee. The Trustee for the Securities hereunder shall at all times be a Person that is eligible pursuant to the Trust Indenture Act to act as such, having a combined capital and surplus of at least US$50,000,000, authorized under the laws of the jurisdiction in which it is doing business to exercise corporate trust powers, and subject to supervision or examination by federal, state, territorial or other governmental authority. If such Person publishes reports of condition at least annually, pursuant to the law or to the requirements of such federal, state, territorial or other governmental authority, then for the purposes of this Section and to the extent permitted by the Trust Indenture Act, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.

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Section 5.10. Resignation and Removal; Appointment of Successor Trustee. (a) Subject to Section 5.10(d), the Trustee, or any trustee or trustees hereafter appointed, may at any time resign with respect to the Securities of any Series by giving thirty (30) days’ written notice of resignation to APSA. If at any time the Trustee shall cease to be eligible in accordance with the provisions of Section 5.9, it shall resign immediately in the manner and with the effect hereinafter specified in this Section 5.10. Upon receiving such notice of resignation, APSA shall promptly appoint a successor trustee or trustees with respect to the Securities of such Series by written instrument in duplicate, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee or trustees. If no successor trustee shall have been so appointed with respect to the Securities of such Series and have accepted appointment within thirty (30) days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor trustee, or the Holders of at least 10% in aggregate principal amount of the Securities of such Series may petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and as it may prescribe, appoint a successor trustee.

(b) In case at any time any of the following shall occur:

(i) the Trustee shall cease to be eligible in accordance with the provisions of Section 5.9 and shall fail to resign after written request therefor by or on behalf of APSA or by any Securityholder; or

(ii) the Trustee shall become incapable of acting with respect to the Securities of any Series, or shall be adjudged a bankrupt or insolvent, or a receiver or liquidator of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation;

then, in any such case, (i) APSA may, by a resolution of the Board of Directors, remove the Trustee with respect to the Securities of such Series and appoint a successor trustee by written instrument, in duplicate, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or (ii) the Holders of at least 10% in aggregate principal amount of the Securities of such Series may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee with respect to such Securities. Such court may thereupon, after such notice, if any, as it may deem proper and as it may prescribe, remove the Trustee and appoint a successor trustee.

(c) The Holders of a majority in aggregate principal amount of the Securities of any Series at the time Outstanding may at any time remove the Trustee with respect to such Securities and appoint a successor trustee by delivering to the Trustee so removed, to the successor trustee so appointed and to APSA the evidence provided for in Section 6.1 of the action in that regard taken by such Securityholders.

(d) Any resignation or removal of the Trustee with respect to any Securities and any appointment of a successor trustee pursuant to any of the provisions of this Section 5.10 shall not become effective prior to acceptance of appointment by the successor trustee as provided in Section 5.11.

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Section 5.11. Acceptance of Appointment by Successor Trustee. Any successor trustee appointed as provided in Section 5.10 shall execute and deliver to APSA and to its predecessor trustee an instrument accepting such appointment hereunder, and thereupon the resignation or removal of the predecessor trustee with respect to the Securities of such Series shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all rights, powers, duties and obligations with respect to the Securities of such Series of its predecessor hereunder, with like effect as if originally named as trustee for the Securities of such Series hereunder; but, nevertheless, on the written request of APSA or of the successor trustee, upon payment of its charges then unpaid, the trustee ceasing to act shall, subject to Section 9.4, pay over to the successor trustee all moneys at the time held by it hereunder and shall execute and deliver an instrument transferring to such successor trustee all such rights, powers, duties and obligations. Upon request of any such successor trustee, APSA shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers. Any trustee ceasing to act shall, nevertheless, retain a prior lien upon all property or funds held or collected by such trustee to secure any amounts then due it pursuant to the provisions of Section 5.6.

Upon acceptance of appointment by any successor trustee as provided in this Section 5.11, APSA shall give, at its expense, notice thereof to the Securityholders as specified in Section 12.5 and the CNV, which notice shall include the name of the successor trustee and the address of its Corporate Trust Office. If APSA fails to give such notice within ten (10) days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be given at the expense of APSA.

No successor trustee shall accept its appointment unless at the time of such acceptance such successor trustee shall be qualified and eligible under this Article, to the extent operative.

Section 5.12. Merger, Conversion, Consolidation or Succession to Business of Trustee. Any Person into which the Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any Person succeeding to substantially all the corporate trust business of the Trustee, including this transaction, shall be the successor of the Trustee hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding; provided that such Person shall be eligible under the provisions of Section 5.9.

In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture any of the Securities shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor Trustee and deliver such Securities so authenticated; and, in case at that time any of the Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor Trustee; and in all such cases such certificate shall have the full force as provided in the Securities or in this Indenture as the certificate of the Trustee shall have; provided that the right to adopt the certificate of authentication of any predecessor Trustee or to authenticate Securities in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation.

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Section 5.13. Representative of the Trustee in Argentina. As long as it is required by Argentine law or by the CNV, the Trustee will have a representative in Argentina for the sole purpose of receiving notices from the CNV and/or Holders. Banco Santander Río S.A. will initially act as the Representative of the Trustee in Argent in a for such purposes. The Representative of the Trustee in Argentina accepts its appointment in relation to the Securities and shall perform all matters expressed to be performed by it in, and otherwise comply with, the provisions of Section 5.14.

Section 5.14. Application to Agents and to the Representative of the Trustee in Argentina. The Representative of the Trustee in Argentina need perform only those duties that are specifically set forth in this Section 5.14, and such duties shall be determined solely by the express provisions of this Section 5.14, or as Representative of the Trustee in Argentina may agree in writing from time to time with the Trustee and APSA. No implied covenants or obligations shall be read into this Section 5.14, against the Representative of the Trustee in Argentina. The Representative of the Trustee in Argentina shall have only the rights and powers stated below. It is further acknowledged that the Representative of the Trustee in Argentina is not and shall not be considered as if it were the Trustee’s general attorney.

The duties of the Representative of the Trustee in Argentina up to the date hereof are solely to: (i) receive from Holders, APSA, the Agents and any governmental or regulatory authority or entity, all letters, claims, requests, memoranda or any other document required by Argentine law or by the CNV Rules to be sent to, and received by, the Trustee, (ii) within seventy-two (72) hours of receipt, notify and/or deliver to the Trustee by facsimile all such letters, claims, requests, memoranda or documents, and (iii) following the express instructions of the Trustee, respond to or answer such letters, claims, requests, memoranda or documents.

The Representative in Argentina shall not be liable for any action it takes or omits to take in good faith, which it believes to be authorized or within its discretion, rights or powers.

APSA shall pay to the Representative of the Trustee in Argentina from time to time, and the Representative of the Trustee in Argentina shall be entitled to, such compensation for its acceptance of this Section 5.14 and its services hereunder. The fees of the Representative of the Trustee in Argentina shall be in the amount of US$3,000, payable to the Representative of the Trustee in Argentina on the date hereof. APSA shall reimburse the Representative of the Trustee in Argentina promptly upon request for all reasonable disbursements, advances and expenses incurred or made by or on behalf of it in addition to the compensation for its services. Such expenses may include the reasonable compensation, disbursements and expenses of the Representative of the Trustee in Argentina’s agents, counsel and other persons not regularly in its employ.

APSA agrees to indemnify the Representative of the Trustee in Argentina for, and to hold it harmless against, any loss, liability or expense, including, without limitation, the fees and expenses of legal counsel, reasonably incurred without negligence, bad faith or wilful misconduct on its part, arising out of or in connection with the acceptance of its commitments

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hereunder, the performance of its duties hereunder and/or the exercise of its rights hereunder, including, without limitation, the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.

ARTICLE VI

Concerning the Securityholders

Section 6.1. Evidence of Action Taken by Securityholders. Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by a specified percentage in principal amount of the Securityholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such specified percentage of Securityholders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments is or are delivered to the Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and APSA, if made in the manner provided in this Article.

Section 6.2. Proof of Execution of Instruments and of Holding of Securities; Record Date. The execution of any instrument by a Securityholder or his agent or proxy may be proved in accordance with Section 6.6 and such reasonable applicable rules and regulations or in such manner as shall be satisfactory to the Trustee. The holding of Securities shall be proved by the Register maintained pursuant to Section 2.10. APSA, by or pursuant to a resolution of its Board of Directors, may set a record date for purposes of determining the identity of Holders of Securities entitled to vote or consent to any action referred to in Section 6.1, which record date may be set at any time or from time to time by notice in writing to the Trustee, for any date or dates (in the case of any adjournment or reconsideration) not more than sixty (60) days nor less than ten (10) days prior to the proposed date of such vote or consent, and thereafter, notwithstanding any other provisions hereof, only Holders of Securities of record on such record date shall be entitled to so vote or give such consent or revoke such vote or consent.

Section 6.3. Holders to Be Treated as Owners. APSA, the Trustee, the Agents and any agent of APSA, the Trustee or the Agents may deem and treat any Person in whose name any Security shall be registered upon the Register as the absolute owner of such Security (whether or not such Security shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or on account of the principal of and, subject to the provisions of this Indenture, interest on such Security (including Additional Amounts) and for all other purposes; and none of APSA, the Trustee, any Agent and any agent of APSA, the Trustee or any Agent shall be affected by any notice to the contrary. All such payments so made to any such Person, or upon its order, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Security. Notwithstanding the foregoing, with respect to any Global Security, nothing herein shall prevent APSA, the Trustee, the Agents or any agent of APSA, the Trustee or any Agent, from giving effect to any written certification, proxy or other authorization furnished by any depositary, as Holder of such Global Security, or impair, as between such depositary and owners of beneficial interests in such Global Security, the operation of customary practices governing the exercise of the rights of such depositary (or its nominee), as Holder of such Global Security.

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Section 6.4. Securities Owned by APSA Deemed Not Outstanding. In determining whether the Holders of the requisite aggregate principal amount of Outstanding Securities have concurred in any request, consent or waiver under this Indenture, Securities that are owned by APSA or any of its Subsidiaries or any other obligor on the Securities with respect to which such determination is being made shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, except that for the purpose of determining whether the Trustee shall be protected in relying on any such request, consent or waiver, only Securities that a Responsible Officer of the Trustee knows are so owned shall be so disregarded. Securities so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Securities and that the pledgee is not APSA or any of its Subsidiaries or any other obligor upon such Securities. In case of a dispute as to such right, the advice of counsel shall be full protection in respect of any decision made by the Trustee in accordance with such advice. Upon request of the Trustee, APSA shall furnish to the Trustee promptly an Officers’ Certificate listing and identifying all Securities, if any, known by APSA to be owned or held by or for the account of any of the above-described Persons, and the Trustee shall be entitled to accept such Officers’ Certificate as conclusive evidence of the facts therein set forth and of the fact that all Securities not listed therein are Outstanding for the purpose of any such determination.

Section 6.5. Right of Revocation of Action Taken. At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 6.1, of the taking of any action by the Holders of the percentage in aggregate principal amount of the Securities or of the percentage of votes cast, as the case may be, specified in this Indenture in connection with such action, any Holder of a Security the serial number of which is shown by the evidence to be included among the serial numbers of the Securities the Holders of which have consented to such action may, by filing written notice at the Corporate Trust Office and upon proof of holding as provided in this Article, revoke such action so far as concerns such Security. Except as aforesaid any such action taken by the Holder of any Security shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Security and of any Securities issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Security. Any action taken by the Holders of the percentage in aggregate principal amount of the Securities or of the percentage of votes cast, as the case may be, specified in this Indenture in connection with such action shall be conclusively binding upon APSA, the Trustee and the Holders of all the Securities affected by such action.

Section 6.6. Securityholders’ Meetings. (a) Each of APSA (through the Board of Directors or the Supervisory Committee of APSA) and the Trustee may at any time call a meeting of the Holders of the Securities of any Series for the purpose of entering into a supplemental indenture as provided in Section 7.2 or waiving a past default as provided in Section 4.10. In addition, a meeting of the Holders of Securities of a Series may be called by the Trustee or APSA (through the Board of Directors or the Supervisory Committee of APSA) at its discretion or upon the request of the Holders of at least 5% in aggregate principal amount of the Outstanding Securities at the time or of the Outstanding Securities of a Series, to make, give or

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take any request, demand, authorization, direction, notice, consent, waiver or other action provided by the Securities of a Series to be made, given or taken by the Holders of such Securities, including the modification of any of the terms and conditions of the Securities. In the case of a request to call a meeting by Holders, APSA shall notify the Trustee in writing of such request. In the event the Board of Directors or the Supervisory Committee of APSA shall fail to call a meeting requested by the Trustee or the Holders as provided in the immediately preceding sentence, the meeting may be called by the CNV or by a competent court at the request of the Holders of the Securities. The meetings will be held in the City of Buenos Aires; provided that APSA or the Trustee may determine to hold any such meetings in New York City and/or London. In any case, meetings shall be held at such time and at such place in any such city as APSA or the Trustee shall determine. Any resolution passed at a meeting convened in London or New York City shall be binding on all Holders of Securities of any Series, as the case may be (whether present or not at such meeting), only upon ratification by a meeting of such Holders held in the City of Buenos Aires in accordance with the Negotiable Obligations Law. The Indenture contains provisions for Holders present or represented at meetings of Holders convened in London or New York City to appoint representatives at meetings of Holders in the City of Buenos Aires. Subject as aforesaid, any resolution duly passed will be binding on all Holders of Securities of any Series, as the case may be (whether or not they were present at the meeting at which such resolution was passed). If a meeting is being held pursuant to a request of Holders, the agenda for the meeting shall be as determined in the request and such meeting shall be convened within forty (40) days from the date such request is received by the Trustee or APSA, as the case may be. Notice of any meeting of Holders of Securities of any Series (which shall include the date, place and time of the meeting, the agenda therefor and the requirements to attend) shall be given not less than ten (10) days nor more than thirty (30) days prior to the date fixed for the meeting in the Official Gazette of Argentina (Boletín Oficial), in one other newspaper of general circulation in Argentina and in a newspaper published in the English language and of general circulation in New York City, and also in the manner provided under Section 12.5 and any publication thereof shall be for five (5) consecutive Business Days in each place of publication. To be entitled to vote at any meeting of Securityholders a Person shall be (i) a Holder of one or more Securities as of the relevant record date determined pursuant to Section 6.2 or (ii) a Person appointed by an instrument in writing as proxy by such a Holder of one or more Securities. The only Persons who shall be entitled to be present or to speak at any meeting of Securityholders shall be the Persons entitled to vote at such meeting and their counsel, any representatives of APSA and its counsel and the Trustee and its counsel. With respect to all matters not contemplated in this Indenture, meetings of Securityholders will be held in accordance with Argentine Companies Law.

(b) The quorum at any meeting called to adopt a resolution will be persons holding or representing a majority in aggregate principal amount of the Outstanding Securities of a Series and at any reconvened adjourned meetings will be the persons present at such reconvened adjourned meeting. At a meeting or a reconvened adjourned meeting duly convened and at which a quorum is present, any resolution to modify or amend, or to waive compliance with, any provision of the Securities of any Series (other than items requiring consent of each Holder of a Security) will be validly passed and decided if approved by the persons entitled to vote a majority in aggregate principal amount of the Securities of such Series then Outstanding represented and voting at the meeting. Any instrument given by or on behalf of any Holder of a Security in connection with any consent to any such modification, amendment or waiver will be

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irrevocable once given and will be conclusive and binding on all subsequent Holders of such Security. Any modifications, amendments or waivers to the Indenture or to the Securities of a Series will be conclusive and binding upon all Holders of Securities of such Series whether or not they have given such consent or were present at any meeting, and on all Securities of such Series, provided that no such modifications, amendments or waivers, without consent of each Holder of a Security of such Series at the time Outstanding directly and adversely affected thereby, shall modify, amend or waive any of the items included in Section 7.2.

(c) Any Securityholder who has executed an instrument in writing appointing a Person as proxy shall be deemed to be present for the purposes of determining a quorum and be deemed to have voted; provided that such Securityholder shall be considered as present or voting only with respect to the matters covered by such instrument in writing. Any resolution passed or decision taken at any meeting of Securityholders of a Series duly held in accordance with this Section shall be binding on all the Securityholders of such Series whether or not present or represented at the meeting.

(d) The appointment of any proxy shall be proved by having the signature of the Person executing the proxy guaranteed or certified by any notary public, bank or trust company or judicially certified in the manner provided under Argentine law. The following persons may not act as proxies: members of the Board of Directors or of the Supervisory Committee of APSA and managers and other employees of APSA. The holding of Securities shall be proved by the Register maintained in accordance with Section 2.10; provided that the holding of a beneficial interest in a DTC Global Security shall be proved by a certificate or certificates of DTC and the holding of a beneficial interest in an Euroclear/Clearstream Global Security shall be proved by a certificate or certificates of Euroclear or Clearstream, as the case may be, or the Common Depositary therefor.

(e) A representative of the Trustee shall act as the chairman of the meeting. If the Trustee fails to designate a representative to act as chairman of the meeting, the chairman of the meeting shall be: (i) a representative designated by the Holders of the Securities; or (ii) should the Holders of the Securities fail to designate a representative, a member of the Supervisory Committee designated by IRSA; or (ii) should IRSA fail to designate a member of the Supervisory Committee, a representative designated by the controlling government agency ; or (iv) should the controlling government agency fail to designate a representative, a Person appointed by a competent court. If the meeting is called by the CNV or by a competent court upon request of the Holders of the Securities, the CNV or the competent court shall designate a person to act as chairman. The secretary of the meeting shall be elected by vote of the Holders of a majority in aggregate principal amount of the Securities of the relevant Series represented at the meeting. At any meeting of Securityholders of any Series, each Securityholder of such Series or proxy shall be entitled to cast one vote for each U.S. dollar or Dollar Equivalent in principal amount of the Securities held by such Holder or represented by such proxy. Notwithstanding the foregoing, at any meeting of Holders of more than one Series of Securities, a Holder of a Security which does not specify regular payments of interest, including without limitation, original issue discount Securities, shall be entitled to one vote at any such meeting for each U.S. dollar or Dollar Equivalent of the redemption value of such Security calculated as of the date of such meeting. Where Securities are denominated in one or more currencies other than U.S. dollars, the Dollar Equivalent of such Securities shall be calculated at the Exchange

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Rates on the date of such meeting or, in the case of written consents or notices, on such dates as APSA shall designate for such purpose. No vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and ruled by the chairman of the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote except as a Holder or proxy. Any meeting of Holders duly called at which a quorum is present may be adjourned from time to time, and the meeting may be held as so adjourned without further notice.

(f) The vote upon any resolution submitted to any meeting of Securityholders shall be by written ballot on which shall be subscribed the signatures of the Securityholders or proxies and on which shall be inscribed the serial number or numbers of the Securities held or represented by them. The chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Securityholders shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was published as provided above. The record shall be signed and verified by the permanent chairman and secretary of the meeting and one of the duplicates shall be delivered to APSA and the other to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated.

(g) If and for so long as the Securities of any Series are listed on the Luxembourg Stock Exchange for trading on the EuroMTF, the BASE or any other securities exchange, and for negotiation in the MAE, meetings of Holders of such Securities and notices thereof shall comply with the applicable rules of the Luxembourg Stock Exchange, the BASE, the MAE or such securities exchange, as applicable.

Section 6.7. APSA to Furnish the Trustee Names and Addresses of Holders. APSA shall furnish or cause to be furnished to the Trustee

(a) semi-annually, not more than fifteen (15) days after each Regular Record Date with respect to each Series of Securities, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Securities of such Series as of such Regular Record Date; and

(b) at such other times as the Trustee may reasonably request in writing, within thirty (30) days after the receipt by APSA of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished;

excluding from any such list names and addresses received by the Trustee in its capacity as Co- Registrar.

Section 6.8. Preservation of Information; Communications to Holders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 6.7

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and the names and addresses of Holders received by the Trustee in its capacity as Co- Registrar. The Trustee may destroy any list furnished to it as provided in Section 6.7 upon receipt of a new list so furnished.

(b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and duties of the Trustee, shall be as provided by the Trust Indenture Act.

(c) Every Holder of Securities, by receiving and holding the same, agrees with APSA and the Trustee that neither APSA nor the Trustee nor any agent of either of them shall be held accountable by reason of any disclosure of information as to names and addresses of Holders made pursuant to the Trust Indenture Act.

Section 6.9. Reports by the Trustee. Subsequent to the qualification of this Indenture under the Trust Indenture Act, the Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto. Subsequent to the qualification of this Indenture under the Trust Indenture Act, if required by Section 313(a) of the Trust Indenture Act, the Trustee shall, within sixty (60) days after each May 15 following the date of this Indenture deliver to Holders a brief report, dated as of such May 15, which complies with the provisions of such Section 313(a) (but if no event described in Section 313(a) has occurred within the twelve (12) months preceding the reporting date, no report need be transmitted).

A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each securities exchange upon which any Securities are listed, with the SEC and with APSA. APSA shall promptly notify the Trustee in writing when any Securities are listed on any securities exchange.

Section 6.10. Reports by APSA. APSA shall file with the Trustee and the SEC, and transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to such Act.

Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt thereof shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including APSA’s compliance with any of their respective covenants hereunder.

ARTICLE VII

Supplemental Indentures

Section 7.1. Supplemental Indentures Without Consent of Securityholders. APSA, when authorized by a resolution of the Board of Directors, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto, in form reasonably satisfactory to the Trustee, for one or more of the following purposes:

(a) adding to the covenants of APSA such further covenants, restrictions, conditions or provisions as are for the benefit of the Holders of the Securities of any Series;

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(b) surrendering any right or power conferred upon APSA hereunder;

(c) securing the Securities of any Series pursuant to the requirements thereof or otherwise;

(d) evidencing the succession of another Person to APSA and the assumption by any such successor of the covenants and obligations of APSA in the Securities and in this Indenture pursuant to Article VIII;

(e) establishing the form or terms of Securities of any new Series as permitted by Sections 2.1 and 2.3;

(f) complying with any requirement of the CNV, the BASE and the MAE in order to effect and maintain the qualification of this Indenture;

(g) complying with any requirements of the SEC in order to qualify this Indenture under the Trust Indenture Act;

(h) making any modification which is of a minor or technical nature or correcting or supplementing any ambiguous, inconsistent or defective provision contained in this Indenture or in the Securities of any Series; or

(i) making any other modification or granting any waiver or authorization of any breach or proposed breach hereunder of any of the terms and conditions of the Securities of any Series or any other provisions of this Indenture applicable to such Series in any manner which does not adversely affect the interests of the Holders of Securities of such Series in any material respect.

The Trustee is hereby authorized to join with APSA in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations that may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Trustee shall not be obligated to enter into any such supplemental indenture that adversely affects the Trustee’s own or any Agent’s rights, duties or immunities under this Indenture or otherwise.

Any supplemental indenture authorized by the provisions of this Section may be executed without the consent of the Holders of any of the Securities at the time Outstanding, notwithstanding any of the provisions of Section 7.2.

Promptly after the execution by APSA and the Trustee of any supplemental indenture pursuant to the provisions of this Section, APSA at its expense may give notice thereof to the Holders of the relevant Series as specified in Section 12.5, and shall give notice to the CNV, the BASE and the MAE, as applicable, setting forth in general terms the substance of such supplemental indenture. Any failure of APSA or the Trustee to give notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.

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Section 7.2. Supplemental Indentures With Consent of Securityholders. Without limiting the provisions of Section 7.1, APSA, when authorized by a resolution of the Board of Directors of APSA, and the Trustee may, from time to time and at any time, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture, the Securities of any Series or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Securities of any Series, with the affirmative vote, at a meeting of Holders of such Series or an adjourned meeting duly convened at which a quorum is present as provided in Section 6.6, of a majority in aggregate principal amount of the Securities of such Series then Outstanding represented and voting at such meeting; provided that no such supplemental indenture shall, without the consent of each Holder of a Security of a Series directly and adversely affected the reby, (a) extend the scheduled due date for the payment of principal of, premium, if any, or any installment of interest on any such Security, (b) reduce the principal amount of, the portion of such principal amount which is payable upon acceleration of the maturity of, the stated rate of interest on or the premium payable upon redemption of any such Security, (c) reduce the obligation of APSA to pay Additional Amounts on any such Security, (d) shorten the period during which APSA is not permitted to redeem any such Security, or permit APSA to redeem any such Security if, prior to such action, APSA is not permitted to do so, (e) amend the circumstances under which the Securities of such Series may be redeemed, (f) change the Specified Currency in which or the required places at which any such Security or the premium or interest thereon is payable, (g) reduce the percentage of aggregate principal amount of such Securities necessary to modify, amend or supplement this Indenture or such Securities, or for waiver of compliance with certain provisions thereof or for waiver of certain defaults, (h) reduce the percentage of aggregate principal amount of Outstanding Securities required for the adoption of a resolution or the quorum required at any meeting of Holders of such Securities at which a resolution is adopted or (i) modify any of the provisions of this Section or Sections 4.10 or 6.6, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Security directly and adversely affected thereby.

Upon the request of APSA and upon the filing with the Trustee of evidence of the consent of Securityholders as aforesaid and other documents, if any, required by Section 6.1, the Trustee shall join with APSA in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture.

It shall not be necessary for the consent of the Securityholders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof.

Promptly after the execution by APSA and the Trustee of any supplemental indenture pursuant to the provisions of this Section, APSA at its expense shall give notice thereof to the Holders as provided in Section 12.5, and to the CNV, setting forth in general terms the

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substance of such supplemental indenture. If APSA shall fail to give such notice to the Holders within fifteen (15) days after the execution of such supplemental indenture and a Responsible Officer of the Trustee shall have notice of such failure, the Trustee shall give notice to the Holders as provided in Section 12.5 and to the CNV at the expense of APSA.

Section 7.3. Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof and upon receipt of any necessary approval of the CNV, this Indenture and the Securities of the applicable Series shall be and shall be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture with respect to the applicable Series of Securities of the Trustee, APSA and the Holders of Securities of such Series shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

Section 7.4. Conformity with Trust Indenture Act. Subsequent to the qualification of this Indenture under the Trust Indenture Act, every supplemental indenture in respect of a Series registered or to be registered under the Securities Act executed pursuant to this Article VII shall conform to the requirements of the Trust Indenture Act.

Section 7.5. Documents to Be Given to the Trustee. The Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Officers’ Certificate, an Opinion of Counsel and copies of resolutions of the Board of Directors as conclusive evidence that any supplemental indenture executed pursuant to this Article VII has been duly authorized by APSA, complies with the applicable provisions of this Indenture and is authorized or permitted by the terms of this Indenture.

Section 7.6. Notation on Securities in Respect of Supplemental Indentures. Securities authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article may and shall if required by the Trustee, bear a notation in form and manner approved by the Trustee as to any matter provided for by such supplemental indenture or as to any action taken at any such meeting. If APSA or the Trustee shall so determine, new Securities modified so as to conform to any modification of this Indenture contained in any such supplemental indenture may be prepared by APSA at its expense, authenticated by the Trustee and delivered in exchange for the Securities then Outstanding.

Section 7.7. Conformity with Negotiable Obligations Law. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Negotiable Obligations Law and Joint Resolution No. 470-1738/2004, as then in effect.

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ARTICLE VIII

Merger, Consolidation, Sale or Conveyance

Section 8.1. APSA May Consolidate, etc, on Certain Terms. APSA covenants that it will not, in a single transaction or series of related transactions, consolidate or amalgamate with or merge into, any Person (whether or not APSA is the surviving or continuing Person), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of APSA’s properties and assets (determined on a consolidated basis for APSA and its Subsidiaries), to any Person unless:

(1) APSA shall be the surviving or continuing corporation; or

(2) the Person (if other than APSA) formed by such consolidation, amalgamation or into which APSA is merged or the Person which acquires by sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the properties and assets of APSA and of APSA’s Subsidiaries (the “Surviving Entity”):

(A) shall be a corporation, organized and validly existing under the laws of a Qualified Merger Jurisdiction or any political subdivision thereof, and

(B) shall expressly assume, by a supplemental indenture, executed and delivered to the Trustee, the due and punctual payment of the principal of, and premium, if any, and interest on (including Additional Amounts, if any, that may result due to withholding by any authority having the power to tax to which the Surviving Entity is or may be subject) all of the Securities and the due and punctual performance and observance of every covenant of the Securities and the Indenture on the part of APSA to be performed or observed.

For purposes of this covenant, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Subsidiaries of APSA, the Capital Stock of which constitutes all or substantially all of the properties and assets of APSA (determined on a consolidated basis for APSA and its Subsidiaries), will be deemed to be the transfer of all or substantially all of the properties and assets of APSA.

Section 8.2. Surviving Entity Substituted. In case of any such consolidation, merger, sale, transfer, lease or other conveyance, such Surviving Entity shall succeed to and be substituted for, and may exercise every right and power of, APSA under the Indenture and the Securities with the same effect as if such Surviving Entity had been named as such. Such Surviving Entity may cause to be signed, and may issue either in its own name or in the name of APSA, prior to such succession any or all of the Securities issuable hereunder that theretofore shall not have been signed by APSA and delivered to the Trustee; and, upon the order of such Surviving Entity instead of APSA and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities that previously shall have been signed and delivered by the Authorized Person of APSA to the Trustee for authentication, and any Securities that such Surviving Entity thereafter shall cause to be signed and delivered to the Trustee for that purpose. All of the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all of suc h Securities had been issued at the date of the execution hereof.

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In case of any such consolidation, merger, sale, transfer, lease or conveyance, such changes in phraseology and form (but not in substance) may be made in the Securities thereafter to be issued as may be appropriate.

In the event of any such sale or conveyance (other than a conveyance by way of lease) and assumption by the Surviving Entity, APSA shall be discharged from all obligations and covenants under this Indenture and the Securities to be performed by APSA and may be liquidated and dissolved.

No Surviving Entity shall have the right to redeem any Securities Outstanding unless APSA would have been entitled to redeem such Securities pursuant to this Indenture in the absence of any such merger, consolidation, sale, transfer, lease or conveyance permitted under Section 8.1.

Section 8.3. Documents to Trustee. The Trustee may request an Opinion of Counsel stating that any such consolidation, merger, sale, transfer, lease or other conveyance or disposition, and any such liquidation or dissolution, complies with the applicable provisions of this Indenture, the Securities and applicable law and an Opinion of Counsel and an Officers’ Certificate stating that all conditions precedent (including the adoption of any appropriate resolution by the Board of Directors) relating to such transaction have been met in all material respects, and the Trustee may rely on such Opinion of Counsel and Officers’ Certificate as conclusive evidence of the matters described therein.

ARTICLE IX

Satisfaction and discharge of indenture; Unclaimed Moneys

Section 9.1. Satisfaction and Discharge of Indenture. If at any time (a) APSA shall have paid or caused to be paid the principal of and interest on all the Securities (including Additional Amounts) Outstanding hereunder (other than Securities that have been destroyed, lost or stolen and that have been replaced or paid as provided in Section 2.11) as and when the same shall have become due and payable, or (b) APSA shall have delivered to the Trustee for cancellation all Securities theretofore authenticated (other than any Securities that shall have been destroyed, lost or stolen and that shall have been replaced or paid as provided in Section 2.11 or (c) (i) all the Securities not theretofore delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one (1) year or are to be called for redemption within one (1) year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and (ii) APSA shall have irrevocably deposited or caused to be deposited with the Trustee as trust funds the entire amount in cash (other than moneys repaid by the Trustee or any Paying Agent to APSA in accordance with Sections 9.3 or 9.4) sufficient to pay at maturity or upon redemption all Securities (other than any Securities that shall have been destroyed, lost or stolen and that shall have been replaced or paid as provided in Section 2.11) not theretofore delivered to the Trustee for cancellation, including principal and interest (including Additional Amounts) due or to become due on or prior to such date of maturity or redemption, as the case may be, and if, in any such case, APSA shall also pay or cause to be paid all other sums payable hereunder by APSA with respect to the Securities, then this Indenture shall cease to be of further effect (except as to (i) rights of

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registration of transfer, exchange and replacement of Securities, and APSA’s right of optional redemption, if any, (ii) substitution of mutilated, defaced, destroyed, lost or stolen Securities, (iii) rights of Holders to receive payments of principal thereof and interest thereon (including Additional Amounts), and remaining rights of the Holders to receive mandatory sinking fund payments, if any, (iv) the rights, protections, indemnities, obligations and immunities of the Trustee, each of the Agents and the Representative of the Trustee in Argentina hereunder and (v) the rights of the Securityholders as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them), and the Trustee, on written demand of APSA accompanied by an Officers’ Certificate and an Opinion of Counsel and at the cost and expense of APSA, shall execute proper instruments acknowledging such satisfaction of and discharging this Indenture; provided that the rights of Holders of the Securities to receive amounts in respect of principal of and interest on the Securities held by them shall not be delayed longer than required by then-applicable mandatory rules or policies of any securities exchange upon which the Securities are listed. APSA agrees to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred (including reasonable fees and expenses of counsel) and to compensate the Trustee for any services thereafter rendered by the Trustee in accordance with the terms of this Indenture or the Securities. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of APSA to the Trustee under Sections 3.4(b) and 5.6 shall survive.

Section 9.2. Application by Trustee of Funds Deposited for Payment of Securities. Subject to Section 9.4, all moneys deposited with the Trustee pursuant to Section 9.1 shall be held in trust and applied by it to the payment, either directly or through any Paying Agent (including APSA acting as its own paying agent), to the Holders of the particular Securities for the payment or redemption of which such moneys have been deposited with the Trustee, of all sums due and to become due thereon as principal and interest (including Additional Amounts); but such money need not be segregated from other funds except to the extent required by law and the Trustee shall have no liability for interest thereon or the investment thereof.

Section 9.3. Repayment of Moneys Held by Paying Agent. In connection with the satisfaction and discharge of this Indenture with respect to the Securities, all moneys then held by any Paying Agent under the provisions of this Indenture with respect to the Securities shall, upon written demand of APSA, be repaid to it or paid to the Trustee and thereupon such Paying Agent shall be released from all further liability with respect to such moneys.

Section 9.4. Return of Moneys Held by Trustee and Paying Agent Unclaimed for Two Years. Any moneys deposited with or paid to the Trustee or any Paying Agent for the payment of the principal of or interest on any Security (including Additional Amounts) and not applied but remaining unclaimed for two (2) years after the date upon which such principal or interest (including Additional Amounts) shall have become due and payable, shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, be repaid to APSA, upon written request, by the Trustee or such Paying Agent, and the Holder of such Security shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property laws, thereafter look only to APSA for any payment that such Holder may be entitled to collect, and all liability of the Trustee or any Paying Agent with respect to such moneys shall thereupon cease.

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ARTICLE X

Redemption and Repurchase of Securities

Section 10.1. Notice of Redemption; Partial Redemptions. Notice of redemption to the Holders of Securities to be redeemed as a whole or in part at the option of APSA pursuant to the terms of such Securities established as contemplated by Section 2.3 shall be given to Holders as specified in Section 12.5 and to the CNV. Such notice shall specify the provision pursuant to which the redemption is being made, the principal amount of each Security held by such Holders to be redeemed, the date fixed for redemption (the “Optional Redemption Date”), the redemption price, the place or places of payment, the CUSIP, ISIN, Common Code or other identifying codes, if any, that no representation is made as to the correctness or accuracy of the CUSIP, ISIN, Common Code or other identifying codes listed on such notice or printed on such Securities, that payment will be made upon presentation and surrender of such Securities, that interest accrued to the date fixed for redemption and any Additional Amounts will be paid as specified in such notice, that on and after said date interest thereon or on the portions thereof to be redeemed will cease to accrue and any other matter required to be specified therein by Argentine law or regulation. In case any Security is to be redeemed in part only, the notice of redemption shall state the portion of the principal amount thereof to be redeemed and shall state that on and after the date fixed for redemption, upon surrender of such Security, a new Security or Securities in principal amount equal to the unredeemed portion thereof will be issued.

APSA shall deliver to the Trustee any notice of redemption specifying the information set forth above at least thirty (30) days prior to the date on which such notice of redemption will be mailed (and forty-five (45) days prior to such date if the notice of redemption must be published) together with an Officers’ Certificate stating the aggregate principal amount of Securities to be redeemed. The notice of redemption of Securities to be redeemed at the option of APSA shall be given to Holders by APSA or, at APSA’s request, by the Trustee in the name and at the expense of APSA at least thirty (30) days but not more than sixty (60) days before the date of redemption (unless otherwise specified pursuant to the terms of such Securities established as contemplated by Section 2.3). Such no tice shall be irrevocable.

If and for so long as the Securities are listed on the Luxembourg Stock Exchange for trading on the EuroMTF or any other securities exchange and the rules of the relevant securities exchange so require, APSA shall, once in each year in which there has been a partial redemption of the Securities, cause to be published in a leading newspaper of general circulation in Luxembourg, which is expected to be the d’ Wort, or as specified by such other securities exchange, a notice specifying the aggregate principal amount of Securities Outstanding and a list of the Securities drawn for redemption but not surrendered.

On or before 10:00 AM (New York City time) one (1) Business Day prior to the redemption date specified in the notice of redemption given as provided in this Section, APSA will deposit with the Trustee (or, if APSA is acting as its own paying agent, set aside, segregate and hold in trust as provided in Section 3.4) an amount of money sufficient to redeem on the redemption date all the Securities so called for redemption at the appropriate redemption price, together with accrued interest to the date fixed for redemption and any Additional Amounts.

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If less than all the Securities of a Series are to be redeemed at the option of APSA, the particular Securities of such Series to be redeemed shall be selected by the Trustee from the Outstanding Securities of such Series not previously called for redemption individually by lot (and in the case of Securities represented by a Global Security, in accordance with the provisions of DTC, Euroclear or Clearstream, as the case may be) not more than sixty (60) days prior to the date fixed for redemption and a list of the Securities called for redemption will be notified to APSA and the Holders in accordance with Section 12.5 not less than thirty (30) days prior to such date. Upon any partial redemption of Securities of such Series, the Trustee shall (a) in the case of Securities represented by a DTC Global Security, cancel the existing DTC Global Security or Securities and authenticate and hold as custodian for DTC a new DTC Global Security or Securities, as applicable, to reflect the aggregate principal amount of Securities of such Series Outstanding after such redemption and (b) in the case of Certificated Securities, to the extent required, authenticate and deliver in exchange therefor one or more Securities of such Series, of any authorized denomination as requested by the Holder thereof, in an aggregate principal amount equal to the unredeemed portion of the principal of such partially redeemed Security. In the case of Securities represented by an Euroclear/Clearstream Global Security, the Common Depositary shall cancel the existing Euroclear/Clearstream Global Security or Securities, and the Trustee shall authenticate and the Common Depositary shall hold as custodian for Euroclear and Clearstream a new Euroclear/Clearstream Global Security or Securities, as applicable, to reflect the aggregate principal amount of Securities of such Series Outstanding after such redemption. Securities may be redeemed in part in multiples equal to the minimum authorized denomination for Securities or any multiple thereof. The Trustee shall promptly notify APSA in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security that has been or is to be redeemed.

Section 10.2. Payment of Securities Called for Redemption. If notice of redemption has been given as above provided, the Securities or portions of Securities specified in such notice shall become due and payable on the date and at the place stated in such notice at the applicable redemption price, together with interest accrued to the date fixed for redemption and any Additional Amounts, and on and after said date (unless APSA shall default in the payment of such Securities at the redemption price, together with interest accrued to said date and any Additional Amounts) interest on the Securities or portions of Securities so called for redemption shall cease to accrue and, except as provided in Sections 5.5 and 9.4, such Securities shall cease from and after the date fixed for redemption to be entitled to any benefit or security under this Indenture, and the Holders thereof shall have no right in respect of such Securities except the right to receive the redemption price thereof and unpaid interest accrued to the date fixed for redemption and any Additional Amounts. On presentation and surrender, pursuant to the terms of such Securities, of such Securities at a place of payment specified in said notice, said Securities or the specified portions thereof shall be paid and redeemed by APSA at the applicable redemption price, together with interest accrued thereon to the date fixed for redemption and any Additional Amounts; provided that any payment of interest becoming due on the date fixed for redemption and any Additional Amounts shall be payable to the Holders of such Securities registered as such on the relevant record date subject to the terms and provisions of Section 2.4.

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From and after the redemption date, if moneys for the redemption of the Securities called for redemption shall have been made available as provided herein for redemption on the redemption date, such Securities shall cease to bear interest, and the only right of the Holders of such Securities shall be to receive payment of the redemption price and all unpaid interest accrued to the date of redemption and any Additional Amounts.

Notwithstanding any provision to the contrary in this Section 10.2, if any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid or duly provided for, bear interest from the date fixed for redemption at the rate specified in the Security.

Upon presentation of any Security redeemed in part only, APSA shall execute and the Trustee shall authenticate and deliver to or on the order of the Holder thereof, at the expense of APSA, a new Security or Securities, of authorized denominations, in principal amount equal to the unredeemed portion of the Security so presented.

Section 10.3. Exclusion of Certain Securities from Eligibility for Selection for Redemption. Securities shall be excluded from eligibility for selection for redemption if they are identified by registration and certificate number in an Officers’ Certificate delivered to the Trustee at least thirty (30) days prior to the date on which notice of redemption will be given as being owned of record and beneficially by, and not pledged or hypothecated by either (a) APSA or (b) a Person specifically identified in such written statement as directly or indirectly controlling or controlled by or under direct or indirect common control with APSA.

Section 10.4. Redemption at the Option of APSA for Taxation Reasons. The Securities of any Series may be redeemed at the option of APSA in whole, but not in part, at any time, on giving not less than thirty (30) nor more than sixty (60) days’ written notice (which shall be irrevocable) to the Trustee and if applicable the CNV, at the principal amount thereof (or, in the case of original issue discount Securities, at the Amortized Face Amount thereof), together with any accrued but unpaid interest and any Additional Amounts to the date fixed for redemption, if, as a result of any change in, or amendment to, the laws (or any regulations or rulings issued thereunder) of Argentina or any political subdivision of or any taxing authority in Argentina or any change in the application, administration or official interpretation of such laws, regulations or rulings, including without limitation the holding of a court of competent jurisdiction, APSA has or will become obligated to pay Additional Amounts and/or Argentine Taxes on or in respect of such Securities, which change or amendment becomes effective on or after the date of issuance of the Securities of such Series, and APSA determines in good faith that such obligation cannot be avoided by APSA taking reasonable measures available to it. Prior to the distribution of any notice of redemption pursuant hereto, APSA shall deliver to the Trustee an Officers’ Certificate and, if so specified in the resolutions of the Board of Directors or an indenture supplemental hereto relating to the Securities of such Series, an opinion of an independent Argentine legal counsel of nationally recognized standing in such tax matters, stating that APSA has or will become obligated to pay Additional Amounts and/or Argentine Taxes as a result of such change or amendment and that such obligation cannot be avoided by APSA taking reasonable measures available to it; provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which APSA would be obliged to pay such Additional Amount s were a payment in respect of the Securities then due. The Trustee

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shall be entitled to accept such certificate and, if so specified in the resolutions of the Board of Directors or an indenture supplemental hereto relating to the Securities of such Series, opinion of counsel as sufficient evidence of the satisfaction of the conditions contained in the second preceding sentence, in which event it will be conclusive and binding on the Holders. In all cases Holders of the Securities shall be treated on an equal basis.

Section 10.5. Redemption at the Option of Holders. In the event that the terms of the Securities of any Series permit the Holders thereof, at their option, to cause APSA to repurchase such Securities, upon the Holder of any Security giving to APSA not more than sixty (60) nor less than thirty (30) days’ notice (or such other notice as is specified in the terms of such Securities) in accordance with Section 12.5, which notice shall be irrevocable, APSA shall, upon the expiry of such notice, repurchase such Security, subject to, and in accordance with, the terms of such Security on the date and at the amount specified in or determined in the manner specified in such Securities, in whole but not in part, together with accrued interest (if any) to the date fixed for such repurchase. In accordance with the provisions hereof relating to payment on redemption at the option of APSA, APSA shall arrange with the Trustee (and each Paying Agent for such purpose, if applicable) for the provision of funds sufficient to make payments to such Holders in respect of such repurchases from time to time.

ARTICLE XI

Defeasance

Section 11.1. APSA’s Option to Effect Total Defeasance or Partial Defeasance. APSA may at its option, by written notice executed by an Authorized Person of APSA delivered to the Trustee, elect to have either Section 11.2 or Section 11.3 applied to any Series of Securities, or to any portion of such Series, as the case may be, unless otherwise designated pursuant to the terms of such Securities established as set forth in Section 2.3, in each case upon compliance with the conditions set forth below in this Article XI; provided that the provisions of this Article XI shall apply only to Securities of a Series that are denominated in U.S. dollars and have a fixed rate of interest.

Section 11.2. Total Defeasance. If APSA shall exercise the option provided in Section 11.1 to have this Section 11.2 apply with respect to all Outstanding Securities of any Series of Securities denominated in U.S. dollars and having a fixed rate of interest, as the case may be, APSA shall be deemed to have been discharged from its obligations with respect to such Securities on the date the conditions set forth below are satisfied with respect to such Securities (hereinafter, “total defeasance”). For this purpose, total defeasance means (except as otherwise may be provided pursuant to the terms of the Securities established pursuant to Section 2.3) that APSA shall be deemed to have paid and discharged the entire indebtedness represented by such Securities and to have satisfied all its other obligations under such Securities and this Indenture insofar as such Securities are concerned (and APSA and the Trustee, upon the written request of APSA, shall execute proper instruments acknowledging the same), except for the following, which shall survive until otherwise terminated or discharged hereunder: (i) the right of Holders of such Securities to receive, solely from the trust fund described in Section 11.4 and as more fully set forth in such Section, payments in respect of the principal of and interest on such Securities when such payments are due, (ii) APSA’s obligations under Sections 1.2, 2.10, 2.11,

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3.2, 3.3, 3.4(b), 3.5, 3.13, 5.6, 5.10, 5.11 and 12.8; (iii) any other provisions specified pursuant to the terms of the Securities established pursuant to Section 2.3; and (iv) the provisions of Section 1.2, Article V and this Article XI. Subject to compliance with this Article XI, APSA may exercise its option under Section 11.1 to have this Section 11.2 apply to any Securities notwithstanding the prior exercise of its option under Section 11.1 to have Section 11.3 apply to such Securities.

Section 11.3. Partial Defeasance. Upon APSA’s exercise of the option provided in Section 11.1 to have this Section 11.3 applied to all the Outstanding Securities of any Series denominated in U.S. dollars and having a fixed rate of interest, except as otherwise may be provided pursuant to the terms of the Securities established pursuant to Section 2.3: (i) APSA shall be released from its obligations under Sections 3.14 and 3.15 and (ii) the occurrence of any event with respect to such Securities specified in Section 4.1(b) shall not be deemed an Event of Default (but only insofar as such event relates to the obligations under Sections 3.14 and 3.15 from which APSA has been expressly released pursuant to Section 11.3(i)), in each case, on and after the date the conditions set forth in Section 11.4 are satisfied (hereinafter, “partial defeasance”). For this purpose, partial defeasance means that APSA may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such paragraph to the extent specified above, whether directly or indirectly by reason of any reference elsewhere herein or in the Securities to any such paragraph or by reason of any reference in any such paragraph to any other provision herein or in the Securities or in any other document, but the remainder of APSA’s obligations shall be unaffected thereby.

Section 11.4. Conditions to Total Defeasance and Partial Defeasance. The following shall be the conditions to application of either Section 11.2 or Section 11.3 to any Securities:

(a) APSA shall irrevocably have deposited or caused to be deposited with a trustee, who may be the Trustee and who shall agree to comply with the provisions of this Article XI applicable to it (the “Defeasance Trustee”), as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of such Securities, (A) freely transferable U.S. dollars, or (B) U.S. Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms shall provide, not later than one day before the due date of any payment, money, or (C) a combination thereof, in each case in an amount sufficient, to pay and discharge, and which shall be applied by the Defeasance Trustee to pay and discharge, the principal of and each installment of interest on such Securities on the maturity of such principal or installment of interest (whether at the stated maturity or by acceleration, redemption or otherwise) in accordance with the terms of this Indenture and of such Securities. For this purpose, “U.S. Government Obligations” means securities that are (x) direct obligations of the United States of America for the payment of which its full faith and credit are pledged or (y) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof or any other obligor thereon, and shall also include a depositary receipt issued by a bank (as defined in

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Section 3(a)(2) of the Securities Act) as custodian with respect to any such U.S. Government Obligation, or any specific payment of principal of or interest on any such U.S. Government Obligation, held by such custodian for the account of the holder of such depositary receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the U.S. Government Obligation, or the specific payment of principal of and premium or interest on the U.S. Government Obligation, evidenced by such depositary receipt.

(b) APSA shall have delivered to the Trustee a certificate from a firm of independent certified public accountants of internationally recognized standing expressing their opinion that the payments of principal and interest when due and without reinvestment of the deposited U.S. Government Obligations plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay principal and interest when due on all the Securities to maturity or redemption, as the case may be.

(c) in the case of an election to have Section 11.2 apply to such Securities, APSA shall have delivered to the Defeasance Trustee and the Trustee opinions of (A) independent U.S. counsel of nationally recognized standing experienced in such tax matters stating that (x) APSA has received from, or there has been published by, the U.S. Internal Revenue Service a ruling or (y) since the date of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, the Holders of such Securities shall not recognize income, gain or loss for U.S. federal income tax purposes as a result of such deposit, total defeasance and discharge and shall be subject to U.S. federal income tax on the same amount, in the same manner and at the same times as would have been the case if such deposit, total defeasance and discharge had not occurred and (B) if so specified in the applicable pricing supplement, in Argentina, independent Argentine counsel of nationally recognized standing experienced in such tax matters to the effect that the Holders of such Securities will not recognize income, gain or loss for Argentine federal income tax purposes as a result of such deposit, total defeasance and discharge and will be subject to Argentine federal income tax on the same amount, in the same manner and at the same times as would have been the case if such deposit, total defeasance and discharge had not occurred.

(d) in the case of an election to have Section 11.3 apply to such Securities, APSA shall have delivered to the Defeasance Trustee and the Trustee opinions of independent U.S. and if so specified in the applicable pricing supplement, in Argentina, Argentine counsel of nationally recognized standing experienced in such tax matters to the effect that the Holders of such Securities will not recognize income, gain or loss for U.S. or Argentine, as the case may be, federal income tax purposes as a result of such deposit and partial defeasance and will be subject to U.S. or Argentine, as the case may be, federal income tax on the same amount, in the same manner and at the same times as would have been the case if such deposit and partial defeasance had not occurred.

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(e) APSA shall have delivered to the Defeasance Trustee and the Trustee an Opinion of Counsel to the effect that payment of amounts deposited in trust with the Defeasance Trustee as provided in clause (a) will not be subject to future Argentine Taxes except to the extent that Additional Amounts in respect thereof shall have been deposited in trust with the Defeasance Trustee as provided in clause (a).

(f) no Event of Default under such Securities or event which with notice or lapse of time or both would become such an Event of Default shall have occurred and be continuing on the date of such deposit or at any time on or prior to the 123rd day after the date of such deposit (it being understood that this condition shall not be deemed satisfied until such 123rd day).

(g) such total defeasance or partial defeasance shall not result in a breach or violation of, or constitute a default under, any other agreement or instrument to which APSA is a party or by which it is bound, and APSA shall have delivered to the Trustee and the Defeasance Trustee an Opinion of Counsel to that effect.

(h) APSA shall have delivered to the Trustee and the Defeasance Trustee an Officers’ Certificate stating that all conditions precedent relating to either the total defeasance under Section 11.2 or the partial defeasance under Section 11.3, as the case may be, have been complied with.

(i) APSA shall have delivered to the Trustee and the Defeasance Trustee an Opinion of Counsel to the effect that (i) the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940, (ii) the Holders have a valid first priority perfected security interest in the trust funds, and (iii) after passage of 123 days following the deposit (except, with respect to any trust funds for the account of any Holder who may be deemed to be an “insider” for purposes of the U.S. Bankruptcy Code, after one year following the deposit), the trust funds will not be subject to the effect of Section 547 of the U.S. Bankruptcy Law or Section 15 of the New York Debtor and Creditor Law in a case commenced by or against APSA under either such statute, and either (A) the trust funds will no longer remain the property of APSA (and therefore, will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally) or (B) if a court were to rule under any such law in any case or proceeding that the trust funds remained property of APSA, assuming such trust funds remained in the possession of the Defeasance Trustee prior to such court ruling to the extent not paid to Holders, the Defeasance Trustee will hold, for the benefit of the Holders, a valid first priority perfected security interest in such trust funds that is not avoidable in bankruptcy or otherwise except for the effect of Section 552(b) of the U.S. Bankruptcy Law on interest on the trust funds accruing after the commencement of a case under such statute.

(j) APSA shall have delivered to the Trustee a certificate signed by an Authorized Person to the effect that such Securities, if then listed on any securities exchange, will not be delisted by such exchange as a result of such deposit.

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(k) APSA shall have paid the Trustee, the Agents and the Representative of the Trustee in Argentina all amounts outstanding to the Trustee, the Agents and the Representative of the Trustee in Argentina (which may include the reasonable fees and expenses of counsel) in connection with defeasance or otherwise.

Section 11.5. Deposit in Trust; Miscellaneous. All money and U.S. Government Obligations (including the proceeds thereof) deposited with the Defeasance Trustee pursuant to Section 11.4 in respect of any Securities shall be held in trust and applied by the Defeasance Trustee, in accordance with the provisions of such Securities and this Indenture, to the payment, either directly or through any Paying Agent as the Defeasance Trustee may determine, to the Holders of such Securities, of all sums due and to become due thereon in respect of principal and any premium and interest, and such money shall be segregated from other funds. Any money deposited with the Defeasance Trustee for the payment of the principal of and any premium or interest on any such Security and remaining unclaimed for two (2) years after such principal, premium or interest has become due and payable shall, upon APSA’s written request, be paid to APSA; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to APSA for payment thereof, and all liability of the Defeasance Trustee with respect to such trust money shall thereupon cease.

APSA shall pay and indemnify the Defeasance Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited by APSA pursuant to Section 11.4 or the principal, premium and interest received in respect thereof, other than any such tax, fee or other charge which by law is for the account of the Holders of the Outstanding Securities.

Anything in this Article XI to the contrary notwithstanding, the Defeasance Trustee shall deliver or pay to APSA from time to time upon the written request of APSA any money or U.S. Government Obligations held by it on behalf of APSA as provided in Section 11.4 which, in the opinion of a firm of independent certified public accountants of internationally recognized standing expressed in a written certification thereof delivered to the Defeasance Trustee, are in excess of the amount thereof which would then be required to be deposited to effect an equivalent total defeasance or partial defeasance.

Section 11.6. Reinstatement. If the Defeasance Trustee is unable to apply any money in accordance with Section 11.2 or 11.3 by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then all the obligations of APSA under this Indenture and the Securities with respect to which such money was deposited shall be revived and reinstated as though no deposit had occurred pursuant to this Article XI until such time as the Defeasance Trustee is permitted to apply all such money in accordance with Section 11.2 or 11.3; provided that if APSA makes any payment of principal of or any premium or interest on any such Security following the reinstatement of its obligations, APSA shall be subrogated to the rights of the Holder of such Security to receive such payment from the money held by the Defeasance Trustee and the Defeasance Trustee shall be entitled to promptly make such payment to APSA.

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ARTICLE XII

Miscellaneous

Section 12.1. Conflict with Trust Indenture Act. Subsequent to the qualification of this Indenture under the Trust Indenture Act, if any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such Act to be a part of and govern this Indenture, the latter provision shall control. Subsequent to the qualification of this Indenture under the Trust Indenture Act, if any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be.

Section 12.2. Shareholders, Officers and Directors of APSA Exempt from Individual Liability. No recourse under or upon any obligation, covenant or agreement contained in this Indenture, or in any Security, or because of any indebtedness evidenced thereby, shall be had against any incorporator, as such, or against any past, present or future shareholder, officer or director, as such, of APSA or of any successor, either directly or through APSA or any successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of the Securities by the Holders thereof and as part of the consideration for the issue of the Securities; provided that under Section 34 of the Negotiable Obligations Law, the directors and members of the Supervisory Committee shall be jointly and severally liable for damages to the Securityholders arising from any violation of the Negotiable Obligations Law.

Section 12.3. Provisions of Indenture for the Sole Benefit of Parties and Securityholders. Nothing in this Indenture or in the Securities, express or implied, shall give or be construed to give to any Person, other than the parties hereto and their successors and the Holders of the Securities, any legal or equitable right, remedy or claim under this Indenture or under any covenant or provision herein contained, all such covenants and provisions being for the sole benefit of the parties hereto and their successors and of the Holders of the Securities.

Section 12.4. Successors and Assigns of APSA Bound by Indenture. All the covenants, stipulations, promises and agreements in this Indenture contained by or on behalf of APSA shall bind its successors and assigns, whether so expressed or not.

Section 12.5. Notices and Demands on APSA, Trustee and Securityholders. Any notice or demand that by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the Holders of Securities to or on APSA shall be sufficient for every purpose hereunder if given or served by facsimile transmission or by internationally recognized overnight courier (except as otherwise specifically provided herein) addressed (until another address of APSA is filed by APSA with the Trustee) to Alto Palermo S.A. (APSA), Moreno 877, 22nd Floor (C1091AAQ), City of Buenos Aires, Argentina, Attention: Chief Financial Officer, Telephone: 5411-4344-4600, Telecopy: 5411-4814-7875. Any notice, direction, request or demand by APSA or any Securityholder to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, upon actual receipt and if in writing and given or made at the Corporate Trust Office by an internationally recognized courier.

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All notices regarding the Securities will be deemed to have been duly given to the Holders of the Securities (i) if sent by first class mail to them (or, in the case of joint Holders, to the first named in the Register) at their respective addresses as recorded in the Register, and will be deemed to have been validly given on the fourth (4th) Business Day after the date of such mailing, and for notices mailed to Holders of Securities located in Argentina, upon receipt, (ii) for so long as such Securities are listed on the BASE and MAE, upon publication in the City of Buenos Aires in the Bulletin of the BASE, MAE and in a widely circulated newspaper in Argentina, and (iii) for so long as such Securities are listed on the Luxembourg Stock Exchange for trading on the EuroMTF, upon publication in a leading daily newspaper of general circulation in Luxembourg (if such publication is not practicable however, notice will be considered to be validly given if otherwise made in accordance with the rules of the Luxembourg Stock Exchange). Any such notice will be deemed to have been given on the date of such publication or, if published more than once or on different dates, on the last date on which publication is required and made as so required. In the case of Global Securities, notices shall be sent to DTC, Euroclear, Clearstream or, if the Securities of such Series are listed on the Luxembourg Stock Exchange for trading on the EuroMTF, the Luxembourg Stock Exchange, as the case may be, or their nominees (or any successors), as the Holder thereof, and such clearing agency or agencies will communicate such notices to their participants in accordance with their standard procedures.

In addition, APSA shall be required to cause all such other publications of such notices as may be required from time to time by applicable law of Argentina.

Any aforementioned notice (a) if sent by internationally recognized overnight courier to APSA as provided above shall be deemed to have been given, made or served on the day on which such courier confirms delivery to the address specified above and (b) if given by facsimile transmission to APSA, when such facsimile is transmitted to the telephone number specified in this Section and telephone confirmation of receipt thereof is received.

Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

Except as otherwise provided herein or in the Securities, APSA agrees to give the Trustee the English text of any notice that APSA is required to provide to the Securityholders pursuant hereto and to the Securities, at least two (2) days prior to the earliest date on which such notice is required to be given.

In case, by reason of the suspension of or irregularities in regular mail service, the temporary suspension of publication or general circulation of any newspaper or otherwise, it shall be, in the opinion of the Trustee, impracticable to mail or publish notice to APSA and Securityholders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice.

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Section 12.6. Officers’ Certificates and Opinions of Counsel; Statements to Be Contained Therein. Upon any application or demand by or on behalf of APSA to the Trustee to take any action under any of the provisions of this Indenture, APSA shall furnish to the Trustee an Officers’ Certificate stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent have been complied with in all material respects, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished. Each such certificate or opinion shall comply with the requirements set forth in this Indenture.

Any certificate, statement or opinion of an Officer of APSA may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous. Any certificate, statement or Opinion of Counsel may be based, insofar as it relates to factual matters, information with respect to which is in the possession of APSA, upon the certificate, statement or opinion of or representations by an officer of officers of APSA, unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous.

Every certificate or opinion of an Officer of APSA with respect to compliance with a condition or covenant provided for in this Indenture shall include substantially:

(1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;

(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.

Any certificate, statement or opinion of an Officer of APSA or of counsel may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants in the employ of APSA, unless such officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous.

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Any certificate or opinion of any independent firm of public accountants filed with the Trustee shall contain a statement that such firm is independent.

The Trustee shall make available to any Securityholder as soon as practicable at the Corporate Trust Office or at the office of any Paying Agent, upon request and upon presentation by such Holder of such evidence of its ownership of its Securities as may be satisfactory to the Trustee, copies of all financial statements and certificates delivered to the Trustee by APSA pursuant to this Indenture or the Securities; provided that the Trustee shall have no liability with respect to any information contained therein or omitted therefrom.

Section 12.7. Payments Due on Non-Business Days. Unless otherwise set forth in the terms of the Securities of a Series, if the Stated Maturity of such Securities or the date fixed for redemption or repayment of such Securities shall not be a Business Day in the relevant locations specified in the terms of such Securities and the place of payment, then payments of interest or principal in respect of such Securities need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Stated Maturity or the date fixed for redemption or repayment, and no interest shall accrue on such payment for the period after such date on account of such delay. Unless otherwise set forth in the terms of the Securities of a Series, if any date on which a payment of interest is due on such Securities shall not be a Business Day in the relevant locations specified in the terms of such Securities and the place of payment, then such payment of interest in respect of such Securities need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on such date and no interest shall accrue on such payment for the period after such date on account of such delay.

Section 12.8. Governing Law; Consent to Jurisdiction; Waiver of Immunity; Currency Indemnity. (a) This Indenture and the Securities shall be governed by, and construed in accordance with, the law of the State of New York; provided that all matters relating to the due authorization, execution, issuance and delivery of the Securities by APSA, and matters relating to the legal requirements necessary in order for the Securities to qualify as “obligaciones negociables” under Argentine law, shall be governed by the Negotiable Obligations Law, together with the Argentine Companies Law and other applicable Argentine laws and regulations.

(b) APSA hereby irrevocably submits to the non-exclusive jurisdiction of any state or federal court sitting in the Borough of Manhattan, City and State of New York, of any Argentine court sitting in the City of Buenos Aires, including the ordinary courts for commercial matters and the Tribunal de Arbitraje General de la Bolsa de Comercio de Buenos Aires (Permanent Arbitral Tribunal of the BASE) under the provisions of Article 38 of Argentine Decree No. 677/2001, and any competent court in the place of its corporate domicile for purposes of any suit, action or proceeding arising out of or related to this Indenture or the Securities. APSA hereby irrevocably waives, to the fullest extent permitted by law, any objection which it may have to the laying of the venue of any such suit, action or proceeding brought in such a court and any claim that any such suit, action or proceeding brought in such a court has been brought in an inconvenient forum. APSA also agrees that final judgment in any such suit, action or proceeding brought in such court shall be conclusive and binding upon such party and may be enforced in any court to the jurisdiction of which such party is subject by a suit upon such judgment; provided that service of process is effected upon APSA in the manner specified herein.

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(c) APSA acknowledges and agrees that the activities contemplated by the provisions of this Indenture are commercial in nature rather than governmental or public and, therefore, acknowledges and agrees that it is not entitled to any right of immunity on the grounds of sovereignty or otherwise with respect to any such activities or in any legal action or proceeding arising out of or in any way relating to this Indenture. APSA, in respect of itself and its properties and revenues, expressly and irrevocably waives any such right of immunity (including any immunity from the jurisdiction of any court or from service of process or from any execution of judgment or from attachment prior to judgment or in aid of execution or otherwise) or claim thereto which may now or hereafter exist, and agrees not to assert any such right or claim in any such action or proceeding, whether in the United States or otherwise.

(d) APSA agrees that service of all writs, claims, process and summonses in any suit, action or proceeding described above against it in the State of New York may be made upon CT Corporation System at 111 Eighth Avenue, New York, New York 10011, as its authorized agent in the Borough of Manhattan, New York (the “Process Agent”), and APSA irrevocably appoints the Process Agent as its agent and true and lawful attorneys-in-fact in its name, place and stead to accept such service of any and all such writs, claims, process and summonses, and agrees that the failure of the Process Agent to give any notice to it of any such service of process shall not impair or affect the validity of such service or of any judgment based thereon. APSA agrees to maintain at all times an agent with offices in New York City to act as its Process Agent. Nothing herein shall in any way be deemed (i) to limit the ability to serve any such writs, process or summonses in any other manner permitted by applicable law or (ii) to require APSA to appoint such Process Agent prior to the issuance of the first Series of Securities hereunder.

(e) If a judgment or order given or made by any court for the payment of any amount in respect of any Security is expressed in a currency (the “judgment currency”) other than the currency (the “denomination currency”) in which such Securities are denominated or in which such amount is payable, APSA will indemnify the relevant Holder against any deficiency arising or resulting from any variation in rates of exchange between the date as of which the amount in the denomination currency is notionally converted into the amount in the judgment currency for the purposes of such judgment or order and the date of actual payment thereof. This indemnity will constitute a separate and independent obligation from the other obligations contained in the terms and conditions of the Securities, will give rise to a separate and independent cause of action, will apply irrespective of any indulgence granted from time to time and will continue in full force and effect notwithstanding any judgment or order for a liquidated sum or sums in respect of amounts due in respect of the relevant Security or under any such judgment or order.

Section 12.9. Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO A TRIAL BY JURY (BUT NO OTHER JUDICIAL REMEDIES) IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE SECURITIES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

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Section 12.10. Severability. If any provision of this Indenture shall be held or deemed to be or shall, in fact, be invalid, inoperative or unenforceable as applied in any particular case in any or all jurisdictions because its conflicts with any provision of any constitution, statute, rule or public policy or for any other reason, such circumstances shall not have the effect of rendering the provision in question invalid, inoperative or unenforceable in any other case, circumstances or jurisdiction, or of rendering any other provision or provisions of this Indenture invalid, inoperative or unenforceable to any extent whatsoever.

Section 12.11. Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument.

Section 12.12. Effect of Headings. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.

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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of May 11, 2007.

ALTO PALERMO S.A. (APSA)

By:

Name:

Title:

THE BANK OF NEW YORK, as Trustee, Co- Registrar, Principal Paying Agent and Transfer Agent.

By:

Name:

Title:

BANCO SANTANDER RÍO S.A., as Registrar, Paying Agent, Transfer Agent and Representative of the Trustee in Argentina.

By:

Name:

Title:

By:

Name:

Title:

EXHIBIT A

FORM OF GLOBAL NOTE

Registered No.:                    

CUSIP No.:                    

ISIN No.:                    

Registered Holder:                    

ALTO PALERMO S.A. (APSA)

Alto Palermo S.A. (APSA) was organized as a stock corporation (sociedad anónima) under the laws of Argentina for a term expiring on August 28, 2087 and was registered on August 29, 1889 under No. 323, Page 6, Book 85, of the Stock Corporations Volume of the Public Registry of Commerce of the City of Buenos Aires, Argentina, and its registered domicile is at Moreno 877, 22nd Floor, City of Buenos Aires, Argentina.

GLOBAL NOTE

representing

[Currency] [Aggregate principal amount]

NOTES DUE [Stated Maturity Date]

[INCLUDE FOR A RULE 144A GLOBAL NOTE (UNLESS SUCH LEGEND MAY BE REMOVED PURSUANT TO THE INDENTURE): THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES FOR THE BENEFIT OF ALTO PALERMO S.A. (“APSA”) THAT THIS NOTE OR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) TO APSA OR TO ANY DEALERS APPOINTED BY APSA WITH RESPECT TO A PARTICULAR SERIES OF NOTES (EACH, A “DEALER” AND COLLECTIVELY, THE “DEALERS”) OR BY, THROUGH OR IN A TRANSACTION APPROVED BY A DEALER, (II) SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A) IN ACCORDANCE WITH RULE 144A, (III) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AFFORDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND IN EACH OF SUCH CASES IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER APPLICABLE JURISDICTION. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, REPRESENTS AND AGREES FOR THE BENEFIT OF APSA THAT IT WILL NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO ABOVE.

Exhibit A

Page 2

THE FOREGOING LEGEND MAY BE REMOVED FROM THIS NOTE ON SATISFACTION OF THE CONDITIONS SPECIFIED IN THE INDENTURE REFERRED TO HEREIN.]

[INCLUDE FOR A REGULATION S GLOBAL NOTE (UNLESS SUCH LEGEND MAY BE REMOVED PURSUANT TO THE INDENTURE): THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES FOR THE BENEFIT OF ALTO PALERMO S.A. (APSA) THAT NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.

THE FOREGOING LEGEND MAY BE REMOVED FROM THIS NOTE AFTER FORTY (40) CONSECUTIVE DAYS BEGINNING ON AND INCLUDING THE LATER OF (A) THE DAY ON WHICH THE NOTES ARE OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) AND (B) THE ORIGINAL ISSUE DATE OF THIS NOTE.]

[INCLUDE FOR A DTC GLOBAL NOTE: UNLESS (1) THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (“DTC”) TO ALTO PALERMO S.A. (APSA) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, (2) ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC AND (3) ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL BECAUSE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE, AND TRANSFERS OF INTERESTS IN THIS NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO HEREIN.]

[INCLUDE FOR A EUROCLEAR/CLEARSTREAM GLOBAL NOTE: TRANSFERS OF THIS NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO EUROCLEAR, CLEARSTEAM, NOMINEES OF EUROCLEAR OR CLEARSTREAM OR TO A SUCCESSOR TO EUROCLEAR OR CLEARSTREAM OR SUCH SUCCESSOR’S NOMINEE, AND TRANSFERS OF INTERESTS IN THIS NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO HEREIN.]

2

Exhibit A

Page 3

[IF APPLICABLE: THE “TOTAL AMOUNT OF OID”“YIELD TO MATURITY” AND “INITIAL ACCRUAL PERIOD” SET FORTH IN THE PRICING SUPPLEMENT REFERRED TO HEREIN HAVE BEEN COMPLETED SOLELY FOR THE PURPOSE OF APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT (“OID”) RULES.

THIS NOTE HAS BEEN ISSUED WITH OID FOR U.S. FEDERAL INCOME TAX PURPOSES. THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR PURPOSES OF APPLYING THE FEDERAL INCOME TAX OID RULES TO THIS NOTE:

ISSUE PRICE: $            PER $1000 OF PRINCIPAL AMOUNT

ORIGINAL ISSUE DISCOUNT: $            PER $1000 OF PRINCIPAL AMOUNT

YIELD TO MATURITY:             .            %

ORIGINAL ISSUE DATE:             ,             ]

SERIES:

SPECIFIED CURRENCY: PRINCIPAL AMOUNT:

ISSUE DATE:

STATED MATURITY:

ORIGINAL ISSUE DISCOUNT NOTE: YES [    ] NO [    ]

OTHER TERMS AND CONDITIONS:

[If Note is a Fixed Rate Note:

FIXED RATE OF INTEREST:]

[If Note is a Floating Rate Note:

INITIAL INTEREST RATE:

INTEREST DETERMINATION DATE(S):

INTEREST PERIOD:]

INTEREST COMMENCEMENT DATE:

INTEREST PAYMENT DATE(S):

THE TERMS OF THE PRICING SUPPLEMENT ATTACHED HERETO ARE INCORPORATED BY REFERENCE HEREIN IN THEIR ENTIRETY.

This [Rule 144A] [Regulation S] Global Note (“Global Note”) is issued in accordance with the Indenture dated as of May 11, 2007, among Alto Palermo S.A. (APSA), as issuer (“APSA”), The Bank of New York, as trustee (the “Trustee”), co-registrar, paying agent and transfer agent and Banco Santander Río S.A., as registrar, paying agent, transfer agent and representative of the Trustee in Argentina (as amended or supplemented from time to time, the “Indenture”) and is subject to the Terms and Conditions set forth on reverse hereof (the “Terms and Conditions”) and the terms and conditions set forth in the attached Pricing Supplement. Such provisions shall for all purposes have the same effect as if set forth in this Note.

3

Exhibit A

Page 4

Copies of the Indenture and the Terms and Conditions are on file and available for inspection at the Corporate Trust Office of the Trustee and at the office of the Registrar in the City of Buenos Aires and, if and for so long as the Notes are listed on the Luxembourg Stock Exchange for trading on the EuroMTF, and such Exchange shall so require, at the office of the Paying Agent in Luxembourg, in each case as specified in the Indenture. The Holder of this Note is entitled to the benefit of, is bound by, and is deemed to have notice of, all the provisions of the Indenture and the Terms and Conditions applicable to it.

This Global Note is a global security representing an issue of duly authorized Notes of APSA issued and to be issued in one or more Series pursuant to the Indenture. This Global Note has been issued in the initial Principal Amount shown above (as adjusted from time to time on Schedule A hereto, the “Principal Amount”) and with the Specified Currency, Issue Date, Stated Maturity, redemption and other provisions specified above and in the Pricing Supplement, and bearing interest on said Principal Amount at the rate of interest specified in the Pricing Supplement.

In the event of any conflict between the provisions stated herein or the provisions of the Terms and Conditions incorporated by reference herein and the terms and conditions set forth in the attached Pricing Supplement, the terms and conditions in the attached Pricing Supplement will prevail. Terms used but not defined herein are used as defined in the Pricing Supplement or, if not defined therein, in the Indenture and the Terms and Conditions.

APSA, for value received, hereby promises to pay [IF DTC GLOBAL NOTE INSERT: Cede & Co.] [IF EUROCLEAR/CLEARSTREAM GLOBAL NOTE INSERT NAME OF APPLICABLE NOMINEE] or its registered assigns, the Principal Amount stated above (as adjusted pursuant to Schedule A hereto) or the redemption amount if specified in the attached Pricing Supplement, in the Specified Currency at the Stated Maturity specified above, unless earlier redeemed in accordance with the terms hereof, and unless this Global Note is an original issue discount Note, to pay interest from the Interest Commencement Date of this Global Note specified in the Pricing Supplement (or from the most recent date to which interest has been paid or made available for payment) on the unpaid Principal Amount (and, to the extent lawful, on overdue principal (including premium or redemption amount, if any, and if this is an original issue discount Note, the Amortized Face Amount, or other amount)) and any interest in respect hereof at (i) if this Note is a Fixed Rate Note, the Fixed Rate of Interest per annum specified in the Pricing Supplement on the Interest Payment Date or Dates specified in the Pricing Supplement in each year, commencing, unless otherwise specified in the Pricing Supplement, with the first such Interest Payment Date falling at least fifteen (15) days after the Issue Date of this Global Note specified above and at Stated Maturity or any redemption date, until the principal hereof shall be paid or made available for payment, or (ii) if this Note is a Floating Rate Note, a rate per annum equal to the Initial Interest Rate specified in the Pricing Supplement until the first Interest Reset Date so specified, or if none is specified, until the first Interest Payment Date, following the Issue Date and thereafter at a rate determined in accordance with the provisions in the Terms and Conditions and the Pricing Supplement or (iii) otherwise as determined by the method set forth in the Pricing Supplement, until the principal hereof is paid

4

Exhibit A

Page 5

or made available for payment. Such interest on a Floating Rate Note shall be payable by APSA monthly, quarterly, semi annually or annually, or at such other intervals, in each case as specified in the Pricing Supplement under “Interest Period”, on the dates specified in the Pricing Supplement under “Interest Payment Date(s)”, and at Stated Maturity or any redemption date, commencing, unless otherwise specified in the Pricing Supplement, with the first such Interest Payment Date falling at least 15 days after the Issue Date hereof.

This Global Note is exchangeable in whole or in part for duly executed and issued Certificated Notes in the form set forth in the Indenture, with the applicable legends as marked thereon, only if such exchange complies with Section 2.10 of the Indenture. Interests in this Global Note are exchangeable or transferable in whole or in part for interests in a Regulation S Global Security of the same Series or an Unrestricted Global Security, only if such exchange or transfer complies with Section 2.10 of the Indenture.

This Global Note is one of the Series designated above, which term shall mean each original issue of Notes and shall be deemed to include any other Global Notes in respect of such Series issued pursuant to the Indenture referred to on the face of this Note. These Notes, together with any other debt securities of APSA issued under the Indenture (“Outstanding Notes”) are limited to an aggregate principal amount outstanding at any one time of US$200,000,000 or the equivalent thereof in one or more Specified Currencies. For purposes of the preceding sentence, the U.S. dollar equivalent of any Note or Outstanding Note denominated in a Specified Currency other than U.S. dollars will be determined on the basis of the Exchange Rate as set forth in the Indenture and the Terms and Conditions.

Unless the certificate of authentication hereon has been executed by or on behalf of the Trustee by manual signature of one of its authorized signatures, this Global Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

This Global Note shall be governed by and construed in accordance with the laws of the State of New York; provided that all matters relating to the due authorization, execution, issuance and delivery of the Notes by APSA, and matters relating to the legal requirements necessary in order for the Notes to qualify as “obligaciones negociables” under Argentine law, shall be governed by the Argentine Negotiable Obligations Law No. 23,576, as amended, together with Argentine Companies Law No. 19,550, as amended and other applicable Argentine laws and regulations.

5

Exhibit A

Page 6

IN WITNESS WHEREOF, Alto Palermo S.A. (APSA) has caused this Global Note to be duly executed.

Date:

ALTO PALERMO S.A. (APSA)

By:

Name:

Title:

By:

Name:

Title:

CERTIFICATE OF AUTHENTICATION

This is one of the Notes referred to in the within mentioned Indenture.

THE BANK OF NEW YORK,

as Trustee

By:

Name:

Title:

6

Exhibit A

Page 7

[ATTACH TERMS AND CONDITIONS IN THE

FORM SET FORTH IN EXHIBIT C TO THE INDENTURE]

[ATTACH APPLICABLE PRICING SUPPLEMENT]

7

Exhibit A

Page 8

SCHEDULE A

Date Principal Amount of Certificated Notes or other Global Notes issued in exchange for or upon transfer of an interest in this Global Note Principal Amount of this Global Note Redeemed or Repurchased Increase in Principal Amount of this Note due to the exchange or transfer of another Note (or an interest therein) for an interes t in this Note Remaining Principal Amount of this Global Note Notation made on behalf of the Trustee by

8

EXHIBIT B

FORM OF CERTIFICATED NOTE

CUSIP No.:                     

ISIN No.:                         

ALTO PALERMO S.A. (APSA)

Alto Palermo S.A. (APSA) was organized as a stock corporation (sociedad anónima) under the laws of Argentina for a term expiring on August 28, 2087 and was registered on August 29, 1889 under No. 323, Page 6, Book 85, of the Stock Corporations Volume of the Public Registry of Commerce of the City of Buenos Aires, Argentina, and its registered domicile is at Moreno 877, 22nd Floor, City of Buenos Aires, Argentina.

CERTIFICATED NOTE

representing

[Currency] [Aggregate principal amount]

NOTES DUE [Stated Maturity Date]

[INCLUDE THE FOLLOWING PARAGRAPHS IF THIS NOTE IS SOLD IN RELIANCE ON RULE 144A OR IN A TRANSACTION OTHERWISE EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT: THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES FOR THE BENEFIT OF ALTO PALERMO S.A. (APSA) (“APSA”) THAT THIS NOTE OR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) TO APSA OR TO ANY DEALERS APPOINTED BY APSA WITH RESPECT TO A PARTICULAR SERIES OF NOTES (EACH, A “DEALER” AND COLLECTIVELY, THE “DEALERS”) OR BY, THROUGH OR IN A TRANSACTION APPROVED BY A DEALER, (II) SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A) IN ACCORDANCE WITH RULE 144A, (III) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AFFORDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND IN EACH OF SUCH CASES IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER APPLICABLE JURISDICTION. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, REPRESENTS AND AGREES FOR THE BENEFIT OF APSA THAT IT WILL NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO ABOVE.

Exhibit B

Page 2

THE FOREGOING LEGEND MAY BE REMOVED FROM THIS NOTE ON SATISFACTION OF THE CONDITIONS SPECIFIED IN THE INDENTURE REFERRED TO HEREIN.]

THIS NOTE MAY BE TRANSFERRED ONLY IN MINIMUM PRINCIPAL AMOUNTS SPECIFIED IN THE APPLICABLE PRICING SUPPLEMENT.

[IF APPLICABLE: THE “TOTAL AMOUNT OF OID”, “YIELD TO MATURITY” AND “INITIAL ACCRUAL PERIOD SET FORTH IN THE PRICING SUPPLEMENT REFERRED TO HEREIN HAVE BEEN COMPLETED SOLELY FOR THE PURPOSE OF APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT (“OID”) RULES.

THIS NOTE HAS BEEN ISSUED WITH OID FOR U.S. FEDERAL INCOME TAX PURPOSES. THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR PURPOSES OF APPLYING THE FEDERAL INCOME TAX OID RULES TO THIS NOTE:

ISSUE PRICE: $             PER $1000 OF PRINCIPAL AMOUNT

ORIGINAL ISSUE DISCOUNT: $             PER $1000 OF PRINCIPAL AMOUNT

YIELD TO MATURITY:             .    %

ORIGINAL ISSUE DATE:             ,             ]

SERIES:

SPECIFIED CURRENCY:

PRINCIPAL AMOUNT:

ORIGINAL ISSUE DATE:

STATED MATURITY DATE:

ORIGINAL ISSUE DISCOUNT NOTE: YES [    ] NO [    ]

OTHER TERMS AND CONDITIONS:

[If Note is a Fixed Rate Note:

FIXED RATE OF INTEREST:]

[If Note is a Floating Rate Note:

INITIAL INTEREST RATE:

INTEREST DETERMINATION DATE(S):

INTEREST PERIOD:]

INTEREST COMMENCEMENT DATE:

INTEREST PAYMENT DATE(S):

OTHER TERMS AND CONDITIONS:

This Note is issued in accordance with the Indenture dated as of May 11, 2007, among Alto Palermo S.A. (APSA), as issuer (“APSA”), The Bank of New York, as trustee (the “Trustee”), co-registrar, paying agent and transfer agent and Banco Santander Río S.A., as

2

Exhibit B

Page 3

registrar, paying agent, transfer agent and representative of the Trustee in Argentina (as amended or supplemented from time to time, the “Indenture”) and is subject to the Terms and Conditions set forth on reverse hereof (the “Terms and Conditions”) and the terms and conditions set forth in the attached Pricing Supplement. Such provisions shall for all purposes have the same effect as if set forth in this Note.

Copies of the Indenture and the Terms and Conditions are on file and available for inspection at the Corporate Trust Office of the Trustee and at the office of the Registrar in the City of Buenos Aires and, if and for so long as the Notes are listed on the Luxembourg Stock Exchange for trading on the EuroMTF, and such Exchange shall so require, at the office of the Paying Agent in Luxembourg, in each case as specified in the Indenture. The Holder of this Note is entitled to the benefit of, is bound by, and is deemed to have notice of, all the provisions of the Indenture and the Terms and Conditions applicable to it.

In the event of any conflict between the provisions stated herein or the provisions of the Terms and Conditions incorporated by reference herein and the terms and conditions set forth in the attached Pricing Supplement, the terms and conditions in the attached Pricing Supplement will prevail. Terms used but not defined herein are used as defined in the Pricing Supplement or, if not defined therein, in the Indenture and the Terms and Conditions.

APSA, for value received, hereby promises to pay to                                          or its registered assigns the Principal Amount stated above or the Redemption Amount if specified in the attached Pricing Supplement, in the Specified Currency at the Stated Maturity specified above, unless earlier redeemed in accordance with the terms hereof, and unless this Note is an original issue discount Note, to pay interest from the Interest Commencement Date of this Note specified in the Pricing Supplement (or from the most recent date to which interest has been paid or made available for payment) on the unpaid Principal Amount (and, to the extent lawful, on overdue principal (including premium or redemption amount, if any, and if this is an original issue discount Note, the Amortized Face Amount, or other amount)) at, (i) if this Note is a Fixed Rate Note, the Fixed Rate of Interest per annum specified in the Pricing Supplement on the Interest Payment Date or Dates specified in the Pricing Supplement in each year, commencing, unless otherwise specified in the Pricing Supplement, with the first such Interest Payment Date falling at least fifteen days after the Issue Date of this Note specified above and at Stated Maturity or any redemption date, until the principal hereof shall be paid or made available for payment, or (ii) if this Note is a Floating Rate Note, a rate per annum equal to the Initial Interest Rate specified in the Pricing Supplement until the first Interest Re set Date so specified, or if none is specified, until the first Interest Payment Date, following the Issue Date and thereafter at a rate determined in accordance with the provisions of the Terms and Conditions and the Pricing Supplement or (iii) otherwise as determined by the method set forth in the Pricing Supplement, until the principal hereof is paid or made available for payment. Such interest on a Floating Rate Note shall be payable by APSA monthly, quarterly, semi annually or annually, or at such other intervals, in each case as specified in the Pricing Supplement under “Interest Period”, on the dates specified in the Pricing Supplement under “Interest Payment Date(s)”, and at Stated Maturity or any redemption date, commencing, unless otherwise specified in the Pricing Supplement, with the first such Interest Payment Date falling at least fifteen (15) days after the Issue Date hereof.

3

Exhibit B

Page 4

As used herein, the term “Holder” means the person in whose name a Note is registered in the Register.

This Note is one of the Series designated above, which term shall mean each original issue of Notes and shall be deemed to include any Global Notes in respect of such Series issued pursuant to the Indenture referred to on the face of this Note. These Notes, together with any other debt securities of APSA issued under the Indenture (“Outstanding Notes”) are limited to an aggregate principal amount outstanding at any one time of US$200,000,000 or the equivalent thereof in one or more Specified Currencies. For purposes of the preceding sentence, the U.S. dollar equivalent of any Note or Outstanding Note denominated in a Specified Currency other than U.S. dollars will be determined on the basis of the Exchange Rate as set forth in the Indenture and the Terms and Conditions.

Unless the certificate of authentication hereon has been executed by or on behalf of the Trustee by manual signature of one of its authorized signatories, this Note shall not be entitled to any benefits under the Indenture or be valid or obligatory for any purpose.

This Note shall be governed by and construed in accordance with the laws of the State of New York; provided that all matters relating to the due authorization, execution, issuance and delivery of the Notes by APSA, and matters relating to the lega l requirements necessary in order for the Notes to qualify as “obligaciones negociables” under Argentine law, shall be governed by the Argentine Negotiable Obligations Law No. 23,576, as amended, together with Argentine Companies Law No. 19,550, as amended and other applicable Argentine laws and regulations.

4

Exhibit B

Page 5

IN WITNESS WHEREOF, Alto Palermo S.A. (APSA) has caused this Note to be duly executed.

Date:

ALTO PALERMO S.A. (APSA)

By:

Name:

Title:

By:

Name:

Title:

CERTIFICATE OF AUTHENTICATION

This is one of the Notes referred to in the within mentioned Indenture.

THE BANK OF NEW YORK, as Trustee

By:

Name:

Title:

5

Exhibit B

Page 6

[ATTACH TERMS AND CONDITIONS IN THE

FORM SET FORTH IN EXHIBIT C TO THE INDENTURE]

[ATTACH APPLICABLE PRICING SUPPLEMENT]

6

Exhibit B

Page 7

FORM OF TRANSFER

[Include the following for Notes not bearing a Restrictive Legend]

TRANSFER NOTICE

FOR VALUE RECEIVED, the undersigned Holder hereby sells, assigns and transfers unto

(Please print or typewrite name and address including postal code of assignee)

this Note and all rights thereunder, hereby irrevocably constituting and appointing                                                                                   attorney to transfer such amount of said Note on the books of APSA with full power of substitution in the premises.

Date:                     

Signed:
	NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatsoever.

7

Exhibit B

Page 8

FORM OF TRANSFER

[Include the following for Notes bearing Restrictive Legends]

TRANSFER NOTICE

FOR VALUE RECEIVED, the undersigned Holder hereby sells, assigns and transfers unto

(Please print or typewrite name and address including postal code of assignee)

Insert Taxpayer Identification No.:                                         

this Note and all rights thereunder, hereby irrevocably constituting and appointing                                                                                   attorney to transfer such amount of said Note on the books of APSA with full power of substitution in the premises.

In connection with any transfer of this Note occurring prior to the date that is two years after the Original Issue Date of this Note (provided that APSA or any affiliate of APSA has not acquired this Note during such two- year period), the undersigned confirms that without utilizing any general advertising or general solicitation:

(check one)

(a) This Note is being transferred pursuant to the exception from registration under the U.S. Securities Act of 1933, as amended (the “Securities Act”), provided by Rule 144A thereunder (“Rule 144A”) and, upon registration of such transfer, each beneficial owner of this Note will be a “qualified institutional buyer” (as defined in Rule 144A), and each such person has been advised that this Note is being sold or transferred to it in reliance upon Rule 144A and has received the information, if any, requested by it pursuant to Rule 144A; or

(b) This Note is being transferred pursuant to the exemption from registration under the Securities Act provided by Regulation S under the Securities Act (“Regulation S”), and the address of the person in whose name this Note is to be registered upon transfer is an address outside the United States (as defined in Regulation S); or

(c) This Note is being transferred to a Dealer or to APSA; or

(d) This Note is being transferred other than in accordance with (a), (b) or (c) above, and documents are being furnished to the Trustee or the transfer agent which comply with the conditions of transfer set forth in this Note and the Indenture.

8

Exhibit B

Page 9

If none of the foregoing boxes is checked, the Trustee shall not be obligated to register this Note in the name of any person other than the Holder hereof unless and until the conditions to any such registration of transfer set forth herein and in the Indenture shall have been satisfied.

Date:                     

Signed:
	NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatsoever.

9

EXHIBIT C

FORM OF REVERSE OF SECURITIES—TERMS AND CONDITIONS

IN THE EVENT OF ANY CONFLICT BETWEEN THE PROVISIONS STATED HEREIN AND THE TERMS AND CONDITIONS SET FORTH IN A PRICING SUPPLEMENT, IF ANY, ATTACHED TO THIS NOTE, THE PROVISIONS OF THE PRICING SUPPLEMENT WILL PREVAIL.

General

The Notes are to be issued under an Indenture, dated as of May 11, 2007 (as amended, supplemented or otherwise modified from time to time, the “Indenture”), among APSA, The Bank of New York, as trustee (in such capacity, the “Trustee”), co-registrar (in such capacity, the “Co-Registrar”), principal paying agent (in such capacity, the “Principal Paying Agent,” and together with any other paying agents under the Indenture, the “Paying Agents”) and transfer agent (in such capacity, a “Transfer Agent”, and together with any other transfer agents under the Indenture, the “Transfer Agents”), and Banco Santander Río S.A., as registrar (in such capacity, the “Registrar”), Paying Agent, Transfer agent and representative of the Trustee in Argentina (in such capacity, the “Representative of the Trustee in Argentina”).

The following summaries of certain provisions of the Indenture and the Notes do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all of the provisions of the Indenture and the Notes, including the definitions therein of certain terms. Capitalized terms not otherwise defined herein shall have the meanings given to them in the Indenture.

Notes may be issued from time to time in one or more Series under the Indenture. The Notes of all Series outstanding at any one time under the Program are limited to an aggregate amount of US$200,000,000 (or its equivalent in a Specified Currency). The particular terms of each issue of Notes, including, without limitation, the date of issue, issue price, currency of denomination and payment, maturity, interest rate or interest rate formula, if any, and, if applicable, redemption, repayment and index provisions, will be set forth for each such issue in the Notes and in the applicable Pricing Supplement. With respect to any particular Note, the description of the Notes herein is qualified in its entirety by reference to, and to the extent inconsistent therewith is superseded by, such Note and the applicable Pricing Supplement.

The Notes will qualify as “obligaciones negociables” under the Negotiable Obligations Law and Joint Resolution No. 470-1738/2004 and will be entitled to the benefits set forth therein and subject to the procedural requirements thereof. The Notes will rank at all times pari passu in right of payment with all other existing and future unsecured and unsubordinated indebtedness of APSA (other than obligations preferred by statute or by operation of law).

Unless previously redeemed, a Note will mature on the date (the “Stated Maturity”) no less than thirty (30) days from its date of issue as specified on the face thereof and in the applicable Pricing Supplement.

Exhibit C

Page 2

Each Note may be denominated in any currency (a “Specified Currency”) as shall be specified on the face thereof and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, payments on each Note will be made in the applicable Specified Currency; provided that in certain circumstances, as may be described in the applicable Pricing Supplement, payments on any such Note denominated in a currency other than U.S. dollars may, to the extent permitted by Argentine law, be made in U.S. dollars. See “— Payment of Principal and Interest” below.

Each Note will bear interest, if any, at the interest rate or interest rate formula set forth in the applicable Pricing Supplement. Unless otherwise indicated in the applicable Pricing Supplement, each Note may bear interest at a fixed rate (a “Fixed Rate Note”) or at a rate determined by reference to an interest rate basis or other interest rate formula (a “Floating Rate Note”) or may bear no interest (a “Zero Coupon Note”). See “Interest Rate” below.

The Notes may also be issued with principal and/or interest payable, to the extent permitted by Argentine law, in one or more currencies different from the currency in which such Notes are denominated (“Dual Currency Notes”), or linked to an index and/or a formula (“Indexed Notes”). Dual Currency and Indexed Notes may be issued to bear interest on a fixed or floating rate basis or on a non-interest bearing basis or a combination of such bases, in which case provisions relating to Fixed Rate Notes, Floating Rate Notes, Zero Coupon Notes or a combination thereof, respectively, shall, where the context so admits, apply to such Dual Currency or Indexed Notes. References herein to Notes denominated in a Specified Currency shall, unless the context otherwise requires, include Dual Currency Notes payable in such Specified Currency.

The Notes may be issued as Original Issue Discount Notes. An “Original Issue Discount Note” or “OID Note”, including any Zero Coupon Note, is a Note which is issued at a price lower than the principal amount thereof, and which provides that upon redemption or acceleration of the Stated Maturity thereof, the amount payable to the Holder of such Note will be determined in accordance with the terms of such Note, and will be an amount that is less than the amount payable on the Stated Maturity of such Note.

Unless otherwise specified in the applicable Pricing Supplement, the Notes will not be subject to any sinking fund and will not be redeemable prior to their Stated Maturity, except in the event of certain changes involving Argentine taxes.

If specified in the applicable Pricing Supplement with respect to a Series of Notes, APSA may from time to time, without the consent of Holders of Notes outstanding, create and issue additional Notes of such Series provided such additional Notes have the same terms and conditions as the Notes of that Series (except for the date of issue, the issue price, the applicable legends and, if applicable, the first payment of interest) and the additional Notes shall form a single Series with the previously outstanding Series of Notes.

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Exhibit C

Page 3

Interest Rate

General

Unless otherwise specified in the applicable Pricing Supplement, each Fixed Rate Note or Floating Rate Note (each as defined below) will bear interest from (and including) the issue date or such other date (the “Interest Commencement Date”) specified in the applicable Pricing Supplement or from the most recent Interest Payment Date (or, if such Note is a Floating Rate Note and the Interest Reset Period (as each such term is defined below) is daily or weekly, from the day following the most recent Regular Record Date) to which interest on such Note has been paid or duly provided for at the fixed rate per annum, or at the rate per annum determined pursuant to the interest rate formula, stated in the applicable Pricing Supplement, until the principal thereof is paid or made available for payment. Interest will be payable on each Interest Payment Date and at Stated Maturity or upon redemption or acceleration, as specified under “Payment of Principal and Interest” below.

Each Note bearing interest will bear interest at eithe r (a) a fixed rate or (b) a variable rate determined by reference to an interest rate basis (including LIBOR (a “LIBOR Note”), the Treasury Rate (a “Treasury Rate Note”) or such other interest rate basis as is set forth in the applicable Pricing Supplement), which may be adjusted by adding or subtracting the Spread and/or multiplying by the Spread Multiplier. The “Spread” is the number of basis points specified in the applicable Pricing Supplement as being applicable to the interest rate for such Note, and the “Spread Multiplier” is the percentage specified in the applicable Pricing Supplement as being applicable to the interest rate for such Note. A Floating Rate Note may also have either or both of the following as specified in the applicable Pricing Supplement: (a) a maximum numerical interest rate limitation, or ceiling, on the rate of interest which may accrue during any interest period (a “Maximum Rate”); and (b) a minimum numerical interest rate limitation, or floor, on the rate of interest which may accrue during any interest period (a “Minimum Rate”).

“Index Maturity” means, with respect to a Floating Rate Note, the period to maturity of the instrument or obligation on which the interest rate formula is based, as specified in the applicable Pricing Supplement.

Fixed Rate Notes

Fixed Rate Notes shall bear interest from (and including) the Interest Commencement Date specified in the applicable Pricing Supplement at the rate or rates per annum so specified (the “Fixed Rate(s) of Interest”) payable in arrears on the Interest Payment Date(s) in each year and on the Stated Maturity or upon redemption or acceleration. The first payment of interest will be made on the Interest Payment Date next following the Interest Commencement Date and, if the period from the Interest Commencement Date to the Interest Payment Date differs from the period between subsequent Interest Payment Dates, will equal the “Initial Broken Amount” specified in the applicable Pricing Supplement. If the Stated Maturity is not an Interest Payment Date, interest from and including the preceding Interest Payment Date (or the Interest Commencement Date, as the case may be) to (but excluding) the Stated Maturity will equal the “Final Broken Amount” specified in the applicable Pricing Supplement.

3

Exhibit C

Page 4

Floating Rate Notes

General. The applicable Pricing Supplement relating to a Floating Rate Note will designate an interest rate basis (the “Interest Rate Basis”) for such Floating Rate Note. The Interest Rate Basis for each Floating Rate Note will be: (a) LIBOR, in which case such Note will be a LIBOR Note: (b) the Treasury Rate, in which case such Note will be a Treasury Rate Note; or (c) such other interest rate basis as is set forth in such Pricing Supplement. The Pricing Supplement for a Floating Rate Note will also specify, if applicable, the Calculation Agent, the Index Maturity, the Spread and/or Spread Multiplier, the Maximum Rate, the Minimum Rate, the Regular Record Dates and the Initial Interest Rate, the Interest Payment Dates, the Calculation Dates, the Interest Determination Dates, the Interest Reset Period and the Interest Reset Dates (each as defined below) with respect to such Note.

The rate of interest on each Floating Rate Note will be reset and become effective daily, weekly, monthly, quarterly, semi-annually or annually or otherwise, as specified in the applicable Pricing Supplement (each an “Interest Reset Period”); provided that (a) the interest rate in effect from the date of issue to the first Interest Reset Date with respect to a Floating Rate Note will be the initial interest rate as set forth in the applicable Pricing Supplement (the “Initial Interest Rate”) and (b) unless otherwise specified in the applicable Pricing Supplement, the interest rate in effect for the ten (10) days immediately prior to Stated Maturity of a Note will be that in effect on the tenth day preceding such Stated Maturity. The dates on which the rate of interest will be reset (each an “Interest Reset Date”) will be specified in the applicable Pricing Supplement. If any Interest Reset Date for any Floating Rate Note would otherwise be a day that is not a Business Day with respect to such Floating Rate Note, the Interest Reset Date for such Floating Rate Note shall be postponed to the next day that is a Business Day with respect to such Floating Rate Note, except that, in the case of a LIBOR Note, if such Business Day is in the next succeeding calendar month, such Interest Reset Date shall be the next preceding Business Day.

Unless otherwise specified in the applicable Pricing Supplement, “Interest Determination Dates” will be as set forth below. The Interest Determination Date pertaining to an Interest Reset Date for a LIBOR Note (the “LIBOR Interest Determination Date”) will be the second (2nd) Business Day preceding such Interest Reset Date. The Interest Determination Date pertaining to an Interest Reset Date for a Treasury Rate Note (the “Treasury Interest Determination Date”) will be the day of the week in which such Interest Reset Date falls and on which Treasury bills would normally be auctioned. Treasury bills are usually sold at auction on the Monday of each week, unless that day is a legal holiday, in which case the auction is usually held on the following Tuesday, except that such auction may be on the preceding Friday. If, as the result of a legal holiday, an auction is so held on the preceding Friday, such Friday will be the Treasury Interest Determination Date pertaining to the Interest Reset Date occurring in the next succeeding week. If an auction date shall fall on any Interest Reset Date for a Treasury Rate Note, then such Interest Reset Date shall instead be the first (1st) Business Day immediately following such auction date.

All percentages resulting from any calculations referred to in the applicable Pricing Supplement will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)), and all Specified

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Exhibit C

Page 5

Currency amounts used in or resulting from such calculations will be rounded to the nearest cent (with one-half cent rounded upward) or nearest equivalent in Specified Currencies other than U.S. dollars.

In addition to any Maximum Rate which may be applicable to any Floating Rate Note pursuant to the above provisions, the interest rate on Floating Rate Notes will in no event be higher than the maximum interest rate permitted by applicable law.

Upon the request of the Holder of any Floating Rate Note, the Calculation Agent will provide the interest rate then in effect, and, if determined, the interest rate which will become effective on the next Interest Reset Date with respect to such Floating Rate Note. The Calculation Agent’s determination of any interest rate will be final and binding in the absence of manifest error.

The Calculation Agent will cause notice of the rate of interest and the amount of interest for each interest period and the relevant Interest Payment Date to be given to APSA and the Trustee as soon as possible after their determination but in no event later than the fourth (4th) Business Day thereafter and, in the case of Notes listed on the Luxembourg Stock Exchange for trading on the EuroMTF, no later than the first day of the relevant Interest Reset Period. Such notice will be in accordance with the provisions of the Notes relating to notices to Holders of Notes. The amount of interest and the Interest Payment Date may subsequently be amended (or appropriate alternative arrangements as may be made by way of adjustment) without notice in the event of an extension or shortening of the Interest Reset Period.

The manner in which the interest rate for any Floating Rate Note that is not a LIBOR Note or a Treasury Rate Note will be determined as set forth in the applicable Pricing Supplement.

LIBOR Notes. LIBOR Notes will bear interest at the interest rates (calculated with reference to LIBOR and the Spread and/or Spread Multiplier, if any, subject to the Maximum Rate or the Minimum Rate, if any), and will be payable on the dates, specified on the face of the LIBOR Note and in the applicable Pricing Supplement.

Unless otherwise indicated in the applicable Pricing Supplement, LIBOR with respect to any Interest Reset Date will be determined by the Calculation Agent in accordance with the following provisions. On the relevant LIBOR Interest Determination Date, LIBOR will be determined on the basis of either of the following, as specified in the applicable Pricing Supplement :

the offered rates for deposits in the Specified Currency having the specified Index Maturity, commencing on the next succeeding Interest Reset Date, which appear on the display designated as page “LIBOR” on the Reuters Monitor Money Rates Service (or suc h other page as may replace the LIBOR page on that service for the purpose of displaying London interbank offered rates of major banks for deposits in the Specified Currency) (“Reuters Screen LIBOR Page”) as of 11:00 A.M., London time, on such LIBOR Interest Determination Date. If at least two (2) such offered rates appear on the Reuters Screen LIBOR Page, LIBOR with

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Exhibit C

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respect to such Interest Reset Date will be the arithmetic mean of such offered rates as determined by the Calculation Agent. If fewer than two (2) offered rates appear, LIBOR with respect to such Interest Reset Date will be determined as described in (ii) below; or

the offered rates for deposits in the Specified Currency having the specified Index Maturity, commencing on the next succeeding Interest Reset Date, which appear on the display designated as Page 3740 or Page 3750, as applicable, on the Dow Jones Telerate Service (or such other page as may replace any such page on that service for the purpose of displaying London interbank offered rates of major banks for deposits in the Specified Currency) (each a “Telerate Page”) as of 11:00 A.M., London time, on such LIBOR Interest Determination Date. If no such offered rate appears, LIBOR with respect to such Interest Reset Date will be determined as described in (ii) below.

If neither “Reuters Screen LIBOR Page” nor a “Telerate Page” is specified in the applicable Pricing Supplement, LIBOR will be determined as if a Telerate Page had been so specified.

With respect to a LIBOR Interest Determination Date on which fewer than two offered rates for the applicable Index Maturity appear on the Reuters Screen LIBOR Page as described in (i)(a) above, or on which no rate appears on Telerate Page 3740 or 3750, as the case may be, as described in (i)(b) above, as applicable, LIBOR will be determined on the basis of the rates at approximately 11:00 A.M., London time, on such LIBOR Interest Determination Date at which deposits in the Specified Currency having the specified Index Maturity are offered to prime banks in the London interbank market by four (4) major banks in the London interbank market selected by the Calculation Agent (after consultation with APSA) commencing on the second (2nd) Business Day immediately following such LIBOR Interest Determination Date and in a principal amount equal to an amount of not less than US$1,000,000 (or its approximate equivalent in a Specified Currency other than U.S. dollars) that in APSA’s judgment is representative for a single transaction in such market at such time (a “Representative Amount”). The Calculation Agent will request the principal London office of each of such banks to provide a quotation of its rate. If at least two (2) such quotations are provided, LIBOR with respect to such Interest Reset Date will be the arithmetic mean of such quotations. If fewer than two (2) quotations are provided, LIBOR with respect to such Interest Reset Date will be the arithmetic mean of the rates quoted at approximately 11:00 A.M., New York City time, on such LIBOR Interest Determination Date by three major banks in New York City, selected by the Calculation Agent (after consultation with APSA), for loans in the Specified Currency to leading European banks having the specified Index Maturity commencing on the Interest Reset Date and in a Representative Amount; provided that if fewer than three (3) banks selected as aforesaid by the Calculation Agent are quoting as mentioned in this sentence, LIBOR with respect to such Interest Reset Date will be LIBOR in effect on such LIBOR Interest Determination Date.

Treasury Rate Notes. Treasury Rate Notes will bear interest at the interest rates (calculated with reference to the Treasury Rate and the Spread and/or Spread Multiplier, if any, subject to the Maximum Rate or Minimum Rate, if any) and will be payable on the dates specified in the applicable Pricing Supplement. Unless otherwise specified in the applicable

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Exhibit C

Page 7

Pricing Supplement, the “Calculation Date” with respect to a Treasury Interest Determination Date will be the tenth day after such Treasury Interest Determination Date or, if any such day is not a Business Day, the next succeeding Business Day.

Unless otherwise indicated in the applicable Pricing Supplement, “Treasury Rate” means, with respect to any Interest Reset Date, the rate for the auction on the relevant Treasury Interest Determination Date of direct obligations of the United States (“Treasury Bills”) having the Index Maturity specified in the applicable Pricing Supplement, as such rate appears on the display on Moneyline Telerate, Inc. (or any successor service) on page 56 (or any other page as may replace such page) or page 57 (or any other page as may replace such page), under the heading “INVESTMENT RATE.” In the event that such rate does not appear by 3:00 p.m., New York City time, on the Calculation Date pertaining to such Treasury Interest Determination Date, then the Treasury Rate for such Interest Reset Date shall be the rate on such date as published in H.15 Daily Update under the heading “U.S. government securitie s—Treasury bills—Auction high.” In the event that the foregoing rates do not so appear or are not so published by 3:00 p.m., New York City time, on the Calculation Date pertaining to such Treasury Interest Determination Date, then the Treasury Rate for such Interest Reset Date shall be the “Investment Rate” (expressed as a bond equivalent yield, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) as announced by the United States Department of the Treasury for the auction held on such Treasury Interest Determination Date, currently available on the worldwide web at: http://www.publicdebt.treas.gov/AI/OFBills. In the event that the results of the auction of Treasury Bills having the Index Maturity specified in the applicable pricing supplement are not published or reported as provided above by 3:00 p.m., New York City time, on such Calculation Date or if no such auction is held on such Treasury Interest Determination Date, then the Treasury Rate shall be calculated by the Calculation Agent and shall be the rate for such Treasury Interest Determination Date for the issue of Treasury Bills with a remaining maturity closest to the specified Index Maturity (expressed as a bond equivalent yield, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) as published in H.15(519), under the heading “U.S. government securities—Treasury bills (secondary market).” In the event that the foregoing rates do not so appear or are not so published by 3:00 p.m., New York City time, on the Calculation Date pertaining to such Treasury Interest Determination Date, then the Treasury Rate for such Interest Reset Date shall be the rate for such Treasury Interest Determination Date for the issue of Treasury Bills with a remaining maturity closest to the specified Index Maturity, as published in H.15 Daily Update or another recognized electronic source used for the purpose of displaying such rate, under the heading “U.S. government securities—Treasury bills (secondary market).” In the event that the foregoing rates do not so appear or are not so published by 3:00 p.m., New York City time, on the Calculation Date pertaining to such Treasury Interest Determination Date, then the Treasury Rate shall be calculated by the Calculation Agent and shall be a yield to maturity (expressed as a bond equivalent yield, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) of the arithmetic mean of the secondary market bid rates, at approximately 3:30 p.m., New York City time, on such Treasury Interest Determination Date, quoted by three leading primary United States government securities dealers selected by the Calculation Agent with APSA’s approval (such approval not to be unreasonably withheld) for the issue of Treasury Bills with a remaining maturity closest to the specified Index Maturity; provided that if the dealers selected as aforesaid by the Calculation Agent with APSA’s approval (such approval not to be unreasonably withheld) are not quoting as mentioned in this sentence, the Treasury Rate for such Interest Reset Date shall be the Treasury Rate in effect on such Treasury Interest Determination Date.

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Exhibit C

Page 8

Payment of Principal and Interest

General

Interest (and principal, if any, payable other than at Stated Maturity or upon acceleration or redemption) shall be paid in immediately available funds to the Person in whose name a Note is registered at the close of business on the Regular Record Date next preceding each Interest Payment Date notwithstanding the cancellation of such Notes upon any transfer or exchange thereof subsequent to such Regular Record Date and prior to such Interest Payment Date; provided that interest payable at Stated Maturity or upon acceleration or redemption shall be paid to the Person to whom principal will be payable; provided further, that if and to the extent APSA defaults in the payment of the interest, including any Additional Amounts, due on such Interest Payment Date, such defaulted interest, including any Additional Amounts, shall be paid to the Person in whose names such Notes are registered at the end of a subsequent record date established by APSA by notice given by mail by or on behalf of APSA to the Holders of the Notes not less than fifteen (15) days preceding such special record date, such record date to be not less than fifteen (15) days preceding the date of payment in respect of such defaulted interest. Unless otherwise specified in the applicable Pricing Supplement, the first payment of interest on any Note originally issued between a Regular Record Date and an Interest Payment Date shall be made on the Interest Payment Date following the next succeeding Regular Record Date to the registered owner at the close of business on such next succeeding Regular Record Date.

Payments of the principal of and any premium, interest, Additional Amounts and other amounts on or in respect of any Note at Stated Maturity or upon acceleration or redemption shall be made to the registered Holder on such date in immediately available funds upon surrender of such Note at the Corporate Trust Office or at the specified office of any other Paying Agent; provided that the Note is presented to the Paying Agent in time for the Paying Agent to make such payments in such funds in accordance with its normal procedures. Payments of the principal of and any premium, interest, Additional Amounts and other amounts on or in respect of Notes to be made other than at Stated Maturity or upon redemption shall be made by check mailed on or before the due date for such payments to the address of the Person entitled thereto as it appears in the Register; provided that (a) DTC and the Common Depositary, as Holder of the Global Notes, shall be entitled to receive payments of interest by wire transfer of immediately available funds, (b) a Holder of at least US$1,000,000 (or the approximate equivalent thereof in a Specified Currency other than U.S. dollars) in aggregate principal or face amount of Notes of the same Series shall be entitled to receive payments of interest by wire transfer of immediately available funds to an account maintained by such Holder at a bank located in the United States as may have been appropriately designated by such Holder to the Trustee in writing no later than fifteen (15) days prior to the date such payment is due and (c) to the extent that the Holder of a Note issued and denominated in a Specified Currency other than U.S. dollars elects to receive payment of the principal of and any premiums, interest, Additional Amounts and other amounts on or in respect of such Note at Stated Maturity or upon redemption in such Specified Currency, such payment, except in circumstances described in the applicable Pricing Supplement, shall be made by wire transfer of immediately available funds to an account

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Exhibit C

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specified in writing not less than fifteen (15) days prior to the date such payment is due by the Holder to the Trustee. Unless such designation is revoked, any such designation made by such Holder with respect to such Notes shall remain in effect with respect to any future payments with respect to such Notes payable to such Holder

Payments of interest on any Fixed Rate Note or Floating Rate Note with respect to any Interest Payment Date will include interest accrued to but excluding such Interest Payment Date; provided, that, unless otherwise specified in the applicable Pricing Supplement, if the Interest Reset Dates with respect to any Floating Rate Note are daily or weekly, interest payable on such Note on any Interest Payment Date, other than interest payable on the date on which principal on any such Note is payable, will include interest accrued to but excluding the day following the next preceding Regular Record Date.

With respect to a Floating Rate Note, accrued interest from the date of issue or from the last date to which interest has been paid is calculated by multiplying the principal or face amount of such Floating Rate Note by an accrued interest factor. Such accrued interest factor is computed by adding the interest factor calculated for each day from the date of issue, or from the last date to which interest has been paid, to but excluding the date for which accrued interest is being calculated. Unless otherwise specified in the applicable Pricing Supplement, the interest factor (expressed as a decimal) for each such day is computed by dividing the interest rate (expressed as a decimal) applicable to such date by 360, in the case of LIBOR Notes, or by the actual number of days in the year, in the case of Treasury Rate Notes.

Unless otherwise specified in the applicable Pricing Supplement, interest on Fixed Rate Notes will be calculated on the basis of a 360-day year consisting of twelve (12) months of thirty (30) days each and, in the case of an incomplete month, the number of days elapsed.

Unless otherwise specified in the applicable Pricing Supplement, if any Interest Payment Date (other than the Stated Maturity) for any Floating Rate Note would otherwise be a day that is not a Business Day in the relevant locations specified in the Pricing Supplement and the place of payment, such Interest Payment Date shall be the next Business Day succeeding such Business Day (except that, in the case of a LIBOR Note, if such Business Day is in the next succeeding calendar month, such Interest Payment Date shall be the next Business Day preceding such Business Day). If the Stated Maturity for any Fixed Rate Note or Floating Rate Note or the Interest Payment Date for any Fixed Rate Note falls on a day which is not a Business Day in the relevant locations specified in the Pricing Supplement and the place of payment, payment of principal (and premium, if any) and interest with respect to such Note will be made on the next succeeding Business Day in the place of payment with the same force and effect as if made on the due date and no interest on such payment will accrue from and after such due date.

Specified Currency Other Than Dollars

If any Note is to be denominated in a Specified Currency other than U.S. dollars, certain provisions with respect thereto will be set forth in the applicable Pricing Supplement, which will specify the foreign currency or currency unit in which the principal or any premium or interest with respect to such Note are to be paid, along with any other terms relating to the non-U.S. dollar denomination.

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Exhibit C

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If APSA offers Indexed Notes or Dual Currency Notes, the applicable Pricing Supplement and such Indexed Notes or Dual Currency Notes will set forth the method by and the terms on which the amount of principal (payable on or prior to Stated Maturity), interest and/or any premium, will be determined, any additional tax consequences to the Holder of such Note, a description of certain risks associated with investment in such Note and other information relating to such Note.

Unless otherwise specified in the terms of a Series of Notes, Notes denominated in a Specified Currency other than U.S. dollars will provide that, in the event of an official redenomination of the currency, the obligations of APSA with respect to payments on such Notes shall, in all cases, be deemed immediately following such redenomination to provide for payment of that amount of the redenominated currency representing the amount of such obligations immediately before such redenomination.

If the principal of or any premium, interest, Additional Amounts or other amounts on any note is payable in a Specified Currency other than U.S. dollars and such Specified Currency is not available due to the imposition of exchange controls or other circumstances beyond APSA’s control, or is no longer used by the government of the country issuing such currency or for settlement of transactions by public institutions of or within the international banking community, then APSA, until such currency is again available or so use, will be entitled, to the extent permitted by Argentine law, to satisfy its obligations to the Holder of such Notes by making such payment in U.S. dollars at the Exchange Rate for the Payment Date. The making of any payment in respect of any Note in U.S. dollars under the foregoing circumstances shall not constitute an Event of Default under such Note.

Payments of the principal, interest, Additional Amounts or other amounts to Holders of a note denominated in a Specified Currency other than U.S. dollars who hold the Note through DTC will, to the extent permitted by Argentine law, be made in U.S. dollars. However, any DTC Holder of a Note denominated in a Specified Currency other than U.S. dollars may elect to receive payments by wire transfer in the Specified Currency other than U.S. dollars by delivering a written notice to the DTC participant through which it holds its beneficial interest, not later than the Regular Record Date, in the case of an interest payment, or at least fifteen (15) calendar days before the Stated Maturity, specifying wire transfer instructions to an account denominated in the Specified Currency. The DTC participant must notify DTC of the election and wire transfer instructions on or before the twelfth (12th) Business Day before the applicable payment of the principal.

If so specified in a the applicable Pricing Supplement, payments of principal, interest, Additional Amounts or other amounts on or in respect of any Note denominated in a Specified Currency other than U.S. dollars shall, to the extent permitted by Argentine law, be made in U.S. dollars, calculated at the Exchange Rate for the Payment Date, if the Holder of such Note on the relevant Regular Record Date or at Stated Maturity, as the case may be, has transmitted a written request for such payment in U.S. dollars to the Trustee and the applicable Paying Agent on or prior to such Regular Record Date or the date that is fifteen (15) days prior to the Stated Maturity, as the case may be. Such request may be in writing (mailed or hand delivered) or by facsimile transmission. Any such request made with respect to any Note by a Holder will remain in effect with respect to any further payments of principal, interest,

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Additional Amounts or other amounts on or in respect of such Note payable to such Holder, unless such request is revoked on or prior to the relevant Regular Record Date or the date that is fifteen (15) days prior to the Stated Maturity, as the case may be. Holders of Notes denominated in a Specified Currency other than U.S. dollars that are registered in the name of a broker or nominee should contact such broker or nominee to determine whether and how an election to receive payments in U.S. dollars may be made.

The U.S. dollar amount to be received by a Holder of a Note denominated in a Specified Currency other than U.S. dollars who elects to receive payment in U.S. dollars will be based on the Exchange Rate, on the second (2nd) Business Day next preceding the applicable Payment Date. If Exchange Rate quotations are not available on the second (2nd) Business Day preceding the date of payment of principal, interest, Additional Amounts or other amounts with respect to any Note, such payment will be made in the Specified Currency. All currency exchange costs associated with any payment in U.S. dollars on any Note denominated in a Specified Currency other than U.S. dollars will be borne by the Holder thereof by deductions from payment of the currency exchange being effected on behalf of the Holder by the Exchange Rate Agent.

Unless otherwise specified in the applicable Pricing Supplement, (i) a Note denominated in Euro may only be presented for payment on a day on which the TARGET system is operating and (ii) if interest is required to be calculated for a period of less than one (1) year, unless otherwise specified in the applicable Pricing Supplement, it will be calculated on the basis of the actual number of days elapsed divided by 365 (or, if any of the days elapsed fall in a leap year, the sum of (A) the number of those days falling in a leap year divided by 366 and (B) the number of those days falling in a non- leap year divided by 365).

In the event of any foreign exchange restriction or prohibition in Argentina, APSA shall make any and all payments in respect of interest on, or principal of, the Notes, to the extent permitted by applicable law, in U.S. dollars by:

(a) purchasing, with Pesos any series of Argentine Discount Bonds or Argentine Par Bonds or any other securities or public or private bonds issued in Argentina and denominated in U.S. dollars and transferring and selling such securities outside Argentina for U.S. dollars, or

(b) by means of any other legal procedure existing in Argentina for the purchase of U.S. dollars and their subsequent transfer abroad.

All costs and taxes payable in connection with the procedures referred to above shall be borne by APSA. APSA’s payment obligations may only be deemed satisfied and discharged upon receipt by the relevant Holder or the Trustee, as the case may be, of the U.S. dollar amounts obtained through the transactions specified above necessary to satisfy the relevant amount owing on the Notes.

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EXHIBIT D

FORM OF CERTIFICATE FOR EXCHANGE OR TRANSFER

FROM RULE 144A GLOBAL NOTE TO REGULATION S

GLOBAL NOTE DURING THE DISTRIBUTION COMPLIANCE PERIOD

(Exchanges or Transfers pursuant to

Section 2.10(d)(i) of the Indenture)

The Bank of New York,

as Trustee

101 Barclay Street, 4E

New York, New York 10286

Attention: Corporate Trust Department

Re: Alto Palermo S.A. (APSA) [Describe Notes] (the “Securities”)

Reference is hereby made to the Indenture dated as of May 11, 2007 (the “Indenture”), among Alto Palermo S.A. (APSA) (“APSA”), The Bank of New York, as Trustee, co-registrar, principal paying agent and transfer agent and Banco Santander Río S.A., as registrar, paying agent, transfer agent and representative of the Trustee in Argentina. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

This letter relates to [currency amount] principal amount of Securities that are held as a beneficial interest in the Rule 144A Global Security (CUSIP No.             ) with DTC in the name of [transferor] (the “Transferor”). The Transferor has requested an exchange or transfer of such beneficial interest for an interest in the Regulation S Global Security (CUSIP No.             ) to be held with [Euroclear] [Clearstream] (Common Code No.             ; ISIN No.             ) through DTC.

In connection with such request and in respect of such Securities, the Transferor does hereby certify that such exchange or transfer has been effected in accordance with the transfer restrictions set forth in the Securities and pursuant to and in accordance with Regulation S, and accordingly the Transferor does hereby certify that:

(1) the offer of the Notes was not made to a person in the United States;

(2) either (i) the transaction was executed in, on or through a physical trading floor of an established foreign securities exchange that is located outside the United States, (ii) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither the Transferor nor any person acting on our behalf knows that the transaction was pre-arranged with a transferee in the United States or (iii) the transferee is outside the United States, or the Transferor and any person acting on its behalf reasonably believes that the transferee is outside the United States;

(3) no directed selling efforts have been made in contravention of the requirement of Rule 903(a)(2) or 904(a)(2) of Regulation S, as applicable;

Exhibit D

Page 2

(4) the additional conditions set forth in Rule 903(b) or 904(b), as applicable, have been satisfied; and

(5) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act.

To the extent applicable, the forms used in clauses (1) through (5) above have the meanings given to them in Regulation S.

This certificate and the statements contained herein are made for your benefit and the benefit of APSA.

[Insert name of Transferor]

By:

Name:

Title:

Dated:             , 20    

2

EXHIBIT E

FORM OF CERTIFICATE FOR EXCHANGE

OR TRANSFER FROM RULE 144A

GLOBAL NOTE TO REGULATION S

GLOBAL NOTE AFTER THE DISTRIBUTION COMPLIANCE PERIOD

(Exchanges or Transfers pursuant to

Section 2.10(d)(i) of the Indenture)

The Bank of New York,

as Trustee

101 Barclay Street, 4E

New York, New York 10286

Attention: Corporate Trust Department

Re: Alto Palermo S.A. (APSA) [Describe Notes] (the “Securities”)

Reference is hereby made to the Indenture dated as of May 11, 2007 (the “Indenture”), among Alto Palermo S.A. (APSA) (“APSA”), The Bank of New York, as Trustee, co-registrar, principal paying agent and transfer agent and Banco Santander Río S.A., as registrar, paying agent, transfer agent and representative of the Trustee in Argentina. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

This letter relates to [currency amount] principal amount of Securities that are held as a beneficial interest in the Rule 144A Global Security (CUSIP No.             ) with DTC in the name of [transferor] (the “Transferor”). The Transferor has requested an exchange or transfer of such beneficial interest for an interest in the Regulation S Global Security (CUSIP No.             ) to be held with [Euroclear] [Clearstream] (Common Code No.             ; ISIN No.             ) through DTC.

In connection with such request and in respect of such Securities, the Transferor does hereby certify that such exchange or transfer has been effected in accordance with the transfer restrictions set forth in the Securities and that:

(a) With respect to transfers made in reliance on Regulation S:

(1)The offer of the Notes was not made to a person in the United States;

(2)either (i) the transaction was executed in, on or through a physical trading floor of an established foreign securities exchange that is located outside the United States, (ii) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither the Transferor nor any person acting on our behalf knows that the transaction was pre-arranged with a transferee in the United States or (iii) the transferee is outside the United States, or the Transferor and any person acting on its behalf reasonably believes that the transferee is outside the United States;

Exhibit E

Page 2

(3)no directed selling efforts have been made in contravention of the requirement of Rule 903(a)(2) or 904(a)(2) of Regulation S, as applicable;

(4)the additional conditions set fo rth in Rule 903(b) or 904(b), as applicable, have been satisfied; and

(5)the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; or

(b) With respect to transfers made in reliance on Rule 144 under the Securities Act, the Notes are being transferred in a transaction permitted by Rule 144 under the Securities Act.

To the extent applicable, the terms used in clauses (a)(1) through (5) above have the meanings given to them in Regulation S.

This certificate and the statements contained herein are made for your benefit and the benefit of APSA.

[Insert name of Transferor]

By:

Name:

Title:

Dated:             , 20    

2

EXHIBIT F

FORM OF CERTIFICATE FOR EXCHANGE

OR TRANSFER FROM REGULATION S

GLOBAL NOTE TO RULE 144A GLOBAL NOTE

(Exchanges or Transfers pursuant to

Section 2.10(d)(ii) of the Indenture)

The Bank of New York

as Trustee

101 Barclay Street, 4E

New York, New York 10286

Attention: Corporate Trust Department

Re: Alto Palermo S.A. (APSA) [Describe Notes] (the “Securities”)

Reference is hereby made to the Indenture dated as of May 11, 2007 (the “Indenture”), among Alto Palermo S.A. (APSA) (“APSA”), The Bank of New York, as Trustee, co-registrar, principal paying agent and transfer agent and Banco Santander Río S.A., as registrar, paying agent, transfer agent and representative of the Trustee in Argentina. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

This letter relates to [currency amount] principal amount of Securities that are held as a beneficial interest in the Regulation S Global Security (CUSIP No.             ) to be held with [Euroclear] [Clearstream] (Common Code No.             ; ISIN No.             ) through DTC in the name of [transferor] (the “Transferor”). The Transferor has requested an exchange or transfer of such beneficial interest for an interest in the Rule 144A Global Security (CUSIP No.             ) with DTC.

In connection with such request, and in respect of such Securities, the Transferor does hereby certify that such Securities are being transferred in accordance with Rule 144A under the Securities Act to a transferee that the Transferor reasonably believes is purchasing the Notes for its own account or an account with respect to which the transferee exercises sole investment discretion, in each case in a transaction meeting the requirements of Rule 144A and in accordance with any applicable securities laws of any state of the United States or any other jurisdiction. The transferee and any such account are “qualified institutional buyers” within the meaning of Rule 144A, and each such person has been advised that this Note is being sold or transferred to it in reliance upon Rule 144A and has received the information, if any, requested by it pursuant to Rule 144A.

Exhibit F

Page 2

This certificate and the statements contained herein are made for your benefit and the benefit of APSA.

[Insert name of Transferor]

By:

Name:

Title:

Dated:                     , 2007

2

EX-4.2

EXHIBIT 4.2

TRADUCCIÓN PÚBLICA

SWORN TRANSLATION

[All pages are initialized.]

AGREEMENT FOR THE IMPLEMENTATION OF AMENDMENTS TO THE

CORPORATE SERVICES MASTER AGREEMENT

Agreement made in the City of Buenos Aires on the 23^rd day of August of 2007 by and between:

(i) CRESUD S.A.C.I.F. y A., domiciled at Moreno 877, Piso 23 in the Autonomous City of Buenos Aires, represented hereat by Messrs Eduardo Sergio ELSZTAIN and Saúl ZANG in their capacities as Attorneys-in-fact (hereinafter “CRESUD”) as party of the one part;

(ii) Alto Palermo S.A. (APSA), domiciled at Moreno 877, Piso 21 in the Autonomous City of Buenos Aires, represented hereat by Messrs Alejandro Gustavo ELSZTAIN and David Alberto PEREDNIK in their capacities as Attorneys-in-fact (hereinafter “APSA”), as party of the second part, and

(iii) IRSA Inversiones y Representaciones Sociedad Anónima, domiciled at Bolívar 108, Piso 1º in the Autonomous City of Buenos Aires and having established domicile for purposes hereof at Moreno 877, Piso 22 in the Autonomous City of Buenos Aires, represented hereat by Messrs Oscar Pedro BERGOTTO and Gastón Armando LERNOUD in their capacities as Attorneys-in-fact, as party of the third part (hereinafter “IRSA” and collectively with CRESUD and APSA designated as “THE PARTIES”);

WHEREAS

(i) On June 30, 2004 THE PARTIES executed a Master Agreement for the Exchange of Corporate Services (hereinafter “the Master Agreement”);

(ii) To facilitate the attainment of the purpose of the Master Agreement dated September 26, 2005, SAP Argentina S.A. and APSA executed the License Agreement for SAP Software End Users (hereinafter the “SAP Agreement”) as well as all amendments and supplementary documentation and also on that date IBM Argentina S.A. and APSA entered into an Agreement for the SAP R/3 Implementation Project (hereinafter the “Implementation Agreement”). Said agreements were executed in the following proportions: 51.40% by APSA in its own name and for its own benefit, 23.30% by APSA on behalf of IRSA and 25.30% by APSA on behalf of CRESUD;

(iii) As a result of the implementation of the SAP Software THE PARTIES adopted, amongst other changes, the automation of the Distribution Process as well as the accrual-basis accounting method abandoning the cash-basis accounting method for the calculation and settlement of Corporate Services;

(iv) THE PARTIES have entrusted Deloitte & Co. S.R.L. (hereinafter “Deloitte”) with the half-yearly review and assessment of the criteria used in the process to calculate and settle Corporate Services, as well as the Distribution Bases and the supporting documentation applied in such procedure which review is reflected in a half-yearly report;

(v) As a result of the experience gained with the implementation of the Master Agreement based on an Implementation Manual in due time prepared by Deloitte, which is currently also working on an update thereto, THE PARTIES have incorporated certain changes as hereinbelow described;

(vi) Given this context and heeding Deloitte’s recommendations, certain operational changes have been implemented in the Areas of Exchange of Corporate Services and the Cost Distribution Bases starting in January 2005, which THE PARTIES wish to acknowledge in writing;

(vii) The Board of Directors of THE PARTIES have approved the AGREEMENT FOR THE IMPLEMENTATION OF AMENDMENTS TO THE CORPORATE SERVICES MASTER AGREEMENT (hereinafter the “Agreement”) on August 17, 2007;

(viii) Additionally, THE PARTIES consider that the Agreement does not match the provisions under Section 73 of Decree 677/01 and they represent that they have notified the Audit Committee of the execution of the Agreement.

NOW IN CONSIDERATION OF THE FOREGOING, THE PARTIES execute this Agreement subject to the following terms and conditions:

ONE: THE PARTIES ratify that the Areas (as defined in the Master Agreement) and the calculation method applicable to the Exchange of Operational Services (also as defined in the Master Agreement) have been changed as from the dates listed below, amending therefore Exhibits I and II to the Master Agreement as per the following detail:

(i) Starting in January 2005, a decision was made to include the Internal Audit Department within the Areas mentioned in Exhibit I to the Master Agreement and therefore also in Exhibit II.

(ii) Starting in July 2005, a decision was made to include the Corporate Services Department within the Areas mentioned in Exhibit I to the Master Agreement and therefore, also in Exhibit II.

(iii) Starting in January 2005, a decision was made to exclude “Secretaries to the Directors” from the Areas mentioned in Exhibit I and therefore also from the Exhibit II to the Master Agreement.

(iv) Starting in July 2006, a decision was made to modify the distribution method applicable to the Finance Area of Exhibit II in a manner such that as from that date it should be made up as detailed in the new Exhibit II.

(v) Starting in July 2006, a decision was made to modify the distribution method applicable to the Works control and supervision services in the Operations Area of Exhibit II in a manner such that starting that month it shall be made up as detailed in new Exhibit II.

In consideration of the foregoing, the PARTIES hereby put on record that, subject to the clarifications detailed in the preceding sub-sections and for purposes of updating Exhibits I and II, they shall read as hereto attached.

TWO: THE PARTIES agree to amend Section Three of the Master Agreement in a manner such that starting on the date hereof, the following individuals have been designated as Individual In-charges: Gabriel Adolfo Gregorio Reznik to substitute for Clarisa Diana Lifsic de Estol for CRESUD and Cedric Bridger to substitute for Gabriel Adolfo Gregorio Reznik for IRSA.

THE PARTIES furthermore confirm that Abraham Perelman continues as APSA’s Individual In-charge.

THREE: THE PARTIES represent that all the sections of the Master Agreement that have not been amended pursuant to this Agreement continue to be fully in force.

In witness whereof, this Agreement is executed in three (3) copies of the same tenor and to a single effect in the place and on the date first written.

CRESUD S.A.C.I.F.y A.

[illegible signature] / [illegible signature]

Attorneys-in-fact

IRSA Inversiones y Representaciones Sociedad Anónima

[illegible signature and seal reading “Oscar Pedro Bergotto, Attorney-in-Fact”] /[illegible signature]

Attorneys-in-fact

Alto Palermo S.A. (APSA)

[illegible signature] /[illegible signature]

Attorneys-in-fact

Exhibit I

Description of Corporate Services Exchange Areas

Human Resources

The Human Resources sector renders to THE PARTIES the service consisting in Human Resources Administration and Management. Human Resources Administration spans payroll calculation activities, personnel administration, solidarity issues, benefits and labor relationships.

Human Resources Management includes personnel recruitment, selection, training, job rotation and related activities.

Finance

The Finance sector renders to THE PARTIES the service consisting in Investor Relations, Capital Markets and general finance in relation to financial transactions.

Institutional Relations

The Institutional Relations sector renders to THE PARTIES the service consisting in the development and control of advertising, broadcasting and marketing actions, relations with the media, preparation of articles, brochures and related activities.

Administration

The Administration sector controls all the accounting transactions of THE PARTIES. It is responsible for the companies’ management control and budget, and its main activities consist in the preparation of the financial statements, tax management, supervision of accounts payable and collections.

Information Technology

The IT sector renders to THE PARTIES the service consisting in maintaining, supporting and updating the IT structure.

Support and maintenance at the user level, help desk, back-up and security issues as well as all related activities.

Updates, control and follow-up of software licenses.

Maintenance, updates and support for infrastructure and communications aspects.

Insurance

The Insurance sector is in charge of managing THE PARTIES’ assets’ coverage by negotiating, acquiring and monitoring insurance policies, dealing with claims in terms of coverage, collection, etc.

Purchases

The Purchases sector is in charge of acquiring the goods and/or services that are most adequate to the intended use, at the lowest cost and in compliance with the deadline set by users.

Furthermore, it takes all necessary measures to obtain the adequate supplier financing for any such purchases.

Errand Running Service

The Errand Running Service renders to THE PARTIES the service consisting in sending and distributing internal and external documentation, menial procurements, going on errands, etc.

Contracts

The Contracts sector renders to THE PARTIES the service consisting in aid to the preparation, analysis and response to legal briefs, agreements, official letters, etc.

Operations

The Operations sector renders to THE PARTIES the services consisting in surveillance, maintenance and control/supervision over works.

Internal Audit

The Internal Audit sector renders to THE PARTIES the services consisting in operational review and control.

Corporate Services Department

The Corporate Services Department renders to THE PARTIES the service consisting in the operational coordination of the Finance, Contracts, Human Resources, Purchases/Insurance, Administration/IT, Operations, Internal Audit, Errand Running Service and Institutional Relations departments.

Exhibit II

Cost Distribution Bases

	Cost Center	Distribution Method
	Human Resources	Number of employees (headcount) under its administration and management.
Finance Each one of the sectors is weighed at 25%.	Capital Markets	Financial transactions outstanding as of the closing date by 40% and the amount of transactions conducted over the last 180/360 days weighed at 60%.
	Relations with Investors	Number of shareholders as registered with the Nasdaq, the volume of shares traded in US$ as well as market capitalization (the price of the shares as quoted by the number of outstanding shares) with the price diluted as of the closing date. The three variables are weighed at equal parts (33%).
	Financial Risk	Number of transactions analyzed, valued and consummated and their amount in US$. Both variables are weighed at equal parts (50%).
	Financial Administration	Total assets weighed at 40% and total liabilities weighed at 60%.
	Institutional Relations	Tasks performed and the time spent in each.
	Administration	Amount and number of payments and collections.
	IT	Number of desktops, licenses, volume of PCs and servers.
	Insurance	Insured amounts and volume of losses. Both variables weighed at equal parts (50%).
	Purchases	Purchase orders by weighing their volumes and amounts.
	Errand Running Service	Number of errands run.
	Contracts	Tasks performed and the time spent in each.
Operations	Security	By the hour.
The three variables are averaged (mix).	Maintenance	By surface area.
	Works	By the hour.
	Internal Audit	Tasks performed and the time spent in each.
	Corporate Services Department	Average based on the use by each company of the corporate areas.

THIS DOCUMENT, CONSISTING OF 7 (seven) PAGES, IS A TRUE AND ACCURATE TRANSLATION into English of the document in Spanish I have had before me in Buenos Aires, on this 29th day of November, 2007.

[For authentication purposes only:]

ESTE DOCUMENTO, COMPUESTO DE 7 (siete) PÁGINAS, ES TRADUCCIÓN FIEL al inglés del documento adjunto redactado en idioma castellano que he tenido ante mí y al cual me remito en Buenos Aires, a los 29 días de noviembre de 2007.

EX-12.1

EXHIBIT 12.1

SECTION 302 CERTIFICATION

I, Alejandro G. Elsztain, certify that:

1. I have reviewed this annual report on Form 20-F of Alto Palermo Sociedad Anónima;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period converted by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervisions, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

/s/ ALEJANDRO G. ELSZTAIN

Alejandro G. Elsztain

Chief Executive Officer

APSA

Dated: December 27, 2007.

EX-12.2

EXHIBIT 12.2

SECTION 302 CERTIFICATION

I, Gabriel Blasi, certify that:

1. I have reviewed this annual report on Form 20-F of Alto Palermo Sociedad Anónima;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period converted by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervisions, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

/s/ GABRIEL BLASI

Gabriel Blasi

Chief Financial Officer

Dated: December 27, 2007.

EX-13.1

EXHIBIT 13.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 20-F of Alto Palermo Sociedad Anónima (the “company”) for the year ended June 30, 2006 as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), Alejandro G. Elsztain, as Chief Executive Officer of the company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that;

(1) The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities and Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company.

	/s/ Alejandro G. Elsztain
By:	Alejandro G. Elsztain
	Chief Executive Officer
	December 27, 2007

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except as to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the company for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended.

EX-13.2

EXHIBIT 13.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 20-F of Alto Palermo Sociedad Anónima (the “company”) for the year ended June 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Gabriel Blasi, as Chief Financial Officer of the company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that;

(1) The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities and Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company.

	/s/ Gabriel Blasi
By:	Gabriel Blasi
	Chief Financial Officer
	December 27, 2007

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except as to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the company for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended.